Bittium. What thoughts?

Stocks
2143

First of all, Merry Christmas to everyone in this thread! :christmas_tree:

People have been upset about that 50k flagging, which of course comes as no surprise. There is probably harsher language on the KL forum, but the following from Nordnet’s discussions was brought to my attention:

image

I don’t expect to convert anyone who is intentionally misunderstanding, but let’s go through this anyway. I believe a significant portion of the critics are more victims of an echo chamber, who are nonetheless open to new perspectives. This is a recap for everyone who has followed my commentary more extensively, but few have the time to watch everything. Someone link this to the former Shareville if you want.

First of all, there is obviously a conflict there, as I gave a Reduce recommendation with a target price of €14.5 in the previous update on October 27, 2025. So it’s one recommendation, not 7 recommendations, which supposedly “haven’t been followed” here. It’s not true that I haven’t reduced my holdings before – unfortunately for my returns. I’ve spoken very openly about this here in the thread and certainly elsewhere too. By scrolling through the thread, you can also find material about the previous 50k flagging, trading graphs (buys and sells), and related comments. It’s been profitable to be aboard Bittium, given that I have to flag again.

Since the previous recommendation, which was almost 2 months ago, I haven’t reduced my holding. That is a fact, which I of course mentioned myself. 2 months might sound like a dramatically long time to do nothing in this hectic TikTok era, but personally, I’m boring in the sense that my investment horizons are usually in years. In this round, I’ve owned Bittium since late 2022 (I had holdings back in the Elektrobit days too, but I’ve divested at times). My wealth accumulation has generally been that kind of boring and slow process.

However, I think the most essential thing is that I’ve acted as I’ve instructed in the reports. A Reduce recommendation can seem dramatic to those who are in the middle of the hype and have never read the reports. Read the research; it’s educational even if you disagree. But this was already discussed here earlier:

So, I’ve been waiting for Indra here before making major conclusions, as mentioned in the headline. Nothing has been heard from Indra yet, and it will likely move to Q1’26 then.

Regardless, as I stated in my previous message, I couldn’t sell even if I wanted to (and again, I won’t take a stance on whether I’d want to). Trading is prohibited when research is ongoing, and it has been ongoing for quite some time. Inderes’ principles dictate that investors always come first. That means an analyst can only trade once the latest view is available to the market, and even then, naturally, after a blackout period.

At Bittium, there has been plenty of news flow, and the share price is so far from the target price that prohibitions would be in place for that reason alone. I can only imagine what kind of outcry there would be if I first sold myself and then gave a Sell recommendation later. The KL forum would probably explode, at least if the share price dropped at all. This is what these rules are for; investors always come first. There are quite a few other rules besides just “you can’t go against recommendations.” Of course, this isn’t the case for all operators.

Generally, I’ve said that those Add/Reduce recommendations aren’t so dramatic for me. Buy/Sell recommendations are, as a matter of principle. 50k isn’t a significant amount for me either, even though it’s generically defined as such in Inderes’ rules, and we naturally go by those in the disclaimers. I think I mentioned both things at least in this spring’s discussion as well, and there was apparently talk about Bittium too:

Even though the title isn’t my invention, you can find a lot of good points for criticism there instead of this, in my opinion, erroneous criticism :wink:

Additionally, there is, of course, a more recent video about Bittium where my failure in 2025 is thoroughly analyzed:

Things went wrong, no doubt about it. Constructive criticism is always welcome and has been received, but it feels unfair regarding my own trading or holdings. Those have, however, been handled very transparently here and are available for everyone interested to see.

I also found this in the same thread:

image

I strongly doubt that someone here would have asked politely about the matter and received a ban for their trouble, especially since things have been explained without any separate questions. But if that resulted in a ban, then @Sijoittaja-alokas, bring them back and throw in some free Premium for the misunderstanding. As far as I know, disagreements have always been accepted here, provided they are presented in a somewhat professional manner. Cleaning up vulgarity is a prerequisite for company representatives wanting to participate here. And I wouldn’t have the energy for it myself either, which is why I haven’t visited the KL forum, for example, in years.

