Carl Zeiss Meditec Ag

Hello, ladies and gentlemen, and welcome to the Carl Zeiss Meditech AG analyst conference for the six months 2025 results. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Sebastian Frerich, head of investor relations.

Welcome, everybody. Thanks for joining the call on our six months results. With me, as usual, our president and CEO, Dr. Markus Weber, and our CFO, Justus Wehmer. And they will take you in just a moment through our half-year results, talk about our financials, and discuss some recent key highlights. And after that, we look forward to your questions. Today, we have a special guest. We have also invited Maximilian Fröst, the incoming CEO of Carthage Meditech, as of June 1st, as we have announced last week, to join the call for a brief introduction at the end of the prepared remarks. And with that being said, I would like to hand over to you, Markus, to start the call.

Yeah, thank you so much, Sebastian, and also a warm welcome. Good morning from my side, ladies and gentlemen. Welcome to the six-month, 24-25, Analyst Conference of Carl Zeiss Meditech AG. So first of all, and actually Sebastian already mentioned that with my successor, I want to address last week's news that I'm stepping down from the CEO role at the end of May. Actually, I have recently decided after more than 22 years with ZEISS, with the company, to seek a new challenge outside of the company. Now it's the right time for me and my family to take the step As I strongly feel, I'm able to lead the company in very good shape and in good hands. The initiatives we put in place during the last year are beginning to pay off. New product introductions are ramping up and order entry is recovering. The business is returning to growth and expenses are well under control. I will make some further comments towards the end of the prepared remarks and will also introduce you to my successor, Max Forst. Now, with this being said, let's have a brief look at our agenda. I will begin with an overview of the group results. Then Justus will, as usual, provide more insights into the financials. And then following also as a standard that we would like to discuss two recent key topics, including a multi-year trend of sales and orders and also an analysis of impact by U.S. tariffs. Then Justus will update you on the outlook for the fiscal year 2024-2025. And at the end of the presentation, Max will give you a brief introduction. Following this, we will be open, as usual, also to your questions. So I'm happy to report that we achieved robust revenue growth, strong order entry, and the stabilization EBITDA in the first six months. Revenue reached 1 billion, 51 million, representing a 10.9% increase compared to previous year. FX adjusted revenue grew at a similar level. FX in the acquisition adjusted revenue was minus 0.5%, moderately below previous year. After a weak Q1, the Q2 overall demonstrated a strong trend where revenue grew by 19%. It's worth noting that recurring revenue now makes up 50% of our total revenue for the first time in our history, thanks in part to the added contribution from DOC. We also observed strong refractive consumable consumption during the New Year holiday in China. Equipment sales remained slightly below last year across the board, mainly because we are in the middle of the transition to VisaMax 800 and the new Kinevo 900S with the new product not yet being deliverable in large quantities, but we are looking very forward to the second half. We received 1,095,000,000 in orders, making a 33.4% increase. FX-adjusted orders grew at a similar level, FX and acquisition-adjusted growth remained strong at 20.8%. We maintained a stable order backlog of $385.4 million, similar to the level at the end of Q1. EBITDA came in at $114 million, a narrow increase compared to last year, despite last year containing a one-off effect of $18 million gain from the Topcon settlement. EBITDA margins stood at 10.8% below last year's 12%. Adjusted EBITDA margin was 10.7% and above last year's 10%. This stabilization is supported by the DOOR consolidation, stronger than expected consumable sales in China, against a weak base, as well as good cost control, against the backdrop of overall weaker equipment and IOL business. With this, now I would like to hand over to Justus who will provide you with more background and will discuss the SBU figures in more depth.

