Revenio Group Oyj

Finland and welcome to Revenio Group Q2 2025 earnings call. My name is Jouni Toijala, I'm the Group CEO and with me as always we have here Robin Pulkkinen, our CFO. Let's go through the agenda first. So I'll start with the highlights for the Q2 2025. And then also I'm going to cover the summary of the first half. Then Robin is going to do a bit more deeper dive to the Q2 financial part plus the shareholders and then reiterate the guidance for 2025. And then, of course, we finalize the day with the Q&A. Back to Q2, so April, June highlights. So, Given all turbulence on the tariff side, geopolitical side, Q2 went reasonably well in our mind. Top line sales growth was 4.2% reported, leading to the 26.5 million. Currency adjusted growth was 7.2%. On the positive side, the trend continued. All the regions, APAC USA, Europe, Middle East, Africa, so all the regions grew during the Q2. Also, all the product categories, so tonometers, finders, imaging, micro-perimetry and the software side of the business, so all the segments grew as well. If you look a bit more deeper to the regions, so the APAC growing nicely. We had a highlight in APAC, which was India. Then in the Europe, France and Germany growing very strongly as well. And then we have been able to improve also the profitability. So the EBIT level is 6.1 million euros and up. roughly 16%. And as I said earlier, Robin is going to cover these ones in more detail. Then looking back to the first half, so net sales for the first half was 52.6 million, up 7.2% reported, currency adjusted, which is relevant for the full year guidance, so that's up 9.6%. Also, the profitability nicely up compared to the previous year or so, 22.3% leading towards the roughly bit less than 13 million euros. Then during the first half, we also got the micro-perimeter out, and also the marketing authorizations from the main markets, and then we have been extremely active and successful on the Loom side as well, so the screening solution has been selling well, including the increase on the hardware side of the business. Then moving towards the tariff, so I think everyone has been wondering what's the current status on the tariff side. So if you go back to the April timeline when we announced our Q1 results, so we estimated if we don't do anything, the 10% tariff impact is going to be roughly from 800k euros to 1.4 million euros. What we have been doing earlier or the late last year, earlier this year, so we have been increasing the inventory levels and now the tariffs have settled down to the 15%. We did the new estimate, so with the 15% tariff level, if we don't do anything, the impact for the remaining part of the year is roughly from half a million to one million euros. And here, of course, we are going to check our pricing. So we have been bit increasing the prices for the probes during the, towards the end of the Q2, and then inventory levels are currently looking quite So when we are starting to run the inventory, or when the inventory starts to run out, then we are going to adjust also the pricing in the USA according to that. But I'm done. So over to you, Robi.