I think that’s enough on this topic. Let’s get back to basics next year. A relaxed and peaceful Christmas to everyone equally!

45 Likes
2144

The dogs bark, but the caravan moves on. There is no point in investors whining about analysts’ forecasts. The analyst isn’t the one pressing the sell button on the investor’s account. Everyone can only look in the mirror if mistakes have been made.

A very merry Christmas to the Inderes team and everyone else too.

18 Likes
2145

We should also understand those who might be frustrated right now if they followed Inderes’ guidance and are now watching Bittium’s surge from the sidelines. Personally, I’m not one of them, and I’m enjoying the ride. It’s been quite quiet on this forum, even though Bittium is hitting new ATHs almost every day.

11 Likes
2146

Even though this is a Bittium discussion, I feel I can share my own comment on these recommendations since they’re being discussed, just as a general tip and thought.

Why couldn’t they have just given a HOLD recommendation in Bittium’s case as well? After all, it’s a fact that for most investors, most of the time, it’s the most sensible move. In my opinion, those investment recommendations are completely useless if they are constantly urging people to trade. I do understand that financial firms make money when stocks are churned aggressively and investors get poorer by constantly paying trading commissions, and liquidity is important, etc. But as I understand it, the majority of those reading recommendations on this forum fall into the retail investor category, though there are certainly a few professionals mixed in as well. But it’s especially not in the interest of retail investors to be constantly buying and selling something. I’d love to see a rise in simple “Hold” recommendations!

27 Likes
2148

Why can’t Bittium just be a ‘Hold’?

It simply can’t, because Inderes’ own general policy—unlike many other research houses—is to forbid such an option as ‘Hold’ and its many variants.

BTW, this principle slightly messes up the consensus recommendations for analyzed companies. I.e., if a company is only analyzed by a few firms, a principle that deviates from the norm distorts the average recommendation.

7 Likes
2149

Even with Bittium, I haven’t considered “buy,” “sell,” or “reduce” recommendations as the primary criteria for my own trades. I have valued the companies’ own updates about their situation, and Inderes has been active with this company too. It has been nice to hear from the companies’ personnel in interviews and at Capital Markets Day. A listener can draw their own conclusions/analyses based on those as well. It has been a different story with certain other companies—Solteq, Dovre Group, and KH Group, to name a few. There has been no trusting the communication from those companies.

4 Likes
2150

Bittium Corporation’s subsidiary Bittium Wireless Ltd has signed an agreement with the Spanish Indra Group for the licensing of Bittium Tough SDR technology to Indra and has received the first order under the agreement, valued at EUR 50 million, from Indra. This order has a positive impact on Bittium Corporation’s financial outlook for 2025, and the company has today published a positive profit warning as a stock exchange release. In addition to the first order received today, the estimated value of the agreement over the next ten years is approximately EUR 70 million, provided the agreement is implemented according to current forecasts.

Updated financial guidance for 2025

Bittium estimates that its net sales in 2025 will be EUR 116–120 million (EUR 85.2 million in 2024) and the operating result will be EUR 19–21 million (operating profit EUR 8.6 million in 2024).

Previous financial guidance for 2025 (published February 18, 2025)

Bittium estimates that its net sales in 2025 will be EUR 95–105 million (EUR 85.2 million in 2024) and the operating result will be EUR 10–13 million (operating profit EUR 8.6 million in 2024).

21 Likes
2151

Finally, but is this licensing deal really that good after all? 50m upfront and 70m over 10 years doesn’t sound that great at first glance. Then again, does this open the door to similar deals in other countries? The press release mentioned a new business model


Edit: Maybe this licensing deal is deceptive, when you change the calculation so that it’s an average of 12M in pure profit every year from this one deal alone. How much hardware do you have to sell to equal 120M in profit?

Assuming I’ve understood the terms of the licensing deal correctly. Waiting for Juha’s comment


10 Likes
2152

At the very least, it is evidently profitable revenue. In the new 2025 guidance, roughly rounded, it’s +€20m to revenue and +€10m to profit. Of course, other orders are likely included in this as well.

