Lower Net Sales in a Quarter Characterized by Challenging Market Conditions

Motion Analysis, however, reported higher net sales and improved operating profit. The successful transition to a subscription-based business model is now beginning to generate results and has also contributed to an increased order backlog.

The Group's strategy remains to invest in market presence and the product portfolios of both business areas in order to strengthen its position in key markets over the long term. An increasing share of sales within Motion Analysis is generated through the Group's own sales and service companies, which is expected to improve both profitability and growth.

Financial overview

CEO’s comments
Jan Molin – CEO and President

Challenging Markets Require Long-Term Focus and Discipline

During the second quarter, the Group continued to operate under challenging market conditions. Customers remained cautious in their investment decisions, with prolonged decision-making processes continuing to impact primarily the RemaSawco business area. Group order intake increased slightly to MSEK 27.4 (26.8), while the order backlog declined. Net sales amounted to MSEK 30.0 (49.5), although they improved compared with the first quarter. The gross margin increased to 77% (63), reflecting the revenue mix during the quarter. EBITDA was negatively affected by the lower net sales and amounted to MSEK -1.2 (2.7). It remains clear that the Group's current earnings level is unsatisfactory and requires further measures.

RemaSawco Continues to Face a Challenging Market

Profitability among Swedish sawmills remains under pressure, although demand has shown some improvement. Prices for sawn timber increased gradually during the quarter, giving rise to cautious optimism in the market. However, high raw material prices combined with limited timber availability continue to create a challenging environment for sawmills, reducing their willingness to invest.
During the quarter, our priorities remained product development, delivery performance, service and customer satisfaction, while maintaining a strong focus on liquidity, which has deteriorated further as a result of the weak order intake. We have therefore implemented a controlled efficiency programme and reorganised the business to become more market oriented, reducing the cost base while preserving the expertise and capabilities required to capitalise on the expected market recovery.

Motion Analysis Business Model Progressing According to Plan

Motion Analysis performed broadly in line with the corresponding period of the previous year despite the challenging market conditions. Order intake declined slightly year-on-year, while the order backlog for subscription and support services continued to grow, accompanied by higher net sales and improved profitability.
This clearly demonstrates that the transition towards a business model with a higher proportion of recurring revenue is progressing according to plan. The new software platform, the growing share of subscription revenue and continued innovation in priority markets remain key drivers of our long-term ambition to enhance scalability and profitability. We also continue to launch application-specific software releases, strengthening our position within selected market segments. At the same time, increased direct sales are reinforcing our presence in strategically important geographic markets.

Focus on Liquidity, Cash Flow and a Balanced Response to Market Conditions – Rights Issue Planned

We continue to closely monitor liquidity, which has been adversely affected by the weak order intake. Cash flow and cost control remain key priorities, and we are implementing measures to adapt the business to current market conditions while gradually strengthening the Group's financial resilience. At the same time, our long-term strategic direction remains unchanged. The Board of Directors has resolved that the Group should retain the expertise, development capacity, delivery capability and customer satisfaction required to capitalise on future market growth.
To support product development, market expansion and the ongoing business model transition within Motion Analysis, the Group has secured bank financing totalling MSEK 20 of which MSEK 5 was drawn during the quarter. Despite the weaker market conditions and longer customer decision cycles, the business area's strategy and financing are considered well aligned to support continued growth.
To enable RemaSawco to continue its ongoing strategic initiatives, there is a need to strengthen the business area's short-term liquidity position. Consequently, the Board of Directors has resolved to propose a rights issue to provide additional capital to RemaSawco, subject to approval by an Extraordinary General Meeting. The proceeds are primarily intended to complete ongoing development projects, execute planned product development initiatives and strengthen the Company's ability to capitalise on the business opportunities expected to arise when market conditions improve.

THE GROUP’S DEVELOPMENT IN THE SECOND QUARTER

Order intake, net sales and profit

Order intake amounted to MSEK 27.4 (26.8) Order backlog as of June 30, 2026, amounted to MSEK 68.1 (84.6).

Net sales amounted to MSEK 30.0 (49.5). Capitalized development expenditure amounted to MSEK 4.2 (2.3) and relates to both business units.

Gross margin amounted to 77 (63) percent.

EBITDA amounted to MSEK -1.2 (2.7).

Other external charges decreased compared with the corresponding period last year, mainly due to a decrease in external consultancy costs. Personnel costs decreased compared to last year’s period, which is attributed to a decrease in the number of employees.

Depreciation/amortization amounted to MSEK –7.2 (-6.3) During the year, we have begun depreciation/amortization of several development projects in connection with commercial launch.

