Revenio Group Oyj

Welcome to Revenue Group first half 23 earnings call. My name is Jouni Toijala, and with me we have here also our CFO Robin Pulkkinen. Today, we are actually going to run this call in a totally different order, and we are planning to start the call by going through the background for the last week negative profit warning, and then moving to the First half results, then highlights from the quarter. Then Robin is going to go in more detail through the financials plus the shareholder structure. And then we are also going to have, of course, Q&A at the end. And the reason for this change in the order is that we got a huge, I mean, really huge number of calls. We got a lot of emails and contacts from private companies. investors, institutional investors and analysts. And unfortunately, during stock exchange rules, we were not able to have one-on-one interaction last week and earlier this week as we were in the silent period. So this is really the reason why we are a bit changing the order of the normal call today. So let's start with the new guidance, which we issued last week, August 1st. So the new guidance is following. So revenue groups exchange rate adjusted net sales is, growth is estimated to be between one to 5% compared to the previous year, and profitability excluding non-recurring items is estimated to remain. a good level. So what we changed? So we wanted to give a clear guidance on the net sales growth so that we are not using the objectives. So the guidance is one to five percent growth for the full year. And then we didn't touch the profitability part of the guidance at all. And then if we jump to the reason So it's a twofold. So the first thing is that we started to see slightly, but not too dramatic, weakening demand between the quarter one and quarter two. So we slightly flagged it during our Q1 earnings call, if you recall. But then when we went further down to the Q2, so we started to have more hesitation, especially on the optometric side of the business. And there, if I need to kind of pinpoint one, especially among the private equity funded optometric sector point of view. Then, secondly, we had a pretty big one-off deal, which we closed last year. during the Q3, so part of the deliveries were out the end of Q3, and then part of the deliveries were out early Q4 last year, so it's a one of five million deal for the micro-perimetry side for the clinical trials, and we actually sold the kind of end-of-life product, which we were thinking that we have a kind of a stock still for two to three years, so we actually sold the stock in kind of a bit more than two years, stock in one go, and that's now out from the kind of a sales portfolio, so we have a five million gap. And when we started the year, so we had a clear visibility that in the normal market conditions, we would be able to catch it up by selling the tonometry and the fundus imaging. Then we received a lot of questions that is this going to be permanent? Is this going to be temporary? So our current understanding and the view is that the challenging time is going to be roughly six to nine months. So we based this one with the discussion, what we have had with our clients and with our distributors. And then just to remind, everybody that even if we saw a quite significant slowdown in a demand during the Q2, so we have been able to grow during the first half. So we have been able to grow faster in the unit level and the emphasis on the unit level. So we have been able to grow faster than the tonometer market and faster than the fundus imaging market. So I think that's good to remind. So really wanting to emphasize that on a bigger picture point of view, the macro trends and the long-term outlook is unchanged. So the people are getting older. There's more people having a lifestyle related diseases like diabetes, myopia is increasing. So we are going to have way, way bigger amount of people with eye disease is also in the long run. So that's not changed. Let's move to the first half highlights in terms of the numbers. Robin is going to go in detail the Q2. So net sales 45.5 million. So it's slightly up from 44.6 million. So 2%. Then if we go back to the last year first half, so we got a Pretty big tailwind from the USD. Now it's actually in a different way. Robin is going to go through the details in his part. And then the operating profit was then $10.8 million. which was actually down from 12.7. And this is, of course, linking to the, we had a one 800K one-off, but then also links to the scalable business model. So when the business's top line is scaling up, so it really scales up really well up from the profit perspective. And then in a way on the other side as well. Then Robin is going to go through the cash flow in detail, but a couple of highlights there. So it was 0.1 million compared to 4.4 million last year, so significantly down, and that was true to the Italy side tax season, also kind of a pre-tax season, and then also the increased inventory. But Robin is going to go this one through in more detail, as I said many times. So a couple of highlights for the quarter. So first half results I went already through. So that was a two-folded. So started positively during the Q1, then down on Q2. Then we went through the kind of forecast on the demand side and so forth. But a couple of other highlights. So during the review period, We added a couple of new disease detections for the iCare iLoom. So the iCare iLoom package includes the DRS Plus, then it includes the iLoom, then it includes the AI. So the first expansion on the iLoom product portfolio was that we added the AMD and Cloud Coma. So, from the user perspective, experience is exactly the same than before. So, end user just presses a button, DRS Plus takes two images per eye, and then the images are sent wirelessly to Ilum Cloud, and then the AI is going to return a report back. And we can do out from these same two images per eye, we can now detect the AMD plus the glaucoma as well. Then in addition to that one, we also disclose the AI cooperation with OFT AI so that they are going to integrate their AI algorithm part of the ILUM platform, and they are extremely strong in France, also in Canada. So that's a plan. for us for the OFT AI. Then also we added the quick pressure feature for the iCare IC200, so improving the kind of a fastness and the workflow there. And then we have been working a bit more longer time related to iCare Home 2 in the USA. So we have had earlier the reimbursement policy for remote monitoring codes and remote measuring codes. But now we are working as well in order to get the reimbursement for the device. So based on the discussions with the experts and the KOL, that is looking pretty good, so that there's a need for that one. But of course, in order to get the reimbursement, it's a bit same than getting the approval from the FDA. So it might take longer time. So for this one, we are not expecting to have any progress during this year. And we come back to this one then early next year. Then we have also decided that we are going to keep the Capital Markets Day November 23. So invitations are going to be sent out. shortly so so that's decided internally and then i want to emphasize that we have currently up-to-date growth strategy in place and then we have good and strong global team who is capable of implementing it and then we also renewed the organization and and that's uh seems to be working well, and we are still fine-tuning that one, and in the final steps of hiring the new head of the R&D, so that's also moving forward, so no worries in that sense, so there the house is in order, and really looking forward to then see and hopefully also meet people then in the November CMD. But with these words, I would like to give a speech to Robin Pulkkinen.