Thank you, Jooni. So let's have a quick look at the numbers in a bit more detail. So the development was good, like Jooni mentioned. Sales were up. Also gross margin over 70%. So looking at the profitability and gross margin, they have been growing actually faster than the top line for this year. The FX has a play here. I'll come back to that a bit more later. If you look at the EBITDA line, so 7.2 million up slightly from last year. And then we do have the reported operating profit. Maybe here just a reminder that last year we had the Ventica write-downs slightly over 700,000 euros. And this year we had these one-off project costs, 0.5 million. So basically if you look at the adjusted operating profit line, so that's growing roughly 10% in Q2, almost 20% in the first half. That's probably if you want to see how we're doing operationally, that's the better number to look at. The EPS is actually, some have noticed that it looks a bit weak compared to the other numbers. So there are quite a bit of unrealized foreign exchange losses in the financials expense in our P&L. Roughly 2.5 million of those for the first half are unrealized, so had no cash flow impact. And it doesn't hit the EBIT, but the EPS shows that kind of impact on those costs. I'll come back to the other numbers in the coming slides. So our sales growth mentioned now many times, so 7.2 currency adjusted, quite good for the second quarter. In the past, we've also said that almost half of our sales are in the U.S. dollars now for the first half. Our dollar-based sales were 44% of our total sales. So as many of you know, of course, we have operations in the US. We don't do any hedging by banking instruments, but we do have quite a bit of natural hedging in our costs. looking at the US-based operations, roughly 40% of the revenue we have kind of offsetting costs in the country. So you're left with 60% above that in the sales versus costs. And then if you look at our variable costs, out of our globally sold products, more than 20% of the components and the materials costs for our products are dollar-based priced. If you kind of add those together, there's slightly around 60% or slightly above of natural hedging against the dollar sales that we have in the group. And if you consider US being roughly 44% of our sales, that then kind of means that on a group level, there's under 18% of our group sales are open for kind of or are not hedged in a way. Operating profit improved. So looking at the EBIT, it's up year over year. the second quarter and for the first half of the year also in absolute numbers in euros uh also relatively uh so so we've been been kind of having a tighter look at the cost base but also the fx impacts uh our cost base uh for the operating cost going down with the us dollar weakening but also just a reminder we do have our software development in australia and also the Australian dollar against Euro has weakened some 15 to 20% over the last year. So that in a way shows us less costs. And we don't have Australian-based sales, Australian dollar-based sales. So the cost savings in a way show up in the group. Cash generation. solid. So for the second quarter, there's actually a couple of things. So the working capital management was quite good, so had a positive impact on it. But then there's a timing thing on the Italian taxes. So we pay our taxes in Italy on the last day of the second quarter. Last year, that payment hit a weekend. So that date on the end of June last year was on a weekend. So the payment hit our Q3 numbers. So in a way, the comparable number is... Not wrong, but it's not kind of how it's supposed to be. So when you go into Q3, we'll have the kind of the tax payment last year there. So in a way, the comparable number is now slightly better than it should be in normal life. And the foreign exchange losses and the unrealized foreign exchange losses actually had no impact on the cash flow for the group. Balance sheet, no really surprises here. It normally comes down in Q2 due to the dividend payments that go out. So we're still now at the end of the second quarter higher than the second quarters in prior years. So overall, the balance sheet remains quite unchanged over the last quarter. Shareholders, looking at how this was at the end of the year, there's maybe one bigger change. So if you look at the Finnish versus foreign ownership, that's more or less exactly the same as it was at the end of the year. Finland ownership is basically the same. Denmark and Sweden are up. US and France are slightly down. Looking at the top 10 ownership list, the Demant Invest has actually increased their ownership from 19.6% at the end of the year to 21.8% now. And then the top 10 list is more or less the same, just small changes like Ilmarinen and Swedbank have switched places. Varma is slightly up, Elo is slightly down, and then we have Handelsbanken, which has been shifted to Evli. So other than that, all the companies or the investors are the same. And the guidance we reiterate, so we expect our exchange rate adjusted net sales to grow 6-15% from the previous year, and profitability excluding non-recurring items is estimated to remain at a good level.

Thank you, Robin. I think it's time for the Q&A.

If 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 Niko Ruokangas from SEB. Please go ahead.

Hello, this is Niko Ruokangas from SEB. Thank you for the presentation. I have a couple of questions and I'll go one by one. Starting with Q2 sales and products there. So you indicated that the new Maya micropyramiders have been received well in the market. So did that already contribute to growth in Q2? And then continuing that, regardless of the product type, did you have any kind of bigger deals affecting the sales in Q2?

So if you look at all the product categories, so if you start from the tonometers, so tonometer sales was growing during the Q2. Then if you go for fundus imaging, so that's Aden family DRS+. So that product category was growing, and then we count the perimetry plus the microperimetry in the same package, and Maya contributed growth to that segment. And then we also have the software side sales. So that increased as well. So that was in a way the logic. So in all geographies, all the product categories were in a way growing.

No bigger deals.

Okay.

Thank you. Then kind of market environment, you said in the report that you expect the challenges in your operating environment to continue. So as you say that you expect them to continue. So have you seen these challenges in your market so far or is this kind of cautiousness regarding all the uncertainties in the market? or at least you described that the Q2 went reasonably well.

Yeah, so if looking forward, how would I say that if we look the normal way, So if you look at the normal situation, we look at the normal order backlog, what it has been for years already. So the normal order backlog is, the visibility to order backlog is extremely short. And the reason is that if somebody orders a tonometer, as an example, in the USA or In the Europol probes, we usually ship in one to two days, and imaging products, we always ship from the inventory in a way. So the order backlog visibility is extremely short. Then what comes to the outlook? So of course, if we think that the tariffs and the current operating environment, also geopolitically, so it's in a way, not in a way, in a normal level, but if you think now Q2, Q4, sorry, Q3, Q4, so I mean similar, we see it's similar than Q2. So currently demand is stable. So no, we don't see any changes on that one compared to Q2. Double visibility, of course, as always, it's limited.

