Revenio Group Oyj

Good afternoon and welcome to Revenue Group Q3 earnings call. My name is Jooni Toijala and I'm the Group CEO and we have here as well Robin Pulkkinen, our CFO. Today I'm going to start by going through the highlights for the Q3. So a bit of a numbers, then highlights from the business and products, then Robin is going to go through in more detailed the financials and then finish up with the shareholders and reiterate the financial guidance. So let's jump to the Q3. So a good quarter in terms of the organic sales growth for us. Net sales 23.9 million, an increase of 8.9 percent from the last year which was at 22 million and it should be noted that we got quite a lot of currency headwind from the US dollar euro exchange rate. So if you look the growth from the currency adjusted point of view, so July, September Q3 growth was actually 15.1 percent. Operating profit 23 percent from the net sales, so 5.5 million down from 6 million last year and here perhaps a couple of comments related to profitability. So we got the headwind FX headwind roughly 0.9 million euros, so roughly a bit more than 50 percent actually goes through the EBIT line as well and then this was really good quarter for us what comes to the launching the new product. So we have a new tonometer now out ST500 then we have the tonovet pro also new tonometer so we have been spending quite a lot of additional marketing money for the global launches for these products but Robin is going to cover in more detail the cost side in his presentation. Net cash flow from operations 2.9 million down from 5.6 but if we then look the whole January to September highlights from the number perspective so extremely strong cash flow if you look the first nine quarters so 14.1 million up from 5.6 and if we look the sales growth for the first nine months so we are currently on 8.2 percent and if looking it from the kindness perspective so currency adjusted growth on the sales side is 8.9 percent but if jumping then next to the business highlights for the Q3 2024 so extremely good quarter from us from the product perspective from regulatory approval perspective and couple of comments related to that one so if looking the sales in general so the sales of fundus imaging devices so double digit growth year on year and again the main growth products were aidon family and then also the the drs plus then from the tonometer side a good quarter as well iCare home again was actually the one if one of the highest growing device from the tonometer and and also from the imaging port product portfolio point of view i see 200 growing well and then also the newly launched ton of it pro getting extremely good good traction and of course probes have been showing a particularly strong performance in terms of the growth as well then positive news from china so so we got the approval for aidon in china also the ic 200 quick measure uh tonometer feature of course together with the hardware was was then approved and got the marketing authorization in china so so actually really good news so these are tending to take time so as an example on the aidon case we we started the project already almost three years ago and these are really really taking the time so now we have a a really good product portfolio available in china so that's drs plus that's aidon plus then the tonometers as well so that that's extremely good news for the future and then news also during the q3 from the ai perspective so we acquired a dutch company called tirona retina and and the logic there was to get the assets on the ai platform so we have been working with tirona for a long time in the context of retina screening so meaning together with the ilumen drs plus what this enables for us is that now we own the assets we have a freedom to decide the business model have a better margin and in this context nothing is going to change so we are going to work with other ai players plus we are going to to guarantee that the support from the tirona retina is going to continue also for other players like topcon like canon etc with whom they are working so there's no plan to change this one at all then in addition to having and using tirona retina on a clinical decision support perspective the other logic for the acquisition was that increasingly or ai is increasingly also gaining importance inside the device and in the and capabilities also in house for that one and for the future development for the devices then not so good news from the cms perspective i.e. the reimbursement code for the hardware for the home too so the decision was not to grant the durable medical equipment reimbursement code for iCare home too and the reason was that you already have a good set of the codes which you are able to use and your your doctors are able to use so the codes currently are code for training then also code for for then renting the device out and also code for for telehealth and remote monitoring and analysis of the of the data so that was a logic so what does that mean for us so we are going to continue the work around those codes and and still one thing to to remind everybody that if you look the q3 so home two was the highest growing product segment for us then we launched also during the q3 iCare sd500 slit lamp mounted tonometer and and this is actually the continuation of the things what we said 2021 april in our cmd and and i'm sure somebody remembers from the from the call audience that we said that the goal in a long run on tonometry side for us is to make rebound rebound technology as a code and standard for tonometry which is currently the codeman tonometer which is more than 70 years old so so so this is now also partly answer for for that one so what we are going to to gain from the slit lamp mounted tonometer is that we haven't had fully blown product portfolio for all patient workflows so the patients which are going to go through the slit lamp investigation so mainly codeman tonometers meter have been used in order to measure the iop so now we have a product for that one it's fully complementing our other rebound tonometers ic100 and ic200 and home then another important part is that if we think the codeman as a a method of measuring the iop so it's not fully reliable so if you measure the patient at the clinic with the codeman tonometer and then as an example with iCare home two at home so you get non-reliable measurements in most of the cases and is not repeatable if you use the codeman so now the we have a clinical proof that actually the whole platform whether you measure the iop with ic100 ic200 home two or with st500 so they are fully repeatable they are fully comparable so it's going to improve then the the patient care from from that perspective so so really good and then perhaps thirdly have to mention that this is not only the st500 so so what is inside the device it's totally new so we have a totally new hardware platform inside the device which we are going to use in the forthcoming new tonometers in in years to come so very significant product for us if we think it from the long-term perspective then we got also the timing timing right so product is is good to go so we have orders already in we are able to produce it able to ship and then we have same time we have fda clearance plus we have the ce marked for the device so from that perspective really good news and and good to go so let's switch the gears and and move to the financial side so over to you robin thanks joanie

