Mentice AB (publ)

Good morning and welcome, everyone. My name is Richard Engberg and I'm an equity research analyst here at TMB Carnegie. With me, I have Frans Venke, CEO and Ulrika Drots, CFO of Mentes. And today we're going to present the fourth quarter of Mentes. Frans and Ulrika, the stage is yours.

Thank you, Richard. Thanks for having me. We have Ulrika from Gothenburg. Unfortunately, she would not be here. So we are basically, Ulrika is virtually and I'm here in person. So what we have today for you is, first of all, the highlights for the Q4 results, as also the financial results by Ulrike, our chief financial officer. I will provide concluding remarks, and then we can go towards the Q&A. So overall, what we saw for the quarter, and this is also the summary to it, we saw an encouraging sales of 91 million Swedish krona. And so that meant an organic growth of 18%. And that was equivalent to 5% if you compare that or basically correct that for foreign exchange, and especially the Swedish krona, the strength of it. The full year net sales came towards 279 compared to 290 million SEC last year. Again, a growth of 3%, but also due to, again, foreign exchange, it was effectively a negative. So overall order intake, we were very pleased with 127 million SEC, an organic growth of 25%. And that really carried the momentum that we also saw in Q3 into the year. So full year, we had an intake growth of 8% organically, equivalent to 2% year over year, again corrected by foreign exchange. And this really showed that in the second half of the year, we had significant momentum. And that's also what you can see in Q3 and Q4, both in sales as also in the order intake. And that more or less corrected also what we did in the first two quarters of the year. EBITDA margin improved towards 25%. It was 19% the year before, and that also reflecting the positive impact that we had from, first of all, the higher sales, but also the cost measures that we put in place. And that is really driving towards the bottom line, and that's exactly what we would like to see. Strong growth, what we saw coming from the medical device industry, and that came primarily also from the Americas, as also from Asia-Pacific. The EMEA region normalized, and we saw basically after a strong year before, we saw that it was almost neutral in that regard. So the strategic focus for us remains on improving our healthcare systems business and making sure that we drive growth in those areas. What we do see here is that the market segment across the different three continents are effectively not positive to us. We are compensating for that by the growth in the medical device industry segment, which we see as quite going well. If we look at the business highlights, what we said is also that we would move our physical simulation business not only from Paris, but also from Stony Brook to Denver. And in the first two weeks of January, we have concluded this. And so this is now all consolidated into Denver, and that business is also up and running. This is also the desired impact also towards our cost structure, but also creates a more effective team where we have R&D, marketing, manufacturing, all co-located in Denver in order to drive our physical simulation business. The second piece is that we also saw quite a high market activity, and not only in Q4, but momentum that we started in Q3, in Q4, is also what we continue to see, as I said, especially with the funnel in place. So we saw that quite positive. It comes towards especially our hardware sales, but also the projects that we do as also the more or less the software sales and the licenses that come with it. What we do see there is that it's not only coming from a few of the medtech companies. It's a broad base of companies that award their projects and that we're working with, as I said, for new projects. And of course, that is positive. That makes us less dependent on a few big customers. We see that as a broad base, which bodes very well not only for more equal revenue streams for the future, but also making us more resistant to potential downturns from an economical standpoint. Activity of active approach towards the healthcare systems market, where we continue to invest in, in order to make sure that we change our proposition and that we're hitting the mark with propositions that truly resonate. Our expectation is that by the end of 2026, we will gain more revenues from this. It's an investment at this moment. So what we do see is that due to our large pipeline of projects which we have for the medical device industry segment is that we need to invest also in what we call our engineering and R&D environment. And that's also what we do both in Denver but also in Gothenburg. So we're hiring project leaders as also software engineers in order to support our customers and to accelerate those projects that could drive additional revenue also for us in 2026, but also in 2027. And we see that as very positive. So very selective investments in R&D and engineering where it drives additional revenue so that we have tight cost control in order to make sure that the earnings that we make are also, or at least the revenues that we make, are flowing through the bottom line as well. focus on the r d we are very actively focused on making sure that our realism is top-notch and realism we mean by is that how we do our simulations of of of especially devices in a body that they behave more or less as it close very close to reality And that could either be basically the feeling, the haptics, it could be how the devices actually move into the body, but it's all the entire anatomy as well. And we really stand out there. We are unique and are also being rewarded by our customers. And that's also one of the key reasons why they come to us in order to drive their projects with us. Finally, what I wanted to state is that what we saw in the final quarter of 2025 is that Gulf of Stream, controlled by the Hyrule family, increased their stake in Mantis. What it means effectively is that there is further focus on growth of the company for Mantis. And also this afternoon, there will be an extra shareholders meeting where there will be a change in board of directors composition going forward, or at least proposed going forward. With that, I want to hand it over to Ulrike, who will provide further guidance towards the financial figures from Q4. Ulrike, the floor is yours.

