Revenio Group Oyj

Good afternoon and welcome to Revenue Group Q1 2025 earnings call. My name is Jouni Toijala. I'm the Group CEO. And then, as always, we have here as well Robin Pulkkinen, our CFO. Plan for today is to go through the highlights for the Q1, and I'll cover that part, and then Robin is going to continue going through the financials for the Q1, and then shareholders and financial guidance for 2025, and then we finish up for the Q&A. But let's... kick off extremely good start for the first quarter. The Q1 was very strong for us in terms of the sales and profitability. Net sales was 26.1 million, up 10.5% from the previous year, 23.6 million euros. If we look the currency adjusted growth So that was 12%. EBIT on good level, 6.6 million, 25.4% out from revenue. If we then go more to the sales split. So imaging and tonometer business grew in every region during the Q1. So we got the growth from US, APAC, Europe, Middle East, Africa, LATAM and Canada. Then if we do a bit more deeper dive into the specific countries, so in APAC region, China grew very strongly, same for India as well. Then we got the good growth also from Europe and Canada. Then I'm sure that there's a lot of questions related to the outlook and the pipeline. So as of today, we see a healthy pipeline from the sales perspective in the USA as well. Then if going through a bit more detailed, the actual product lines. So from the tonometer perspective, Probes selling really well. I see 200 selling really well. And then we launched also the new Tonovet Pro version during the second half of 2024. So that has been performing extremely well as well. Then on the fundus imaging side, more or less the same story than in the last quarter. So DRS plus business growing well and the aid on product family growing extremely well as well. Then during the Q1, so all the growth was organic, so we didn't have microperimeter sales in at all. And from the microperimeter perspective, everything is looking extremely good. So we got the FDA approval during the Q1, and then actually we got also the CE approval. certification end of March 2025. So we are good to go in all the regions and we have been started the deliveries already and then we have a good order pipeline also for the coming months and coming quarters. From the software solution perspective, business is moving well forward as well. So if you look at the iCare iLoom screening business, and if you go in the details of the actual installed base and the sites, so we grew roughly 50% in terms of the live sites and live customers compared to the last quarter of 2024, and also the report amount has been increasing 30% year on year. And the plan is also, of course, to expand the business in other countries. Then I'm sure everybody is keen to understand where do we stand with the US tariffs. So let's cover this one. I'm sure there's a lot of questions as well. So let's be sure that all the questions are tackled during the Q&A. But a couple of words regarding When comparing us to the comparable companies, we are in extremely good and resilient position. If we look first at the macro trends, they are definitely backing us up still. In all the regions also during the Q1, we have been seeing increasing amount of patients. And if you look at the product portfolio perspective, so we are well positioned in terms of the value of the products compared to the price. And currently, as said earlier, so if you look at the pipeline in the USA and globally, so the pipeline is looking still very good. Also the profitability is in good level, so if the profitability in Q1 was 25.4% out from revenue, so for us this means that we are able to still invest and continue all our R&D projects as in the last couple of years. Then we have a good toolbox to tackle the tariffs, so let's go back to that topic. So what we have been doing already in order to be prepared, so we have increased inventory levels. already during the Q1 and even last part of the last year. And if you look the inventory in more detail, of course, it depends product by product, but we have, depending on the products, the inventory from two to six months. Of course, that's having a slightly impact also to the net working capital, but in a nutshell, We are well prepared from the inventory level perspective. Then we have been estimated the tariff impact to the bottom line. Robin is going to come back to that one. But if we look to Q2, Q3, Q4 2025, so the hit to bottom line, if we don't do anything, is roughly from 800,000 euros to 1.4. a million euros, and this is without any actions. And if we increase the prices, which is the plan, so then we have a strong view that we are able to mitigate the impact of the current level of the tariffs, which is, as of today, 10%. So this is where do we stand in terms of the tariffs, and then I let Robin to go through financials, and then we come back to this topic for sure in the Q&A.