Thank you, Markus, and good morning. Welcome also here from my side. I'm, as Markus said, giving you now a more detailed overview of our financials, starting with the performance of the SBU ophthalmology, which achieved 808 million euros revenue in the first six months, representing a plus 15.4% increase with only a minor currency impact. Adjusted for currency and acquisition, revenue remains stable. It's worth mentioning that we achieved strong revenue growth in Q2 of plus 23.6%. This was against a somewhat depressed previous year's base, which had been heavily impacted, as all of you will remember, by the refractive destocking in the Chinese sales channel. In addition to the door consolidation contributing to the top line, we observed strong refractive procedure growth in China in Q2. Let me make another comment on China refractive in particular. We observed that the consumer environment in China for refractive has stabilized somewhat in recent months after a weak start to the fiscal year. We are back to mid single digit percentage growth year to date in procedures. which we can measure from our installed base of Visomax units. The Smile to LASIK product mix seems to have stabilized in recent months as well. The trading down that we have observed most of last fiscal year seems to be no longer getting worse. Procedures motivated by military enrollment contributed to the rebound in Q2, as some of our listed customers have pointed out publicly. The Chinese military has tightened regulations on recruitment eligibility and now require a certain stabilization period of six months after refractive procedures, something that had not been strictly enforced in the past. As a result, some candidates for surgery may have chosen to pull forward their treatment from earlier plans. While we cannot track military demand precisely, The recovery in procedure trends is much broader than can be explained by this effect alone in our second quarter. The more stable outlook is also underpinned by good interest in our VisaMax 800, which has been launched in China on March 1st. During March, we received a first and relatively large bulk of VisaMax 800 orders, reflecting an encouraging start to the rollout. and signaling strong customer excitement about this new premium option in the market. We are also seeing our first upgraded customers establish substantially higher pricing points for Smile Pro in the market, in many cases at a premium of 20% or more. Quick comment on other key categories. The investment climate for equipment continues to be challenging, though the order entry has improved further against last year's base. Volume-based purchasing pricing continue to pressure IOL revenue in China, which we feel in global IOL volumes as well, despite positive volume growth. EBITDA margin has seen an improvement of plus 1.5 percentage points, reaching 9.2% compared to 7.7% last year. This was achieved thanks to a positive contribution from the door consolidation. We already mentioned strong refractive consumables business. and cost control measures, particularly a reduction in R&D expenses leading to lower underlying OPEX. In terms of revenue split, ophthalmology contributes 77% of total revenue, with an ophthalmology recurring revenue now accounts for 59%. Microsurgery sales recorded 242 million euro. Following an incremental recovery in Q2, the six-month decline was narrowed to minus 1.7% on a foreign exchange-adjusted basis, minus 2.2%. The decline was mainly driven by a softer neurosurgery business set against the backdrop of the product cycle transition to the Kinevo 900S. In China, we observed a gradual slow rollout of certain stimulus measures and a recent uptick in hospital tender activity. However, equipment sales over the first six months continue to lag. Q2 was ahead of Q1, and order entry is trending in a favorable direction, which gives us confidence for the second half of the year. EBITDA margin has contracted to 16.3% down by minus 7.7 percentage points from last year's 24%. This contraction was mainly driven by a lower top line and an unfavorable product mix with the high margin neurosurgical category much weaker than last year ahead of the new product ramp up, which will help us later in the year. Keep in mind that the first few months of last year were very strong delivery periods for microsurgery with the backlog from the previous year finally melting down following a lengthy period of supply chain shortages. The base for comparison gets easier over the next few months and quarters as we compare with the weaker period in the business during 2024. In terms of revenue splits, microsurgery accounts for 23% of our total revenue. Within this, 19% comes from recurring revenue streams, such as service contracts, grapes, and instruments. Topline growth was recorded across all regions, with Americas leading the way. Order entry growth rated outpaced top line across all regions. Revenue in Americas reached 278 million euros, marking a 28% increase compared to last year's 217 million euros. At constant currency growth was 26%. The increase was mainly driven by the consolidation of DORC as well as strong organic growth. Revenue for EMEA reached 330 million euros, up 14% from last year's 289 million euros, At constant currency, this is plus 14%. Excluding the dog contribution, revenue would have shown a slight decline compared to a strong period prior year. Solid underlying growth in core markets such as Germany, UK, and Spain contributed to strong performance. Revenue for Asia Pacific inflected with a stable trend reaching 442 million euros. The positive trend continued in Southeast Asia and India, while China and South Korea remained stable, though Japan was below the previous year's level. Let's have a look at the P&L lines. Gross margin with 52.7% was slightly below previous year's level due to unfavorable product mix, including volume-based procurement-related price cuts in IOLs. and some missing Visamax and Kenevo revenues amid the transitionary period. Q2 came in ahead of last year's quarter, however. Excluding the draw consolidation, underlying OPEX were down by around 13 million euro year over year as a result of strict cost control measures. This reduction was mainly driven by lower R&D expenses. Underlying OPEX ratio came down by minus 1.3 percentage point, including the door consolidation, the overall OPEX ratio was also slightly down. Administrative expenses increased due to the door consolidation and rising IT expenses, mainly related to our ongoing SAP investment. All in all, EBITDA was roughly stable as a result. Net income declined from 84 million euro to 61 million euro. and earnings per share from 94 euro cents to 70 euro cents, a minus 26% drop compared to last year. This was driven by a lower reported EBIT, including the amortization on intangible assets from purchase price allocations and negative financial results, including negative FX hedging results, lower interest income, and higher interest expenses. Finally, Adjusted earnings per share came in at 81 euro cents, down 12% year over year. The adjusted figure excludes non-cash valuation effects on contingent purchase price liabilities and the financial results. As a reminder, the foreign exchange hedging result remains unadjusted, as it should offset over time with FX influence on operating results. This table now provides a brief overview of the bridge from EBIT to EBITDA and to adjusted EBITDA. Regular amortization on intangible assets from purchase price allocations amounted to 14.5 million euro in the first half, including dog effects of 13.2 million euro and smaller effects from former acquisitions. As for other special items, last year primarily contained a one-off gain of €18 million from the TOPCOM settlement. Stripping out these special items, adjusted EBITDA amounted to €113 million, a 19% increase. The adjusted EBITDA margin rose to 10.7%, slightly up from 10% last year. Now, finally, a quick overview on the cash flow statement. For the first half, operating cash flow decreased to 9 million euro compared to 68 million euro last year. This decline was mainly due to a weaker operating result and an increase in account receivables, which was mostly intercompany to what size distribution network due to a higher consumable deliveries in Q2. Investing cash flow also declined from 15 million to minus 16 million euro. This was driven by a decline in treasury receivables, while slower investments in capex. In the first half, both tangible and intangible capex together represented 3.9% of revenue. Financing cash flow increased to 14 million euro mainly due to a ramp up in treasury payables and a lower dividend payment. By the end of the first half, net financial debt slightly increased to minus €414 million, mainly refinanced by shareholder loan from the parent company. And with that, I hand it now back to Markus.

Thank you, Justus. Let's move to the key topics. I would like to walk you through the order and revenue pattern over the past years. Reviewing a period of previously unprecedented volatility for our business and why we believe we are entering a more stable situation now. I would like also to address the recent impact of U.S. tariffs. So let's take a closer look at the multi-year development of order entry, revenue, and book-to-bill ratio. Please note all numbers are excluding DORC. So starting from the pre-pandemic period, order entry was largely in line with revenue, and revenue growth typically remained in the high single-digit range, indicating a healthy and balanced demand environment. Rising recurring revenue limited any short-term deviation between orders and revenue. So during the early pandemic, we observed a sharp demand shock, which is visible in a significant drop in both order entry and revenues. In the late pandemic phase, demand began to recover. However, this recovery was constrained by global supply chain disruptions. Orders temporarily spiked as customers placed disproportionately high volumes to secure cars' inventory, pushing the book-to-bill ratio above normal levels. This also led to some overordering among distributors, as we can clearly see retrospectively. Moving into post-COVID environment, deliveries improved, but markets had become temporarily oversaturated. Inflationary pressure and high interest rates damped capital equipment investment, particularly in surgical microscopes, and we saw the book-to-bill ratio weaken. In the most recent quarters, we are beginning to see a new normal and observe that order entry and revenue are again moving in sync. This reflects increased business stability with a higher share of recurring revenue, smoothing out fluctuations. The dog acquisition will further solidify that trend. At the same time, equipment product cycle dynamics are showing early signs of improvement. Overall, this development supports our view that the business is gradually returning to a more stable and sustainable growth path. and will again become more resilient to the volatile external environment. This leads me to the next topic, impact by the U.S. tariffs and the mitigation measures. So let's turn to the impact of U.S. tariffs. The map here shows our global manufacturing and operational footprint, which supports our flexibility in navigating these trade challenges. We currently have approximately 250 million in US import revenue exposed to tariffs. The majority of these imports are from the EU, while a smaller part is being imported from Singapore, where we have a contract manufacturer for diagnostic equipment. While the situation remains fluid, we are closely monitoring and reviewing pricing strategies across our portfolio in case these tariffs become permanent. We have also been increasing stocks of certain key products to mitigate the impact in the short term. Importantly, based on our market assessment, our competitive positioning in most categories remains intact, since our key products in the US market are micro-surgery and diagnostic equipment. Competitors in these both categories are primarily European and Japanese companies. All are similarly subject to tariffs. However, There is continued short-term uncertainty for U.S. order entry due to the prolonged trade tensions. Beyond tariffs, we are also watching macroeconomic and currency risks, particularly fluctuations in the U.S. dollar, Chinese yen, and yuan, and South Korean won, which may affect our cost base and pricings. From an operational standpoint, our sourcing strategy supplier network and potential material inflation risks remain under close monitoring. Regarding DOC's competitive position in the U.S., we would like to highlight that it is mainly a consumable business with a relatively modest pricing for the hardware, typically as part of transaction with bundling character. The price point for the EVA Nexus is modest and lower than some competitive equipment in the market. We do not expect the tariffs to materially impact our competitiveness across the DOC portfolio, and we also do not expect it to change in light of the new offering from Alcon. Now, I would like to hand back to Justus, who will talk about the outlook.

