Equity Research Enrad, Q2 2025: Investments and growth according to plan

Enrad AB’s net sales of SEK 15.2 million in Q2 2025 fell short of our estimate of SEK 16.2 million by about 6%. Compared with Q2 2024, sales grew by 21%. Expensed investments reduced profitability but will yield results further ahead. 

Expensed investments are building a solid foundation for the future

Enrad AB (“Enrad” or the “Company”) reported net sales of approximately SEK 15.2 million in Q2 2025, which was slightly below our estimate of SEK 16.2 million.

The gross margin of 50% came in almost in line with our estimate of 52%. However, higher-than-expected operating expenses contributed to EBIT for Q2 2025 landing at minus SEK 3.4 million, compared with our estimate of SEK 1.6 million. The elevated costs are attributable to investments that are expensed rather than capitalized, which naturally affect results already from the EBITDA level. Product development, product management, and the launch of the Dutch subsidiary are examples of investments that impacted results during the first half of 2025 but are expected in the long run to drive strong growth and sustainable profitability. Expensed investments can be expected to continue showing up in the figures, which may lead to fluctuating margins for some time ahead. The Company’s cash position amounted to approximately SEK 21.2 million as of June 30, 2025, down from SEK 37.3 million at the end of Q1 2025. Cash flow during Q2 2025 was thus about minus SEK 16.1 million.

In the Q2 2025 report, CEO Andreas Bäckäng noted that the order book is fully booked for Q3 2025, while work is progressing on replenishing the order book for Q4 2025. At the same time, the hope is that the Company may receive its first order in the Netherlands already in Q4 2025, following the major initiative launched in spring 2025 through the subsidiary Enrad B.V. As noted previously, however, lead times in the industry are long, which means that sales processes can take time.

We lower our estimates for Enrad’s net sales for 2025 slightly, from the previous SEK 67.3 million to SEK 64.3 million. For 2026 and 2027, estimates remain largely unchanged. We assume a gross margin of 52% for 2025–2028, which is then expected to decline from 50% in 2029 to 45% during 2034–2037. At the same time, we expect, as mentioned, fluctuating EBITDA and EBIT margins going forward, which we believe will be most evident during 2025 and 2026.

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