Revenio Group Oyj

Welcome to Revenio 2024 financial statement release. And special thanks for all the people who are here face to face at Sanomatalo, and of course, for all of you who are behind the webcast. My name is Jouni Toijala. I'm the Group CEO for Revenio. And today, together with me, we also have our CFO, Robin Pulkkinen. For today's menu is looking like this. So we have five topics. So I'm going to start with the business highlights. Then I'm going to recap the strategy and then also look back to the year 2024, how we have been able to execute the strategy. Then Robin is going to take over to go through the Q4 and the overall 2024 numbers. And then we are going to give at the end the financial guidance. And Robin is going to conclude with the topic revenue as an investment. And then we move to the Q&A at the end. Q4, net sales 30.5 million. So this is reported sales. So if you look the currency adjusted sales term, so we were down 1.1%. Operating profit in good level. So 29.9% from the sales leading to 9.1%. million euros. Then if you look the whole quarter, so the cash flow was extremely strong. So we ended up to the positive cash flow up to the 9.8 million from 5.2 million compared to the last year Q4. If you look where the money came, so more or less exactly the same than before. Tonometers selling well, especially the IC200 probes were selling well. Also the ADON family DRS Plus were selling well. Regional split. So this is the first time that we are giving the exact numbers related to the regional split. So we have been talking about the USA before, but now we have EMEA, LATAM and Canada in one packet and then the APAC. So USA roughly 50%, Europe, Middle East, Africa, LATAM and Canada 33.7% and the APAC 16.6%. 16.6%. Then if we go back to the product, so we have had quite many product launches during the second half. So ST500, then we launched a bit before the Christmas, we launched the iCare Maya device and then two VET products. And we have had also the sales start, so it's different to launch the device compared to have it in the market in a sale. So ST500, So we have been getting the sales already during the Q4 for ST500, same for Tonovet Pro and same for Tonovet PET. And as we have stated earlier, so the Maya micro perimeter is on time. We have already ordered backlog for that one and estimated to start the sales early Q2. Then first time we are also giving out the recurring revenue ballpark. So roughly one third of the total sales. So if the reported sales was 103.5 million this year, so roughly one third is coming from the recurring revenue. So that's mainly probes and the software. licenses and of course partly also from the service contracts. Even though that the 2024 was not particularly easy, so we have been able to implement strategy extremely well and I come back to that one as a next step. So even though The world is in quite turbulent situation quite now, whether it's the geopolitical challenges or economical in general. So no fundamentals of any have changed. So people are aging, more lifestyle related diseases like diabetes are coming up. So the amount of the patients and the need for eye care is growing globally day by day. And then if we match this one with the insufficient amount of the eye care professionals, so we have a totally unbearable situation at the moment. And in order to cope that one, we really need the smarter ways of working, as we have been stated many times. And in order to keep the wonderful visible for all, those growing amount of the patients, so we laid out the strategy at 23 November for the period of 2024, 2025, and then the 26. And that was to watch the connected and predictive eye care pathways. And we had four key cornerstones in our strategy. So the first one was related to the devices. So improve the quality of clinical diagnostics with targeted product innovations. example, rebound technologies, TrueColor, Confocal with full automation. And I come back to how we have been able to execute 2024 in the coming slide. Then the second topic was how do we optimize the clinical care pathways with connected and predictive solutions. So we had three different pathways inside this bucket. So the one was glaucoma care pathway, one was retina, and then we had the retina screening. Starting with the glaucoma, diabetic retinopathy and then AMD. Then we also talked a bit more than a year ago in our capital markets day. We talked about third topic, which was enhanced customer focus in operations and sales. So that included how do we more efficiently work with our supply chain partners, how we work with our manufacturing partners, how we improve the customer satisfaction brand and also marketing and develop new channels to the new segments like diabetic clinics or primary care. And then as a fourth topic, which is the foundation. So we have to guarantee that we have the right competencies at the right time, at the right place. Then we take care that we are able to retain our key people and then able to attract when we hire more. And then, of course, we have been working around our values. and culture. And logic is that if we do these four things extremely well, we are able to continue our profitable growth. And if you go back to 2024, improve the quality of clinical diagnostics with targeted product innovation. So many new products came out last year. So we have been investing constantly more or roughly 10% or more even throughout the years. So if you look last year, a lot of new things, totally new tonometer, Iker ST500, and it's also the basis for the future tonometers which we are going to launch and which we are going to have in a roadmap. And that's a new hardware platform, that's a totally new software platform. Two products for the wet side. Then we have been working with the new microperimeter, and that's looking good. So we have papers already submitted to the FDA. So now we are in the waiting mode to get the feedback from the FDA. Then from the market entry point of view, so China was actually selling well during the Q4. And the reason for that one is that we got the IC, 200 quick measure in during the 