Thanks, Jouni. So, Jouni went through the numbers there slightly. Great start for the year. Best quarter in Q1 in terms of profitability and top-line euros. 10.5% growth on top line, FX adjusted 12% growth. Now looking at, people remember that we did some changes in the balance sheet, restructured it a bit during the last quarter of the year. You can now see some of those FX impacts that we had before hitting the revenue line, now hitting the financial costs. And by doing so, there's actually roughly 500,000 of FX cost that is now hitting financial expenses instead of revenue so if we did not do those changes the top line would have been lower but of course the FX adjusted number would have fixed it but the reported number would have been lower. Gross margin also higher than what we're used to seeing for us. There's been some changes in the IFRS accounting, more related to how we treat our own personnel commissions. In the past, they've been posted to cost of goods sold, and nowadays, due to the changes, we are now posting them in the operating expenses, so it has a slight improvement on the margin line, less than 1% impact. the tariffs will then again go the other direction. So it's interesting to see how this line is going to continue to develop during the year. But in general, the Q1 average FX was 1.05 compared to 1.085 a year ago. And now that we can see that the FX is moving towards 1.14, this will also have some impacts on our numbers going forward. So operating profit 6.6 million, up almost 30%, 28.6%, and above 25.4% of revenue. And I'll come back to the other numbers a bit later. So Q1, a bit longer trend line here for the sales development. It's really good to see that the were able to grow quite well in the first quarter after having a quite flat Q1 last year. Also keeping in mind that we didn't have the new Maya in our product portfolio. So that will be now kicking in starting this quarter and the demand pipeline seems very strong for that. The sales team is very positive about the product and I think the operations team is Pulling out as many devices from the manufacturing line as they can and that capacity is also increasing quarter by quarter as we move towards the second part of the year. Operating profit also for the first quarter on a record level, 6.6 million. There were no significant extraordinary items or actually either clinical trial costs within the quarter, which would have had an impact on the profitability. So, for the bit more clarified from we've been expecting, I think the investors have also been expecting these clinical trial costs for the iCare ELUN-based screening solution to start kicking in, and that's been our original estimation also. last year. Currently, we're still kind of going through alternatives and the authorization process for the FDA and kind of reviewing clinical study alternatives for the authorizations. And our current expectation is that the trial costs will not start to run within the next two quarters either, so earliest Q4. Cash generation, very good. Looking at, if you look at last year, Q1, okay, it's flattish, but then it's good to keep in mind that all our employees have a short-term incentive program. In 24, we had very little payouts for that program. Now we're back to normalized levels this year. And then you can look at back to 22, Q1, the operating cash flow was basically zero, same for 23. So the 24 was actually quite exceptionally good due to the kind of not very or very low bonus payouts which is not the normal trend. So it's the first time in the last 10 years that it was close to zero. But that was a good reason for it. It's basically for the not so good performance in 2023. But this year, basically, what that difference is, is this year the payouts were roughly 2.5 million in the first quarter, and last year less than 500K during the same time. And if those were kind of set at the same level last year also, if the payouts were normal last year, our operating cash flow this year would have been almost 50% higher than a year ago. The balance sheet continues to get stronger. We're again above 80% equity. It's actually the first time since the acquisition of Centerview that we are reaching this level. So the interest bearing debt, it's actually down from 16.6 million last year after the Q1, down to 11.3 million at the end of Q1 this year. So we basically have twice as much cash in the bank than we have interest bearing debt In Q2, of course, the cash balance is going to go down due to the dividend payouts and the net gearing will go up slightly closer to the zero range. Shareholders, some actually changes here. So at the end of last year, demand was still around 19%, 19.6%. And now they actually flagged in Q1 that they went above the 20% ownership. And actually looking at the top 10 list, the logos are all the same. But seven out of 10 of the largest owners have increased their ownership of revenue during the quarter, which is, I can't remember such a positive movement in one quarter in any of the recent years at least. Overall, I think the Finnish ownership is slightly up, United States slightly down, Denmark slightly up, Sweden and France pretty flattish during the quarter. And the guidance remains the same. The exchange rate adjusted net sales are estimated to grow from 6% to 15% from the previous year, and profitability excluding non-recurring items is estimated to remain at a good level. And like we've said earlier, even though the range is quite large, we aim for the double-digit growth. But there is quite a bit of uncertainty in the market. So that's the reason for the wider range for this year, for now at least.

