CellaVision AB (publ)

Thank you very much and thank you to everybody for dialing in to the first quarterly reporting here in 2025. I have our CFO Magnus Blikst with me and we are pleased to present the Q1 results of Cellivision. So the heading of the quarter is of our report is strong quarter in a rapidly changing environment. We are reporting a revenue of 195 million so it represents a growth somewhat above 14% and .1% organically. So we believe and we are reporting a pretty strong start to the year and that is really contribution from the three regions but also given the traction of our solutions across many markets. We know that the nature of our business is really subject to some quarterly fluctuations given our order based sales processes as you may know the ones who have followed the firm for four years but also the delivery timing of entire block lines is a function here. However, we are proud to get a good head start to the new financial year and I'm pleased to elaborate a little bit more on that and then we will do the Q&A. Essentially with this result it also emphasizes and it contributes to our strong financial position. We have very very little depth on the balance sheet and now a very strong still a strong cash position that is growing including a pretty strong operational cash flow. In terms of the progress on our strategic direction we have chosen to highlight some of the themes that we are investing in. We have increasingly invested in R&D as part of our power of focus and we're in the midst of a very rich and valuable roadmap. We are continuing our clinical trials for the application of a bone marrow module that will allow us to classify the different cell intermediates of bone marrow. That's continuing according to plan. We're also today sharing that we have part of our R&D investment has also been upgrading our current solution. We are actually running verification and validations of software solutions for our current hematology solution which also comes with some workflow advantages and improved user interface. We will certainly talk more about that at the point of launch but here you are certainly getting the hint that it's pretty nearby. Then again we are very proud of what we reported in our annual report of 2024 in terms of our progressive development of the four year cytographic microscopy solution which is also part of our next generation hematology solution. We still have traction and interest from new potential partners in the field of pathology and cytology.

So

our commitment to our R&D investments are continuing according to plan. Let's take a little bit a look on the P&L and I excuse myself with my voice. I have a little bit of a delay code. So as I said we demonstrate and report the 195 representing 14% growth. It's a strong gross margin that it comes with 70% versus 66% in our compare Q1 2024. I think the main sort of element here is that the compare was actually before we implemented the price increases of last year. We also in Q4 had a pretty decent gross margin of 69%. We are lifting it a little bit and that is also a contribution of our product mix. So both we had solid instrument growth with a reasonable gross margin but actually also within our software and other category we have contribution from software and actually a little bit decline on the spare parts and others but a good contribution from software. So taken together we have a strong gross margin. Our operating expenses 41% of top line they equal 80 million. We are increasing a little bit on the admin side due to commitment to regulatory requirements but not the least following our investment plan on the R&D side with an increased investment on R&D where a quite big chunk of the raise is also capitalized. Our operating profit equals 57 million for the quarter and then including the depreciation we land at an EBITDA of 66 million which is equivalent to 34%. So it's a strong EBITDA driven by our gross margin, strong gross margin and of course the scalability of our business as we are reporting a strong top line growth. In terms of cash flow, here on the working capital side we do have an increase in the cash receivable slightly decline on the inventory level so essentially a contribution of around .5% from working capital which brings us up to 61% of an operating cash flow and then we are investing as planned primarily in R&D so that's 18 million out of the 21 million from investments and then we have our financial activities which brings us down to a total cash flow of 37% within this quarter. So that's the P&L in short. Let's take a look at the regional highlight. So essentially as I said in the beginning it's driven by pretty much all positive growth across all regions. Americas, no doubt we've had a little bit of a soft quarters in Americas given the previously reported insecurity when the American presidential election was on. I think here we are reporting that we are coming back both on the, you can say the large instruments we have seen contributions similar to the comparable quarter and somewhat higher than Q4 and we are also seeing positive growth on the DC1 catering for the small lab segment so overall we report 8% growth in Americas and here is 21% it's 96 million in total that's a very strong contribution from multiple countries So we have really we are seeing you can say output and success from our close collaboration with our strategic distribution partner in this region which is good to see that also it demonstrates the attractiveness of our collective solutions which resonates across different countries out there. We are also reporting a solid double digit growth for our hematology regions of 12% so that is another driver which is also pending on our strategic distribution partnership APAC 12% growth so 21 million it's always a little bit the APAC number can fluctuate quite a bit given the fact that we at times we typically ship larger boats of instruments so it's a little bit vulnerable but by the end of the day we see traction from both Japan and China in these numbers and we see intensified activities also in close collaboration with our strategic partner so that gives us a lot of sort of appetite and motivation that we can actually really pursue growth across this region as well. If we cut our numbers so here on the chart it says sales per product group so here we have chopped up our revenue into the different solutions on the instrument side in this quarter it represents 59% of the total revenue so no doubt that instrument is a strong driver of the strong results which is a good basis for our solutions so in total we had 115 million coming from instrument versus 92 in the comparable quarter I think in terms of reagents I mentioned the double digit coming out of EMEA with a total growth of 5% so a certain proportion of our business is our non-hematology which is only growing modestly but however it's a good customer base and it's still a good contributor to our business but it is obviously hematology reagents where we bank on 12% growth and that is taking an increasing share of our reagent business in EMEA we are working on expanding of course into APEC and we also have plans for the US in terms of software here we software and others that's important so we did 42 million in that product category versus 42 in the comparable quarter we can say that we had a larger share of software as I alluded to in the beginning which means that especially the consumables like oils for the install base but also spare parts are a little bit low so we had a little bit of a low software sales in Q4 so there is a little bit of a contribution from excess software coming into this quarter not that it's significant large enough but there is a little bit of a contribution which also explains the somewhat lower in Q4 so if we just wrap up here and say we do believe that in isolation Q1 is a strong quarter we actually think despite the fluctuations and what we define as the changing environment that we are all aware of we think that the signals we get from our partner and the market are positive we do understand that there is uncertainty sitting out there and also the nature of our business as I started to elude it to is influencing the business for a quarter to quarter however the basis that we really get the message that there is a strong traction for what we do and our solutions across the different product categories and across the different markets we appreciate our enhanced collaboration it takes time to get close when you go to market together there are many interactions, many relationships that needs to be built but we are really progressing on our results but also on the trust level and the way we work together so I want to thank our strategic partner for that indeed we are fully committed to execute on the power of focus so as mentioned in the beginning I mentioned our focus on R&D, our spends but also I really want to send a heartfelt appreciation to my staff my team who are really executing according to our plans and our roadmaps so they are taking the investments very seriously and working extremely hard to allow us to differentiate within hematology and beyond over time and with that I think we should go to the Q&A so I will hand it over to the moderator and I appreciate the interest you show in our company thank you