Thank you, Markus. So, let me talk briefly about the guidance for fiscal year 2024-2025, and I can already summarize this unchanged from last quarter. For this fiscal year, we continue to anticipate a rather challenging global macroeconomic environment. The uncertainty created by U.S. trade tariffs and increased currency risk certainly does not help at all. Against this backdrop, and with a typically more important second half of the fiscal year still ahead of us, when both China and the U.S. go through their peak seasonality in our business, we believe it would be inappropriate to provide a more precise forecast at this time. Our guidance stated at the end of Q1 therefore remains unchanged. We reiterate revenue to return to moderate growth driven by the stabilization of recent order intake and the full year consolidation of DORC. The amount of organic growth will depend heavily on macro conditions. EBITDA and EBITDA margin will develop stable to slightly higher compared to the prior year. It is encouraging that we are roughly flat on EBITDA at the half-year level, with the base for comparison now getting easier as we go through the remaining months of the year, while we have a solid order backlog, unlike the situation we were facing last fiscal year. The risks attached to the second half we have already highlighted. Cost discipline will remain in place. It is encouraging to see the underlying improvement in OPEX as the business returns to growth. For the long term, a gradual EBITDA margin increase is targeted in subsequent years, supported by growth in recurring revenue streams. Sustainable potential for the EBITDA margin is seen in the range of at least 16% to 20%. Now, with this being said, and as the last part of this call, I will pass it back first to Markus, and then on to today's guest, Maximilian first.

Yeah, thank you, Justus. So dear analysts and investors, now the time has come for me to extend my farewell to you. As I said at the beginning, and in spite of the difficult year in the market we had in 2024, the company is fundamentally in good shape. Because as Meditech is very well positioned, the long-term potential in our market presents us with many healthy growth opportunities across our markets and our portfolio, supported by a strong innovation pipeline. Following a couple of years of good growth amid a tough operations and supply chain environment in 2024, we were faced with an unprecedented downturn in the capital equipment business at the same time that our main market of China began to slow down. As we have shown you on the previous slide on order entry, the weakness in equipment likely was a lagging effect of the pandemic and the upheaval in the supply chain. We made an important course correction during fiscal year 23-24 to bring expense trends back in line with the more restrained business environment. At the same time, we focused on launching new products with good impact to move our business forward, such as our new ophthalmic and neurosurgical microscope generations, as well as the Visomax 800 in China. Margins are now bottoming out and beginning to turn around, while the top line is again accelerating based on much recovered order entry. Through the acquisition of DORC, we have gained a strong position in the adjacent field of the retinal surgery. This will lead to further share of wallet gains in the surgical segment, create synergies with our cataract business, add to recurring revenue, and provide a non-cyclical diversified revenue stream to our business, making Carl Zeiss Meditech more valuable. For our customers, the retina work for the combination of our retinal imaging, surgical microscope, and the dog-retractomy portfolio of devices and consumables will create more safety and quality and set a new gold standard in patient care. I am very, very proud of the team that I had the privilege to lead in this time and would like to thank my colleague, Justus, as well as my fellow members of the extended management team for their passion and team spirit. A big, big thank you. Thank you so much. So I want to thank you, your analysts and investors and friends of CarSize Meditech for the support, trust you have given me over the years. I look back on many good conversations, valuable advice and strategic input from your perspective. CarSize Meditech has a strong long-term shareholder base and I appreciate very much many of you have followed and supported the companies over the years. A big thank you to all of you. On May 31st, 2025, I will pass the baton to Maximilien first. I'm pleased to have found such a highly qualified successor, not only from InDesign Group, but with a long and special history with Meditech. It is hardly an understatement to say that Max knows all our business extraordinary well and has been a key architect behind some of our biggest successes and growth drivers over the last decade, such as Refractive and Intraocular Lenses in China. I'm very confident that under his leadership, Carl Zeiss Meditech will achieve great things in the future for our customers' patience and build on a great team. I wish you, Max, all the best for the future. Max, it is my pleasure to give you the last words on this call now. Again, a deep thank you and looking forward to the future.

Max? Thank you very much, Markus. Dear investors, shareholders, and analysts, good morning. It's a great pleasure to speak to you today for the first time. My name is Maximilian Faust, and it's really an honor to be coming on board in the role of CEO at Carl Zeiss Meditech. Starting June 1st, I'll be taking over from Marcus, who I have closely worked for over the years and whom I would really like to heartfully thank. I go back quite some time with the Zeiss Medical business, which I joined close to 30 years ago, actually even before today's Carl Zeiss Meditech was created. Most of my early career at Zeiss was spent in the ophthalmology business in various roles, namely as product manager in the area of ophthalmic lasers, whereas a product manager for retinal solid-state lasers. Later, as head of ophthalmology product management, I managed a number of key innovation projects, such as the introduction of the IOL master, which, as you know, was the first non-touch biometric device for cataract planning, and which turned out to be a major milestone for ophthalmology business. I later transitioned into a marketing role for medical, and from there into sales management. Firstly, at Carl Zeiss France, where in the early 2000s, I was responsible for the full portfolio of the Zeiss Group in that market. During that time in France, Meditech first expanded into the IOL business through the acquisition of IOL Tech in La Rochelle. And I was actually managing the post-merger integration process of that acquisition, which, as you know, has become a pillar of our growth in ophthalmic surgery. I then held the same role for the Carl Zeiss Group in the Korean market, where we were a pioneer market into the IOL and refractive businesses, and in particular smile surgery, and what is today honestly one of the key medical markets for Carl Zeiss Meditech. Since 2009, I am leading the Greater China business of Zeiss. And over the last 15 years, our passionate local team has transformed the company from what was a double-digit million revenue region for the entirety of the ZEISS business to now over two billions of revenue in ZEISS and more than half a billion specifically for CarZEISS Meditech. I've had the pleasure of setting up and driving our group's substantial operations and innovation hubs in China, which are also benefiting Meditech. I've been working actually very closely with Meditech management over the years and on many topics affecting its business. Today, I truly believe that Carthage Meditech is exceptionally well positioned with a strong team, a broad portfolio, a well-designed strategy, and a healthy innovation pipeline and roadmap. It's all very good prerequisites to do well even in the challenging times such as these. I'm really looking forward to continuing that innovation-driven strategy, but I'm also bringing in my market and customer experience in driving forward our workflow and recurring revenue-centered business models and further develop our market access and commercial success. Together, we will get it done and create profitable growth and value for you, Carzeis Meditech shareholders. I look forward to working with you, and we continue to shape the future of eye care and medical technology together.