2024. We also got the ADON family in, and then we also have DRS Plus in. So now the product portfolio, which we have available also for China, is quite comprehensive. Back to the clinical care pathways, so we acquired the rest of the share from Tirona Retina, so the Netherlands-based AI company, and now that team is part of our iCare team, fully integrated, and really the acquisition logic was of course linked to our retina screening solution, so DRS plus the Illume plus the AI. But the ASPIC logic is as well that how do we enhance our devices with the AI capabilities when going forward. So that's also the... the key in order to understand the acquisition logic. Then what comes to the Illum expansion in the markets. So we have been able to increase the installed base 4x compared to 2023. We have doubled the amount of reports during the 2024. So good traction also what comes to the DRS plus, plus the Illum, plus the AI package. Then on the customer And operations perspective, lots of things done there also during the 2024. So we haven't had any delivery challenges. We haven't had any supply chain challenges during 2024. And we have been able to manage also the cost level that comes to the components extremely well. Then with the manufacturing partners and with our other stakeholders, we have been able to improve the product quality across all the product categories. It has been in extremely good level before, but we have been able to improve that one further. And then we constantly measure the brand and the customer experience. So we have a slight improvement compared to 2023 results to the 2024. So we have slightly able to improve also the brand recognition. And then what is important, so we have been able to build new non-ophthalmic distribution channel also for the screening business. Of course, this is ongoing work, so plenty of work to be done. Then people on culture side, so we have been spending a lot of time and also money to keep developing our leadership skills among the teams and people who are working for us. Then we have also gone through so-called job architecture project where we have been going through all roles and responsibilities inside the company, across all the geographies, and then set up a job leveling for everybody. And then, of course, we have been continuing working on our values and culture. And Robit is going to go more detailed, of course, the numbers and the profitability, but also compare how we have been able to perform in terms of the growth and profitability, what comes to our peer group. So if we think that one, so 2024, we have been returning back to the growth and profitability has been on a good level. So we start to be in the middle of the strategy period. So if the strategy period for us is three years, so that's 24, 25 and 26. So roughly one quarter to go, and then we are the middle of the three-year strategy period. And if looking at the priorities for this year, so we are going to continually invest into the R&D in order to launch the new product. So we have a clear understanding what kind of products we should launch in the future on the tonometry side. Same for fundus imaging and same for the perimetry. And then we have a clear roadmap also, then what comes to our software and solution business. And from the sales channel perspective, so we are doing constant optimization of the sales channel and plan is also, of course, to work with the retina screening solution. And also we have some other products coming on the software side when going forward. to watch this strategy period. Then M&A, I think we are going to talk at least on the Q&A side regarding to the M&A. So constant work is ongoing. Hopefully we are able to move on that front also this year. And then what comes to the ESG. So there the house is in extremely good order. So based on the auditors, so we have run already the kind of a pre-testing for the 2026 readiness, so that we are able to report all CSRD readiness numbers 2026. So now we are collecting the data. But with these words, I think it's time to call Robin here.

Thank you, Jouni. So my name is Robin Pulkkinen and I'm the Group CFO. So going a bit through the numbers. So Jouni covered the top line there slightly earlier, but for the full year, just over 7% growth, reaching 103.5 million. And then for the last quarter, just under 5% growth. The FX has been quite of a roller coaster for especially the second half of the year for us. It was a bit more not so visible in the first half, but then the Euro-US dollar exchange rate kind of peaked in end of Q3 and now it came back down again in the last quarter. So the headwind we had in Q3 came back as a tailwind now in Q4. And now maybe there's one point there that what we have been working on, kind of rearranging a bit of the balance sheet. So a lot of those items that, for example, now have hit the growth or the sales lines have been kind of eliminated in a way that we rearranged the balance sheet so a lot of that FX is actually going to hit the financial costs and returns going forward. So starting from December 1st we did the balance sheet kind of rearrangement there. EBITDA, there's been some kind of one-off costs that have been adjusted out in Q4, not much, under 200k. So the adjusted EBIT actually 30.3%. For the whole year also, we had last year and this year roughly one million of adjustments, which we have brought into the table here. So the full year adjusted EBIT just over 25%, slightly down from last year. So the growth, and kind of like Joni said, we're now back on the growth track. I think just as a recap, last year, our reported numbers were, our 23 reported numbers were flat. The driver there in 22, if some still remember, we sold the remaining stock of our microparameter, the Maya, which Joni was saying that is now hopefully being launched again, and we're applying for the FDA approval. now in the next couple of months, hopefully. So we ran out of that stock at the end of 2022. We had roughly seven million of sales in 2022. In 2023 we didn't have anything to sell, but the sales were still flat. So basically saying that the tonometer and imaging