so going through a bit more detail like you only mentioned the sales were growing organically quite well we're quite actually satisfied with the top line unfortunately things that we could couldn't control were the effects side which which did hit us quite hard during the quarter and it kind of shows on the top line so the the the effects adjusted growth was more than six percent more than the reported growth and and due to our cost structure a lot of that effects hits the gross margin line which is is the main driver for for the gross margin to drop below 70 in the quarter and also to the eb line we did have some one-off costs during the quarter like we did in the compare comparable quarter but they're quite minor so you do have the operating profit here and the adjusted operating profit but there's not a huge difference between those lines but it's showed separately here as there were certain one-off costs which which are adjusted so year to date 73 million in sales and that growth is 8.2 effects adjusted 8.9 showing a bit more history so on the top line the quarterly fluctuations looking at the last quarter we would have been probably pretty close to the trend line without the effects impact but but seems like the effects has come down a lot since the end of the end of the quarter so end of september peaked pretty high and now it's down multiple percentages again so so interesting to see how it plays out now during q4 and what the impact will be but if it goes down it should have a positive impact on the q4 numbers so profitability slightly down so the one big driver is the effects which we've been talking here but also we did have direct costs also that increased you only mentioned the the marketing costs so so those together with the personal costs kind of accounted to roughly 85 percent of the cost increase year over year and on the personal side you might remember from from last year we we had very minimal bonus payouts so the accrual levels are are higher now for this year as we are within the guidance and then holding to the guidance for the whole year so that's one of the major major part of the cost increase together with the marketing which was actually quite significant the the clinical trials we didn't have a notable impact on during the third quarter we're still looking and working with fda to understand the the scope of the trials and hopefully hopefully those will start to run again during this quarter so q4 but but they haven't yet started so so i guess that's still to be worked out how that's going to play so -to-date net cash flow it's actually on a record level so so looking at it's actually quite interesting when you look at the the net profit for the first nine months we're actually exact same net profit than last year during the first nine months but our cash flow from operations is up 150 percent that improvement is mostly coming from working capital so so more effective management of the working capital and also a little bit lower paid taxes but the working capital basically ar ap inventory is the major player there and then of course the beginning of the year bonus payments were pretty low which which is one reason for the first quarter to be quite good balance sheet continues to be be strong and get stronger so the total balance sheet value went up slightly from 128 to 132 -over-year on the the asset side the the theorem acquisition shows on on the flip side the coin the cash is down slightly equity up also and the short and long-term liability is slightly down so typically looking at the net gearing for our company the the dividend payouts bring up the number so during the second quarter and then third fourth and first quarter we build up the cash reserves now in q3 we did pay out for the theorem up but basically looking into q4 we would be pretty fair to expect that line to turn down again for the next report on the shareholder side there's not many changes we have 23,324 shareholders at the end of the quarter the finish ownership actually went down roughly from 20 49 percent to 47.7 and and on the top owner list there's not really any changes so the number eight has dropped to number 11 but that's like the only only change in the top 10 list and then the country split here so denmark equals almost fully demand and then we have sweden over 10 percent u.s 8.3 percent and france 4.3 ownership in the guidance revenue groups exchange rate adjusted net sales are estimated to grow five to ten percent from the previous year and profitability excluding non-recurring items is estimated to remain at a good level so basically when you do the math we expect to celebrate our first 100 million year sometime during this quarter now so hopefully it's sooner than later but but to to keep the guidance means that we have to go over 100 million in sales this this q4