7 Likes
2153

I personally believe that this is specifically a door opener. Now it has been proven that there is the capability for international defense supply chains, credibility and, of course, a reference.

19 Likes
2154

An absolutely stellar reference. I believe this will provide entry into Germany and the UK. A great day to be a Bittium shareholder!

A fantastic demonstration of the superiority of Bittium’s technology and an ingenious way to structure a licensing agreement. This approach will allow us to gain entry into many different markets.

19 Likes
2155

Exactly. Let me continue CEO Toljamo’s statement a bit:

The new business model, where we license our technology, enables countries that need sovereign modern tactical radio technology to utilize our solutions. This significantly expands the international reach of our technology and products to countries with strong defense industry players


and whose principles do not allow procurement directly from anyone other than national preferred suppliers.

At the same time, Bittium is also showing that it believes it is competitive in the market. Perhaps more could have been squeezed out of Indra in this deal with a different kind of arrangement, but they are reaching for more from the Christmas table than just scraps falling to the floor from the Israel boycott.

Ed: And condolences @Juha_Kinnunen, I hope the ongoing analysis wasn’t just about to be published. The figures and scenarios probably had to be partially redone, I guess


6 Likes
2156

@Karoliina_Malmi

Should this Spanish deal now be interpreted in such a way that this €120M is “absolutely everything”
 meaning that after this, Indra can basically sell radios developed by Bittium to Spain (and elsewhere in the Spanish-speaking world) as much as their heart desires (surely it can’t work like that, everyone will just buy from Indra in the future and Bittium’s share was just this
?) or is this “just a general technology transfer deal” and will there be a separate cut from the products sold? And how does the situation then relate to those potential countries outside of Spain?

That “estimated total value” for the next 10 years (€70M) unfortunately looks like that’s already everything
 and if this is what we get from a total pot of billions as a completely central solution, then it went cheap. That €120M, 10 years, and we carried all the risk ourselves, and then it’s sold at that price with the table already set
.

8 Likes
2157

I already forgot that we were told the content of today’s announcement a long time ago. :smiley:

6 Likes
2158

Hi @Karoliina_Malmi,

An excerpt from today’s press release:

“Bittium Corporation’s subsidiary Bittium Wireless Ltd. has signed an agreement with the Spanish Indra Group for the licensing of Bittium Tough SDR technology to Indra and has received the first order under the agreement, valued at EUR 50 million, from Indra. This order has a positive impact on Bittium Corporation’s financial outlook for 2025, and the company has today published a positive profit warning as a stock exchange release. In addition to the first order received today, the estimated value of the agreement over the next ten years is approximately EUR 70 million, provided the agreement is realized in accordance with current forecasts.”

Are these announced sums purely license income? I have understood from the Spanish press that Spain initially also needs finished products before Indra gets its own production capability ready using Bittium’s technology. In other words, it would be a so-called “mixed project.” Is there a possibility that Bittium could also receive orders from Spain for finished products (if today’s was indeed a license order)?

Thanks in advance for the answer.

10 Likes
2159

I don’t dare say anything for certain now, as I am intellectually ill-equipped, but my own interpretation—responsibility for the interpretation thus lies with the reader of this message—is that it seems Indra is the first to license this technology, and all manufacturing and other costs will be borne by Indra, while Bittium collects a total of 120M (if everything goes as agreed, and thus 7M/y for the next 10 years, assuming that the 70M is distributed equally for each contract year). An important observation can be found in the [quoted] press release below:

“This agreement demonstrates strong confidence in the excellence of our software-defined radio technology. The new business model, where we license our technology, enables countries that need sovereign modern tactical radio technology to utilize our solutions. This significantly expands the international reach of our technology and products to countries with strong defense industry players. We are excited about the cooperation with Indra, and together we are making a significant contribution to strengthening defense capabilities,” says Petri Toljamo, CEO of Bittium Corp.”

So this operating model can be utilized in other large defense industry countries, so new deals might be coming as early as next year. Sounds too good to my ears
 if you can’t win ‘em - join ‘em.

13 Likes
2160

That part about the first order is interesting. You can’t help but think it had to be released during 2025 because the government has allocated funds for it and more will follow. The previous deals from Finland and Austria also mentioned 2025–26.