Yeah. Okay, good. Thanks. Then one additional question from me. You said that you aim to increase prices of your devices in the US when you run out of inventory there. So how long do these inventories last? And do you think that you can transfer the tariffs totally to prices despite now being 15%

So it depends on the product. I think we're all kind of eating through the tariff-free probe inventory in the U.S. So like Joni said, we've increased those prices already. But some products, we do have inventory all the way through the year almost, or at least until the fourth quarter. So there's not really a good single answer how it looks. I think all the products are a bit different. But definitely the probes, we're already kind of selling the inventory, which is impacted by the 10% tariff. And the price increases, you only do want to...

Yeah, we look product by product in the USA and also bit case by case, depending on the deal size, how we are then going to price and what's the pricing policy. So this is a normal situation. If compared to the competition, we are, of course, in extremely good position because the profitability is extremely high. And then if we look at the the feature set image quality compared to the price level so that's very competitive and we are already in a way we have been priced lower than the competition earlier so in that sense it's good but we are going to look the pricing and as I said current estimation if we don't do price increases impact is half a million to million and the plan is to increase the prices when the tariff-free inventory is ending up, but this is a product by product decision and case by case this is.

All right, so this should kind of support mechanically the reported sales growth in H2 than if you start to increase price more. Yep, yep. All right, thank you. That's all from me.

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

Hi there, guys. Thanks for taking the questions. I had a couple, please. I'll do them one by one. Thinking about the strength in India and France and Germany, were there any kind of specific products that you would kind of call out as being particularly strong within those markets, particularly? I mean, I know that you said that there was strength across kind of all the categories, Kynometis, Kynometis, Fundus, Micro, Primitri, and on the software side, but anything you'd call out there specifically within those markets?

I think in general, of course, the India is going strongly. So we have all the imaging sales has been strong and also tonometer sales has been going well in India. Then if you look France and Germany, so quite a lot of growth in those areas has been coming from the screening based cases. So that's a combination of software plus the DRS Plus, I would say. But as I said earlier, so all the other product categories have been performing well as well. But those were the highlights for the France, Germany and India.

Okay, great. Super clear. Thank you. My next question was on Home 2. I was wondering if you could update us on how your conversations with the U.S. players are going here.

So first to say from the Home 2, so the growth is double digit during the Q2, so that's a good sign. Then what comes to the reimbursement, so we are now sitting still, so we haven't started or restarted the reimbursement discussion at this stage. But as said, so globally home to growth is on the double digit path. And the growth was double digit during the Q2.

Fantastic. And then my last question was just on tariffs. So can I just confirm, I'm not sure if I fully understand, the half a million to a million impact that you're expecting at this stage is without any offsets, but you are actually planning to implement offsets. So the impact would be less than that or at the lower end of the range or kind of clarify that.

Yeah, the range is basically kind of looking at our forecast, looking at how many units of tariff-free inventory do we have in the U.S., and based on that, so it's kind of the number that we have. If we don't do anything, it's somewhere in the middle. Then if the forecast changes, it might go up or down. Then there's some buffer on both sides, so kind of... It's our kind of current view. If you just give one number, it's basically in the middle of that range. And then I think the price increases discussion is still open a bit what we do.

So, and the logic is that it's between 500K and a million if we don't increase the prices and the plan is to increase the prices after we have run out of the tariff-free stock.

Yeah. Perfect. Thanks, guys.

Thanks. Thank you, Jack.

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

Hi, it's Daniel Lepisto from Danske Bank. Thanks for the presentation, and I also have a couple of questions. Maybe starting up with the gross margin, which clearly expanded in the first half compared to last year. So can you remind us what are the key drivers here? Does this relate to these external commissions you pay for the salespeople, or is there some mix-related things here playing a part? Thanks.

Yeah, I think definitely one big change compared to last year, it's not the external commissions, but the internal people's commissions USED TO BE POSTED IN THE VARIABLE COST AND NOW STARTING FROM END OF LAST YEAR IT'S BEEN POSTED IN THE SALARIES IN THE OPEC SIDE. SO THAT'S ONE SINGLE QUITE LARGE CHANGE, LIKE LESS THAN A PERCENTAGE COMES FROM THAT. SO LAST YEAR WE ADJUSTED IT IN THE LAST QUARTER BASED ON THE DISCUSSION WITH THE IFRS SPECIALISTS AND THE CHANGED regulations for the whole year we had it in there but like now in the Q1 and Q2 it's the quite small number there still so but that's one difference in the in the accounting in a way for the first half of the year but for the full year it's still in line but those are one one bigger item there and then the other part is the kind of we have done price increases and then then of course the product mix all the products have very different margins and and also now that we like the, the us share has also changed a bit. So also it depends whether we sell direct or, or indirect, uh, the direct sales have a lot higher margin.