Net financial items amounted to MSEK -0.7 (-0.1) where the increase is attributable to external financing.

Result after taxes amounted to MSEK -8.9 (-3.5).

Financial position, investments and cash flow

The Group’s investments in non-current assets during the quarter amounted to MSEK 5.0 (4.2) of which MSEK 4.2 (2.3) was related to capitalized development projects. Capitalization of development projects takes place in both business units.

The operational cash flow during the quarter amounted to MSEK -11.5 (-13.8). Solidity as of June 30, 2026, amounted to 44 (57) percent. Net indebtedness amounted to 0.4 (0.1) times.

Net debt as of June 30, 2026 amounted to MSEK 32.1 (8.6), primarily as a result of increased borrowings.

Available cash and cash equivalents amounted to MSEK 21.1 (22.2) as of June 30, 2026.

THE GROUP’S DEVELOPMENT DURING THE INTERIM PERIOD

Order intake amounted to MSEK 46.0 (57.7). Order backlog as of June 30, 2026, amounted to MSEK 68.1 (84.6).

Net sales amounted to MSEK 47.7 (88.5) Capitalized development expenditure amounted to MSEK 8.0 (5.6) and relates to both business units.

Gross margin amounted to 82 (67) percent.

EBITDA amounted to MSEK -7.9 (5.5), mainly is attributable to the low order intake and net sales within business unit RemaSawco.

Depreciation/amortization amounted to MSEK –14.0 (-11.6). During the year, we have begun depreciation/amortization of several development projects in connection with commercial launch. Net financial items amounted to MSEK -1.1 (-0.2).

Result after taxes amounted to MSEK -22.7 (-6.0).

ROLLING 12-MONTH ORDER INTAKE, REVENUE AND EBITDA

The Group’s rolling 12-month EBITDA margin during the second quarter amounted to -3.1 percent. The Group’s long-term EBITDA target of delivering a stable 15 percent EBITDA margin requires growth in net sales. The pace of the ongoing change in the Motion Analysis business unit, to a higher proportion of subscription and support agreements, may also affect how quickly the long-term goal is achieved.

BUSINESS UNIT: REMASAWCO

RemaSawco provides solutions to optimize production in the sawmill industry. The product portfolio includes proprietary software that, with the help of laser, 3D scanning, X-ray, and automation, measures and analyzes timber and boards throughout the sawmill process to maximize value exchange, minimize waste, and thus increase customer profitability.

Performance during the period
During the second quarter, there were signs of cautious optimism in the Swedish sawmill market, despite continued pressure on profitability. Demand improved somewhat, primarily due to normal seasonal patterns in Europe, and prices for sawn timber increased gradually. However, these price increases were not sufficient to offset persistently high raw material costs and the limited availability of spruce logs. Market sentiment improved compared with the previous quarter, with sawmill inventories returning to more normal levels, demand strengthening in certain export markets and price trends stabilising. Nevertheless, sawmill profitability remained at historically low levels.

Order intake increased slightly year-on-year to MSEK 18.2 (16.2), although investment appetite among sawmills remained subdued. Net sales declined to MSEK 19.2 (42.4), while EBITDA decreased to MSEK
-0.4 (6.8), corresponding to an EBITDA margin of -1.9% (15.7).
As order intake remains weak, the order backlog continues to decline and liquidity has deteriorated further, an efficiency programme, including workforce reductions, has been implemented. The objective is to reduce costs in a controlled manner to manage periods of subdued demand while transforming the organisation to become more market oriented, ensuring the business is well positioned to capitalise on a future market recovery.

Product development
During the quarter, development of the product portfolio continued with a focus on enhanced performance, scalability and long-term competitiveness. Development efforts included further enhancement of the modular 3D and X-ray scanner platform, as well as solutions for automated log measurement and quality grading. Work also continued on standardising the hardware platform to strengthen digitalisation and optimisation throughout the sawmill process.

At the same time, AI-based models were implemented in both internal processes and products to improve customer value, operational efficiency and delivery quality. By integrating AI into the product development process, the Company is creating the conditions to accelerate the introduction of new functionality and launch new products at a pace previously not possible. This initiative forms part of the Group's long-term strategy to remain at the forefront of technological innovation and to meet customer needs with greater speed and precision.

BUSINESS UNIT: MOTION ANALYSIS

Motion Analysis Systems offers its customers software for the analysis of high-speed film, a niche where the Company is the world leader. The software is sold under the product names TEMA and TrackEyeⓇ.