Thank you.

Thank you to all of you presenting, Max, Markus, and Justus, and to everybody listening for your interest and for your attention so far. And now we look forward to the Q&A session, and I'll give it back to the moderator to introduce the Q&A.

Thank you. So ladies and gentlemen, if you would like to ask a question at this point, please press nine followed by the star key on your telephone keypad. In case you wish to cancel that question, please press three followed by the star key.

So just one moment for the first question, please.

And the first question comes from Jack Reynolds-Clark, RBC Capital. Please go ahead. Your line is open.

Hi there. Thanks for taking the questions. Three for me, please. Firstly, on China refractive demand, could you talk through how you're seeing things progress so far in the quarter and what are your expectations for the summer season? Next on EBITDA, so outside of tariffs and currency and all of the macroeconomic caveats you mentioned, would there be anything else that you might call out that would make you more hesitant to be more optimistic on the guidance? What are the other potential headwinds or opportunities there through the remainder of the year? And then finally, Marcus, wish you best of luck with your next adventure. Maximilian, you mentioned the recurring revenue business and the market access as kind of key things that you're going to be working on. Could you share any other views on where you think the opportunity might be in the near to medium term for you to address when you become CEO? Thank you.

Okay. Good morning, Jack, and wonderful for your questions and happy to answer it. Maybe to start with the first question concerning China refractive business, I will take that. I think Justus takes the EBITDA question. Concerning my future ventures, this is still something which is not published yet, Jack, so that's maybe fair to answer this directly. And I also would like to hope for your understanding that we want to give Max first time actually to come into the job and and to listen and then in the next call to answer all your questions concerning the future strategy. So that means if you have any questions, I think just with myself concerning strategy, I'm very happy to answer on this. I hope for your understanding here, but we really want to give Max here the time for a deep dive, well knowing that he's actually very much in touch with the team and the topics here. Nevertheless, I think we should give him the time. So China Reflective, is this okay for you, Jack? Yeah? Yeah, absolutely. Okay, good. Super. So China Refractive, first of all, I really would like, yes, I think it was a very strong Q2. I just mentioned also special effects. We are looking to that very, very carefully. So that means the military regulation has been changed. That's something that we are discussing also with our customers, really to understand what is the big market trend. Overall, And I think that's also driven really by the macroeconomic and consumer confidence, which is connected in the way what is currently happening in the trade wars. But overall, we believe that we have reached the bottom of the market and that the market is stabilizing and is coming back actually to a way that the stabilization remains over the years. So to be very honest, it's really hard to say what is happening. So we have seen in the past that very often when we predicted actually something in the next quarters that the things turned around. Nevertheless, we see in utilization, hospital utilization, we see a positive trend here. And this is now quite crucial to see what is happening in the next couple of months. But overall, I think we are I would call it modest or modest optimistic in that way. So I think also overall, and it's quite important to say, the VisaMax 800 is very successful. So we see really a great response from the Chinese market for the VisaMax 800. You will see this especially then in the next quarters. So this is really strong, and we see also that then SmilePro and the procedures connected to that are very, very well accepted. So this will give us an additional push, which is quite positive. And with this, I would like to hand over to Justus talking about the tariffs.

Yeah, Jack, I mean, your question was broader on the headwinds that we see beyond tariffs. And, of course, tariffs right now is almost unpredictable with everyday tariffs. different news on deals or whatever, you know, indications for deals. But I would mention as probably the strongest headwind, the currencies, you know, because as you know, there is, depending on the economists that you look at, there are some forecasts or predictions that the US dollar may devalue further. against the Euro and I have read some reports that are saying that it may not be too far out that the US dollar goes down to 120 or even worse. And then considering the portion of US dollar tied business that we make that obviously will have a negative impact for us and likewise for the Chinese Yuan. We now have seen after the recent news a little bit of recovery for both currencies, but we also have seen them last week already trending pretty much down versus Euro. So I'd say that to me is beyond the question of the tariff deal between the EU and the US, which as we all know is currently not yet in a process of being anywhere close to a finalization. I think this is the other more significant headwind that we see right now.

Yeah, and maybe strategy. So overall, we actually developed a strategy now just in the springtime and further on. So from exploration to market penetration, and this is exactly where Maxis also has a great pedigree and also a great competence. Actually, when it comes to go-to-market and really bringing the consumable business now to the next level, this is really something where this is now to come. As I mentioned and as I said, we have now reached more than 50% with our consumable business and more to come here. And I think that's a wonderful proof that our strategy is gaining momentum and that we are here on the right track.

Thanks very much. That's super clear.

The next question comes from Oliver Reinberg, Kepler Chevreux. Please go ahead.

Thanks so much for taking my questions.

I'm leaving. Thanks so much for the collaborations and Mark's welcome on board. Three questions from my side. Firstly, I think the outlook so far excluded the potential from VisaMarkt and Camivo. So I was just wondering if you can give us a bit of an update, what kind of sales potential you see from this kind of new launches in the second half of the year. Is 40 million revenues here kind of a decent assumption? That's question number one, please. Secondly, on tariffs, I mean, if we assume that the current regime stays unchanged, we are basically talking three months, 10% on 250 million, 20% for another three months, which brings us towards, I guess, 80 million tariffs. Is this the right way to think about it? And what share of this do you believe you can offset via pricing? And then thirdly, lastly, just on the Chinese momentum, I guess you're mixing it to the growth that you referred to is adjusted for this kind of destocking effect. Can you just give us some kind of flavor? What kind of growth have you actually seen in Q2 itself? And what are the kind of trends opposed to Chinese new season, please? Thank you.