Thank you, Franz. So what we see during the last quarter of 2025 is, as Franz has mentioned, an increased impact on the market activities that we saw increasing in the third quarter. We saw that during the earnings call for the third quarter, and this is also what we show in the figures for the fourth quarter. Especially the growth in America, as Frans mentioned, is very strong, with an organic growth of 23% for the quarter. So that gives us a net sales of 91 million and organic growth of 18%. And we are, as Frans mentioned, and as we've said previously also, we are very impacted by the foreign exchange, especially the US dollars and the euros, because we have all our invoicing done in those currencies. And the growth in order intake during the fourth quarter led us also to an organic growth of above 25% for the quarter. Also really good to see is the EBDA margin and the result with 23 million, which is a good increase compared to last year. And this is a combination of increased sales and reduced costs, especially in employee costs, as an effect of the strategic realignment that was done in Q2. And I will come back to the cost implications of this. The order book leaving the last year had an organic growth of 4%. Taking FX into account, it shows a decrease of 6% if you compare year to year. And we have 87 million scheduled for 2026. Operational cash flow is lower than the same quarter in 2024 and this is due to the increased sales leading to higher working capital and accounts receivables. And looking at the full year, if you follow our earnings call earlier, you know that we like to look at the rolling 12 months perspective because it gives us a good view on the performance since we have variability between the quarters. And what you can clearly see in this graph is that the Decrease that was quite clear in the second quarter of 2025. And as Frans mentioned, we had a very good second half of the year. And that is shown in the figures where we moved from the 262 to 279 in Swedish crowns, million Swedish crowns. So the growth within the MDI segment in the Americas region continues. And as Franz mentioned, this is both with the existing large customers, but also a broader base of customers within the MDI segment. The region EMEA had a very strong Q3 and Q4 performance for EMEA was more stable. And last but not least, on the EBITDA margin, you see here the cost base is stable through the fourth quarter as well. And adding some more comments on orders and order intake, which you can see on the next slide. This really clearly shows the increase of orders within the MDI segment in the fourth quarter, where you can see the Americas region really growing in the graph on the upper right-hand side. And the HCS segment, we don't see it yet in the net sales, but we do see an increase in order intake, mainly actually driven by the region EMEA and APAC. And looking then at the perspective of net sales on the next slide. This is where you can see that the growth within the Americas and the MDI segment is really strong with an organic growth of 23%. Taking FX into effect, it ends up with a 10% increase. And as Frans also mentioned, we do not really see the performance within the HCS, the hospital segment. It has been declining for some while, and the strategic initiatives that we have been talking about have not yet given the results. And as Frans mentions, this is still a continued focus for us. And then finally, some comments on the cost base. As you can see in this graph, there was a reduction during the third quarter as an effect of the strategic realignment done in the second quarter. And we continue to have a stable growth. cost base in Q4. And this is key for us going forward to keep this tight cost control. So basically with this, we think that we're entering 2026 with a stronger pipeline, improved cost structure, and a strategic focus.