to ask a question please dial pound key 5 on your telephone keypad to enter the queue if you wish to withdraw your question please dial pound key 6 on your telephone keypad

hi can you hear me yes ok hi Simon hi Magnus this is Ulrich from Karnac a few questions on my end and did I understand you correctly when you said you got a good head start on 2025 and giving the sort of high instrument sales in the quarter that there is some risk of order stocking among your commercial partner and distribution partners or did I sort of misinterpretate that

yeah good question Ulrich I would say I would say given the timing of when the orders were placed in Q1 let's say the first half and the first couple of months of Q1 I would say the order stocking is probably less of a signal and here I'm really my argument is or my position is my statement is based on when did the you know the terrors and the insecurity really increase during let's say March and April and here I would say that the numbers we report today here we saw orders pretty much before so I will probably argue that there can be a risk for it but it's actually not something we've heard specifically anything about

ok great thank you and European development it looks to be continuing to be very strong like Q4 obviously affected by orders that ended up in Q3 but if we were to sort of normalize those numbers the momentum in Europe looks to be going really strong is there something special happening there or is it sort of the effort in you combining sort of your commercial efforts with Sysmec paying off or is there something exceptional that you're seeing or is it just from underlying demand

yeah I think it is a long run and I think the diversification the effort across multiple markets is paying off I think that's what we're seeing because I think it's been robust and now it's pretty robust and as I said in the beginning it can fluctuate somewhat but the trends in Europe are really growing so my sense is really that this is about the much closer relationship that we started a year ago on the commercial end it takes time to get results basically so this is part of the fruit that we're collectively harvesting here

great

and then moving into the R&D efforts made and you gave a bit of a teaser and we talked about this historically integrated technology into your own hematology systems but I was just wondering and again we talked about this before what are the sort of implications on the commercial model in your hematology system line and can you achieve any type of higher recurring revenue out of a new platform