Great. Thank you, Robin. It's time for questions.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Niko Ruakangas from SEB. Please go ahead.

Hello, this is Nick Rorgnes from SEB. Thank you for the presentation. I have a couple of questions relating to naturally tariffs and then also another one. And maybe starting with a question that you indicated in your report that your sales were supported by a couple of bigger one-off deals. So how big impact did these

Hey, hi, Nikko. So not as big as we have had, but a bit more bigger than the normal smaller deals. I think that's the best way to put it.

Okay. So are we discussing about seven-digit number or less than that? uh ballpark yes but not i mean not the millions like we have had before yeah okay all right uh thanks yeah and and of course less than a million but yes yeah all right uh then on tariffs and uh what's your take on the market and client activity since the announcement of the tariffs You said that you have a good sales pipeline in the US, but have you seen kind of any changes in the demand environment before that? And then on the other hand, do you think that your Q1 sales were supported by pre-buying ahead of tariffs?

So first, the answer to the pre-buying, so no. So especially if you look at the USA, so there's a tendency that nobody buys for the stock. Tonometers, 24 to 48 hours from order to delivery, one to two weeks for imaging devices. Clients were not buying products in a stock. And then if we look from the pipeline perspective, so last time we checked the pipeline on Friday and the pipeline is looking good. So we haven't seen any decrease on the sales pipeline side.

All right, that's good to hear. you estimated this 0.8 to 1.4 million impact on earnings in Q2 to Q4 if assuming no actions taken to mitigate the tariffs so just to get the estimate and ballpark of the impact right so given that you already have increased your inventory so this kind of 0.8 to 1.4 million impact would be if no other actions impacting Q3 to Q4, am I kind of assuming right?

Yes, there could be also in some products we have around two months inventory, so could be some products going out the door with tariff impact already during Q2, but basically most the Q3, Q4 and And the idea is that we will be increasing our price. We did actually a global increase in price at the end of Q1, but we will be doing another increase actually in the US due to the tariffs. And they will be in place as long as the tariffs are in place. So if they are withdrawn, we're kind of planning to withdraw the tariff increase as well.

yeah i understand and and you haven't kind of seen that q end of q1 price increase impacting your client activity no we do that every every year around the same time frame yeah okay good uh then uh last one from me at least uh at this point increased like 10% year-on-year, despite the comparable quarter having the higher FDA costs, which you didn't have now. So you already flagged the change in IFRS reporting, but kind of how much did this change explain this increase year-on-year?

It's a couple hundred thousand. Then in general we do have more people. Also the marketing costs were slightly up. But basically it's payroll related for a big part. And also the fact that some of that cost of goods sold is now being posted in the costs is driving the cost up. Just looking at the OPEX.

Yeah, okay, but kind of if we clean those reporting related issues, but there is some kind of underlying cost.

Yeah. Okay, I think so. Yeah, I heard roughly the average number of employees is from 219 to 246 in Q1, so that also increases. Salary increases. Yeah, plus salary increases, yeah.

Yeah, I understand, I understand. Okay, I think that I'll go back to the queue. Thank you.

The next question comes from Jack Reynolds-Clark from RBC Capital Markets. Please go ahead.

Hi there. Thank you for taking the questions. I had a few, please. So the first one, just on tariffs again. You mentioned, obviously, the price increases to offset the impact of tariffs. But what level of pricing increase do you think that your customers are willing to kind of accept? And how much demand elasticity to price do you anticipate?

So the plan is to, so basically the end user price increases not exactly 10%, so we will be able to kind of split the pain to kind of borrow our head of sales comment on the fact. So we will be able to cover the tariff kind of euros, but kind of overall, of course, so if you say that we invoice a million more and we get a million more in COGS, so some of the percentages will see an impact in the percentages. But basically, single digit increases we're looking at.

Okay. And do you expect demand to be impacted by those increases?

The good thing is that all of our competitors mostly also manufacture outside the US. We're also the most profitable company, so So many of the competitors have been struggling last year with the profitability and growth. So I would expect to see increases also from the other players. But it's a bit unclear to us, I guess, also how much different companies have inventory in the U.S. imported before the tariffs. So we're, of course, having a close eye how things develop.

