CellaVision AB (publ)

Thank you very much, and thank you to everybody dialing in to listen in on our comments and presentation of the Q1 report here in our fiscal year 2024. I have our CFO, Magnus Blix, with me, and we're happy to share all the insights that we just published this morning. So we can... go to the first slide where we talk about the quarter in brief. So Q3, we have designated the title to the report, Strong Sales in EMEA, Amid Market Uncertainties. So I would say the quarter has been characterized by a reasonable Q3, also historically it's not our strongest quarter. However, the fluctuations amongst the different regions are distinct. So we have seen EMEA really benefited from very strong growth across multiple markets, but also across essentially all product groups. And then we are up against a weak compare, a favorable compare, if you like, from last year. Sales have declined in Americas. We've seen uncertainties play out in the clinical settings around in the hospital environment. So delays of both tendering but also auto placement given the political situation with the election. That has been the main driver for the uncertainty and not getting sufficient orders all the way out there. This is what we see as a temporary thing in the market and not a sign of the competitive changes. In APAC we see fluctuations during quarters and here we would say we've had three strong quarters shipping to China and this time around no shipments out there. but actually strong shipment elsewhere. So in our book, it's purely fluctuations amongst quarters when we comment on APAC specifically. That gives us an organic growth of 9% this quarter. It's almost double-digit, and it translates into an EBITDA of 27 percentage points. In terms of, yeah, I could highlight that the actual revenue is 179 million versus the 168 last year. In terms of progress on our strategic direction, then we've been in the, you can say, in transitioning into a strategic partnership alliance with Sysmex earlier in the year. So we've We've been working with multiple markets and really getting to know them and the market specifics. And I'm proud to say that we are continuing that journey also on a tactical level and really an educational level. So here we've made some really paved the way for joint training and marketing activities and how we share and conduct e-learning across all countries in a global setting. So I think we've accomplished quite a bit together there and this will be the fruit going forward of educating the community in digital cell morphology via some of these tools. Furthermore, on the development side, we have started our clinical validation. We completed the pre-clinical validation of our bone marrow prior this year and now we are actually in the midst of executing our regulatory or our clinical validation leading to regulatory process in 2025. So we are active in two European sites and soon in a US site with our bone marrow validation. So we are still aiming at launching the bone marrow with the CE mark for Europe in 2025. So that's according to the plan. If we proceed and try to unfold the P&L that we reported, as set on this slide, you see, I know it's a little bit busy. We have the quarter we are just reporting on the very left-hand side, and then we have the comparable quarter, followed by the year-to-date and the full year last year. So in the first column here, 179 million assets, giving us a 9% growth organically when we correct for the FX. We had three negative percentage points in FX that we absorbed under the gross margin. And furthermore, we are seeing an increase from 66 to 68% in the gross margin, and that is what we have alluded to previously that the kick-in of the majority of the price increases takes place right now. And this is what we've been able to demonstrate by the increase here of a couple of percentage points. So that has been according to our expectations. On the operating expense side, we are seeing a slight decline on the sales despite, of course, the normal annual adjustments, etc. And that is referred to the restructuring we did last year. And then we are spending a little bit more on the admin side in terms of consultants to get ready for regulatory requirements coming up in the upcoming years. And then according to plan, we are investing a little bit more in R&D, given the maturity of our pipeline and our development programs. That brings us to an EBITDA of 49 million, equivalent to 27%. So in essence, it's 22% of R&D of sales this quarter, and then we are capitalizing 14 million in this quarter. Cash flow-wise, still a strong cash flow, but obviously on paper here, it looks much weaker than the comparable quarter. That is really working capital. There are two drivers for this. Since we have a difference between the comparable quarter of 40 million, it's account receivable. We have not changed any terms. We have unchanged aging profile, et cetera. So it's really... when we received the actual monies, which were outside of the quarter. So that's kind of like, that's really facing, if you like. And then inventory, we're up against last year where we had had some weak quarters and then we really gained on clearing our inventory or cutting down on the inventory