Okay. So, I take the first and third question. I think this is okay. I think you are the master of tariffs here. So, yeah, thank you, Oliver, and great to talk to you. And so, outlook. So, overall, yes, we see a very positive momentum of Kinevo and Visomax, as said. And now the critical thing is, first of all, the Kinevo, especially here in U.S. and Japan, is actually to make sure that the leads which are coming in and the orders are not delayed because of, for instance, terrorist discussions or the kind of uncertainty which is coming in. But overall, there is a good trend and we see also potential that there is a realization in revenue until the end of the year. The visa market, as already stated by Justus, is gaining momentum here, especially in China. But that's also quite important to know. It's also in our plans. So to compensate this and to make sure that we gain the momentum also against competition. As you know, competition is not sleeping. And that's the reason that we are actually increasing our tech time. So that means it's getting faster, the innovation cycles to make sure that we are staying ahead here and that we provide the best solution to our customers. So in terms of the stocking, so yes, what we can do and what we have a good transparency is also the hospital utilization. So it's true. So we had the stocking effects last year. That's always a kind of change in terms of their inventory here. But overall, what we see, and that's what I mentioned, Oliver, was that we see that the hospital utilization usage is going up, and these are the important numbers. So, that means how many patient procedures are executed, and here we see the positive trend. So, Terrace?

Yeah, Terrace, Oliver, it's, again, Under the assumption that we are talking right now about this 10% tariff being applied currently, and then we all know we have this 90-day grace period or whatever you want to call it. So my comments are now referring to what we currently have to deal with. So I think by and large, the answer is we see ourselves in a position to offset a good portion of this impact. Why is that the case? First of all, I think across our portfolio, the price elasticity varies a lot. As you know, our US business is mainly a device business. Most of our device competitors are also foreign companies, either European or Asian, and by this, or for that matter, then also affected by tariffs being applied. And from that perspective, we would, under the current circumstances, think that we can offset what we would potentially right now estimate as a double-digit million hit on our bottom line. But as I say, where we feel that across the portfolio, we do see different opportunities to offset for it. I think that is pretty much the answer that I can give you right now. Okay, super.

And can I just ask, the sales potential of Visumax and Kenevo, I mean, it's 40, 50 million in a reasonable ballpark, the second half?

I'd say that is, by and large, that's not wrong. I'd say to be a bit more precise here, we are tracking currently very well for our expectations in terms of the order entry that we are seeing. And I think that to bring things into perspective, because we had in recent calls a lot of times the discussion about do you feel that in this rather depressed market environment, whether the interest will be actually there. I think today we can tell you, yes, the interest is there. And I think I want to highlight again what I said earlier. The fact that the higher pricing for the procedures being applied, even in this environment, is also actually encouraging and kind of confirming our expectation that the market is very much interested in the upgrades.

Okay, super. Thanks very much. Markus, all the best. Yeah, thank you so much, Oliver.

The next question comes from Falco Friedrichs, Deutsche Bank. Please go ahead.

Thank you. Good morning.

My first question is whether you noticed any pre-ordering before the tariffs came into place for anything that might have boosted your order intake in the first half because of that? Then secondly, could you speak a little bit more about the developments you have seen specifically since Liberation Day, so about five to six weeks ago, whether there was any change in demand or ordering patterns? And then thirdly, do you notice any impact or expect any impact from stimulus measures in China to potentially spur demand over the summer season?

Thank you. Okay, Falco.

Good morning, first of all. So maybe I take all the three questions. I don't know. So pre-order and also during liberation day, well, you know, we carefully screened that and discussed it with the team. And for sure, I think case by case in some of the customer's This was definitely discussion and also concerns, what has triggered delays in the ordering process on the one hand, so that means after liberation days, and a kind of pull-in before the liberation days because people were very sensitive on that. Would I say this is now a big change in terms of the ordering pattern, what we see now more than on a monthly basis, and there may be some deviations, I would say with the fast changes we see currently, I would say no. So that means overall, yes, the sensitivity on the customer side is high, but due to the uncertainty, there's definitely, I think it's not supporting overall, that's clear, but overall, we don't see also now big deviations in that way. So stimulus packages, That's something what we expect that this creates also impact here. Is it easy to quantify that? Currently still not because also here is a lot of changes and dynamic in that. I think it will be much, much easier to say than in the next couple of months what the impact of these packages and how they are looking like because there is also a lot of volatility in.

And if I just may add, Falco, I mean, Liberation Day was April 2nd. And for us right now, you know, we always have a seasonal pattern, March being very strong, April being relatively one of the softest months in the year. And we see that this year. And therefore, it's a little bit difficult to assess whether this is directly and only attributable to Liberation Day. Again, I cannot disclose here now numbers of Q3, but I'd say with the very dynamic situation right now and building on, we just yesterday spoke with our sales teams and people who were attending US trade shows in the last two weeks. They actually just brought back a rather positive perspective for the second half of the year. And that is clearly already building on the fact that some of the deals have come true that the administration was expecting and hoping for. And there seems to be now a bit of a moment of relief in the markets in the U.S.

Okay. Thank you. And all the best to you, Markus. Thank you, Falco.

The next question comes from Sam England at Berenberg. Your line is open. Please go ahead.

Hi, guys.

Thanks for taking the questions. The first one, you commented on pricing dynamics for IOLs in China, but can you give us some more color on IOL volumes in China? and I suppose how much of an uplift you're seeing after the rollout of VBP and whether we should expect an acceleration in Iowa volume growth in the second half of the year in China. And then on cost containment, R&D spend was obviously down quite a bit in Q2 in absolute terms versus last year and also as a percentage of sales. Was that all just related to your cost containment plans or are there any timing factors around R&D spend in there? And I suppose looking ahead on R&D spend, should we be thinking about a similar percentage of sales going forward?

So, good morning, Sam. I think Jesus is talking about pricing and volumes first, and then I will cover the R&D spending.

Yeah, clearly, Sam. I think overall, actually, as we had expected after, you know, what started to be a little bit slower period just after the NBVP, we now see actually across the IOL portfolio a growth of roughly 4% in volume and somewhat smaller in revenue. And what's actually really good to see is that a key driver with an even higher volume growth is in the premium IOLs, which was exactly, as you may remember when we discussed our tactics for the tender, that was exactly what we explained to you why we acted as we acted, assuming that we would see then on a higher price base for our premium lenses, however, still a positive impact, the volume impact in the private sector. And this is what we actually are seeing now firmly materializing. And from that perspective, we do have somewhat, you know, cautious, optimistic view then for the second half of the year to actually with the volume growing at some point in time, then in total net contribution to offset the negative impact that we had seen last year.