In general, Jack, so we have been extremely good what comes to the price and value. So if you look the competition in terms of the product, so the value which we are able to deliver in specific price points, so there's a flex on the price compared to values compared to competitors. And we are talking about the single digit increase here. So based on the sales input, we don't see too much a risk on this one, what comes to the demand.

And I think the plan is to communicate to the customers also that, like I mentioned earlier, so if the tariffs are removed, the increases will be also removed that are being done for the tariffs.

Understood. Super clear. Thank you. My next question was on Maya. So obviously, put positive development on the launch there. Could you talk through how you're thinking about that from a geographical perspective? And are you able to quantify at all what kind of contribution to revenue growth it could offer in 2025?

So do A couple of topics. So the first topic is that now the approvals are okay in CE marked countries plus the FDA. Currently the pipeline, the order pipeline comes more from the drug research and drug testing side, which is extremely good. They are not so price sensitive in general, and for sure they have had the will to buy the product already. beforehand and now luckily we have a product in place. Then I would be personally extremely disappointed that if we wouldn't be selling more than we sold Maya earlier, so we sold steadily two to three million per year, so there's an expectation for higher amount during the queue. during the 2025, but Robin, anything you would like to add on the expectation demand side?

No, seems like everybody within the sales, the specialists in the board are extremely positive about the product and its outlook, so we're quite optimistic. But time will show, of course, very still early, but we do have a good solid number of orders in the tens of units already in the system, so.

Great, okay, understood. And then my third question was just on iCare Illume. You mentioned, obviously, 50% more placements with 30% more patients coming through. Could you remind us how that translates into revenue for Revenio? What's the revenue model there, and how do those higher volumes translate to benefit to you guys?

So, we don't, sorry Chuck, give the details, but I can go through the revenue model and the split. So, first starting from the solution itself. So, it consists three parts. So, the first part is DRS Plus, a fundus imaging device. Then we have Illum Cloud solution. Then we have iCare RedCAD. So that's a Tirona asset which we acquired last year, the remaining shares Q3 last year. 90% of the cases when we sell the solution, so we sell also the DRS Plus. Then, of course, we sell the Illum recurring license, usually for one year, and then we have a volume-based prices for AI report. So there's three revenue streams, so there's selling the device, then selling the Illume subscription and then AI report. So that's a model. And if you look the Q2, so even the device sales starts to be significant in a way because we really say almost in all the cases we also sell the hardware and this hardware sales is generally going to totally new segments like diabetic clinics. So that's where we stand today, and feedback is extremely good. Then we also launched Q1 so-called IllumConnect, which helps us to refer the patients to the ophthalmologists, which are out in a way out from the network. So if, as an example, in Germany we have a case that devices in diabetic clinics or in the optometry, but there's no in-house ophthalmologist, so we are able to refer the patient digitally to the right place right away if there's challenges in the eyes. So this was the core functionality which we got through the Oculo platform. and which is used in Australia and New Zealand, but now that's also the part of the Illum solution.

Okay, great. That's super clear. Thanks very much.

Good question.

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

Hi, it's Daniel from Danske Bank. Thanks for the presentation, and I have a couple of questions as well. Maybe still going back to the products and discussion on these. I noticed that you didn't mention SP500 in the report, even though I recall that the initial perception has been extremely good. So what's the status on that one, and how is the business momentum getting traction with this device?

Let's start with the positioning the product first. So if we think the IC100, IC200 with quick measure, so the main segment optometry and to optometry related workflow. Then ST500 segment ophthalmologists. And if we look now the progress on the SD500 perspective, so we started the sales work towards the end of last quarter, and now we have been moving forward in the areas where the ophthalmology specific workflows are in use. And of course, we have to recognize that the start applies the same logic than in the early phase for the tonometers, for the handheld tonometers, so there's a more heavy lifting which we should do because the workflow is new and the customer segment is totally new, but still feedback good and lots of, of course, work ahead. And it's a new product compared to the volumes of IC200 with the quick measure, so not yet moving the needle as much as an example IC200 with quick measure, but moving on steadily.