Thank you, Ulrike. So clearly what we see from a strategy and an outlook standpoint is that we have an encouraging development towards our medical device industry business with a broader partner base and also sustained engagement. And as I also stated earlier, this helps us if there are shock effects in the economy, We are dependent on a broader base of customers who award their projects to us. And that's also what they see. What we see is that many customers are now coming to us and that we have a good name, a very good name when it comes towards our realism, but also the simulations that we provide. So what we do see as well is that we are reviewing currently the supply channels for EMEA and APAC to scale also the commercialization and making sure that we can grow there as well, not only in North America. And what we do is also support the good things that we're doing in the U.S. We bring them also over towards EMEA and APAC, but of course in a customized way. We're serving the medical device industry customers in that regard. We have a high pipeline of projects that we have, and it's on us now also to making sure that we drive the implementation of those projects and that we accelerate them, and that we do that with high customer satisfaction, but also in such a way that it drives, of course, the revenues towards mentors. The long-term focus and strategic focus on the healthcare systems market remains, so the hospital market, and it is a critical value also towards Mentes, and we are making sure that our proposition is going to resonate and making sure that we drive sales along the way. So continuous investment in scaling and also our realism from an R&D standpoint in order to make sure that we drive our propositions even more effective towards our customers. The highlights that we see is that overall we had a strong quarter from top to bottom. showcasing the results of the strategic initiatives or effectively the cost control that we put in place, but also the focus on the sales side. We see basically the top line increasing as also flowing down towards the bottom line. Increased order intake driven by a medtech sector which is strong, but also, again, as I stated, the sales organization who is very focused on service and customers and making sure that we help them as best as possible with their introductions of new devices that they bring to market. We also see a high number of projects that we need to execute on and collaborate on. We're doing that also with the pipeline of projects that we have in place. We are investing in that pipeline in order to bring them down. That will also help us with revenue for 2026 and beyond. So important steps in order to drive simulation, but also strengthening our leadership in image-guided therapy. That's what we do. And it basically remains focused on all the entire workflows. If it comes to aortic, peripheral, neuro, cardiac, we do them all. And that's also where we would like to excel in. So also continuous investment in what we call next-level realism, so that also we're very interested not only for medical device industry companies, but also for robotics companies who truly reward the realism that we have in place. And again, that's why we are unique, and also that's why we are awarded those projects towards us. so in all what we see is that mentis can accelerate its growth potential and we will work relentlessly also with our partners to execute on the project pipeline that we have in place and actually deliver them also towards the customer base and our mission remains the same we have the right partners we have the right customers we have the right people in our organization and the right propositions that really bodes well for a 2026. So confidence, what we see from Q4 results, but also how we go into 2026. Thank you for this. Thank you. And I would like to hand it back towards Richard for maybe questions and answers.

Thank you, Frans and Ulrike. And my first question is basically, can you elaborate a bit on how your broad and customer base works? within the MDI segment has affected you. And going forward, is this broadened customer base a sign of the quarter-over-quarter volatility might increase since you get less dependent on large orders from specific customers?

Now, great question, Richard. So what we see is that indeed many of the not only larger companies, medical device industry companies, but also the smaller ones are coming to us now. And they see that we are being recognized by providing the solutions that customers need. in order to drive their new devices towards the market, in order to educate and train their customers, but also do it safe and effective for their physicians. And what we see is that that broader base of customers will help us. So it makes us less volatile, also from a revenue standpoint for the future, but also simply less dependent on a few big customers. So in all, I see that as positive across the board for our business going forward. And it's simply on us to execute on that large base of projects that we have. So all are positive in that regard, what we are executing.

Okay, thank you. And can you elaborate a bit on the specific initiatives that you're taking within the healthcare segment to return to growth?