Yeah. And so actually to answer on the question concerning R&D and spending here. I think first of all, it was all of this was also part of the strategy actually to push and to accelerate innovations. And what you see now with the Visomax 800, actually also the approval in the markets, what we do in IOLs, also the pushes here, all of these activities and workflows, workflow solutions, digital, all of these activities has been pushed in the last couple of years. And that was also the reason I think we discussed this also here with you, that we had higher R&D spendings in the last two to three years actually to get that acceleration. As I mentioned before in the first question here from Jack concerning the strategy, I think we go now from exploration to market penetration to make sure that our products and solutions will hit the market and will become great innovations. And this is exactly what is happening now. And that's the reason that when we are talking about R&D spendings, that we would like to come to, let's say, innovation driven company like spending ratio. And this is in the regime of between 13 to 14, 15%. This is something we would like to have and to keep there. And that's exactly what we did. So that means we are focusing now on the R&D topics which are most important now for the market penetration. We do also life cycle management topics now very much. We are working on the quality and also cogs down. And this combination is part of one of our big priorities and MAD priorities, which is already beneficial and where we see already the good return on investment.

Great. Thanks very much and best of luck for the future, Markus. Thank you.

The next question comes from Graham Doyle, UBS. Please go ahead.

Morning, guys. Thanks for the questions, and good luck in the new role, Marcus, and welcome, Maximilian. Just a few questions to me. Just firstly, on gross margins, it used to be good to understand. Obviously, year over year in Q2, you had the big tailwind of the restocking effect on consumable refractive products in China. And what's big enough on the negative side that's offsetting that within that mix? So what specifically is, it means you're effectively flat-ish growth margins rather than up, say, 200 bps. And then secondly, could you give us an update on the DORC margin? So just how that's progressed, because post acquisition, it obviously came down a bit. It would just be interesting to see how it's performing now. And then just your comment, last one, just a comment on tariffs around pricing. I mean, one of your competitors does produce pretty much everything in the U.S., so presumably they're not going to pass through that price. Have you thought about how that might affect competitiveness there? Thank you.

Hi, Graham. Just to see, I take it the three questions. Number one, gross margin, what was the adverse effects, considering that we obviously had the tailwind from the higher RTP volume? Clearly, and as we mentioned before, obviously in the first half of the year, we were both lacking the high margin contributions from Kinevo and VisaMax. And that, as we always told you, Kinevo first six months was kind of book building. And therefore, you have seen the MCS margin contraction because in the mix, The real kind of flagship full accessory, full accessory, you know, Kinevo deliveries were simply still missing. But I can confirm that this is kicking in now. And secondly, of course, Visomax, which, as we said, you know, with the launch in China only starting in early March, that did not get really obviously filled in the books. So that is, I think, the two key issues. DORC margin development, we have to say actually that we were pretty pleased with the second quarter now with DORC with very solid double-digit growth rates year over year, actually just confirming our investment thesis. And as you know, You know, roughly the percentage in revenue in DORC is only a bit more than 10% equipment related, and the rest is consumables. And therefore, with the higher volume, we also have seen margins actually hitting our expectations. And let me make one more comment. Actually, that is also a bit of a response to Sam's previous question. on our R&D development, let's not forget that we obviously have some tailwind in our R&D expenses from the dog acquisition. So the vitrectomy investments that otherwise we would have had to undergo, we obviously can now save and that is also one not unsignificant reason why we see the R&D expenses coming in lower. Tariffs US and our competitive landscape, yeah, well, you're absolutely right. But again, you know, the competitors there that we have are, first of all, strong in their consumables, namely IOLs, where, as you know, we unfortunately do not yet have the strong position that we would have liked to have at this point in time. So therefore, that will not make a material difference in terms of the equipment that they supply. And then, of course, that varies across our portfolio. I think we feel ourselves at least in some portions of the portfolio simply due to the technology, and I just refer to the Artebos here, which have a splendid first half year, and also, especially in the U.S., and are one of the key drivers for the good growth that we have just shared with you in the U.S. Now you may say, okay, but now the tariffs kick in, but as I said before, I don't see any of our competitors having a product similar to Artebo, for example, and what will happen in vitrectomy still remains to be seen, you know, too early to tell. I think the Alcon Unity launch is basically happening, but we do not yet see really data from the market that is showing that we would be negatively affected. Not to say that that may not to be seen later in the year, but at least not yet. Yeah. Thanks.

That's really helpful. Thanks to the color on the gross margin in particular. Thanks a lot, guys. I really appreciate it.

Yeah. Thank you.

The next question comes from . Please go ahead.

First of all, Marcus, wishing you the best in your future endeavors and welcome, Max. So maybe just, Marcus, starting on the Chinese military comment, could you tell us when the stricter enforcement of this stabilization period was implemented, just to check if it doesn't affect the summer season as well? And just in terms of the numbers, just back of the envelope, I'm thinking about 200 to 300 KIs or something, which is around 10% of annual volume. Does that sound about right?

Thank you, and good morning. Can you rephrase the first question? I didn't get it entirely.

Sure. So at one point you guys talked about the Chinese military pull forward, that there's this six-month stabilization period about refractive procedures. I just wanted to know whether this is really sort of a pull forward or more of an annualization impact, and if you could tell us roughly when that was implemented. And my follow-up on that was what the gross impact of that is roughly in terms of the number of eyes. I got to a number that said roughly 10% of annual volume is military impact. but any color would be helpful.

So, Dylan, I can share with you how we see things and what we can tell you about military regulations here. So, first of all, the enforcement, I can't give you the exact date, but I think ultimately it's simply that they are now enforcing that after procedure, you have to undergo a kind of a stabilization period of six months. And we certainly can try to investigate on that later, but that kicked in apparently with the beginning of this year. So now the question is, how much could this be now a kind of pull forward of demand that we would otherwise see in the second half of the year? Two comments on this. First of all, we can't really ultimately quantify it. We do not have exact data from our customers, you know, how much of their total customer population is military enrollment and which is not. So, therefore, I'm somewhat reluctant to confirm here your assessment. But what I'd offer on the other side is to say that this regulation, of course, is not a one-off, so it is in place and it is, from all what we know, it's going to stay. That means for the next recruitment wave, people will have to also consider this six-month period. So that's just, you know, conceptually to keep that in mind. However, I don't want to kind of ignore or deny that we may see that there is a pull in, and we may see that this will reflect in a somewhat softer than typical summer peak. It's just hard for us to quantify at this point in time for the reasons that I just said, because it would also mean that then, you know, we would exactly know how many military motivated surgeries are typically undergone in the summer peak, and that data point I do not have in my hands. Sorry for that.

