RaySearch Laboratories AB (publ)

Welcome to RACE Search presentation of the second quarter of 2026. My name is Carolina Strömlid and I'm head of Investor Relations. Today, our CEO and founder, Johan Löf, and our CFO, Nina Grönberg, will take you through the key highlights and financial results for the quarter. After the presentation, we will open up for questions. Simply raise your hand in teams if you would like to ask a question. And with that short introduction, I'll hand over to you, Johan.

Thank you, Carolina, and welcome again, everyone. This is a summary of research as of today.

We have four different software platforms, RayStation, which is a treatment planning system, RayCare, which is an oncology information system, RayIntelligence, an analytics platform, and RayCommand, which is a treatment control system. and they're all dedicated to improving cancer treatments. We have 472 employees of 41 different nationalities. We collaborate with 26 industrial partners and we have over 1,200 customers in 51 countries. But most importantly, our software has been used to treat over 11 million cancer patients. So this is the revenue development over a very long period of time. And the message here is that research has grown every year since 2008, except for the two pandemic years. Even though, as we can see in this diagram, the fluctuations between quarters can be quite significant. And you look at the last two quarters, we have had two quite significant week quarters but nevertheless we expect that this growth journey to continue. So a few words about Q2. So the weaker development in net sales and operating profit during the quarter was of course disappointing. It was primarily due to poor performance in the US where several deals were postponed compared to our expectations. Net sales decreased by 11% to 272 million, while organic growth was a negative 8%. Recurring support revenue continued to provide stability, amounting to 133 million, or 49% of total revenue. Operating profit was 28 million Swedish grams, corresponding to an operating margin of 10%. If you look beyond the individual quarter, the last 12 months show a bit more consistent performance. Net sales amounted to 1.27 billion Swedish crowns with organic growth of 9%. Recurring support revenue provided a solid base accounting for 41% of total revenue. Operating profit was 277 million with an EBIT margin of 22% over the last 12 months. So while the second quarter was disappointing, the last 12 months figures show a more stable view of our underlying performance. Despite the weaker quarter, demand remains stable across our markets and ordering intake increased by 23%. Several expected deals in the US were postponed during the quarter, but a number of those were received in early Q3. In total, we secured nine registration orders worth approximately $5 million in July. These came from well-established cancer centers, for example, University of Florida Health Proton Therapy Institute, the University of North Carolina School of Medicine, the Lexington VA Health Care System, and the Emory Proton Therapy Center. We made progress in several other important markets, We received our first ray station order in Vietnam and Yonsei Cancer Center in Seoul, South Korea expanded its ray station installation with additional licenses for carbon ion therapy. In Germany, the upcoming end of life of Pinnacle contributed to five new ray station orders. Overall, we continue to see solid demand with several important opportunities across our markets. Another important customer win during the quarter was Dana-Farber Cancer Institute in Boston. We selected both RayStation and RayCare for its proton therapy program. The order value was 900 kilograms, and we expect approximately one third of that to be recognized as revenue in Q3. And this also means that another leading cancer center, one of the top 15 clinics in the world, join our growing customer base. The solution combines RayStation and Raycare to enable efficient, adaptive, and data-driven workflows together with Mevion's S-250 fit proton therapy system and Leo Cancer Care's Marie chair and CT. And the combined system is supported in RayStation version 2025. The first treatment was done in June this year, and that treatment happened at Stanford.

Some other key highlights from the quarter.

In mid-May, Iridium Network in Belgium performed the first online adaptive treatments using RayStation RayCare on the Varian TrueBeam linear accelerator. This opens up for advanced adaptive radiation therapy to many clinics and patients around the world using equipment that they already had. We also further strengthened our proton expertise through the recruitment of Anthony Lomax, who is one of the world's most highly regarded experts in proton therapy. During the quarter, we participated in the ESTRO Congress here in Stockholm, which was a great opportunity to connect with the global oncology community. On the product side, we launched new versions of RayStation, RayCare and RayIntelligence during the quarter, Together, these releases expand our capabilities within adaptive treatments, more efficient workflows, and more precise personalized cancer treatments. Finally, we introduced a long-term incentive program to attract and retain talent. To secure shares for the program participants, we acquired treasury shares. We also carried out additional repurchases to reduce the number of outstanding shares. So in total share repurchases amounted to 200 million Swedish crowns. I will now hand over to Nina to go through the financial development in details.

Thank you, Johan.