Thanks, Jooni. We'll jump to the... Okay, I'll take the... Here we go. So a bit more details on the numbers. Net sales for the second quarter, 22.3 million, down 8.7% year-over-year. FX adjusted decline, 6%. And like Jokunioni mentioned, first half sales, 45.5 million, up 2%. FX adjusted, 4.3%. So on the top line, it's important to keep in mind last year was quite exceptional from the FX. So the whole year, the FX tailwind was almost 6 million euros. And also for the first half, the FX impact was almost 3 million last year. And this year is just over 100K. In the second quarter last year, the FX alone was roughly 2 million euros tailwind. The gross margin remained healthy throughout the quarter and throughout the beginning of the year. So even though we discussed about the growing faster than the market on the units, but also it hasn't been kind of cannibalizing our margin or we haven't been doing tricks there. So we've been constantly keeping our margin levels healthy throughout the quarter and the year. The profitability side has come down. We did have incur in the second quarter 827,000 euros of non-recurring one-time project costs, which have had a negative impact on the EBITDA and the profit and the EBIT. So the adjusted operating profit line is probably more comparable if you want to compare apples to apples. First, second quarter, 5.5 million, down from 7.1 million. It's roughly 22.9% decline, almost 25% EBIT percent compared to 29.2 last year. And for the first half, we're down 8.1%. And the profitability, 25.6% this year out of revenue compared to 28.4% last year. Our EPS, 12.2 cents this year. Last year Q2, 20.3 cents. And for the first half, 28.1 cents. And last year, 37.9 cents. On the next slide, you can see a bit more trend on the top line. The second quarter, like we've covered, was exceptionally weak in terms of demand. You can see it also clearly here falling below the trend line. But kind of looking back in history, the Q1 typically has been below. Q2 was below in 2020, roughly on the line 21. Last year, where we are now comparing and against, the Q2 was actually clearly above the trend line. So we are comparing against very strong Q2 last year. Last year Q2 grew 30%, profitability grew over 60%. So we were not kind of going out with against easy numbers or easy comparables. Of course, it doesn't explain what the numbers were, what they are, but the comparables were really, really tough. On the right side, you can see The profitability trends, you can see the EBIT percent also on the line. If we look at the Q2s a bit further out, so you can see Q2 2020, Q2 2021, the EBIT percent is roughly around the same area where we are now at this quarter. So actually last year also here stands out on the profitability as a quite exceptionally high year. also on the euros, but also on the profitability percent. On the cash flow side, on the left half graph here, you can see you only mentioned the Italian taxes. So the Italian tax system works is that you're taxed on the profitability of the prior year. So if you look at last year in Q2, didn't pay much tax in italy the reason was that the 21 result in italy wasn't very good so there wasn't much tax payments in the 22 last year 22 as a whole year last year in italy was quite profitable uh so so the taxation what we paid now in q2 this year is is the the kind of the taxes for the last year uh which is a big part of it and also the taxation for this year is based on last year's profitability which are also higher so we paid The Italian taxes are paid twice a year in kind of Q2 and then Q4 in November. So we pay like 40% of the pre-tax for this year and all the taxes that we didn't pay last year are also paid in Q2, which was the kind of the one biggest item running down the operating cash flow or the cash flow from operations. There is a chance to split those payments out to make this look nicer, but there's extra costs and interests related, so we haven't gone that way. The working capital was also impacted slightly by the increased levels in the inventory. Some of the components have long lead times and of course the sales wasn't quite at the level where we expected, but there's kind of no risk of any kind of write downs or anything in the inventory. So it's all good devices and materials and components that we have in there. The equity ratio is the highest levels to what we've seen since the acquisition of Centerview. So it went over 70%. The increase in the net gearing is due to the fact that the dividends for last year went out in the early Q2. So the equity ratio actually increased by 11% from just under 80 to almost 90 million. The shareholders, there's been some changes here. The Finnish ownership actually has bounced back slightly, had been going down for a long time. The US investors have been selling some of their shares. Then all the four other countries on the right here you can see have been increasing their share. So France, Sweden, Denmark, Finland have gone up and the US has gone down in the ownership. And then the guidance, which Joni already went through, I'll just read it once again. So, revenue groups exchange rate adjusted net sales growth is estimated to be between 1% and 5% compared to the previous year, and profitability excluding non-recurring items is estimated to remain at a good level. Good. And I think we have probably a few questions also.