excellent thank you robin it's time for the questions please please

you wish to ask a question please dial pound key five on your telephone keypad to enter the queue if you wish to withdraw your question please dial pound key six on your telephone keypad the next question comes from nico ruocangas from seb please go ahead

hello this is nico from sb thank you for the presentation i have a couple of questions and and and starting with that you say that the investment by p-driven opticians continue to move slowly and the slight positive momentum seen during h1 has not yet materialized in large orders so have you still seen the positive momentum despite not larger orders yet and and then on the other hand when do you expect the orders starting to materialize

so the status nico and hi nico hey so so status pretty much the same as as before so we are getting orders but not these big big orders or not on on the big chunks but i i mean here and there and so so in that sense remains to be the same and then of course the question mark is that when it's going to to turn so i don't have a full full question or sorry i don't have a full answer to that one yet so but i mean the sentiment has been the same and and orders popping in but not kind of a huge chunks and it used to be earlier so in that sense status is the same all right i

understand any other changes to your how do you view your your outlook compared to q2 report

i mean and the no no so so exactly the same logic so if we look what we have been communicating so q1 more or less on on on the bar for the previous year q2 good growth q3 good growth and and then again when we go to watch the the the q4 so so we as we have said earlier so so the most of the growth for the fully for the if you look the whole full year is coming from q2 and and q3 but anything robin you would like to add on that yeah i

think

the q4 comparables

were challenging like q1 and and kind of i think the year has played out very much like we've been discussing all year along so it's already in q1 we assumed q2 and q3 to bring bring the biggest growth and then q4 is a more challenging quarter for us and i think the situation has played out pretty much what we expected it to do

yeah i understand then i would like to again ask a question regarding competition which has been discussed quite many times but but has right here become more visible competitor to you in in parameters either in either in europe or or the u.s and and has the competitive situation affected your pricing so

we have been now very active on couple of trade shows where the right heard has been in so es crs ao about two weeks ago so i i mean no impact to the sales no impact to our pricing so they have been surprisingly quiet still and if you look our tonometer growth and the probe growth so so far so good but as as before so remaining humble and vigilant from that perspective but status is exactly the same that it was during the q2

i understand then on the fda costs so you say that there were not much in in q3 so how much are there still left and and then does it mean the delay or does it mean delay in the process that the trials are not currently ongoing i

could answer to that one so we have done two presubs for the fda fda so so let's before perhaps i go there so let's understand that what what has been going if we think the fda costs in general so we have had products in a pipeline so st 500 generating the fda cost so so of course those are kind of a gone clinical studies gone we have clearance from fda and then we have been working on on the clinical studies related to maya maya 3 next generation maya so those costs have been coming and then what comes to the iluma uh and then uh drs plus so there we have been doing now the presupps in order to get the scope of the clinical studies right and we have done two presupps now and now we have the fda approval and and still still going at the feedback through and and really the logic is that we don't want to hurry and we want to get it right so it would be a shame that we do a long clinical study pay one to 1.5 million and then then the fda accounts and say that hey you didn't take this small part into account and then we should run the clinical studies again so this is where do we stand now so we haven't yet started the clinical studies and that we haven't taken the patients in yet because we want to be sure that everything goes as it should be towards the fda so that we meet all the requirements so that's the current status

okay so that will still bring another one to 1.5 million euros of costs during q4 and h1 we didn't have some in the