It is obvious that our second quarter didn't turn out the way we expected and the demand that we see in the market wasn't reflected in order intake nor in our net sales. Order intake was up 23% and it did include orders of strategic importance and that is good. But the growth was in relation to a rather low comparison quarter and order intake on licenses was down 14%. As you know by now, our business model involves fluctuations and the underlying fundamentals in our market and research position have not changed. We continue our growth. The book-to-bill ratio was 1.1, and order backlog end of June amounted to 1,691,000,000, of which 670 is expected to turn into net sales in the next 12 months. The overview of net sales and EBIT margin development gives the view of the disappointment in the second quarter with the drop of 11% from 305 million SEK in 2025 to the 272 million in 2026. License sales decreased 18% in the quarter and hardware sales were down 38%. support sales did increase with 1%. There are still some headwinds from the stronger Swedish krona and organic growth was minus 8%. The low net sales led to an EBIT of 28 million and an EBIT margin of 10% and both of them are lower than last year's 36 million and 12%. And we were not able to keep up the margin in the same way as we were in the first quarter of this year. Currency gain from revaluation of working capital gave us a positive 4 million SEK effect in the second quarter. Leading the revenue into licenses, support, hardware and training. The support revenue stood for 49% of the total revenue in the quarter, where our normal number is usually around 40%. and those higher 49 was related to the lower license sales in the quarter. Taking away currency effects from support numbers, the growth would have been 4%. We still have some periodization effects in support sales that moves revenue into later periods.

Moving to the next slide with the quarterly and

last 12 months development of free cash flow. Free cash flow in the second quarter was 50 million SEK, and that is including positive effects from an increase in advances from customers and temporary increases in accounts payable. And as you can see, it is an improvement compared to last year. Cash flow is always in focus and it will be so also going forward. But as I have mentioned before, we have contract situations, for example, larger, very profitable contracts, frame agreements and so on, where we do accept longer payment terms. And we do see it as a strength that we are able to have this flexibility. We have very, very low bad debt and by the end of the quarter, we also had 390 millions in advances from customers. Cash balance end of the quarter amounted to 213 million. It was affected by a dividend payment that we did in May of 137 million. And during the second quarter, we also did share buyback of 142 million. In July, we have acquired own shares for an additional 58 million. That gives us in total share buybacks of 200 million. That means that we have acquired 995,558 shares at this point. That stands for 2.9% of the total registered shares. As Johan also mentioned, there are two purposes with those share buybacks. One is to keep treasury shares in order to secure our long-term incentive program. And the other one is repurchases to reduce the number of outstanding shares and to transfer value to our shareholders. In order to keep a high level of flexibility and preparedness for possible investment opportunities coming up, we have signed during the second quarter a new credit facility. It is a so-called rolling credit facility that we use when we want to, and it is in the amount of 225 million SEK.

And that was all from me, so I hand over to you again, Johan.

Thank you very much, Nina.

Okay, so let me summarize and share our outlook. Are we not satisfied with our performance during the first half of the year? Our long-term growth prospects remain unchanged. Demand for advanced radiotherapy software continues to be strong. We're already seeing robust order momentum in the US in early Q3, which supports a strong second half of the year. We are a leading player in the global proton therapy market, which continues to grow and offers a large number of business opportunities. The clinical milestone achieving RayStation and RayCare on TrueBeam is very important. Online adaptive treatments on the most widely installed treatment machine in the market support a broader adoption of both RayCare and RayStation. Finally, we believe in strong performance during the second half of the year and our operating margin target of at least 25% for 2026 is unchanged. So now it's time to open up for questions and I will hand over to Carolina.

Yes, I will just remind you to please raise your hand in teams if you would like to ask a question. The first question comes from Kristoffer Liljeberg at DNB Carnegie. Kristoffer, please go ahead and unmute yourself.

Yeah, there, sorry.

Thank you. A few questions from me. Can you hear me now? Do you hear me? Yes. Okay, good. So the first question is, you received quite a number of orders here in early third quarter. So is it possible to say how much of the miss in the second quarter has now been recovered in early third quarter? That's my first question, and then, yeah, maybe we could start with that.

Yeah, we can answer that one by one, I think. Yeah, it's a big part, but I wouldn't say it's everything. But, yeah, that's my answer. It's not 100% on its head orders.

Okay, but do you expect to recover all of it in the third quarter, or could it be further delayed here?

Now, those particular expected orders for Q2, I think I'm quite confident that we'll recover all of those during Q3.

Okay. And do you see a risk for additional delays instead in the third quarter and fourth quarter?