level. which was really cash flow positive. We have not done that to the same extent this quarter. This is also part of the story when we unfold the difference here. Having said that, we've continued to decrease the inventory level quarter by quarter. So we're on a good track there. So that gives us a total cash flow of $16 million during this quarter. All right, so let's go to the regional highlights. Yeah, so negative growth of 20 cents in Q3. So this is really the big hit. And we do really prescribe this to the uncertainties surrounding the political climate around the election. This is something we've also exploited at seminars and elsewhere. And of course, in a dialogue with our customers. So we're really seeing a hesitation at the hospitals to actually place the investment in capsule equipment. So the interest rate, the uncertainty around the interest rate potential budgets, that is the underlying driver for that pattern, which apparently was also part of the equation four years ago, even though we also were disturbed by the pandemic at the time. In the end, As I said, very favorable growth across different markets, across the product lines. We also disclosed that we had a couple of orders on top in September, and that was really to pre-end logistical disruptions later in the year for one of our partners, however, even we felt that there was a need to be super transparent around it because yes, that brings us a little bit higher up. But if we even reduce with, with our estimate of that, then we will still be an all time high sales in India. So, so I think we, uh, we can faithfully say that we have a good momentum across multiple markets. Um, and I think the, yeah, I'll get back to the reagents and APAC as I said, we, um, We have seen fluctuations across quarters, and lately we've actually had momentum. The tricky thing when I highlight China is that sometimes when we serve China, it's really a lot of orders we ship at once. So whether they are in a quarter or not, that really influences our numbers. Now we've had three quarters with shipments going to China, and this time around this did not take place. That's really a function of all the distributors that are serving the hospital market in China, whether our partner is placing an order or not. And that was not the case. However, we are seeing a lot of very great activities across APAC, both in Japan this time around, Singapore, and we have a lot of good attention and fruitful dialogue around Australia and New Zealand as well. So we would prescribe the soft quarter of 12 million versus 22 as a facing component. If we cut the numbers by product group, instrument sales were 6%, and obviously 6% is a little bit on the low side, also given the fact that it's a large instrument that drives the majority of our revenue. So we're a little bit impacted, especially from the US piece. But again, both large instruments and strong instruments were actually significant across Europe. So we like to see that trend is continuing, because we've actually had quite a number of quarters where that took place in EMEA. Reagent-wise, here I would highlight that we have 11% growth. We have 12% in EMEA. And that is a combination of both hematology reagents and the non-hematology reagents. So we are continuing a steady double-digit growth in the reagent market. Software-wise, it's a little bit soft, and that is also a function since it follows the instrument sales standards. However, we are, just like I said, across EMEA, we are also seeing software as a positive contributor to the revenue growth. Let's just jump into the key takeaways. Yeah, so the short version here is that we do see strong growth. We continue to see the growth across multiple markets and product groups in EMEA. We have seen this delay which takes place as we speak in the US. So we're trying to follow that as close as we can and assess what is the indication from other companies. But this is really our conclusion that we did see the political uncertainty as a wait and see component. As mentioned, fluctuation at APAC, we have the good belief that we have traction in multiple markets out there. And then we have really found a way to deploy our training modules in a digital fashion and share that across multiple markets, in fact, locally. So that has been a major milestone on the internal lines, which will hit and serve the customers in how they deploy. digital cell morphology, how they understand the digital cell morphology, and how they deploy our solutions to serve that need. Great progress according to plan on the clinical validations, executing two sites, soon three. So we're driving the plan accordingly there. So with that, I think we should invite the audience to pose any questions you may have. We would be happy to answer those. So thank you very much for your attention.

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 Ludwig Lundgren from Nordea. Please go ahead.

Yes. Hi, Simon and Magnus. A few questions on my end. First, looking here at the instrument sales, it was quite a mixed quarter, as you mentioned here, with EMEA really sticking out on the positive side with, I think, 50% sequential growth. Maybe if you can unpack a bit what is driving the strength here in this region.