q1 but but yeah the scope and the number of patients needed i don't think any of that is yet looked uh and if you still need to adjust the or do a new pre-submission that would mean that probably there won't be any cost in q4 either but we don't know yet for sure so we're talking with the a and try to understand and make sure that whatever uh studies we start they meet all the requirements needed to get the approval

okay i understand that's all from me at this point thank you nico thanks

the next question comes from daniel lepisto from danske bank please go ahead

hi it's daniel lepisto from danske bank i hope you can hear me well apologies my client has been quite poor during the call but i have a couple of questions maybe continuing on the e-funded opticians and your note of there being no larger orders yet but i guess looking at the organic growth on effects such as the basic basic accelerating quarter and quarter it seems that you are still doing quite good business so who are these customer segments now that are driving driving this growth at the moment

it's the standard segment so optometry of topology and then we we have been able to to get the constantly every quarter the new deals for the iloom package and with the iloom package i mean drs plus plus the iloom plus the ai and and the tendency is that uh we tend to sell uh those uh packages outside of our traditional customer segments i.e. optometry and ophthalmology of course part to the optometry but um but that has been also the new segment for us this year where we have been able to to sell but we have been as said earlier so we have found uh the new clients and the new growth from the optometry of topology and then uh as an example from the diabetic clinics in in europe

okay i mean can you give us any sort of a contribution of the iloom because it certainly sounds that it has been it has started to become a bigger contribution for growth compared to maybe some time ago

uh no i think the the traction is good we have a lot of users coming on the platform and a lot of reports being run but in revenue wise it doesn't yet move uh the iloom part but the hardware sales uh those are kind of recognized and and and uh as they be they're being delivered so those are kind of in a way you could say hardware sales but it's fully related to the software being part of it but the iloom revenue of course is a recurring revenue stream that then starts to play a more bigger role in the coming coming years

all right yeah i understand good clarification uh i guess the second topic on the sd500 and the launch thing thinking about the discussion on the goldman or the gap technology i recall that the goldman technology used to be like 20 percent of the total markets and i guess this is now a sort of a portion that you can target quite well with this new solution so is this market share estimate still valid and are you sort of a more confident on capturing more sort of global tonometer market share looking at the following year coming years

i think the goldman is actually more more like uh let's say if we're 35 uh then then goldman and air puff was probably both in in the 30s range also so um basically it's a pretty big market then we didn't have really anything to offer uh to the the slit lamp mounted goldman uh to replace that so now it's the first time we're able to sell to that segment so definitely there's uh good potential and actually the the the product has been received very well also in the us and europe uh and then the trade shows we have the aeo and the escrs in barcelona uh i think the the the product drew a lot of attention also within the slit lamp manufacturer so it's interesting to see how all that's gonna play out

all right that's uh that's good uh i guess the final question maybe still on the new or that new products or product refreshments on the my microparameter you i guess you know that there will be first commercial deliveries in early 25 so can you clarify here you already have a functioning product and that is approved uh or do you have any sort of already saved pipeline for product or is this just your expectations that there will be deliveries so

a couple of things there so we have done so one of the most important thing what we have passed already many months ago is to guarantee that if we measure a patient with the next generation mayas or the new maya we get exactly the same results compared to the old maya so that's done and we have done the clinical studies in order to prove that one so that's the first hurdle which we have already passed then we already have a working device which is and so the software is pretty mature so we have a working device here at our office so from that perspective we are in good shape and of course then the third thing is is is that we have to get the regulatory approvals and current goal is that we would be able to start taking the orders in and and start being able to to to move the business forward to watch the the the first half of next year and hopefully q1 so that's where we currently stand so nothing has changed on that perspective and it looks good that we are able to to keep the q1 timeline from that perspective that we are able to start commercial deliveries regarding to the pipeline sorry daniel still so regarding to the pipeline so that has been the unfortunate case that we so so i i mean we would have been able to sell uh devices if we the demand for the device as soon as we can get it out so that's a good thing

yeah all right that's great to hear uh i guess that's all from my side thank you for the answers

the next question comes from jack reynolds clark from rbc capital markets please go ahead uh jack reynolds clark rbc capital markets your line is now unmuted please go ahead