Yeah, that's it. Thank you, Robin. So, let's open the floor for the questions, so please.

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The next question comes from Niko Ruakangas from SEB. Please go ahead.

Hello, this is Nick Ronis from SCB. I have a couple of questions. So first of all, your competitors' reports do not indicate as strong weakening as your guidance downgrade. So I know that the portfolios do not completely match, but for example, one of your competitors said that the CapEx demand seems solid from major optical chains in US and Europe. So could you help us? How should we interpret this compared to your comments on dramatically weakening in the market? And then continuing on that, so you told that you grow stronger than the market in H1, both in fantasy imaging and tonometers. So how do you believe your growth was in Q2 compared to the market?

Hey, thanks, Nikko, for the question. So, are you able to give an insight and the competitor name, so then we are able to understand that this portfolio matching or not?

Well, for example, Topcon states that the optical chain demand seems rather solid.

Yeah, so they have slightly different and wider portfolio, so I think that's the first thing to know. Then we have been extremely strong, especially in the UAE, the private equity driven optometry markets. So I think that's the second. So we were really strong last year on that one. And then just a kind of a reminder that we compete on, if you think optometry, so we have a fundus imaging and tonometry going on, in that one, and then if you look at the overall portfolio perspective, so Topcon is having a wider, but this is the current thing on that front. And you had the second question, do you Robin want to give audio insight on that one? It was related to the growing faster than the market.

Yeah, so we haven't opened the second quarter, but probably there are devices that did grow, but there are also ones that didn't, so it's hard to... I don't have that data right in front of me right now, but there's positives and negatives in there, reds and blacks, so...

building top of that one so we usually see the market growth rates as a full year basis because then we know the quarterly fluctuations but now we looked and put it so that we looked at the first half but I think we are wiser towards the end of the year when we understand the overall demand.