Okay. Okay. Thanks. So it's, it's mainly all accounting related, uh, from the switch. So no, like, uh, underlying improvement, maybe a bit from the pricing.

Some. Yeah. Some. Yeah, for sure. I'd say it's probably around half percent or something. Maybe the accounting change. I don't have the exact number in mind, but around there.

Okay, thanks. Maybe if you could, then the next question, if you could give us sort of maybe a bit of a sentiment update on these key customer segments, such as these private equity backed optician chains, which were a big issue for you a couple of years back. So how is the momentum there? Have you seen sort of these customers waking up with the investments?

So of course we have been tracking that status and if we consider the USA in general so it has been surprisingly stable during the Q2 also the visibility to Q3 so slightly picking up more or less the same but I mean now they have been ordering and then we have also the other segments that have been active. So I think that's the current status.

Okay, that's clear. And I guess the final question regarding this APAC growth you highlighted, but you don't mention China in your discussion. So only India. So is the situation in China not developing as well as in the beginning of the year?

China growing as well, but India was growing really, really well, so we put that one in a context.

So... Okay, so all is good there.

Momentum is... Yeah, of course, we have to remember what comes to the China. So, of course, that status hasn't changed, that they are really... also focusing and giving the guidance that you have to buy the chinese products and and it's way easier for us to to sell in in china the tonometers compared then to the imaging devices so so uh i think that hasn't changed in china but still it it has been it has been good but i'm in the india if if you have to highlight one country from apac region so that's clearly india in terms of the growth and in terms of the positive demand. Anything, Robin, you would like to add on? No, that's good.

All right, thanks. That's all from my side.

Hey, thank you, Daniel.

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

Hello, gentlemen, it's Pia from DMV Carnegie. A few questions, if I may. So, firstly, I'm interested in understanding, do you see any difference in terms of sales growth between tonometers and fundus imaging devices? I mean, which one is currently growing then slightly faster and which one slightly slower?

Overall, I think it was quite close. They were almost kind of at the same level of growth. Then, of course, different countries differ quite a bit, but the total growth was pretty similar in both of those main categories.

And then adding a building top of what Robin said, and then when we talk about the fund's imaging, We don't count the micro-perimetry on it.

If you add the micro-perimetry in the fundus imaging, then the fundus imaging grew faster. But if you keep it separate under perimeter, then they were pretty evenly strong.

Good. Thank you for the clarification. Then I saw in the report that you mentioned something about price increases announced early in the year appear to have shifted demand slightly towards Q1. So do I understand you correctly that you saw kind of maybe a boost in demand in Q1 and then slightly softer demand in Q2? So my question is, first of all, is this a correct interpretation? And then secondly, With this in mind, how has the Q3 started now? Any change?

So if we go back to this, we did a minor price increase or we informed about the minor price increase during the Q1. And we have the terms and conditions so that we have to inform about one month before and we put the new minor price increases in place so that they are on the effect starting from the 1st of April. So what we were seeing is that the customers and the distributors perhaps slightly order certain products like process example, most probably a bit to the stock still towards the end of the March. And that was behind our comment regarding to the Q2. And now I mean Q3. So going according to the plan as we speak.

All right. Thank you. Maybe still looking back at the Q1 report, I think you were quite positive on the sales funnel and opportunities in the US. Any update to this situation?

That's stable, so basically no new update on that one. So we were thinking during the Q2 and wondering that all this tariff discussion is going to take us and take the sales funnel in a way, but it has been resilient and it has been stable. So Q3, executing as we have earlier planned.

All right, thank you. And then maybe a bit trickier regarding your ambition to grow through acquisitions. We haven't seen any news, so is there any change in your focus or is there any change to your target list? Any updates to this?

Yeah, we have been working on that. We spent quite a bit of time with Vioni and a few other people in the company on the M&A. And we have spent time this year also. Mostly the target list is similar, but we have also... been talking to a few new companies outside the original list, but I think it's also something that we definitely want to be able to execute at some point.

