Translation: Original published in Finnish on 4/24/2026 at 8:34 am EEST.

Betolar's Q1'26 report was weaker than expected despite record revenue. A smaller portion of the large order for Q1'26 was recognized than we expected, which resulted in weaker-than-expected profitability and financial position. We lowered our revenue forecasts for the coming years, as the commercialization of the key technology appears to be progressing slower than we expected. The company stated that it aims to find a financing solution during the current financial year, but despite this, the tight balance sheet keeps the risk level high. Reflecting the changes in our estimates, we lower our target price to EUR 1.0 (was EUR 1.1) and downgrade our recommendation to Sell (was Reduce).

Record revenue, sluggish new orders

Betolar’s Q1’26 revenue was 0.4 MEUR, which was clearly below our 0.7 MEUR estimate. Thus, the  the large order did not support Q1'26 revenue as we had expected, but we anticipate the order to be recognized as revenue mostly during Q2–Q3'26. Q1'26 EBITDA was -1 MEUR, which was below our forecast of -0.5 MEUR. We believe that the miss is explained by lower-than-expected revenue. Due to lower-than-expected EBITDA, Betolar's cash position was strained more than anticipated in Q1'26 (Cash and short-term investments 5.2 MEUR vs. forecast 6 MEUR). Betolar's new orders in Q1'26 remained at 0.2 MEUR, representing growth from a very weak comparison period but a decrease compared to the levels of Q2'25–Q3'25. This was clearly below our forecast, which anticipated 0.6 MEUR in orders. We believe individual large orders will have a significant impact on revenue growth, and securing these is key to the progress of commercialization.

We lowered our revenue estimates clearly

Betolar guides that 2026 revenue would grow significantly from the previous year. We believe achieving the guidance is practically certain, reflecting the largest order in the company's history received at the end of the financial year. Revenue growth indicates that Betolar's technology has commercial potential, but the business model is still taking shape. In the short term, revenue is supported by an ongoing large infrastructure construction project and blast furnace slag brokerage operations. In addition, the company commented positively on the short-term commercial outlook for a new  solution designed to protect critical infrastructure. However, achieving the commercial potential of metal separation technology, which is at the core of Betolar's technological expertise and thus, in our view, has the greatest value creation potential, appears to require more time and investment than we anticipated. Betolar has limited opportunities for such investments with its current financing. Reflecting this and weaker-than-expected order development, we lowered our revenue estimates for the coming years by approximately 20%. The company stated in its report that it aims to find a financing solution during the current fiscal year. The continued development of the business is dependent on securing additional funding by the beginning of fiscal year 2027, until which point the company's cash reserves are sufficient according to our forecasts. This keeps the risk level related to financing and business continuity high.

A high risk level warrants caution regarding the stock

Due to Betolar's early development phase, the predictability of the business is low and the risks associated with estimates are high. Based on our estimates expecting fast growth, Betolar's EV/S multiples (11x-6x) are higher than for the peers as a whole. Our DCF model, which focuses on long-term potential, reaches EUR 1. However, options and financing needs put upward pressure on the number of shares in the model, which we believe significantly weakens the expected return. Stretched valuation combined with high business, financial, and estimate risks keeps the risk/reward ratio subdued in our books.