Understood. No, but very clear. So maybe just to recap, it sounds like it's not just this one-off. It's also just kind of extending, and it makes subtle sense to be a little bit conservative there. Maybe then just one follow-up, maybe for you, Max, if you could comment on on this, or maybe Marcus for that matter as well, just because I understand the Visimex 800 launch event took place. I'd just be very keen to get a bit of a color, sorry, in China. You know, what kind of excitement you guys were seeing there and what kind of, you know, who's the typical Visimex 800 client at this point? Is this docs replacing older 500s, some of which are maybe you know, five or 10 years old, or is this like totally new installs? Are these second, third machines? And yeah, that'd be, that'd be super helpful.

Thank you. Thank you, Dylan. So first of all, I think there's really a great excitement and because the SMILE procedure is really the gold standard within China. And I think being now also in China in the beginning of the year, and talking or last year, actually in December, talking here to the teams and also understanding what the current trend is. Overall, the VisaMax 800 now is actually pushing the market. So that's quite important to understand. So that means that overall, our customers are very keen because with this, they can go directly to the patients. Again, they can do patient direct communication, which is a great topic here in China. in terms of marketing. And so this creates really a competitive advantage. And that's the reason, on the one hand, that we see a lot of, let's say, established customers swapping, and that's actually currently the main topic, and adding also partially at least big chains, adding new systems. So this is good. On the other hand, as you said, overall, and as I said, the market is still soft. So people are still reluctant to invest in our totally new devices and capacity increase because currently, as we discussed, it's uncertain what the things are doing. But we see again, and it's quite important to understand, we see a growth in the hospital utilization, which is good. But overall, there is still a kind of reluctance in the market. So to conclude here, Dylan, I think the Visa Max 800 is, from my point of view, is key. It's really the key actually for continuous success in China. and the trade-in of the systems are crucial here. And we really see here a growth in the mid-double-digit regime, which is really good for us.

Excellent. Thank you very much. All the best, Markus.

Thank you.

The next question comes from Anca Verma, J.P. Morgan. Please go ahead. Hi, good morning.

I have three questions, please. Firstly, I just want to follow up on the China refractive market. Could you please share what you've seen in April and May so far in terms of demand? And can you point to any market data points that either show you sequential improvement or that the reluctance continues? And then the second one was on Your creating cash flow was down significantly around 85% in H1, mainly due to an increase in receivables. Is this because you've been offering more favorable terms or have you cut prices towards the end of the quarter? And have you received the cash for this now? And then the last one is just a bit of a housekeeping on your FX assumptions. FX is supposed to be ahead for this year. Could you just tell us what you've baked in your guidance for the sales and EBIT impact?

We can take that very, very quickly. So, as you know, April and May are soft months in China anyways after the spring peak, and they are pretty, I'd say, almost meaningless from that perspective. I think that data does not tell us anything. I think important is that overall, year to day, we do see high single-digit growth in procedures. I think that is, as we just said, encouraging given the overall clearly still somewhat difficult market environment and clearly consumer confidence rates that are still, compared to where we were years ago, fairly low. Cash flow, no. I can tell you, you do not have to worry about us having to – do magic on our payment terms or anything. It's actually simply a reflection of, if you compare year over year, we had, different from last year, we had a very strong and accentuated march this year, and therefore, the receivables in comparison to last year are very much growing. And therefore, of course, this is actually the bulk effect on the somewhat lower cash flow. I'm actually for the remainder of the year. Again, not knowing what this tariff discussions will do, but I'm other than that pretty actually positive on the cash flow, the operative cash flow for the remainder of the year with tight controls and working capital and tight control and CapEx and so on. And at X-BASE, you were, I think, if I understood your question correctly, what were our budget assumptions and what do we see? I would, you know, for details, I would refer to Sebastian, but I can tell you that for what we see more lately in terms of the exchange rate development. And again, it varies quite a lot. The volatility is high, but we clearly see that the key exchange rates like dollar and Chinese yuan are somewhat, you know, in the range of around 5% and more off from what we had anticipated and However, again, you know, considering only the US dollar in the recent days, it was almost at 115, 116. Now it's, I think, back to 110 or something. So it's fluctuating quite a bit. And I think we have to wait a bit before we can be more precise on what it may do for the rest of the year. But as I said before, if I look at the outlook, you know, the FX, could potentially be a major headwind if there is no solutions on this tariff discussions.

Thank you.

Thank you very much, and best of luck to you, Markus.

Thank you.

The next question comes from Sigi Osener, HSPC. Please go ahead. Your line is open.

Hi, thanks for taking my questions. So one on orders and pricing and one on dog please. On orders, do you have full ability to reflect any types of charge or price increases to the orders at the moment? And how have the lead times changed recently? And on DARK, we have seen the contribution from Europe. Without DARK contribution in Europe, would your orders still be positive? And we've also seen some competitive launch in DARK's areas. So can you confirm to us that there has been further growth in terms of equipment installed base expansion for DERC?

Hi.

Yeah, happy to take that. If I may, I'll start with the DERC question. So first of all, we can clearly confirm that we grow actually nicely our installed base of EVA and Nexus. Again, you know, well knowing that our competitors are carefully listening to when disclosing a detailed numbers, but I can tell you that we are making great progress. We have ramped our capacity for the devices and the systems are being put in the customer accounts according to our plans. who listen carefully, as I said before, we have seen actually monthly, year-over-year growth, and clearly also attributed to the growth of the installed base. So your question on Europe, yes, we have seen order entry growth in Europe also organically. I think that was the core of your question, and I think if I otherwise you were wondering whether the order entry growth had included. And there I'd say, yes, like every year, because we typically have an annual price increase. That now has to do directly with the tariff discussion. I hope that helps.

Yeah, I just wanted to understand if you maintain, like, the ability to reflect any changes to prices through tariffs to the order book, or do you commit yourself to a certain price when accepting the order?

Oh, sorry. Now then, I just read your question. I mean, typically, you obviously have to basically... what you have confirmed your or the order that you have put in your books and I think right now we think we should basically honor that okay did we lose you

Yeah, I lost you for a few seconds, so I couldn't hear your answer, but I'll check the transcript. Thanks very much.

Thank you.

The next question comes from Richard Felton, GS.