And we don't have any market data for this year yet so all the

historical references or the references we have in the slides are are for for last year yeah i understand thanks uh then you told that the intraocular pressure sales have returned to pre-covid levels so does this mean that the weakening is especially in that site and and do you expect them to continue to grow from the now the lower levels at this a couple of percentage level going forward, and does this indicate further downside risk, and does this indicate also that fantasy imaging has been growing in Q2?

So, if we go back in history, so when we look the earlier this month, we looked the the market data, we look at the market report. So, even during the COVID time, the overall tonometer market has been, on average, growing roughly 2 to 3 percent. And if we go as an example and remind the growth numbers, Q2, 21. So, the top line grew 38 percent. For us, bottom line, 29 percent. Last Q2, top line grew 29%, bottom line 60%. So that sentence is referring that we grew in the certain quarters on the tonometry side, 15 to 20 times than the market, roughly. So giving a kind of a highlight and now only the comment is that we are going perhaps back more modest growth and not kind of 10 to 15 times faster than the market on the tonometry side. So, that's the reason behind the comment. So, do you want to, Robin, comment or add more flavour on this one, on the kind of earlier growth rates?

Yeah, it's definitely totally exceptional growth and the market share went from 27-ish or something to closer to 40 during this time. So the market share has been really fast growing over the last years.

All right. So then you continued this earlier growth, not earlier, but more normal growth rate, but also from lower levels going forward, I guess. then then one last from me at this point so so your guidance indicates that your effects uh that you expect effects such as the sales growth uh to improve uh in h2 compared to q2 so uh this despite you know uncertainties of and of course this is one of item you you mentioned so so could you open where does this assumption of improvement in growth rate uh

based on and what risks do you see in it yeah it's of course our our backlog is not very far far lasting so we haven't sold like anything for q4 yet basically uh so so it's based on our kind of internal uh discussions with then forecast what we do um we talk quite frequently weekly with the sales team and have an up-to-date forecast how they see the the deals coming in. There is a quite healthy pipeline, like Jooni mentioned. There are very interesting cases in there. So we're kind of quite optimistic that we're able to remain within the guidance for the second half. But of course, there's quite a few uncertainties also in the air. But the biggest challenge is, of course, the micro-parameter, which we now don't have a device to sell. There would be a lot of demand for it, but unfortunately, we won't have a device to sell until sometime next year.

All right. Thanks. That's all from me at this point.

The next question comes from Daniel Lepisto from Danske Bank. Please go ahead.

Hi, it's Daniel Lepisto from Danske Bank and I have a couple of questions. So maybe starting up with the growth guidance and the expectations you discussed. Earlier, if we treat this 5 million micropyramid deal you got last year as a true one-off and eliminate it, looking at this new guidance, sort of a comparable basis, it looks to me like that you're still expecting like clearly about market growth for H2. So can you confirm this thinking and is this sort of reasonable listening to your quite cautious views on the market conditions right now?

Yes, yes, you've read it right. And yes, we've had quite a few calls with the sales team over the last couple of weeks and the customers. So we are kind of standing behind the guidance and think that it's pretty much in the ballpark where we think we should be landing.

All right. Maybe... continuing on the topic on the sort of more difficult customer groups, like the optometric sector you mentioned. So, can you remind us on the sort of your exposure to these customers, both in the US market and globally?

So, I would start answering that one to kind of divide and perhaps start from the USA. So, if you look, exposure, so we could say that roughly kind of a 50 to 55% in the USA come from optometry, from ophthalmology, so we talk OD and MD, so roughly 40 to 35 is then on ophthalmology side, and then the remaining then is others. Then we don't have so detailed split if we go for the other regions, because we are working behind the distributors. But I think the US part is more or less exactly as I explained.

PE driven, but a big part, they're becoming larger and larger. So there has been a kind of a clear trend of PE consolidation in the optometry side.

