ContextVision AB (publ)

Welcome to Context Vision. Today we publish our second quarter result. And I'm happy to be on this webcast together with Richard, our CFO, myself, Gerald, and we're going to give you a short overview of the second quarter and the first half year. if we look at the agenda it's going to be a short meeting a quick business update we'll look into the financial numbers and close with a summary and outlook for the rest of the year so let's right jump into the summary of the second quarter In summary, the second quarter has shown a couple of highlights. Namely, we have signed new customers. We're continuing our strategic investments both into our image quality as well as in our data quality business. And we're making good progress in our POCUS efforts. I'll come back to those topics in a minute. Financially, second quarter numbers showed 31.7 million SEC in net sales and an EBITDA of 9 million. If we adjust for the investments into POCUS of 1.6 million SEC in the second quarter, we land at an EBITDA margin of 28.4%. Operating results likewise came in with 6.7 million SEC and a margin of 21.1%. the first half year this means we are in line with the same period in the previous year 66.4 million sec was the result for the first and second quarter in a row adjusted ebta came in at 23 million sec and likewise adjusted for investments in focus for q1 and q2 ebta margin lands at 35 percent richard you're going to go into those details in a minute So let's move to the business overview and let's start with a bit of a reflection on the development over the previous quarters. So rolling 12 net sales is trailing now at 132 million SEC. So this is not a surprise with the first two quarters being stable at 66 million SEC. we see a very stable rolling 12 over the previous quarters and that is also a good indication for the coming quarters now if we look at the bottom line EBTA you see those two key strategic decisions that we're working through with Context Vision number one is the spin-off of our digital pathology business earlier in 2022 And then the investments both into our ongoing image quality business as well as the POCUS business. Now keep in mind that the EBITDA margin now trailing at 35% is adjusted for investments into POCUS. Meaning that you clearly see the investments that we at the same time have in our core business to expand our portfolio in that respect and prepare for growth. So let's look into our operational highlights for the second quarter. We have signed new customers both in Asia as well as in North America. Now with those contracts, we have a good opportunity to expand our footprint, especially in the veterinary market. Now, if you compare our development to previous year second quarter, we have seen a slight reduction in net sales. Let me emphasize, there is no churn. We have not seen customers or contract cancellations. However, regular fluctuations of bulk purchases, market seasonality, as well as market share fluctuations within our customers clearly show effect. The market in general remains stable with 3-4% CAGR. So take away currency headwinds, take away NRE peaks, take away fluctuations and seasonality. We show good organic growth in our recurring license revenue business. Likewise, our cash position in the second quarter was good and gives us a stable position to continue investing into our image quality as well as into our data quality business. So let's go a little deeper into what's happening on the POCUS side. Keep in mind, POCUS is the first effort into our data quality business. In POCUS, we're now entering early stages of development for an entire new product pipeline of organ-specific applications. That's key and it's the way forward for us and we have also shared a separate press release before summer. So we're now having a operational team, development team in place, operational. We're making progress in signing a partnership agreement with the Reno University as well as a medical device manufacturer. Now, for those of you who followed in Q2, our Q1 webcast, we had already indicated they were close to signing an agreement. Meanwhile, we have decided to not sign a letter of intent, but jump right into contract negotiations because of the good progress. So stay tuned for those announcements to come. And let me just mention financially, before I hand over to Richard, that we're holding our expectation of investing around 10% into the POCUS endeavor. And we're still in the ramp up phase, if you see the investments that we've done in Q1 and Q2. Now, having that said, I'll hand over to you, Richard.

OK. Thank you, Gerald. Looking then into our Q2 sales development, net sales decreased by 6% compared to Q2 last year. This was mainly due to large orders in Q1 affecting this quarter and negative FX of 3.5% compared to last year instead of a positive FX in 2023. The comparable quarter last year had exceptionally good conditions. However, we see positive sales tendencies with new customers, but it will take a while until we see the effect of this. The sales for the first six months are nevertheless in line with last year. Looking forward this year, as mentioned last quarter, we could still see market dynamics affecting some of our customers and thereby us. Looking at Q2 profitability, our EBITDA adjusted for investments in POCUS came in at 9 million SEK with an adjusted EBITDA margin of 28.4%. The lower profitability is affected by higher personnel costs, administrative costs and negative 0.6 million in transactional FX versus actually positive 0.4 million in 2023. Also, there was no capitalization this quarter. Compared to last year, we're now gearing up for expansion into data quality and focus, as well as to increase the frequency of product releases and sales and image quality. We thereby expect our costs in general to be at a higher level going forward compared to 2023. Now looking at our cash flow in Q2. We have a cash flow of 11.4 million SEK, meaning we strengthened our cash position from 65 to 76 million this quarter. Last year we had a dividend of 23.2 million SEK, which was divided into two tranches during the year in Q2 and Q4 respectively. To sum up, we are in a good cash position and we continue to invest in both data quality and image quality. And in terms of data quality, that includes POCUS.

Thanks, Richard, for the deeper look into the financial results of the second quarter and the first half here. now let's summarize this webcast important to keep in mind that we're on track executing our growth plan both in our existing image quality business where we have won several new customers as well as in our data quality business where we're ramping up the product development of a new product pipeline for our focus business and we're about to sign a partnership contract with a renowned university and a medical device manufacturer sales-wise we have had a stable first half year and so do we look ahead we've won several new customers this quarter both in the us as well as in asia and this gives us a good opportunity together with a good cash position and good cash flow to continue investing into our business Thanks for your attention, and see you next time.