It's a fair question because now we have had two quarters with delays. although it was more elaborate or more clear in the second quarter in particular related to the United States. But there are other ways of looking at this, and given the pipeline that we have now, we are confident that we will deliver on the promise for the entire year. And that requires a very strong comeback in both Q3 and Q4.

And that's actually my second question. So when you say deliver on what you have promised for the year, then you refer to the margin or would you be willing to give any sort of indication what type of sales growth we could expect for the full year?

sales growth target. So I'm really referring to the EBIT margin target.

Yeah, okay. But given that sales is down FX adjusted here first half of the year, do you think it's fair to assume that you could be back at double-digit sales growth for this year?

That's definitely our aim. Given that we We can't change the cost base drastically because that's mostly related to our staff and that we can only change that in a slow fashion. So with that assumption, then to be able to deliver the EBIT margin target, it requires a significant growth.

Okay. Just one more question on R&D amortization, which were down here in the first half of the year. Is this the level we should assume now going forward, or as you continue to capitalize, will R&D amortization pick up anytime soon? Thanks.

Yeah, I'll take that question. I mean, the main reason for the amortization to be lower this quarter is that we have a later release of RayStation. Previous year we did that release already in April and this year it was in June. So that is the effect that you see in the depreciations. When it comes to the capitalization rate, it was low, I would say, in the comparison quarter. It has been on 70% last year, the total of last year. And now in the quarter to 2026, we are approximately on those 70% again.

With the release, amortization, we should expect it to go up again in third quarter.

Yeah, I would say so, yes.

Okay.

Thank you. Thank you.

We will now move over to Mattias Wadsten for the next question.

Mattias, please... Sorry, Mattias Wadsten at SEB. Mattias, please go ahead and unmute yourself.

Good. Hello, can you hear me? Yes.

Hi.

Perfect. First one, just a clarification made on the press release on 10th of August and the comments you made today around the $5 million in orders from the US. So basically, is that all US revenue you have received in July or is it referring to those specific orders that slipped from the second quarter?

It's referring to the ones that slipped but I right now I don't know if there is additional I can't answer that question if there is some additional orders on top of that at any rate it's not no big ones but it could be a few smaller ones Perfect thank you very much and then I was keen to hear a little bit about on on APAC and Europe would you say that those regions are performing more or less in line with your initial expectations so for this year or general terms yes yes I would especially in Europe they have been performing very well so far APAC is a little bit behind but they also have a very strong H2 protected.

Thank you. And then I have a question. Before you have been given the pinnacle conversion as percent of license revenues, I don't know if you're willing to give that for either Q2 or first half or anything?

I'm sorry, I don't think we have it at this moment. Sorry, can you please repeat?

No, we haven't.

Okay, that's fine. Last one was on the cost side. Selling expenses in Q2 looked quite high and at the same time admin was lower. So I was just keen to hear if there are any reclassifications in cost items or anything like that. That's disturbing the comparison figures.

Sorry, Mattias, I was focused on your previous question, trying to look that up, the clinical replacement. So I'm sorry, but can you repeat it again?

Yeah, of course. No worries. It's the selling expenses that looked high at the same time as I think admin looked quite low. So if there are any reclassification or anything going on.

Yeah, I mean, admin, if you related to last year, we had a couple of items that were affecting comparison last year, if you remember. So that's the main reason for the lower admin costs. And when it comes to selling costs, I would say, I mean, we have increased the staff there. So that increase is mainly related to that.

Okay, then I will squeeze in one last question. The 1,227 customers you presented in the beginning,

Sorry, Mattias. Estro was also a big thing that added some costs in this quarter, too, related to last year since it was in Stockholm this year. We had some extra activities. And we also have a minor effect that we have moved our patent costs from admin to sales. So that is also part of it. But I would say the main thing is that we have increased the staff.

Okay, thank you. I will squeeze in one last question now. So the 1,227 customers you presented, is that as of Q2? I mean, as of June then, or is it today?

Yeah, end of. No, okay, that is the number you presented. Customers, that is of today, right? Yeah.

Okay, thank you so much. Thank you, Mattias.

Our next question comes from Carlos Moreno. Carlos, please go ahead and unmute yourself.

