Q1 preview: excellent growth, pipeline rich in catalysts

Q1'26e EBITDA is seen to more than triple yoy to € 5.2m, implying a 19% margin, up 10pp yoy (eNuW). The improvement should mainly reflect the strong sales ramp up in Defense & Security and related operating leverage. Q1'26e EBIT is expected at € 1.5m, up from € 0.4m in Q1'25, implying a 6% margin (+4pp yoy; eNuW). While still shaped by seasonality and accelerated amortisation related to the Indra technology transfer, the latter which we estimate to weigh on margins by c. 8pp, Q1 profitability should already mark a clear step towards the group’s 24% structural EBIT margin (eNuW).

The Defense & Security order backlog stood at € 70.9m at end-2025, which covers ~60% of FY26e sales of € ~119m for the segment (eNuW). With this, visibility is noticeably better than it was at this point in prior years; the beginning backlog in Defense & Security covered 34% of the FY24 segment sales and 40% of FY25 segment sales respectively. With the additional € 20m Indra follow-on order received in January 2026, the order backlog provides a robust runway toward Bittium’s sales guidance of € 140m - € 155m. Based on our own estimates, Bittium would need € ~44m in new orders to achieve eNuW FY26e sales, which sits on the upper end of the guidance at € 152.9m (eNuW).

Likely candidates to bridge the eNuW FY26e sales gap are: (i) a first double digit €m order from the Swedish Armed Forces, (ii) winning a new military as a major customer (Bittium is currently in talks with 10+ militaries to renew tactical communication systems), or (iii) leverage the installed base through follow-on orders or cross-selling. Finally, (iv) the UK tender can be truly transformational. As flagged in previous notes, we see either Bittium or Thales winning the tender. Further, a collaboration between different vendors cannot be excluded. While it is difficult to exactly gauge the financial opportunity for Bittium here, a significant involvement in the UK tactical communications procurement would inevitably trigger a guidance hike (eNuW). Noteworthy: while the UK tender is scheduled for conclusion in June 2026, the program has been mired with delays, creating uncertainty on timing. Against this backdrop, the key focus for the Q1 release, in addition to Q1 performance, will be on any incremental pipeline commentary.

We only make minor adjustments to our model ahead of Q1'26 results. We keep our BUY rating and PT of € 40 unchanged, based on DCF model.