ContextVision AB (publ)

Welcome to this third quarter Q&A for Context Vision, the CEO, Gerald Perch, and CFO, Richard Holston. But first to you, Gerald, give us some highlights for the third quarter.

But once again, we've delivered a record-breaking quarter. Let me put it into perspective. So at the beginning of this year in February, we invited the entire company to celebrate the first time in a 40-year history 100 million SEC revenue at the end of 2022. Now, nine months later, we have reached 100 million again. Isn't that fantastic?

Oh, absolutely. And the margins are good as well, I understand.

Absolutely. So as you know, it's not all about revenue. In the end, it's the free cash flow that we're generating. So I'm very happy that we kept margins in the mid 40s EBITDA up over the first nine months, which is a fantastic trend.

And then the growth on the top line has continued, you said. And how much this time?

Well, in fact, 28% net sales growth in the third quarter. Fantastic. Currency effects, however, have only been 6.5%.

But still, it's more than 20%. So, you know, how is that possible?

So, indeed, it's healthy organic growth, I would say. And we've done quite some work with the team on increasing our clock speed in execution. And we've rebuilt our service organization. And those effects are paying off now.

Well, you've just finished your 40th anniversary celebrations. And what do you think is the key behind the success of Context Vision?

So to simplify, the DNA has three core components. Number one is we've always been at the forefront of innovation. We've managed with strong and reasonable investments in R&D to always keep ahead of the curve. For instance, in AI, we started almost 10 years ago investing into machine learning, which clearly pays off nowadays. Number two, I think we've always been flexible to changing market conditions. So the flexibility of a smaller company and the speed of being able to adjust has also paid off throughout the years. And then number three, I think it's all about the team. So we have a unique company culture, almost a family culture, I must say, with a good blend of new and and people that have many years of service. So over the last two years, we've. Around 25% new employees. However, on that 40-year celebration, we have given out awards for years of services. And more than half of the company received an award of five years, more than 10 years, 15 years, 20 years. And we even had one to receive a diamond 30-year. Wow.

Well, that says something. And, you know, Richard, you're on the team, so you have a way to go there. Been here for a month as a CFO. How has the start been?

I already feel part of the family after one month here. And I think there is a strong culture, a strong sense of innovation. And I really can understand why Context Vision has been a market leader for 40 years. Yeah.

But you've been in the medtech business for decades, some larger companies, some smaller growth companies. What is your first take on context vision?

I mean, this is an amazing medtech software company that ticks almost all of the boxes. It has growth, it has profit, it has also strong cash flow. And I think there are plenty of opportunities for growth, both in the existing business as well as in adjacent areas.

But, you know, what do you bring to the table?

I mean, I have experience from scaling up businesses from relatively small to really into the OE side of things. And I think that doing this in a profitable manner, that's really what I can bring to the table.

Well, you know, sounds good, Gerald. We talked about the high margins. Do you think they will continue?

Absolutely. So for our core business, we plan to continue the level of margins that we've seen in the past. On the other side, I must say we have announced and we plan to invest a good part of the free cash flow into our organic growth program. So that's going to have an impact short term on the group margins.

Okay. But the top line growth is much higher than your competitors. Why is that?

Well, if you take away the currency effect, we're, as I mentioned, still growing very healthy on the organic side. Apart from the internal work that we've done, I think we've also placed the bets right in being in the ultrasound business, which is a strong growing market segment. And even from a geographical and customer-based perspective, we have a strong footprint in Asia and is also paying off strongly over the last quarters.

Do you think these high margins will continue?

Well, I don't see a reason why we shouldn't continue executing and growing both in our core business, but as well as in the growth segment. So we're going to see some impact on that also midterm. Let's talk about that a bit more in detail.

Yeah, absolutely. Point-of-care ultrasound, the so-called POCUS, that will be important for the growth, you know, going forward next year, the year after. What exactly is that context vision does within POCUS?

So we're going to change radically point-of-care imaging in ultrasound. You know the saying that a picture tells more than a thousand words, and I guess that's the entire problem. So we are facing an explosion of images that need to be taken and then that needs to be acquired. It needs to be read. It needs to be interpreted. It's way too complex to know. It takes way too long. So we need to dramatically simplify the way ultrasound is being used. And we're going to make it independent from the user.

Wow. Well, it's exciting. It's exciting.

cool but then you know all over the world there's a huge focus on healthcare and healthcare investments do you feel blessed being in in this market well i guess we uh we we all do right um it's it's a a continuously growing market uh it's less impacted from the uh from the from the global issues that we're seeing today and we're looking very positively into the future

Right, and what I can add, it's an exciting journey ahead for Context Vision, and it's a really good time for me to start with Context Vision. Great to have you. Thank you.

The future is bright.