Hello there. Thanks for taking my question. I've got, well, I've got two questions. They're sort of related. I'll come out with them. If I would have gone back 12, 18 months ago, I would have thought that this year, which, by the way, looks like all the quarterly volatility is going to be a decent year for revenue growth. um but i would have thought it would have been like a banner year because of the pinnacle roll off and it makes me slightly worried about what's going to happen post pinnacle because you do have a bit of a tailwind at the moment it's an okay year with this tailwind and as you you say yourself ray care is a very long cycle sale and Connected to that, I wanted to ask, I'll just lay it out and then we can answer the two bits. I want to know if there's any change in your customers when it comes to thinking about paying for your software monthly rather than upfront with maintenance. Because if you think about back to Pinnacle, they've got the machines, they know they're doing a software swap out. Surely these customers don't think of it as CapEx, they think of it as OpEx and they would be very happy to do a SaaS sale. So I want to talk about Pinnacle and what happens post Pinnacle in this tailwind period. And I want to talk about the move to SAS, which to me seems sooner or later, it's going to happen. And I just want to know what your customers are saying to you. Thank you.

Okay, thank you. So first of all, the Pinnacle, as you say, tailwind, and it wears off in certain, it's already gone in certain regions. for example, Japan and UK are good examples. It's been gone for a while. And then we sell, we replace instead other systems like Monaco and Eclipse. And then that will happen in the other markets as well. So we see a transition from grabbing the low-hanging fruit that still exist regarding Pinnacle as it you know goes away then there are other systems to replace and the the Raycare sales are slowly but surely picking up and there's a lot of interest there's a big pipeline now we have had okay not so many but four four sales so far this year it was four sales in total last year and now I think we'll add a good number of additional Raycare sales during the second half of this year. I'm not too worried about the loss of Pinnacle Tailwind, if you will. I don't think you mean SaaS, you mean subscription. And so we do offer subscription and we have some subscription customers, not that many. The overwhelming buying behavior of our customers is still to have, to not view this as OPEX, but to view this as a CAPEX. investment, and it makes some sense because it's a very long-term investment. I will add some details to this, some nuance, but I think it makes sense that if you, most of our customers, they buy RayStation and they stick with RayStation for forever, as far as we are concerned so far. And that doesn't feel like a subscription situation because you really buy something for a very long period of time and then I think the customers view it more as an investment type of purchase. That being said, we want to, it's really in our interest to at least not to avoid these quarterly fluctuations, to have more of a recurring revenue heavy model. And I believe there are ways where the customers can invest in the RayStation or RayCare framework, and then functionality on top of that can be subscription-based. For example, treatment techniques in some way, they come and go. If you go back 25 years, then all the treatments were called 3D CRT with uniform beams. And then for a long time, after 2000, it was another treatment technique, IMRT, and then yet another one came, VMAT, and I'm sure we'll have other treatment techniques. So that type of thing, think it lends itself nicely to subscription where you can things that can change over time that I think is is very well suited for subscription so we're going to investigate and move into that field because right now we just offer full registration of full ray care in a subscription fashion then

and I think we'll see some sort of hybrid model going forward.

Okay, but by the sound of it, it's going to be slow. Basically, your customers aren't that interested in it and it's not particularly changing. Yeah. Thank you very much.

Thank you.

Thank you.

Next, we have Oskar Bergman from Redeye. Oskar, please go ahead and unmute yourself.

Perfect. Can you hear me? Yes.

Great. It seems that we are experiencing more delays in this industry as of late, specifically in the US. So I'm just wondering if you can give some background as to why that might be. And I'm speaking in general terms for the industry.

Of course. We have some theories and some data points. The reimbursement levels have gone down in the US during this year. What we hear from some customers is that the administration around procurement and the part of the hospital that handles procurement has become much more cautious. and so they slow down the process. And some people say that it's because they really want to make sure that whatever the hospital buys is really, really needed. So I think that's part of the explanation that... But of course, in our cases, the hospitals, they do need the software and nothing has been canceled so far. So I guess in the end it turns out that the hospital or the purchasing departments decide that this software is needed, but the whole process is slower because they want to sort of minimize unnecessary purchases. That's the main explanation. And these delays, we don't see them in other regions. This is US specific.

Okay, great. Thanks. At Astro, Johan, you showed a very interesting slide during your presentation. One slide illustrated the six machines that you have RECARE interoperability agreements with today. And then on the second slide, you showed an additional 18 machines that you expect to have interoperability agreements with in the next 12 months. So I just want to make sure that I understood the timeline correctly.

Yeah, 18 sounds a bit much. I think I know which slide you refer to. I'm not sure it's 18, but it's a significant number. It's around 10 new machines. And you have understood it perfectly right. So we are adding interoperability to RayCare to a large number of machines right now. Okay, great.

follow up on that. The customer pipeline in respect to those expected interoperability agreements, I suspect you have pretty far going discussions already with those potential customers that this wouldn't take for you.

