Translation: Original published in Finnish on 11/6/2026 at 9:24 am EET.

Source: Inderes

Teleste's Q3 revenue fell well short of our estimate as deliveries shifted to Q4. Despite this, the result met our expectations, as strong profitability was supported by a favorable product mix and efficiency measures taken. Order intake rose to a record level, supported by the Siemens agreement. Teleste revised the upper end of both its revenue and earnings guidance ranges slightly downward. Our current earnings estimate (adj. EBIT of 8.9 MEUR) is right at the top end of the new range, so preliminarily, there is slight downward pressure today. In the big picture, Teleste's expanded customer base in both businesses creates a strong foundation for continued earnings growth in the coming years. However, the merger of the largest customer in the Networks segment continues to cause short-term uncertainty in North America.

Postponed deliveries weighed on revenue, orders at record levels

Teleste's Q3 revenue fell by 18% to 28.4 MEUR, which clearly missed our 35.9 MEUR forecast. According to the company, revenue is distributed differently between quarters this year, and deliveries shifted to Q4. Networks segment revenue decreased by 26% to 15.5 MEUR, while our forecast expected a 5% increase. North American deliveries fell year-on-year as the merger of the main customer (Cox) with Charter continued to hinder investments while the initiation of new customer relationships was postponed until 2027. Nevertheless, growth continued in Europe, and, according to the company, the business developed strongly. Orders received by the segment increased by 4% to 14.7 MEUR, but the order volume was fairly low in absolute terms. In the previous quarter (Q2'26: 25.6 MEUR), the level was, in turn, very strong, and the timing of orders has a significant impact on quarterly performance.

Public Safety and Mobility's revenue decreased by 5% to 13.0 MEUR against what the company described as a strong comparison period, while our forecast had called for 3% growth. The decline was due to lower volumes in deliveries to public transport operators and in the maintenance business. Orders received by the segment rose sharply to 55.0 MEUR (Q3'25: 15.9 MEUR). This figure includes a Siemens agreement worth approximately 40 MEUR signed in September, with deliveries set to begin in 2028. Consequently, the group's order book jumped to 156.5 MEUR (Q2'26: 115.3 MEUR).

Profitability was strong despite declining volumes

Teleste's adjusted EBIT landed at 2.1 MEUR in Q3 (Q3'25: 2.3 MEUR), which was in line with our estimates. Adjusted EBIT margin (7.4% vs. 6.6%) improved year-on-year and clearly exceeded our estimate of 5.9%. The share of material and production costs in revenue decreased to 41.3% (Q3'25: 47.8%), which was clearly below our expectations and supported the gross margin. The company attributes this to a favorable product and customer mix, a decrease in certain order provisions, and savings in material and production costs. Personnel expenses (8.8 MEUR vs. 10.9 MEUR) were also lower than in the comparison period, as production is weighted towards the end of the year.

The Networks segment's adjusted EBIT margin (9.5% vs. Q3'25: 11.8%) decreased due to lower volumes. Profitability in Public Safety and Mobility (11,8 % vs. Q3'25: 6.5%) improved significantly. The segment's adjusted EBIT of 1.5 MEUR was the highest in its history, surpassing the previous record set in Q2. The work Teleste has done in recent years to streamline its business and expand its customer base is now clearly beginning to show in its development.

Cash flow from operating activities was -0.7 MEUR in Q3, and cash flow from January through September was 0.2 MEUR. Cash flow clearly lagged behind earnings because the company has increased its inventories for year-end deliveries amid a tight component situation. Consequently, the net debt-to-EBITDA ratio increased to 2.2x (Q2'26: 1.9x). We expect working capital to be gradually released over the coming quarters.

Upper limit of guidance lowered by one notch

Teleste refined its guidance for 2026. The company now estimates revenue to be 140-145 MEUR (prev. 140-160 MEUR) and adjusted EBIT to be 7-9 MEUR (prev. 7-10 MEUR). Based on the results from the first three quarters, the guidance calls for Q4 revenue of 44.7–49.7 MEUR (Q4'25: 6.1 MEUR) and adjusted EBIT of 1.1–3.1 MEUR (Q4'25: 1.2 MEUR). According to the company, approximately 19% of the order book, or around 30 MEUR, is scheduled for the current year. Prior to the report, our estimates expected revenue of 143 MEUR and an adjusted EBIT of 8.9 MEUR. Our earnings estimate is right at the upper end of the updated range, meaning there is slight downward pressure on it.

Based on the guidance, Q4 revenue must be the highest of the year, as Teleste had already anticipated earlier. This depends on confirming the last orders and successfully completing large deliveries in both segments, and there are still risks associated with the timing. In North America, the merger between Charter and Cox has been finalized. According to Teleste, it is difficult to assess its impact on customer capex at this stage, and some revenue from new customers will not materialize until 2027.