Let’s hope it’s a good deal and that through Indra, new countries can be secured to generate license revenue.

8 Likes
2161

Good morning to the thread,

Attached is a comment regarding yesterday’s Indra order:

Great news and congratulations to the Bittium team! The size was roughly what I speculated here back in the day, but the cash flow will presumably be nicely front-loaded, strongly lifting the earnings outlook for the coming years, and Indra will not become a competitor limiting Bittium’s potential. And of course, at least for me, it’s a different matter that the agreement is signed and not just coming soon. Nicely negotiated, and it reinforces the view of Bittium’s technology having a significant lead, especially in the ESSOR world. But no more on the comment.

As those following the situation have surely noticed, an update of the extensive report on Bittium has been underway for some time. The update is expected in January, with the aim to release it sometime mid-month. This is not a promise, and the matter is not solely in my hands, but that is what we are aiming for. Usually, these schedules are not announced publicly, but now it’s a bit of an exceptional situation, so I’ll open up about that too. All changes will come at once, and until then, I’ll just state that the view is outdated.

Well yeah, the report will be partly redone, but it’s nicer to replace long speculations mostly with facts regarding Indra. There were many uncertainties there, and now at least fewer. Concreteness is good. The current situation is significantly better than the extensive report becoming outdated immediately if the deal had come right after its release.

Of course, it could still become outdated quickly with the financial statement and 2026 guidance coming relatively soon after the expected publication, but that’s just life. We’ll work with the best information available then, and then see how the story progresses. It’s unlikely to be boring next year either.

Happy New Year!

44 Likes
2162

German Jussi’s new PT €31.50 and BUY.

17 Likes
2163

The following long article discusses Bittium alongside several other companies (including Saab, W5, Mildef, etc.). It’s recent enough that even the Indra deals are included.

Bittium (market cap EUR 1 bn) – Finnish secure communications specialist scales with NATO-level tactical networks

Bittium is a Finnish technology company specializing in secure communication and connectivity solutions for defense, public safety, critical infrastructure, and medical applications. In the current cycle, Bittium’s revenue has grown from EUR 82.5 million in 2022, when the operating result was near zero and the order backlog was approximately EUR 28 million, to EUR 85.2 million in 2024, with an order backlog of EUR 45 million and an operating profit of EUR 8.6 million, representing a 10.1% profitability. Bittium recently achieved a breakthrough in Spain in cooperation with Indra and raised its 2025 guidance to a revenue of EUR 116–120 million and an operating profit of EUR 19–21 million. This includes a small portion of the technology transfer agreement made with Indra, but the underlying earnings performance is also on an excellent track.

The growth of European defense budgets, accelerated by the war, has boosted Bittium’s Defense and Security business, as demand for tactical IP networks, software-defined radios, and secure government smartphones has increased among armed forces and security agencies, while its medical and R&D service operations have remained better protected from the conflict cycle. We believe this combination is significant. Part of the current growth is conflict-driven, as NATO and EU countries accelerate the modernization of tactical networks and command and control systems in the short term, but much of the demand is strategic and related to multi-year programs aimed at strengthening command, control, and communications rather than just the immediate tempo of the war. Together with cost-cutting measures and a refocused strategy, this improves Bittium’s potential for growth and profitability improvement as tactical networks modernize.

We see the current valuation as containing aggressive expectations even after the Indra deal. Based on the 2025 guidance, the EV/EBIT for Bittium’s Defense and Security segment is approximately 45-50x (estimated based on the group’s current valuation), so the company would need to achieve exceptionally large profits in the defense sector in the near term for the valuation multiple to look comfortable. Since Bittium currently appears to have a solid technological lead over major competitors thanks to its highly capable tactical IP networks and Tough SDR radios compatible with ESSOR waveforms, it could achieve significant market share in the coming years and produce the required results. The Indra deal in Spain proves that Bittium has the potential to beat even “national champions,” so the outlook is excellent. It remains to be seen whether it is enough to justify a market capitalization of EUR 1 billion.

10 Likes