Okay, thank you. Are you expecting S&P 500 to maybe start to contribute more maybe later in this year or next year? How are you seeing the sort of commercial traction?

Sure, going to contribute, but I mean, it's a so big amount what we are getting the growth from the IC200 with quick measure example and home continues to grow constantly in the double digit. So for the new products, of course, it's taking time.

Yeah, OK, fair enough. Then on sort of these geographical trends, you noted that the APAC growth has been quite strong in Asia, particularly in China. China is sort of a new area for you to target. So can you quantify a bit how much growth contribution is coming from China, for example, at this point?

Well, we don't disclose exactly, haven't disclosed the country level, but China growth was in the hundreds of percentages, so it was a very good growth for us. Also India, very, very strong growth. So we haven't disclosed exact euros for those countries, but definitely they had an important part in the quarter success.

Okay, thank you. Then maybe the final question on this FX and obviously we have seen large movements in FX once again after Q1. You did these balance sheet reclassifications and I guess you mentioned that, okay, there is not that pronounced impact to the top line anymore from the FX, but how much of an impact we should anticipate what comes with the percentage points? Since there seems to be so much changes what comes to this topic as of late, can you help on this one?

Yeah, I think this year when you look at the FX adjusted sales, so okay, we don't get the direct postings to the revenue anymore from certain balance sheet, US dollar balance sheet items. But the comparison numbers have them in them. So last year we did still have, like last year Q1, the number had 400,000, 400,000, 500,000 of FX tailwind posted in the revenue. So kind of the divider in the FX adjusted growth will need to be adjusted this year still. I think the balance sheet impact on this year reported numbers will be very low. But then, of course, what happens to the US dollar exchange rate? So now it's around 1.14, I think. And if it goes up to 1.20, of course, it's not good for us. So that will have an impact. The good thing is, well, we don't hedge with any financial hedging, but we have natural hedging. So certain parts of our components are U.S. dollar based. Also in the U.S. we pay our commissions to the reps in dollars. We have the whole sales team and marketing team. in the US on payroll, all the travel is in dollars. So we have like 50% or so, depending on the sales mix, natural hedging, what comes to the dollar FX impact.

Okay, that's helpful. That's all from my side. Thank you.

Good on you.

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

Hi, Oni and hi, Robin. Thank you for the presentation. A few questions. If I start with the probe sales, I think in the report said probe sales were also really good in the quarter. Is there anything specific behind this if it's driven by increased usage or is it some kind of stocking effect among your clients?

I think the probes have been growing. for the last decade very strongly. So I don't know if you remember, but back when we still reported the probe part of the, I think when I started 10 years ago, the probe part of the total sales were like 22, 23% and it grew to over 30% by the time we stopped reporting it. So all along the probes have been one of the very strong growing parts of our company. And it seems to be continuing that way, which is good. So we can see that our devices are being actively used around the world. We haven't really seen any slowdown on probe sales ever during my time.

All right, thank you. Then still regarding to the larger one of orders, are the orders for imaging devices specifically and not for panometers? And what kind of customers are placing these bigger orders?

Imaging and government. So that's in a nutshell. And then for screening for certain, so if you think for the Europe, so also screening related business.

All right. Thank you. Then going back to the US and the clinical trial, it seems that the process has been delayed further. So is there any color you can add to what you are working on now and what do you mean by studying alternatives in the US?

So this links back to what we discussed shortly, a bit more than one month ago, related to the extremely good quality coming from the DRS+. And also based on the discussions with the other AI players who have been trying to get the approval for the DRS+. So the basic dilemma which we are facing is that because of the extremely good image quality for DRS plus, plus good AI performance, so the results are compared to the standard fundus imaging ground truth device plus the human being, and that combination is not seeing as many diabetic retinopathy cases, and then when we run the same patients with DRS plus plus AI, so we detect better the positive cases and then those cases are compared to the ground truth device which is the standard fundus camera plus the human and they don't detect the same cases even they exist so we get more false positives and now we really have to think through that what's the protocol and how we run the clinical studies so that we get the comparable results and we are not wasting too much money and the time and get this one right. So that's simply the logic. So also the requirements from the FDA what comes to the what kind of people we should use, what kind of a ground through devices we should use in the study. They have changed in the last four or five quarters, so we are adapting to those changes as well and looking at the optimal setup. So not of course not optimal case, but in the meanwhile I would like to still emphasize that we sell a lot of DRS Plus devices in the USA for screening cases, which is a huge amount and they are sold for the human grading. So there's a lot of human grading screening business where the DRS Plus is used. But that's the status as of today.