All right, that's very helpful. Maybe going towards the next question on the profitability guidance, can you give us some indication how wide is this guidance in terms of the sort of maybe underlying margin expectations? Looking, for example, at just the deepest margin you did during Q2, is this sort of a good profitability for you, how you verbally guide it?

I think I can't really say exactly what the spread is, but kind of typically our second half has been more profitable than the first half, at least in history. Not promising anything this year yet, but kind of if the history repeats itself, it hopefully would be higher than the first half.

Okay, so we should be expecting sort of a gradual margin improvement for the rest of the year. And also, are there any initiatives that could help you to sort of protect your margins with now sort of a lower growth expectations for the rest of the year?

Yeah, I think the profitability is very much kind of dependent on the top line. So any extra million we sell, if we sold one million more last quarter, we would have made 700,000 more EBIT. It's quite straightforward. So it's very much driven by the top line.

Have you sort of prepared for any sort of initiatives that could be helping if things remain sour, maybe during Q3 and so on, where you could adjust?

maybe to protect the margins and so on to the downside yeah i of course we have been looking so so of course everything starts from the gross margin so we see that that remains in in in good level then of course if we go uh big bucket items if we go for personal costs and and so forth. So, money that goes to the R&D, money that goes to the sales. So, current kind of feeling and the guidance and decisions are, of course, we are looking at the costs, but there's no plan at this stage to start thinking that should we reduce the investment, which is going to R&D. So we have a good portfolio of new things coming from tonometers, fundus imaging, new software for perimeters, new micro-perimeter in a preparation for 24. So So we play the long game, so there's no plan to cut from the R&D. Then if we look the personal cost, so of course we are more careful with the hiring, so we hire the replacement hires if somebody departs, and then we do selected hires in selected areas, which are then essential for the forthcoming growth. Of course, we look, travel perhaps a bit more carefully and so forth, but in a way, there's no cost cutting program in place. We, of course, monitor the situation clearly, but this is a long-term game, And we are a product company, so we have to keep the products in good shape and the product portfolio in good shape. So I think that's what I want to emphasize. Anything, Robin, to add on the cost side?

No, but then if you look at the salary cost, for example, they didn't go up as much as you maybe could have thought of. One big driver, of course, is the variable payments, which are probably going to be lower this year. So those are the kind of... parts in the OPEX that kind of also kind of live a little bit with the performance of the company.

All right, excellent. That's all from me. Thank you.

The next question comes from Joni Sandvall from Nordea. Please go ahead.

Thanks. It's Joni from Nordia. Maybe still a follow-up on the guidance. I'm just thinking how long visibility your sales team has on the demand, and maybe also how confident you are currently with this forecast after this fast demand slump seen during the Q2.

I may perhaps pick up that one, Joni. We are, as Robin said, so we are, as of today, we are confident to keep the 1-5% net sales growth. And how it in practice goes, so we have constant dialogue, all the sales is having constant dialogue with the clients, especially, of course, in the USA, because we work directly. And then our sales works with the distributors and also even we work through the distributors in Europe, Middle East, Africa, LATAM, Canada, and AIPAC. So all these bigger deals, which we have in a pipeline, we work together. So the current view is based on that one.

Okay, thanks. I think we went a bit through on product categories, but could you give any Any additional color on geographical sales performance now? At least UK was down, but what about US?

So I think Q2 was kind of soft in all regions pretty much. So there wasn't really any one country, US for example, alone that was totally underperforming. I think the Q2 was kind of surprisingly weak in all areas. So it wasn't just one area or region.

Uh, then maybe have you seen any, any changes on the, on the competitive environment or, or, or in the pricing environment now with, uh, I would, uh, think that the component prices are at least coming down.