yeah I think the sort of in general there are opportunities to optimize the current offering that's what when I talk about the upgraded software version that is something we do occasionally and here we are flacking that there is actually more value had to be extracted in very short while and in terms of our next generation you're absolutely right it comes with it will be very much more explicit around the value proposition but of course it's both on the throughput with the FPM technology and the image quality and we will explore the opportunities to commercialize that both in respect of where can we actually land the cocks and also can we implement it is our intention to increase the software component the applications just kind of the same philosophy as we will launch with the bone marrow where there will not be a non-perpetual license but for applications there may be an opportunity to gain more recurrent revenue from software licenses so that's kind of without going into the specifics that's the thinking

that is great and then just in terms of your competitive position in the market does this move the needle additionally in your favor where you believe that you are moving ahead of your competition and as well I guess that would play into discussions you are having with Sysmecs on pricing and the US on the back of tariffs as well so if you can give us some type of insights

yeah I think in general we are across many markets together with Sysmecs we are winning share in the hematology arena and I think we will continue to do so I think the next gen will also make it more let's say for the share of the market that already running digital semaphore it will be more compelling to actually purchase next gen when we get there so obviously it cements our position on a more long term basis

okay just a follow up question on that as you say that the next gen in terms of the ones that have already adopted digital cell morphology that they would be more prone to replace their systems do you feel that obviously a majority of your sales is generated streams plot lines are replaced and then added this Sysmecs or your partner adds this as a compliment to that plot line but this I guess is still sort of a stand alone system and although it is a major upgrade do you still believe that you can be faster replacement cycles among those who have already converted to digital cell morphology

yeah I think it runs contractually with a certain period of time five years typically and then the replacement cycle is we tend to say seven to nine years and I think it becomes more attractive but it is a function of when is the entire plot line exchange budgeting wise it's typically the entire plot line but certainly there will be an appetite to include and exchange the existing digital cell morphology system with a new one I'm pretty convinced that will happen but in the meanwhile I think there is more we can do and we will be very explicit around what we are doing with also software upgrades as we sort of elude to today I think there are still good opportunities there

okay great thank you very much Simon I'll get back into the queue

thanks Oren

the next question comes from Richard Romanius from Redeye please go ahead

good morning I have one major question which I'll begin with which is about foreign exchange rates what do you think will be the impact from the strengthening SEC for the rest of the year and how was it that you had no currency impact in Q1

yeah maybe Magnus maybe you can answer that I can comment on the FX implications yeah

I can start looking at the year over year comparison we could see that the exchange rates in the beginning of the year for the euro and the dollar was on par with last year it was rather high and then we saw a fairly steep decline of the exchange within the quarter so the average rate for the quarter then compares to the average rate of the same quarter last year even though the ending period at the end of the period the exchange rates were lower than the average last year we've seen exchange rates changes before but what's a little bit special this time is that the change was in a quite narrow time scope at the end of the quarter actually

ok so I guess we'll see the effects starting from Q2 then

yeah we've seen a little bit of re strengthening of the currency especially the euros of course they go up and down a little bit we follow it closely to see how we can monitor it our price contracts are negotiated on a yearly basis so in the short term there's not much we can do we are affected by FX changes and the majority of our revenues are in euros but also dollar is an important currency for us very little in SEC and other currencies so the majority, the full, the euro and dollar covers almost all of it

ok I understand, last question I'm interested to know if you could say something about the sales mix in Europe of instruments of large versus small instruments

yeah so instrument wise we have we've gained a good traction on the large instruments I would say we see significant growth in this quarter it has primarily been in the large instrument segment a little bit high on the small as well but the bulk of it is in the large labs the adoption of the small instruments has been a little bit slower in Europe because it's across multiple markets as opposed to the scalability of the US where it really resonates in the US with the integrated health networks they've started with the IHN and purchasing the DC1 there's a great opportunity for us over there still but we are starting to see the value and the differentiating opportunity for the small lab but currently we are selling the DC1 across the different countries but we certainly think this is a growth triumph for us that will play out as we continue pushing the business great

thanks that's all for me thanks Richard

hi Simon and Magnus, congrats on the strong numbers here in the quarter so you highlighted that America's sales recovery was driven mainly by DC1 installations so then I wonder how the SysMex installation pace has been for the larger instrument for larger laboratories which you have been talking about before has this improved so to say quarter over quarter

