Following INVISIO's Q1 2026 interim report, we have updated our investment case on the company. Our updated investment case covers the key investment reasons, risks, and valuation perspective relative to peers across Nordic/EU defense equipment, international defense communications, and audio/hearing protection.

INVISIO delivered its strongest Q1 ever with revenue of SEK 431m (+29% y/y, +34% in constant currency) and order intake of SEK 335m (+27% y/y), despite the US Department of Homeland Security being shut down for a period of the quarter, which delayed Coast Guard deliveries and ordering. The order book closed at SEK 751m, and management expects most of these orders to be delivered in Q2 and Q3. EBITDA came in at SEK 55m (+23%) and EBIT at SEK 39m (+43%), with the operating margin at 9.2% (8.2%). The gross margin of 54.3% (58.7%) was the soft spot in the quarter, primarily reflecting a one-off lower-margin sale related to a customer's onward donation to a third party rather than a structural shift in mix.

There are indications that the gross margin and US-related softness are timing-driven rather than structural. The DHS shutdown is a temporary effect, and management expects the delayed US Coast Guard income to be recouped during the year. At the same time, the strategic landmark Coast Guard contract is already producing knock-on effects, with test orders received from coast guard organizations outside the US and from other maritime actors, effectively opening up a new maritime vertical. Importantly, initial shipments began during Q1 of the three new products launched in H2 2025, the T30 headset, INVISIO Link™ wireless and H Series smart hubs, with volumes expected to step up in Q2 and accelerate further during the rest of the year.

The quarter illustrates a central point in the investment case: order intake and revenue remain lumpy from one quarter to the next, but the underlying direction is clear. Revenue grew at a 5-year CAGR of 27% to 2025, and on consensus estimates is set to compound at ~21% to 2028E, with EBIT compounding at ~38% over the same period, a profile that is hard to find in the European listed defense universe outside of the largest primes.

The key investment reasons center on structural NATO rearmament tailwinds, with European defense spending of EUR 380bn in 2025 already +60% above 2020 levels and the NATO 2% GDP target now being accelerated towards 5% by 2035, providing a multi-year procurement backdrop into which INVISIO's NATO-qualified products fit directly. High operational gearing in an asset-light model with subcontracted production enables continued margin expansion as the topline scales, with the 2025 EBIT margin of 18% already well above the Nordic/EU peer median of ~11%. A market-leading position underpinned by regulatory hurdles, co-development with armed forces and 3-5 year procurement cycles supports high switching costs and recurring upgrade orders, and the shift from headset supplier to integrated soldier and vehicle system provider, via the T30, Link™, H Series and the UltraLYNX bolt-on, raises revenue per customer. Strong cash generation also supports a continued dividend, with a 5-year average payout ratio of 48% and the proposed dividend for 2025 of SEK 3.00 per share (+30%).

The key risks remain centered on valuation expectations and revenue lumpiness. The share continues to trade at a premium to Nordic/EU defense peers, leaving limited room for execution slippage in the new product ramp or further US-related delays. Lumpy revenue and order intake creates q/q volatility, as Q1 2026 illustrated through the DHS shutdown and the low-margin one-off sale, and larger framework orders may exacerbate this going forward. Defense supply chains may struggle to keep pace with industry growth, partly mitigated by INVISIO's inventory build and third-party scale options. Modern warfare is also evolving rapidly, and equipment priorities may shift over time.

From a valuation perspective, on 2026E multiples, INVISIO trades at 24.9x EV/EBIT and 34.2x P/E, a moderate premium to Nordic/EU peers (21.3x and 29.3x) that has compressed over the last twelve months with the share down 27.8%. On 2027E estimates, multiples fall to 17.8x EV/EBIT and 24.2x P/E, broadly in line with peer medians at 16.6x and 24.8x. The valuation is supported by a superior growth profile (revenue CAGR 21% and EBIT CAGR 38% over 2025-28E versus peer medians of 16% and 26%) and a higher margin profile (2026E EBIT margin of 21.9% versus the peer median of 14.4%).

For further insights into the Q1 results and management's focus areas for the rest of 2026, you can watch the event we hosted with INVISIO: https://www.inderes.dk/videos/invisio-praesentation-af-regnskabet-for-1-kvartal-2026

Disclaimer: HC Andersen Capital receives payment from INVISIO for a Digital IR subscription agreement. /Rasmus Køjborg, CFA 15:00 22/05-2026