That's clear. Thank you. And if you start the clinical trials in Q4, is there any estimate or de-estimate on what kind of costs we should consider?

Not exactly. I think the whole package and the alternatives are all a bit different priced, so better not to say anything on the cost yet.

A few shootings still towards the end of next year, but now really trying to optimize the amount of the patients and the amount of the sites and the protocol.

All right, thank you. Then regarding the costs and the personnel costs in Q1. Do you consider them representative for the remainder of the year, the current personnel cost level?

I didn't hear the question. Can you repeat?

Sorry, the personnel costs in Q1, are they representative, you think, for the remainder of the year?

Yeah, yeah. We will probably have some new people, but in sort of all the bonus accruals and others are in. there's no adjustments for last year's employee costs. So it's a pretty clean quarter what comes to the cost. Of course, then it depends a bit if the growth is towards the upper end of the guidance, then the bonus accruals will increase towards the end of the year. But at the moment, I think it's a fair number to use throughout. Of course, the salary increases are starting from uh february or march do you remember yoni so it's not for the full quarter but uh so there will be a little bit higher higher salary basis uh for the full quarter in q2 but maybe a couple percentage more when the q1 was okay thanks

And then finally regarding the U.S. and your presence there, so are you looking into transferring some of the assembly to the U.S. and then what kind of timeframe and costs would that maybe include?

I think there the time will show, so of course we look all the options, but now the tools which we have in the toolbox and which we are planning to use at first, because it's a quite volatile environment and we don't know for sure where this is going to end, so we don't want to do any hasty decisions. So the tools which we are currently using is really, we have been adding the inventory already during the Q1 and the last parts of the 2024. So the inventory looks good in the USA, and then our plan is to do a slight trade-specific or tariff-specific price increase only for the USA. And these are now the tooling. Then we evaluate the other options, but as the direction is not clear, so we don't want to commit to investment if the situation is changing, as an example, to moving the production. So this is where we stand today. Anything to add, Robin? No.

Very clear. Thank you. That's all for me.

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

Hello, this is Nick Rons from SEB again. I have one additional question and also related to profitability and your guidance. As you discussed, you have personal costs up this year and then FX headwinds will impact your kind of sales and margins even if no balance sheet. impact anymore that much and then possibly some impact from tariffs even though maybe not kind of absolute number in but margin impact so but if kind of something those do you think that you should be able to improve your EBIT margin this year if you reach the sales guidance or at least a double digit sales growth level. I know your guidance on profitability, but maybe just if you could discuss a bit factors behind that.

I think the tariff is tricky to say what happens there. Basically where you say, okay, if we have a plan to kind of mitigate the dollar or euro impact with the tariff price increases, basically it's probably more or less a flush. So say that you have a million more on top line, million more on cost of goods sold, but the EBIT is zero. So in a way, depends how big the tariffs end up being, also has an impact on what the percentage for profitability will then end up being, if you follow what I mean. So if the tariffs go back up to 25, the impact will be bigger. In Euro-wise, we're covering the impact, but percentage will be weaker, just how the math works. And then I think the FX is good to remember that we have a lot of dollar-based salaries as well, so if the FX continues to get, Euro gets stronger compared to the dollar, then also the cost on the operating costs will continue to go lower what we consolidate to the Euro for the group numbers. It's a bit difficult to say. It's difficult because we don't know how the tariffs will play out. But if the tariffs were not there, we would definitely, I think, it would be easy to commit that we should do a better profitability if we're in a higher double-digit growth.

Yeah, I understand that answer to the question. So thank you.

Thank you. So have an extremely good continuation of the spring and let's come back with the Q2 and first half numbers then early August. So have a good continuation of the spring and thank you for the participation. Bye bye. Thanks. Bye.