hi there guys sorry uh i've had a bit of technical issues uh so far on the call so uh apologies if you can hear me now uh an apology if the question i'm going to ask is there has already been answered um but i had a question on my home two device um so what was the reasoning that cms gave behind the the decision not to um to reimburse at home two separately and then on the existing code how generous are these how accessible are these and kind of how much incremental sales investment do you think is required um to grow home to in the u.s now that these codes aren't going to be available for you separately thank you

so so i start first the reason so they said that you already have a coach in use and i'm answering to the second question as well so they said that you have already training codes in use so according to my recollection it's roughly 20 usds or 19 usd then if the if if renting the device so that's uh roughly uh 50 usd and then analysis and monitoring that's 130 usds then and and then you have to analyze the data follow up and have a verbal conversation and so forth so so there's a pretty good set of the codes which doctors are able to to bill already uh so so so that was a logic uh from the cms why not uh to to give the dme so durable medical equipment code uh and and then in terms of the sales effort and increasing the sales effort so we go uh and continue the work as as we have been before so if if as an example thinking the last month or two weeks ago we had a a o or es crs so we have had the key opinion leaders talking on the stand ike ahmed who is considered to be the the one of the gurus on cloud colma management in the usa so so he was talking uh to to other doctors during the aal then barbara vitsensky and during the es crs so so we continue according to the same spend as before uh to to sell and to promote uh the iqert home too and as said so it was a highest growth device for us in terms of the percentages uh during q3

uh great that's okay thank you very much

hey thanks chuck

the next question comes from pia rosquist hansalmi from carnegie investment bank please go ahead

yeah hi it's pia here hi joanie and hi robin um a few questions i still come back to the uh explanation on on the burden from uh the effects change so when i look at the rates the euro usd rate looks broadly flat in in the third quarter so uh can you please again explain what happened on your pnl and and in your balance sheet that affected your sales growth rate negatively

so basically uh it's a complicated package but the the us dollar revenue is revalued um for the whole year so it's here today to revalued every every quarter when we do it and that's based on the the weighted or the average exchange rates but then the balance sheet is revalued at the end of the the closing date exchange rate and there basically the the balance sheet uh certain values in the balance sheet also gets revalued on the top line so it's an adjustment line uh effects adjustment line on the on the revenue and that's also a a big player there so kind of a combination of those and it's it's difficult for for an outsider to understand the impacts because there's items that get revalued which is not visible to you so so it's a difficult thing to kind of try to analyze or forecast how it's going to play

okay thank you still uh so is it the fact that the balance sheet uh revaluation is that the larger explanation now in in the third quarter uh

it was a uh a big part also um i don't have the full split in front of me right now but there are different items

all right okay uh then uh then the business the you say that the sales development of the probes was really strong so what do you attribute that growth to is it higher prices is it higher volumes is it higher usage how would you describe the demand for probes

so we haven't the hype here so uh you only here so we haven't touched the uh we haven't touched the the pricing so so if if we look one one way to look q3 is of look it through the top line but then look it through the unit sales growth perspective so so we we had a really good growth during q3 also from the unit perspective so we just have been selling more probes and and the devices are i mean they they have been used more than than last year q3 clearly and we have shipped more probes

right thank you then uh regarding stronger sales to asia pacific can you be more granular on on the country level so is it uh japan is it uh china or is it a more broader picture

so um it it depends bit country by country so australia has been has been now q3 picking up picking up well and and so forth so there are a couple of couple of countries don't want to go in in detail because the competition reason then i i think what this clear highlight apoc perspective is is actually the china because we now we now have drs plus in china we have a don in china we have ic200 quick measure in china so if you look the q3 apex numbers so now also the china moved the needle during q3 if you think the apex numbers but do you robin have any insights on i think

the australia was the biggest one kind of country uh that performed really well so and the imaging cells there but yeah we sell to quite a many countries that they're all a bit different some are up some are down but those are kind of the two major factors

okay thank you then uh regarding the decision not to grant the reimbursement code for uh home too so how do you view view this uh do you think this is a setback i mean you still reported very solid growth or very strong growth for home too but compared to your expectations where where the plan to to to get a single reimbursement code kind of the key to to unlock faster sales and and how do you view the potential now with with the doctors having to use multiple codes of

