CellaVision AB (publ)

The participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to CEO Simon Ostergaard. Please go ahead.

Thank you very much. And thanks to everyone taking the time to listen in to our quarterly report that we've launched this morning for our third quarter. I'm happy to say that I also have our interim CFO, Monica Jensen, with me and will be happy to also answer any questions you may have when we get to that part of the session. So the quarter in brief. And so we have named our quarter report soft quarter with mixed regional performance. And this is also related to currency effects. We saw Americas and EMEA. We had some quarterly variations resulting in modest growth, which we are highlighting here. We are coming out with a quarter here where we are reporting net sales decreased by 1.7 percentage points to 176 million. However, due to the FX headwind of minus 4.3%, then sales increased organically by 2.6% during this quarter versus the comparable quarter last year. On the EBITDA side, we increased our EBITDA to 50 million, so we increased by 1 million, and this relates to or corresponds to an EBITDA margin of 28%, also a small increase. In terms of what we want to highlight with regards to our strategic direction and our progress, we actually see a lot of progress. It's a very exciting time for the company and our partner. We're highlighting the fact that we've completed our clinical trial. We've submitted our documentation to receive the C mark for our bone marrow application. We do expect this one to be done according to plan and obtain the CMOD by, here we say, early 2026. I think we've set Q1, so that's still in line. We are positively optimistic around it, even though there are, of course, always risks with anything, but this is an exciting time. Now we are really looking into training and the commercial launch activities for 2026. Another big chunk of our investment has gone into an upgraded software for our platforms where we've done the verification that has been completed and now being installed at customer sites for final validation before we roll it out, which is planned for next quarter, which is this quarter here in November. All right. Thank you. Here we go. And then a slide around the financial development. So it's a busy slide, but what you have here is our Q3 numbers reported fresh at the very left-hand side, the comparable quarter, and then the year-to-date numbers for 2025 in the middle, followed by the compare last year, and then the full year 2024 on the very right-hand side. So I talked about the organic growth and the revenue of 176. If we sort of peel the onion and work our way through the P&L, that translates into a gross margin of 69%. So we increased the gross margin by a percentage point. We had full impact from our price increases during Q3, and we had a little bit of a product mix. So that was a positive contribution. On the operating expense side of things, we invested 82 million, went down as compared to last year, a little bit on sales, a little bit on admin, and according to plan, invested a little bit more on the R&D side. So that actually translated into a growth of EBITDA of around two percentage points. So from 49 to 50 million, despite the negative decline in revenue. On the R&D side, as you can see, 24% of sales is what we have invested into R&D, of course, slightly affected by sales. However, really the investments are following our plan and we've capitalized a little bit less than normal, only 14 million this quarter, which is primarily due to the vacation piece. And partly also completion of the software upgrade, which also had a little bit of an impact on how much we capitalized. On the cash flow side of things, we had a cash flow before the working capital items of 52 million. And then the working capital adjustments or impact was increased. was actually minus 22 million. And the majority of that was from accounts receivable since we had quite a number of orders being placed in September. So this is why our accounts receivable increased. So we had an operating gas flow of 29.6 million, 30 million. And on the investment side, we invested 22 million, both on the capitalized R&D activities, as I said, but also investments into data storage was a significant chunk this year to server capacity for some of our new technologies. And then after subtracting our four million of finance activities, the cash flow that were related with that, we ended up with a total cash flow of four million. So that's really the story around our P&L. Let's take a look at the regional highlights. So in Americas, we had 68 million on the top line coming from the Americas region, South and Northern America, which is equivalent to organic growth of 4%. So we also had currency effect there, of course. I'd say in general, it came from really good traction on the large instrument platforms and less from the smaller instruments where we saw a modest decrease. However, we also saw good traction in Latin America. So that is also positive for future growth. Generally, I'd say also when we look at our leading indicators in collaboration with our strategic partner, We believe that we have increasing potential in the US, which was also confirmed in the half-year report of Sysmex launched yesterday. In EMEA, likewise, sales amounted to 96 million versus the 98 last year. That is an organic growth of 1%. I think this was actually acceptable also in the light that we were up against a pretty tough compare since we had inventory build up in the comparable quarter last year. So a decent single-digit growth in reality. We had reagents growth as well, quite a bit from AMIA. However, on the hematology side, it was modest, very modest with only 1%. So there was some facing of orders on the hematology side there, but generally a good 14% growth on the reagent business. For APAC, I'd highlight that it was a soft quarter, 13 million. So 10% growth, but of course on a very low base. This was also what we hinted in our previous quarterly report where we had some inventory shipping since we are entering our program where we are manufacturing out of China. So we ship quite a number of of parts and instrument modules to China, which impacted sales. This was the main contributor to a soft sales across APAC. We sold also outside of China. So we do see momentum in pockets across Southeast Asia and Australia. So that is a positive outlook there. And then I also want to emphasize that we are seeing good traction, 5x improvement of revenue sales from our reagent in APAC. Of course, it's small numbers in APAC, but it gives us the confidence that our penetration and expansion in APAC on the reagent side is on the right track. If we cut the numbers, in terms of sales per product group. So same numbers, but sliced per product category. We have 93 million versus 102 on the instrument category. And again, contribution from the large instruments was important. And then as I just alluded to on the Made in China initiative, it is very important for us to be able to participate in the market in China by manufacturing our instrument in China. So that is a project that is finally also coming to the end as part of our strategy. On the reagent side, I mentioned the growth of 40 million in revenue versus the 35. So that's the 14% growth. So good to see also that our, what we define as non-hematology is actually contributing with a decent sort of single digit healthy growth this quarter here. So that is really good. And then finally on the software side, 43. So, and that is also a correlation of against how we're doing on the instrument side, but it is actually a decent software revenue we accomplished. And also we had a contribution coming from spare parts and consumables worth 23 million. So the key takeaways is that, as we say, yes, we've had somewhat softer quarter with some different variation across the regions, but the underlying is a healthy business, which is supported by the gradually expanding strategic partnership which is advancing across multiple dimensions on internal processes on the now the focus also on launching the products, because this is another thing that the power of focus strategy that we launched in June 2022. It is starting to provide the output both from what you see when we decided to enter the specialty arena or specialty analysis with the bone marrow that is expected to come out. So our focus and activities are really on training and commercial loans activities. And so they will be here as we start the new calendar year. I also emphasized the software upgrade without going into details prior to launch, then I would say that it is delivering a faster, smarter workflow and it does have a new cutting edge user experience. In terms of our fifth pillar in our strategic direction or strategy, the power of focus, we also have these new areas where we expand beyond hematology, which is really the focus of deploying our 4U titrographic microscopy technology, the FPM technology. And we have reported that we are lifting this into our next generation hematology analyzer. And that is really proceeding according to plan. And based on this development, we're now also able to really scan different sample formats in the context of cytology and pathology as an example. And that is also an exciting area where we are having discussions with partners, potential partners playing in those fields. So taken together, a solid quarter. We worked hard, but also on the R&D and now on the marketing side is wrapping up. So it's a pleasure to present the result today. And with that, I think we should open the floor for questions. Any questions are, of course, welcome. Thanks.

If you wish 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. The next question comes from Simon Larson from Danske Bank. Please go ahead.