And I think, Pia, like we have been discussing also earlier, so We would have been able to close during the last two years, but then if we start to dig down deeper the numbers and define what would be a good deal for the shareholders in terms of the valuation, so we haven't found fully the match on the valuation side and the overall performance and the growth side. And that's one of the biggest reasons why we haven't now closed yet. So if we want to close, we want to close also the deal so that they add clearly long-term shareholder value. And the valuation is on the right ballpark. Would you, Robin?

Yeah, I think the... Us being a public company and people looking at our multiples doesn't make life always easier. I think it would have been a lot more successful if we were a private company. Nobody knew how we are doing, but it is always difficult when they start to look at our numbers and multiples.

Yeah, understandable. All right. That's all for me now. Thank you.

Yeah.

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

Hi, thanks for the presentation. I was out for a couple of minutes. Hopefully these were not answered yet. A follow-up question on still the Maya ramp-up development. Do you have some timeline when you are, let's say, fully ramped so that you can orderly deliver from the backlog?

So we have been delivering the, how would I say, the backlog. So, I mean, we have been able to deliver, we have been able to produce the devices and so forth. What we yet haven't done is that we haven't started aggressively marketing. So we are not currently producing having, as an example, marketing campaigns. So we are serving the existing order backlog and the existing clients. And that's a big opportunity for us to really start the market and boost the next generation Maya product. But that's on the works. Okay, that's clear.

And then maybe if there is any update on the FDA process that you are running.

Yes, so there's an update and now we have a clear, so during the Q3 we clarified the path to go forward, so that's going to be twofold. So we do the pre-study at first and the reason for the pre-clinical study is that the image quality of the DRS plus the AI, so that's on the higher level than the reference package which is the composite with traditional fundus camera and then the human reading and creating the images so we basically detect better the images than the reference and then that leads to the position to watch the FDA that we see more cases which are DR cases, i.e. then it looks like we have more false positives and then it leads that we are not able to get the clearance even though that in a way we are the right and the package is correct. And now we have to run first a pre-study and then based on the pre-study results, we have to fine tune the algorithm so that it matches the reference and then run the second phase of the clinical study. So now everything is okay. We are moving forward, unfortunately, because we have to do this one. So we look more towards the mid of 2027 now, the timeline. All this said, so we, of course, we have been extremely active on the screening side in the USA for a long time. And we have many cases where we have been selling a lot of hardware DRS pluses in the USA. also during last year during the first half and we are going to be selling for screening cases with the human grading also during the second half so I think that's good to remember that even though that we don't have a FDA clearance for DRS plus for the human grading purposes we are selling a lot of DRS pluses for screening in the USA.

Okay so does that mean actually that you are Let's say versioning your algorithm for this to be, you know, then approved by FDA.

Yes, we have to have. So currently we don't have that challenge on the other regions. So current case is what we have. So it's going to be the different version of the algorithm. Luckily, we have our own resources and we have our own algorithm in order to be able to do that one.

Okay, and maybe follow up for Robin of the costs related to that minor costs now for the pre-study and then, I don't know, when it's mid-26, you know, more costs or how should we view this?

The pre-study will generate some costs now for the second half in the hundreds of thousands. Yeah. But it will be a bigger ticket item than next year, which we will then probably clarify a bit more towards the end of the year.

Okay, thanks. That's all from me.

Thank you, Ani.

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

Hello, this is Niko Ruokangas from SEB again. I have one additional question regarding your answer where you described the process of price increases. So you said that you needed to inform your clients one month before regarding kind of the ordinary price increases you made in the beginning of this year. So is the process similar when you now make kind of extraordinary price increase regarding tariffs? And if so, have you already informed your clients regarding this

No, so yes, of course. So the process is the same because we have to follow up the contracts. Of course, the new case is if we are selling and having a new RFQs, RFIs, etc. So then we are, of course, able to quote the new price right away. But for the existing customers in the USA, if we have a contract with them, we have to inform earlier. And then, of course, we know well in advance already that when the certain products are running out of the stock, so then we inform earlier.

All right, but no information yet.

No, because we, okay, probes, yes, but the other products, no, because we still have a stock.

Okay, thanks for the clarification. That's all from me.

There are no more questions at this time, so I hand the conference back to the speakers.

Hey, thank you all. Have a nice end of the summer, and we come back during October. Thank you very much. Thank you.