Thank you very much. Good morning, and I appreciate you taking my question. Just two left from me, please, both on microsurgery. So first of all, on Kenevo 900, You mentioned in your prepared remarks that it's not yet being shipped in large quantities. Could you just explain what the bottleneck has been and when you expect production and revenue generation to ramp for Kenevo 900 and how much visibility you have on that into the second half? And then if it wasn't Kenevo 900 driving the improvement in revenue for microsurgery and Q2. What was driving that improvement and how much is that going to continue to drive performance into the second half of the year? Thank you.

Happy to take these two questions. Hi, Richard. So, concerning the first question, well, I think that, sir, I would call it a kind of standard ramp-up, what we do here. So, that means, sir, that there's always, first of all, the demo tools and then to bring that then to the key markets, and that's exactly what we do. I think we expect that momentum is now rolling and that we are able then to deliver, and especially now in the second half of the year. This then getting, again, I think Justus mentioned that already, especially getting some good order books and leads actually ongoing so that overall we see good positive momentum. So that's on the Kenevo 900S. I think you mentioned also what comes on top and what gives you confidence. for the second half year, so be aware of it's not only the Kenevo 900S, we have also the Pentaro 800S now launched last year, which is a great thing, which will come also to China now over the next months. And this is also a big push for us, where we see a positive momentum, so that we still strongly believe that this will be a very strong second half year for microsurgery.

Great, thank you very much.

The next question comes from Susanna Ludwig Bernstein. Please go ahead.

Good morning, and thanks for taking my questions. I have two, please. I guess first on the order backlog, we saw a large step up in Q1, and now it's been stable in Q2. In terms of your comments about this being sort of the new normal period, should we therefore expect that this is sort of the new order backlog level and we should expect it to be stable, or is there any potential for a reduction in the backlog to be a contribution to revenue in the second half of this year? I don't know, perhaps from sort of the Kenevo 900S book building that you've been doing. And then second, just in terms of your comments on intensifying competition, I wanted to focus on the refractive market in China in particular. You know, when do you expect to see a competitor lenticular extraction platform approved and sort of what's the timeline for a potential local competitor to emerge?

So, I think this is to take the first question. I am happy to take the second one and directly to answer this to you, Susanne. Hi. Good morning. So, first of all, it's always, you know, hopefully you're understanding that I'm not talking about competitors in the launch plans here. That's something you can talk to the competitors directly and ask them. But overall, what we see is we are really so strongly ahead. And I think there are standard procedures, as you know, in LASIK, in PRK, which is already there and which is also reflected in our product mix. So overall, I think there are some systems out currently not in China, but in other regions in the world. And we see also that our procedures are superior in terms of outcome and quality. and overall stability. So this is quite positive, and that's the reason that we are pushing hard also in new procedures and new markets, especially, I think, as we discussed it also over the years in Presbyopia and Presbyond. So this is something that we also push and what we push now also in China. So overall, If you ask me, I believe that the superior system will stay for the next couple of years. But that doesn't mean that competition is sleeping. And that's the reason that we are really focusing here, making sure that we have, as I mentioned before, quick and fast innovation cycles also combined with our workflows so that we have the full customer and patient experience with our systems. I hope this is answering the questions. I would like maybe just to start.

Yeah, Susanne, on the order backlog, I'd say by and large, your assumption on being somewhat a plateau for the time to come, I would confirm. Again, you know, across the portfolio, you will always have, depending on product launches and then peaks in sales, In auto entries, you always have some sort of natural oscillation of some of the lead times. But I wouldn't see anything anywhere close to what we have seen in the pandemic times repeating itself, where, as you may remember, for some of our products, we had ridiculously long lead times of six to 12 months or so. So we are far away from anything of that nature, and also keep in mind that we have invested in our capacities across the portfolio. So to cut it short, I think, by and large, you should see this kind of order backlog level going forward.

Great, thanks both. That was very helpful.

Thank you, Susanne.

There's one follow-up question coming from Oliver Reinberg. Please go ahead.

Thanks very much for taking my follow-up.

Just a quick one. Just as I think in your prepared remarks when you discussed the operating cash flow and the account receivables, I think you mentioned that these are also linked to consumables being sold to price. Maybe I misunderstood it. I just want to clarify if there has been any kind of unusual stocking effect that could impact the kind of sales realization in the summer peak in China. Thank you.

Oliver, thank you very much for the question because this would be the last I wanted to get out of this call somewhere in anybody's mind. So, no, it was clearly not. So, I can tell you it was just a combination or culmination of various effects. And as I said, we had a really exceptionally strong march and that in the accounts receivable, but nothing that I would tie to any kind of one-off special effect and clearly not to any, you know, over-proportional ramp-up in stocks or so.

Yeah. Perfect. Thanks so much.

There's another follow-up question coming from Graham Doyle. Please go ahead.

Sorry, thanks a lot for taking the follow-up. I appreciate it. If it's long, I can speak to Sebastian offline. But just to follow up to Angela's question around the trade receivables, the related party receivables, so it looks to be 80, 90 million in terms of an increase versus the end of last year. What exactly is that? And I just would have thought that would kind of ease at the end of March rather than pick up. So just maybe just to get a sense of phasing, is that just ahead of, say, summer boom in terms of refractive? Is that what we're looking at?

Graham, again, it's a combination. We had several product launches, so there's a lot of demo devices going out, and depending on how timing is, it can happen that you then have a bit of a bulk of demo tools going into markets where the global launches are always in waves happening, and then you may get... a kind of a combination of demo orders that then, you know, can build to what we were just explaining here. So I think that is to give a bit of flavor.

Yeah? How would you expect that number to be by the end of the year, if you know what I mean? Or when does that normalize, just to get a sense, as long as cycles take?

Yeah, that should normalize over the course of the year. But for the ramp up and the importance you obviously need to have demo capabilities in the field. But normalization, I think, can be expected then.

Okay. Thanks a lot. I appreciate it.

So thank you, everyone. This concludes today's Q&A session, and I'd like to hand it back to the speakers for some closing remarks.

Yeah. Thank you again for this wonderful time and the good discussions we had not only today, but also in the years before. I appreciate very much, as I said before already, the good interaction, collaboration, also your trust in the company and in our customers. So this is really something what I appreciate very much, what I will keep very much in my mind. There will be definitely, and that's the normal thing in life, most likely we will see us again in different roles, I'm looking very forward to it. And again, a deep thank you. All the best to you. And keep the track with ZEISS and especially Meditech. I think it's worthwhile. It's a wonderful company. And I think we are really shaping the markets and creating value for our shareholders. With this, all the best to you. Thank you again and all the best. See you then.