Performance during the period
Despite challenging market conditions and longer customer decision-making processes, Motion Analysis delivered a solid performance during the quarter. Order intake declined slightly to MSEK 9.2 (10.6), while net sales increased to MSEK 10.8 (10.1). EBITDA improved to MSEK 0.7
(-1.5), corresponding to an EBITDA margin of 5.2% (-17.4). The order backlog for subscription and support services continued to grow, reaching MSEK 43.1 (33.5). Overall, this demonstrates that the strategy of transitioning to a subscription-based business model is now delivering tangible results. The first half of the year also showed stronger performance than the corresponding period of the previous year in terms of order intake, order backlog, net sales and operating profit.
During the period, the business area continued to invest in sales and marketing resources to increase market visibility, generate additional business opportunities and expand the share of direct sales in key markets.

The new software platform represents a strategically important element of the Company's growth agenda. Combined with the increasing share of subscription revenue and a stronger market presence through direct sales in priority markets, it is expected to be a key driver of future growth and improved profitability.

Product development
During the quarter, a new software release targeting the automotive safety industry was launched. The release enhances one of the business area's flagship capabilities—rigid body analysis—by addressing key measurement challenges and introducing functionality that has long been requested by customers. At the same time, significant emphasis has been placed on automation and more efficient workflows.

Several additional initiatives are underway to deliver innovative software releases to the business area's target markets. A common denominator across these initiatives is the use of AI, both in the development of new functionality and as an integrated component of the solutions themselves.

OTHER INFORMATION

Parent Company

The Parent Company's revenue for the second quarter amounted to MSEK 0.5 (1.5). Operating profit amounted to MSEK -1.5 (-2.6), while profit after tax amounted to MSEK -1.5 (-2.6).

Investments in non-current assets amounted to MSEK 0.0 (0.0). As of 30 June 2026, the Parent Company's available cash and cash equivalents amounted to M 0.0 (0.2). Shareholders' equity amounted to MSEK 113.4 (116.2), and the equity ratio was 99% (98).

Significant events after the period

Business Unit RemaSawco received an order worth approximately MSEK 5.8 from a global forest products group.

On 13 July 2026, the Board of Directors resolved to propose that an Extraordinary General Meeting approve a rights issue to raise capital for RemaSawco. For further information, please refer to the press release published on 17 July 2026.

Personnel

The average number of employees was 70 (73). The number of employees at the end of the period was 74.

Number of shares

The number of shares on June 30, 2026, amounted to 89,207,818.

Accounting policies

Image Systems applies the International Financial Reporting Standards (IFRS) as adopted by the EU. The interim report for the Image Systems Group is prepared in accordance with IAS 34, Interim Financial Reporting, and the Swedish Annual Accounts Act. Disclosure in accordance with IAS 34, Interim Financial Reporting, is provided in notes as well as elsewhere in the interim report.

The interim report for the Parent Company, Image Systems AB, is prepared in accordance with the Swedish Annual Accounts Act as well as the Swedish Financial Reporting Board’s recommendations RFR 2 Accounting for Legal Entities.

Image Systems applies the ESMA (European Securities and Markets Authority) Guidelines on Alternative Performance Measures. Definitions of indicators are provided on page 15 and relevant reconciliations on page 14.

Risks and uncertainties

The Group’s significant risks and uncertainties include business risks related to agreements with customers and suppliers as well as other external factors such as currency fluctuations. The Group’s significant financial and business-related risks are discussed at depth in the management report and under Note 3 in the 2025 Annual Report. No significant new or changed risks or uncertainties have been identified during the quarter.

This interim report has not been reviewed by the Company’s auditors.

Financial Calendar

Interim report January–September 2026 October 23, 2026

Year-end report 2026 February 5, 2027

Long-term financial objectives

Image Systems aims to create long-term value growth for its shareholders. To achieve this, the Board of Directors has set long-term financial objectives:

EBITDA >15%

Solidity >50%

Dividend 20% of the profit after taxes

The Board of Directors and the Chief Executive Officer confirm that the interim report provides a true and fair overview of the Parent Company’s and the Group’s operations, financial position, and performance and describes the material risks and uncertainties facing the Parent Company and the companies included in the Group.

Linköping, Sweden, July 17, 2026

Anders Fransson Jörgen Hermansson Catharina Lagerstam
Chairman of the Board Director Director

Matilda Wernhoff Jan Molin
Director Director and CEO

Financial reports are available on the Company’s website http://www.imagesystemsgroup.se

Questions will be answered by:

Jan Molin. CEO and President

telephone +46(0)13-200 100, e-mail: jan.molin@imagesystems.se

Image Systems AB, Snickaregatan 40, 582 26 Linköping, Sweden. Corporate registration number 556319-4041