yes

so when we talk about the large and the small order pick up that has happened both at the very end of Q4 and also here in the beginning of the year but again the complexity here is one thing is the orders that our partner like SysMex are picking up but then the implementation is a function of when is the entire bloodline and when is the hospital ready to implement and that is typically two, three months sorry two, six months and it can be much more than that but there's not a one to one relationship between that we get the signals that there has been traction I think I reported that also at the Q4 call that hey the outlook seems reasonable and we actually see that we have a pretty good base of large instruments in this quarter and then we do also have growth versus large on the small instrument that is definitely that is because the model really resonates with excuse me that is because the DC1 really resonates building the digital ecosystem across the Americas

excuse me great thanks and a follow up on America's instruments so historically this has been mainly US instrument placements but you highlight that that America is growing fast so maybe if you can give us an insight on the sales split between these two regions currently

yeah I'd say Latin America that is also growth coming out of Brazil and it's also DC1 which is a good driver in that region Brazil is the majority of that so it's not across the entire South America but it is different as opposed to North America which is really driven by high volume labs and large instruments which tie in the DC1 in those networks so the scalability and the size of the markets are very different that's important to say

okay great and one on reagents as well you delivered strong sequential growth here like looking Q over Q but I wonder if you expect any seasonality effects for reagents in 2025 or is this Q1 number a good indication for how the year will unfold

I think we certainly aim to continue growing in our largest footprint which is obviously in the air it is less characterized by our reagent business is less characterized by seasonality there is a little bit around when a test conducted during holiday seasons but it is much less seasonable versus the instrument software business which can really fluctuate whether we are getting orders or not and whether we are shipping a lot of instruments at the same time to a given jurisdiction so a lot less sensitive I think it is a signal of our installed base that grows that's how you should look at it

okay great thanks that was all on my question

thank you and good morning I have a couple of questions please could you please clarify regarding the growth of the instrument sales which grew by 25% were there similar growth rates for both DC1 and for the larger instruments

yeah I would say in general that growth rate rise we are in the same ballpark area that's very similar but of course the contribution revenue wise is much better on the large lab segment

okay perfect did the strong demand in Japan and China result in material sales in Q1 or do you expect to see this in the coming quarters

yeah I think the tricky especially China is our biggest market in APAC and we are still even though there is a competitive situation that is more pronounced in China than elsewhere we certainly still have traction and are still winning deals in China I think the challenge is also it's not a direct market so our distribution partner would be working with local distributors so the transparency as to the actual demand out there at the hospitals very delayed and very invisible for us because there are two layers out there having said that we are continuing to see demand since we are getting orders so there are certain wins out there in China so that's a significant market for us and then we are starting to see a market like Japan which has been relatively slow but the adoption of digital silver foil has been less than in other very developed countries but we are definitely seeing traction and increased attachment rate out there so that's a positive one then there are opportunities when we talk about APAC which sits outside of Japan and China that we are also trying to establish together with our partner

Ok, perfect, thank you and the price adjustment seen in the gross margin improvement have you reached the full impact already or can we expect some gradual improvements going forward?

Yes, as Magnus alluded to then we or maybe I talked about it actually but we adjust once a year and in our compare they were unadjusted so we certainly have another price adjustment coming up but it may not be in the given the lay of the land it may not be in the same magnitude as we were able to do last year

we came out of a period with higher inflation last year so it was a bit of a compensation for lost grounds last year

but we will still adjust our prices during the

year So should we review the gross margin of 70% for the remainder of this year?

No, I think we've landed at a pretty decent spot there are a number of variables within the the gross margin we talked about the effects impacts we could have write-offs, etc but generally I think we've proven that we are strong coming back at these 70% marks so that's a good proxy for the business we came from I believe it was 69.2 or so in Q4 I could be wrong on the digit but kind of around that so we've proven also the scalability here but of course can there be deviations? there probably will be but this is a pretty good sort of guidance as to where we expect to be

Perfect, thank you very much that's all for me

Pleasure Christian

If you wish to ask a question please dial pound key 5 on your telephone keypad There are no more questions at this time so I hand the conference back to the speakers for any closing comments

Thank you very much and again thank you everybody for showing and paying interest in our company I really want my team also to be proud on the strong quarter despite this rapidly changing environment as we are all in the midst of despite that I just want to re-emphasize that I do think we have a strong position that we can grow further so we remain optimistic about our ability to actually dry growth and deliver long-term value across our hematology business while also pursuing long-term growth pockets outside of hematology so I want to thank my sincere thanks to the entire team at Cellavision and not the least to our strategic partner in terms of SysMix for where we've started the year and what we've built up over the last years I'm very excited about where to take us in the coming year here so thank you everybody for listening in