So on, if, if looking the Q2, so, so the players, uh, who have been there last year during the Q1, uh, so no changes, uh, on, on that front, uh, on the product kind of competitiveness from the computer competition point of view no changes on that one we have heard a couple of cases from certain fundus imaging players that they have quite aggressively they have cut prices so even ballpark of 20-30% but we so far we have been made a decision that And we want to keep the healthy cross-matching because it feeds the overall engine. And if kind of giving a flavor on the profitability side, so if we take the non this one non-recurring cost item out and we look the EBIT performance. So according to my understanding, if we go and look the competitors, what we have, so the EBIT numbers might be double digit, but they don't start with two. We might have competitors that are operating on single digit operating profit. we have been trying to safeguard the cross-marching, and still I want to remind that even though that kind of a top line was slightly weakened out from last year, but we need to sell quite a lot of devices in order to meet over 20 million quarterly sales.

I mentioned earlier the regions, so like we look at like EMEA, many countries in there. So, of course, within the regions, there are good countries and some that are doing poor, not as good. So, kind of, it's not that every country is doing bad. There's, I think, more than 10 countries out of top 20 grew double digit still, but then there's still some bigger countries that are not doing so well, but kind of, there's good and bad countries in all regions.

And good and bad segments. So, if we think optometry in Germany, So we did record sales ever in Germany for optometry.

Just that the regions are such large areas for us that there's a lot of different colors. Yeah, that's clear.

Maybe then going back, Jooni, you were speaking about the Illum and I think we have been speaking about this for a couple of quarters now, how the market entries is actually proceeding and should we expect there coming support for the imaging sales now during the H2?

It's picking up actually really well. So if we go back to the Elume launch, so we launched it more or less exactly a bit more than a year ago, it went to the, sorry, way more than a year ago, so it was April, actually end of April 2022. Then we got the first production version out early June 2022, and then went into pilot. So my assumption was that we would be seeing live paying customers Q1 2023. We started to see them Q4 2022. And we have been constantly able to grow the device sales plus the ELUM sales during the first half. And there's quite good pipeline for Europe. Then we are going to, for your Retina, we have the new publication coming from the KOLs, which indicates extremely good performance. related to DRS Plus, plus the Illuun, plus the Tirona AI. So, that's more or less published now, so worthwhile of reading that one through. And then also, not with the Tirona, but with the DRS Plus, plus the Illuun, plus the APAC AI players, so there's quite a lot of activity in the APAC as well going on. So, that's going even slightly better than the plan, And that's going to help in the long run to scale the recurring revenue plus sell more DRS pluses.

Okay, thanks. Last one from me. Any new color on the M&A opportunities in the market?

We're constantly working on them. We've been working on them for a long time already with the owners, so not really... anything we can disclose here. But kind of it's an ongoing ongoing project for us. Companies are few and far between. Negotiations tend to take a long time, like with center where we saw it took two years or so of negotiations. So so so nothing really to comment on the MFA side or then it's topic that definitely a topic that is high on the agenda for us.

Okay, thanks. That's all for me.

The next question comes from Pia Rosquist-Heinzalmi from Carnegie Investment Bank. Please go ahead.

Hi, Robin. This is Pia calling from Carnegie. I'm coming back to the second quarter. Can you still give some more color on the demand by segment or product? I mean, what was the demand for tonometers and for imaging devices?

So they both grew faster than the market. So kind of I think the thing that kind of brought the growth number down was the micro-parametric side of business. So the probes, the tonometers, the imaging, all grew. I think the challenging part was the the kind of the like you only mentioned the one of course the countries that go through distribution channels we don't have full details on all of those but kind of the us especially the pe driven optometry which is a big part for us uh they're they're kind of some of the account orders have gone down significantly compared to last year i think those are the kind of the biggest holes uh we can kind of pinpoint and name the customer even uh so i think There are areas that are doing good, but then that's a clear area where we have had major challenges in the second quarter.

Okay, and the price increases you have flagged for now during the past maybe 18 months, do you have a feeling of that the price increases would hamper your growth opportunities now?

We haven't heard from the sales that we would be losing deals because of pricing. Still, we are competitively priced. Some of the competitors actually have been slashing their prices, like you only mentioned earlier, just to win deals. So we haven't gone through that path. I think our kind of the DRS Plus, for example, is highly competitive device, best available in the market. There's no other manufacturer that is manufacturing rebound tonometers for the human side. The pricing hasn't been an issue on any sales discussions we've had. We've had probably 10 calls over the last couple of weeks and nobody has lately raised pricing as being the problem for our Q2.

