ContextVision AB (publ)

Gerald Perch, you are the CEO of Context Tuition. You delivered yet another fantastic quarter. Can you give us the key takeaways?

Well, absolutely. So both the second quarter as well as the entire first half year have shown excellent growth on net sales. And we've been showing very strong EBITDA margins, which is fantastic to see. We also remain cash flow positive. We've distributed a good part dividend payments. So all in all, we couldn't be happier with the second quarter.

Yeah, you know, the growth was close to 10%. Do you expect this to continue?

Well, the fundamental reason behind the growth that we're seeing is an increase in license sales. So that's recurring revenue. We're stepping up both with existing customers as well as winning new customers and driving our service revenues through the non-recurring piece. So I would say the organic growth behind it is very healthy. But we're also seeing currency effects, and that's continuing due to the weaker Swedish coronavirus. But all in all, I'm very optimistic on a strong 2023.

Okay, so the core business is doing good. It's been a year since you joined Context Vision. And earlier this year, you launched a very ambitious growth program. Is that on track?

Well, indeed, already in spring this year, we initiated the growth program and decided to have dedicated investments into that growth program. The second quarter, then, we've defined the strategy. We've adjusted organizational structures, both in the R&D organization as well as in the service organization. And we have recruited key talents. And I think that journey is going to continue, but at the end of the year, I'm pretty sure we have the team online.

Is it difficult to get the talent?

Indeed. We're operating in a niche business, highly specified resources, both in machine learning as well as in image processing. So we take our time to recruit the best talent, but it can be found. We're a very attractive employer, since 40 years on the market, excellent culture. So we do get the right tempt.

But if we look at the overall market, you know, we are getting older and older, you know, in the whole world. And how would this affect contact patients' business?

Well, overall, as you say, the market is growing strongly. We're getting older, we're getting sicker, we see more chronic diseases. So the need for clinical and diagnostic images in particular is growing. On the other side, we're facing a tremendous shortage of skilled staff and resources. So we have set course now to help our customers, the OEM, to solve that dilemma in the healthcare market, which means we need to increase efficiency. We need to rationalize. So one of the things is if we could make to be used by non-easier people, to be used by non-trained users like nurses, like general practitioners, the ones that are not experienced in imaging per se, could use ultrasound systems as easy as a mobile phone or as a compact camera. That would solve a huge part of the business.

And you are actually using artificial intelligence and deep learning to get this done, aren't you? Exactly.

So I think the key point to make the use of an ultrasound system, as an example, easier is to build up acquisition intelligence to get the right shot at the first time. Keep it simple, but at diagnostic quality. And that's where deep learning combined with image enhancement is the strongest asset.

And you've called this POCUS. Can you explain a bit better?

Well, POCUS stands for Point of Care Ultrasound. And that's a paradigm shift in the healthcare market where previously you had sent patients to an expensive imaging center or a department. But now, if we have ultrasound as simple as a mobile phone, we can bring that ultrasound system to the patient, to the point of care where it's happening, whether that's in the emergency department, whether that's in the ambulance, whether that's in the general practitioner's office. So overall, lower cost care settings is the key benefit of having more Pocons. So we see that as the strongest growing market overall. CAGR is around 20%, 25% over the next five years. So fantastic growth rates in number of systems that are going to be sold. And if we unlock that market with our acquisition intelligence, it's going to be a fantastic once-in-a-lifetime opportunity for Context Vision.

Do you see any big challenges when you work on the bookies?

Well, there's two challenges. Number one is, as we talked about earlier, to get the right talents. So still, there's a lot to be done. The technology needs to solve the problem of having controllable and tunable artificial intelligence. That's nothing you can buy ready-made, something that we develop. Number two is access to data. But I think that's every AI company facing that challenge. And we do have a good set of data and good collaboration partners that we work with to ensure the data supply.

Okay, a bit back to the core business. You expect that to grow going forward. What is the key to managing to get that growth?

So we've seen over the last couple of quarters, EBITDA margins in the 40s, high 40s, when you look to Q2. We want to track that performance and show that performance to our investors moving forward. So we're going to show from Q3 on adjusted EBITDA margins to show the performance of our core business and at the same time show the investments that are going into our growth program around Pocos. So we're going to be able to track the success of the innovation in the growth program. And I'm very optimistic, by the way, that even that happens. innovation team is going to create revenues soon.

Well, you know, personally, OEMs very well. Context Vision, you know, for 40 years, they've been clients, you know, so they also know it well. How important are these OEMs for Context Vision?

So they're absolutely key. And I think We will continue in our core business to invest into our image enhancement portfolio. So we continue investing into our X-ray family, into our ultrasound family. We're going to grow, share. So there's still room within those OEMs that are partners already today to cover more platforms, to cover more. more systems to cover more releases. So there is quite some room to grow in our existing customer base. But thirdly, I think we increase our professional services. So we're going to much tighter interact and work with those OEMs on a service side, but also on an R&D side. And I think that partnership aspect is is key to be built out for us in the core business.

Well, you know, it's exciting times for Context Vision. And again, congratulations with fantastic figures for the second quarter. And good luck with the growth.

Thank you.