Yeah, so what we do see in the healthcare segment is that across all the continents is that we see strained investments into simulation equipment and also education equipment. And of course, that also is reflected in the numbers that we show for what we call HCS. And in order to make sure that we truly can grow in this segment, we are investing in the proposition that we do it differently. And so that means a lot of hospitals, for example, are strained if it comes towards personnel. And also the onboarding of personnel is a critical factor. And where we would like to support those hospitals is also providing solutions that help onboarding personnel in a quicker and more easier manner and also more cost-effective manner. And that is what we're currently driving and creating with our team in order to do just that. Of course, we also remain close towards basic simulation and training. We'll do that as well for fellows, etc. But also there, we need to make sure that we not only provide the system itself, but also the support structure behind it.

Okay, great. And my next question is more general. I mean, you visit a lot of conferences within the medical... Medtech industry. And how would you say that the industry climate is right now? Is it a lot of talk about investment or is it a bit more restrained?

It is where the beginning of last year, it was quite restrained. It really picked up during the summertime, and it's a June-July timeframe, and we have seen ongoing investment in the medical device industry segment if it comes towards new devices. So we saw that in Q4, and that went also into 2026. So it is encouraging to see.

Okay, great. And now a question for you, Ulrike. Can you explain the development in the gross margin during the quarter? Was it mostly driven by mix effects that is decreasing somewhat, albeit to a strong level, from a strong level to a really strong level?

Yes, you're absolutely correct. This is a mix effect of the product. So the hardware sales has increased. This is tied to the MDI segment and the larger customers. So that is affecting the average gross margin.

Okay, great. Then I guess this is a question for you. It has to come from the web. And it's basically, how do you view the cost base going forward? You talk about investment, but should we still view it as quite stable during 2026?

Yes, you should view it as quite stable. And as Vance mentioned, there will be some minor investments needed to do what we want to go forward. But we're really committed to keeping a cost control and a stable OPEX basis.

Thank you.

Maybe one addition to it, indeed, any investments that we might do are directly linked towards revenue generation or projects that we have effectively in place. But we're very focused on making sure that our cost base remains as low as possible so that also... any revenues that we make flow down towards the bottom line. And that's also what we have implemented within the company. You can see it in our results and we will stay operating accordingly.

Great. And my last question is a bit on the revenue mix within the Mantis Vist segment. Hardware sales were really strong year over year, but the software sales were year over year down. Is this primary timing related as, well, you need hardware in order to install software?

It's timing related. So simply what we saw also in Q4 is some of the medical device industry customers really investing in hardware. And that is the reason why we had large deals also coming in. And then we see a more skewed towards hardware. But over time, we do not see that that will be a changing mix. So it will, of course, correct itself again.

Okay, thank you, Frans. And do we have any concluding remarks?

No, it's maybe a few. First of all, that we're encouraged by what we saw in Q3, but also in the Q4 results. And that sets us up very well also from an activity standpoint, how we go into Q1. especially with our cost control that we have in place, but also the cash position that we have as also the funnel of projects. As I said, we look with confidence towards 2026. And it's simply on Mantis and our entire team that we have, the great people that we have, but also the great customers that we have that we simply need to execute. And that's what we will do. So we are looking with confidence towards 2026.

Okay, thank you. And I just received another question online. So if we can just take that before we are finishing the call. Yeah, sure. And it's related to your R&D investments that you have spoken of in the quarterly reports. How should we look at them going forward? And will they increase quarter over quarter during 2026 in order to execute on your sales pipeline?

They will, to how we look at it, they will percentage-wise stay constant in the P&L. So in that regard, it will go up because of our growth, but percentage-wise it will stay effectively flat. And the focus will be primarily in making sure that innovations... towards customers that we go more from basic to more advanced simulation where we allow for customers to create also their own cases. So we create flexibility for our customers in order to drive better simulations for their customers. And that is our focus and that's also what we will drive and our innovation is primarily in that direction. Artificial intelligence is a key component into this, as also additional technologies which are linked towards virtual reality or augmented reality that are going to be part of that solution. And that is our investment that we currently do.

Okay. Thank you, Frans. Thank you. Thank you, Ulrike. And thank you, everyone who has been listening. Thank you.