Okay. And I'm thinking just about the investment kind of climate. So you don't see or do see a risk now for the coming six to nine months, assuming that the current macroeconomic maybe softness then continues, that customers are even more cautious in ordering these more expensive devices, say imaging devices, and then continue ordering tonometers.

Hi, Pia. Joni here. Maybe I can pick this one up. So, based on the discussions what we have with the clients, and what we have with the distributors, so there's a lot of different kind of deals in a pipeline, and the current view is that Even though that the inflation would stick, even though that the higher interest rate continues to stay longer than the current forecast. So in some stage they just have to, because the older devices are breaking up and more patients are coming. So eventually you have to do the investments on the device side. So that's the current understanding what we have when discussing with the clients and with our distributors.

All right. Then still, I'm sorry if I've missed this, but this non-recurring item of 0.8 million, what does it relate to?

It's... a clear kind of one-off, nothing to do with the ongoing business, but unfortunately something that we can't really open in detail what it is at this time.

Okay. And coming back to maybe something that is not that core, but still, I think maybe half a year ago, maybe we talked about Ventica and you were quite optimistic that Ventica The project is moving on and you have news to tell by the first half of this year. So do you have now some news to share with regards to Ventica?

Yeah, so there actually the logic was, which looked pretty promising. So actually work... together with a company and build up the package where the Ventica was part of the package and the logic was to fund it and get the funding by the VCs. And I think if going to the overall investment climate at the stage where we are and where we kind of started to enter, end of last year, so that's the reason that we have been putting that one in a hold, so the only thing what we do, so we only continue the prepaid clinical studies, so no cost is going on, but we have still a couple of clinical studies ongoing with the big hospitals and research institutes related to Ventica. So we only continue and it doesn't require resources or money from us. So that's the current status, unfortunately.

Okay. All right. And then finally, to your profit guidance for this year, you talk about the or as you say, you use these adjectives and talk about the good profitability. But looking now at your profitability for the first half of this year, you had the margin, EBIT margin adjusted of around 25%. So would you describe this as a good level?

I'm not sure if I can say that right now because we haven't been there before, but the full year guidance is good level. And then, like I mentioned earlier, historically second half has been always better profitability-wise than the first half.

All right. Thank you so much. That's all for me now.

The next question comes from Niko Ruokangas from SEB. Please go ahead.

Hello, this is Niko Ruokangas from SEB again. I have a couple of additional questions, but before that, sorry for repeating this, but I heard that you say when you answered the P at tonometers and found this image in both crew in Q2, and that the problem was microperimetry. So data here, right?

I was referring to the first half. I said wrong if I said Q2.

Yeah, yeah. Okay. But can you give a comment on Q2 only?

I think we mentioned earlier that we don't have that data now. We are available. We're coming to the first half for the growth now. But there are products that did grow faster and products that didn't grow at the speed of the market. But I don't have the full data to disclose now.

Yeah, yeah, I understand. Then coming back to my original question, so one of your competitors published now a competing rebound tonometer. So have you seen them in the market? And does this explain any of your kind of downgrade at all? And how have you reacted to defense, your position? And do you think that this could even increase pressure on your growth rates when they enter the U.S. market as well?

I may try to answer that one, Nikko. So, if we start now from the product portfolio that Raihert is having. So, they have two models. So, first one is the wet. They have been long time in a wet market. And now it has been coming clear that the product, is not really top-notch usable on the wet side because you have a screen and you have to point the tonometer through the screen in order to measure the dog or cat or so forth. And I realized this one when I took our dog to the vet and they actually measured the IOP with ton of it. So you actually see how it's done. So it's almost impossible to go into the level of the dock and kind of a pointy tonometer, the tonometer, how it's designed to use. So first part or first answer for the question is that no impact and no signs that or negative impact on the vet side. Then on the human side, Reihardt has had the freedom to operate in the USA since 2019. So they are not in the USA, even if it has been okay to operate there. They have been now coming to Europe based on the input from the sales. So we haven't faced them yet in the cases. I'm sure that in the ESCRS, they are going to be active. That's our assumption. And when we lowered the kindness last week, it has nothing to do with the Raihertz or the pressure from the Raihertz on the tonometry side, I think to be clear on that one. So those are still house in order. and our product is competitive on that front, also on the human side.

