Modelon AB Year-end report Q4 2025
EBIT improved in Q4 despite lower ARR
Quarter, October – December
- ARR amounted to MSEK 50.8 (54.7), an annual decrease of 7%.
- Net revenue amounted to MSEK 16.3 (22.8), of which software revenue was MSEK 12.7 (15.7).
- Cash flow from operations amounted to MSEK -9.0 (-11.4).
- Adjusted EBIT amounted to MSEK -5.2 (-11.6).
- Operating expenses were MSEK 24.3 (38.8), including non-recurring items of MSEK 0.0 (3.2) and development costs of MSEK 7.1 (12.6).
- Net profit amounted to MSEK -5.0 (-14.1).
- Earnings per share amounted to SEK -0.28 (-0.82) before dilution.
Period, January - December
- Net revenue amounted to MSEK 71.5 (83.6), of which software revenues were MSEK 55.8 (58.1).
- Adjusted EBIT amounted to MSEK -27.0 (-49.4).
- Operating expenses were MSEK 107.4 (147.3), including non-recurring items of MSEK 5.2 (11.8).
- Net profit amounted to MSEK -32.6 (-59.4).
- Earnings per share amounted to SEK -1.86 (-4.23) before dilution.
- The board proposes that no dividend is paid for the 2025 financial year.
Comments from the CEO
EBIT improved despite lower ARR
Net revenue in Q4 2025 was MSEK 16.3, a decrease of 29 percent compared with the same quarter in 2024. The decline was primarily driven by adverse currency effects (a weaker USD against SEK), a lower volume of customer service projects, and fewer software deals in North America. A North American fuel cell customer reduced license subscriptions in Q4 2025, due to cuts in R&D expenses. Reductions in US federal funding affected projects at NASA Jet Propulsion Laboratory, Naval Research Laboratory, and National Renewable Energy Laboratory. We have the ambition to win back lost business with these accounts during 2026.
Annual Recurring Revenue (ARR) in Q4 2025 amounted to MSEK 50.8, representing –7 percent in constant currencies, largely reflecting reduced activity at the US customers mentioned above. Excluding these accounts, license renewals in Q4 aligned with expectations and accounted for roughly half of our annual software revenue. We also secured new agreements with two European customers: a major industrial equipment supplier and a provider of heat-pump diagnostics software. Additional growth came from an Asian construction company, and we expanded software use at a North American social media provider based on work related to digital twins for AI data centers. Discussions with several data center operators and suppliers of climate-control equipment are progressing, and we remain positive about the potential of this segment. We are well-positioned to combine the speed of neural network/AI models with the accuracy of physics-based simulations, paving the way for digital twin deployment at scale.
Operating profit for the quarter was MSEK –5.2, an improvement of MSEK 9.5 compared with Q4 2024. Efficiency programs executed in 2024 and early 2025 have reduced our cost base significantly, providing a solid foundation for further EBIT improvement in coming quarters. Operating cash flow in Q4 2025 was MSEK –9.0, MSEK 2.4 better than the same period last year. Cash flow in Q4 2025 included restructuring payments, which will be completed in Q1 2026.
Sales improvements
Revenue development in 2025 did not meet our expectations, and we have taken measures to strengthen the capacity and effectiveness of our sales organization. Our Chief Revenue Officer (CRO), who started in Q3 2025, has sharpened focus on growth opportunities, including the rapidly developing data center industry. Beginning in Q1 2026, a dedicated Customer Success team will take responsibility for support, expansion, and long-term development of existing accounts. Their mandate is to help customers broaden the use of Modelon’s simulation capabilities across engineering and operations. A team of account managers will report directly to the CRO, driving new customer acquisition and replicating proven sales approaches across markets and geographies. These organizational changes will enable more efficient prospecting and accelerate our path back to revenue growth.
Product innovation
Modelon continues to differentiate through a scalable cloud architecture and a modern, web-based user experience. During the fourth quarter, we launched several new features that further strengthen our technology leadership. A new environment for simulation model development provides customers with enhanced capabilities for creating custom models and building systems using Modelon’s proven libraries. Our approach combines Modelon’s expertise in physics-based simulation with advanced, state-of-the-art software tools for AI supported development. Our base technology, Modelica, is an open modeling language that we combine with generative AI to create enhanced customer experience. We believe that new Modelon Impact features will significantly improve customers’ productivity, enabling faster and more accurate results than what competitors’ solutions or in-house tools typically deliver.
Summary and outlook
We summarize a year with significantly improved profitability, thanks to a more efficient and sustainable cost structure. Revenue performance was below expectations, largely due to adverse market dynamics and to reduced business at US federal accounts. Looking ahead, we expect more stable business conditions for our customers, and we see sales opportunities for system simulation in rapidly developing markets such as liquid-cooled AI data centers. Our return to revenue growth will come both from upselling at existing customers, and from winning new accounts.
Modelon is well-positioned to grow recurring revenues based on a SaaS product that delivers clear advantages over competing simulation tools and customers’ internal software. We maintain our ambition to achieve ARR growth of 20 percent, generate positive cash flow in 2026, and deliver a long-term EBIT margin above 20 percent.
Jan Häglund, CEO Modelon
Lund, February 17, 2026
Investor presentation
Modelon invites investors to a presentation of the Q4 year-end report at 12.00pm CET on February 17, 2026. CEO Jan Häglund and CFO Jonas Eborn will present the Q4 earnings in a webcast.
The complete Q4 year-end report is attached to this press release and is also made available on the company webpage: http://www.modelon.com/investor-relations/#FinancialReports.