course we were hoping and of course we are disappointed that that we didn't get the code but i i mean we we continue the work so again if we think this quarter and the status and the feedback what we received from escrs so aio so so we are more and more confident that in order to be able to serve the patients those ones who are having a cloud they should measure the the pressures at home and and and follow up the fluctuations in order to get the medication right so so we continue the work on on on on that premises and in order to be sure that the patients are getting their right medication and and and so forth so so so the work continues of course it would have been nice to get the code but the traction is good there's a technical benefit so so we continue hard work from the home perspective

okay thank you then uh still my final question regarding your comments on the outlook uh uh i think you said that you have you feel that you have very limited visibility into the future are there any new concerns on the horizon that you follow extra carefully or is this just a general reflection into the current economic environment yeah

nothing new has really come up everything seems the same than before of course we can see from many of the other company reports that the economy hasn't taken a kind of a huge growth in the last months but uh we keep on eye on that of course

yeah all right thank you so much that's all for me

the

next question comes from joni sandvall from nordia please go ahead

yeah hi thanks for the presentation i have a couple of questions maybe getting back on the the margins cross margins were were done quite clearly year over year and and also q over q so so i understand that there is the effects impact chip but you also mentioned very strong growth in tonometers which to my understanding have have higher margins so so so what has actually changed is there some some some cost pressure or price pressure or is this uh triumphe geographical difference in

in sales split

yeah it's uh

the the the effects is of course a big part so well the very big part of the whole top line effects hits the kind of the gross margin as well because our variable costs we have the commissions for the u.s sales reps as a dollar based cost but other than that it's it's there's some components in the devices that are dollar but it's it really flows down to the gross margin that's the biggest single reason then of course it depends how much the sales grew for tonometers for example i've used that as example in in the u.s versus rest of the world where we have our direct sales channel so the the margins in the u.s sales are of course a lot higher because because we sell direct to the end user we leave like 40 45 percent of the money on the table on every other country in the world where we sell and then of course the product mix so we have the gross margins vary between the products quite significantly so a combination of those things

okay okay that's clear maybe maybe a broader question on as the u.s elections are closing so so do you see actually is there any risks from from possible tariffs following the elections on on on your behalf

we actually have been thinking it and and according to my understanding i think there might be brighter brains on this on on this topic on this call so if somebody else would like to comment but as as far i haven't seen too much discussion related to the medical equipment but if there's insights on this one so other on the other shareholders and analysts so please please feel to jump in

to the next question. Okay

okay that's

clear hey then maybe follow up on this st500 and it seems quite interesting addition but could you give us any indication what you're you what are you expecting on sales sales in in 25 for this product to just get some grasp of the of the potential of the of the of the new tonometer yes

sorry sorry Joni so we don't we don't unfortunately give out so so but we have a we are now building the budget for next year so the there's a healthy number on on the also for the st500 like ic100 ic200 and and and for the home and for the probe so so sorry can't comment on probably

the fastest growing product next year because we don't have much sales this year yet a couple months of sales so for sure for present

she's are going to look really good but also hopefully the dollars yeah also hopefully the dollars but we have a good order backlog for for that product already so that's that's a good thing

okay good to hear and then the last one this maybe goes to robin so so could you give any indication of this marketing spend how much was this you know delta to to normal so so we could take this into account it's uh hundreds

of thousands so after the cost increase marketing spendings and personal expenses are like 85 percent and and uh it's not evenly 50 50 but maybe the the personal is a bit more than the marketing but it's a big chunk

okay thanks that's all for me thank

you

as a reminder if you wish to ask a question please dial pound key five on your telephone keypad there are no more questions at this time so i hand the conference back to the speakers for any closing comments

great hey thank you i think it's time to to conclude the q3 conference call next time we are going to meet uh february so we have a bit of a change in in plans so we are going to run a webcast because it's a full year and and perhaps a bit more extended earnings call on february so really looking forward to see see and and and have the participation februarian and thank you for your participation and have a extremely good end of the year and let's meet again early february thank you thank you