All right. Thank you. I understand. Then, do your distributors have any extra inventory, given that the end-user demand seems to be softer than earlier expected? And does this inventory destocking explain any of this weakness in Q2 or your expectations for Q2?

Typically, they don't hold much inventory. They order monthly. Some customers order bi-monthly, some maybe two, three times a year, but those are very few. So those sometimes have a small swinging effect between quarters, but mostly there's not much inventory held. especially in the imaging side. They're so expensive that they don't hold those in the inventory. So if there is, there's some inventory for probes and maybe a few tonometers, but basically, typically they order monthly from us.

All right. So this is not an explaining factor in your outlook. I understand. Then my last question relating to your longer-term profile. So you mentioned that your long-term targets remain unchanged. So when do you believe that it would be realistic to achieve this accelerated growth you have earlier been talking about again? And is this after this six to nine-month period when you expect to enter that path again?

So that's a current view and then still pointing out to this accelerated growth. So if we have been having an average growth rate of roughly 13%, so in the last CMD, we stated that to accelerate from that one to convert to 14 to 15, I think we have been able to keep the promise and then relate it to forthcoming long-term guidance. So currently, view is that this is a temporary hiccup and we are going to be back on the growth path in six to nine months. And this is, of course, a big topic that we are going to discuss in the forthcoming CMD in November. So I'm sure this is going to be covered and reviewed then in the CMD.

All right. Thank you. I understand. That's all from me.

The next question comes from Pia Rosquist-Heinzalmi from Carnegie Investment Bank. Please go ahead.

Hi, it's Pia here again. Another question still coming back to understanding the demand by product. You underlined that when you talked about volume growth, you referred to the second half. But if I try to draw your comments now and conclude, is it a specific micro-parametry issue that is burdening you in the first half, and particularly in the second quarter?

I may try to pick this one up, and Robin, you correct me if I'm wrong. So, if you think now the first half, and we start from the product portfolio in general, so we have a fundus imaging, we have tonometers, we have perimeters, and then we have micro perimeters. So if we first start from the first half and what Robin was saying that during the first half on the tonometer and the fundus imaging, which is the main volume business for us. And so that was growing faster than the market. So tonometers were growing faster. more than this 2 to 3 percent, fundus imaging was growing more than this 4.2 percent, which according to our understanding are the growth rates for tonometry and for fundus imaging if looking at the market growth. Then if we compare it to last year, so perimetry was performing worse than last year. And then if we go for micro-perimetry, which is now the so-called MAIA and SMAIA products. So we sold last year in this one-off deal, the whole more than two years stock out. So for this year, we don't have micro-perimetry products, i.e. MAIA and SMAIA. in sale at all because we sold all the stock last year during the Q3. And the deliveries were kind of the end of the Q3 last year and the beginning of Q4. And the amount of that which is now Visible in our numbers, it's 5 million. Of course, we sold more than 5 million throughout the whole year, but not kind of too much more. But anyway, we sold micro-perimeters also last year, but not kind of huge and significantly. But the 5 million as a one-off deal, which we don't have, so that, of course, is having already some kind of impact. for our second half numbers. Anything to add? Did that clarify, Pia, or did I confuse you more?

Yes, thank you. Thank you. And my question regarding the inventory, which I think Niko already... Yeah, Niko already asked that question. So, I'm fine, thank you.

Do we have any more questions coming? Seems to be like no. So thank you for the record long earnings call. Thank you for the excellent questions. And we are going to be back then to go through the Q3 results and then, of course, back on the CMD. So thank you very much and have a good rest of the summer.

Thank you.