products still grew quite well during the year to kind of catch up for the hole that we had for the moya we sold in 2022. And now in 24, no Maya sales, but reported growth over 7%. Now going into the 25, of course, like we guided, we'll go back to that later, but we're quite positive of the growth drivers we have, and especially the new microparameter that is hopefully coming out soon. We finished the year with a strong profitability. The kind of graphs look very familiar from every year. So the last quarter is always where we make like one third of our profits. We did have cost increases. So in 23, we had very little bonus payments, for example, for all the employees have a bonus program for the performance wasn't really what we were hoping to have back then. But also there has been additional investments into IT and marketing for many of those new product launches that Joanne was going through. The clinical trials actually didn't have, at the end, a very big impact on the profitability for last year. The balance sheet remains very strong. The equity ratio has been growing. Basically, the dividend payout ratio has remained around 50% for the last couple of years, so it's the biggest driver for the improving equity rates. Net gearing has been below zero for the last five years at the end of the year. It's pretty good considering that we at the same time have paid over 45 million of dividends and then acquired companies with the cash reserves and still we have more cash in the bank than interest-bearing debts in the balance sheets. So the cash generation was really good for last year. The biggest improvements, so actually the operating cash flow is up 120%. The biggest improvements actually come from the working capital management. So we've been working on that and paying quite a bit of deep time on that to make sure that we get the improvements in that area. And it kind of pays out well now here, looking at how the cash flow developed over the timeframe here that you have on the graph. So from 2016 to 24, our compound annual growth rate for the operating cash flow has been nearly 19%. And that's the way we kind of plan to run the company in the future also. So we are a cash generating company and we are planning to stay so also in the coming years. So like Jooni mentioned on the R&D investments, we spent roughly 10% of our sales in R&D. There basically two-thirds of our R&D investments go into hardware and embedded software. So in Italy we have our imaging and perimetry teams. Italy in general is our biggest single site. So there we do have a quite big R&D team. The tonometers are are managed and developed in Finland. And also in Finland, we use quite a bit of outsourced service providers for non-core R&D work that we buy from the outside. And then the one third actually goes to the software development, which is mostly in Melbourne, Australia. Also a couple of people in Italy office helping on that work. And then the competition. what we have drafted here is kind of a combination of publicly available competition data on the net sales growth, EBIT growth and EBIT margin. So kind of the movements have been similar going into the same directions. I think the right hand side here on the graph, the EBIT margin, you can see that our profitability level has been on a totally different level than any of the publicly available data that we have. And also non-listed companies that we have been looking at. It's quite exceptional level where revenue is moving. So our profitability has come down. Now we finished last year, 25%. So come down from 30 to 25. Looking at the competition, the relative drop from 15 to 5 is actually quite big, even bigger, a lot bigger than revenue. And then the dividends. So the board is proposing to the AGM, 25 AGM in April, that a dividend of 40 cents would be paid. So the dividend payout ratio is 57.6%. We do maintain or plan to keep a strong balance sheet to finance acquisitions. So like we've been talking, we've been working on that a lot. We've had challenges on the valuation level still on many of the targets and could have closed deals, but haven't moved because we have thought that they're not good for the shareholders. And also we aim to pay a sustainable dividend that doesn't endanger the parent company or the group liquidity. Shareholders, there are not really any major changes during the year. William Demant has bought roughly 1.5% more or 1.7% more, if I remember right. Other than that, the other companies are very much the same that we had a year ago and more or less in the same order almost also. The foreign ownership is just over 51% or 51.7% now. The Finnish ownership actually went up a little bit from end of Q3. there has been activity there. Demand has been buying more shares in Q3 and Q4 at least, but quite small blocks, nothing significantly changing the ownership structure. And like we said back in the CMD in end of 23, this still holds. So despite what the guidance is, we are still targeting to grow three times faster than the ophthalmic diagnostic device market starting from this year. So revenue operates in the ophthalmic diagnostic device market, which is roughly 3.5 billion USD in size. With our product portfolio, we roughly cover one third of that market. The tonnometers growing roughly 2-3%, that's roughly tonnometers with the probes excluding the home, 200 million market annually. Retinal imaging devices growing faster than 4%. That's also roughly a half a billion market annually. And then the perimeters growing around 2% on average and the market being around 300 million. And the guidance for this year, our exchange rate adjusted net sales are estimated to grow six to 15% from the previous year and profitability excluding non-recurring items is estimated to remain at a good level. Then to the Q&A.

Did you... Jump in as well. Yeah, you're welcome. Nikko. So, hey, let's do so that we have to juggle a bit. So we have three ways to actually put the questions forward. So we have the audience here and then we have a webcast team behind the camera. And then we also have the chat availability. So we start from Nikko here.