Yeah, in some cases. I think Dana Farber is a good example because they purchase maybe unfit. The interoperability is not there technically yet but it's very it's very close we have uh teamed up with both mevion and leo cancer care and there will be interoperability between raycare and and that machine um but uh dana barber has they have already purchased it because they they know that the interoperability will come okay and um it's the final question uh for me

I recently spoke with someone who's very, very familiar with Pinnacle, and he told me that a part of the Pinnacle users today actually will continue using Pinnacle after end-of-life because there are some third-party service providers that are still, you know, going to service this TPS. I'm just wondering if you have noticed this to any significant degree or if you expect that this is a very small part that over time is likely anyways to convert as well.

Yeah, I don't think that's a long term. solution. It's still a very old system, and that's why they abandoned the system. It's been very robust, it's survived many, many more years than anyone expected. And for a medical device, as treatment planning system is, you don't want to have it supported by a third-party organization. for any longer period of time. So I think that's going to be a short term, at least in the Western world. But I think it's probably true in, for example, China. There will be pinnacles ongoing even before end of life. But the majority of the pinnacles in North America and Europe will be replaced. All right, yeah, makes sense. Okay, thanks. Thank you.

We will move over to Daniel Corsa for the next question. Daniel, please go ahead and unmute yourself.

Hi, thank you for taking my question. So regarding the North American markets, I think a lot of us investors have seen sort of a dual trend with large health systems consolidating while care simultaneously. somehow shifts towards smaller outpatient clinics and satellite centers. And I was just going to ask how research positions itself to product offer. I mean, particularly research and rate care to capture this shift and how does it affect your sales strategy in the US?

Currently, we work on both fronts. We work both with small, medium sized clinics and we work with the bigger networks. So it's not really We don't distinguish. Of course, we distinguish with them. We don't prioritize one over the other.

But with the consolidation, wouldn't bigger hospitals, bigger hospital parks, a lot more diversifications in the machines, could that be some kind of tailwind for you guys, giving you guys moat with your software?

I mean, if you look historically, the biggest... most renowned, we just announced Degna Farber and that means that we have 11 out of the top 15, top 15 and largest clinics in the world. And they represent what you are describing. So yeah, on paper, that should be in our favor. But I also think it's important for research to go after, because the bulk of the market in the US is still all these smaller clinics. So we have to The bigger clinics, I mean, Czech, they come to us eventually. The smaller clinics, we have to work harder to break into the one, two, three Linux centers.

Okay, thank you. And just one more question regarding China. So, I mean, look at China. China has, for years, there's been a sort of strong regulatory push for hospitals to source domestic medical equipment. And there came a new law about procurement also. I was just going to ask how is research navigating these bi-local requirements? And do you see these regulatory shifts creating long-term hurdles for yourselves in the region? Or is it also some kind of tailwind?

Yeah, regulatory-wise, it's a hell of a headwind, I would say. So far, it's a very heavy regulatory process. I mean, it's clear that China aims to purchase more and more domestic in the healthcare sector. One way that we address this is to work closely with a number of new machine vendors that are Chinese. And we have really good, really strong partnerships with several new machine vendors. We have worked for a long time with Shinva. We work with Intel Array. We work with Aure and several others. So that's a good approach for us to bundle with a Chinese machine.

Okay. Thank you.

Thank you.

Now we have a follow-up question from Kristoffer Liljeberg at DNB Carnegie. Kristoffer, please go ahead and unmute yourself.

Yeah, thank you. Yes, I wonder if you could disclose the number of proton therapy deals you signed in the second quarter and in the first half in total.

Okay, I don't have that number on top of my head. Do you have that?

No, not exactly how many it was. We have to get back on that one.

Okay, that's fine.

We can come back on that.

Okay, great. Thank you. It's easy to find out. We just have it right now.

Yes, we have received a few written questions, but most have been covered already. But I have one here regarding the Ortega project. RayStation for the first two clinics was recognized in Q1. When do you expect RayCare for those two clinics to be delivered and recognized as revenue? And when do you currently expect RayStation and RayCare to be delivered to the third clinic?

We have delivered two clinics. There will be at least two more deliveries this year. There will be up to four in total. and then we have another five to go. Yeah, that's correct. And they will probably be delivered within 2027, 2028. And I can say exactly when the revenue for Raycare will be recognized, but I would guess almost all of it should have been recognized before end of 2028.

Yeah, so I can add that we have recognized revenue for Raycare for the two first sites now in quarter two. And as Johan said, when we deliver to the two additional sites in 2026, that will also be with Raycare.

So four Raycare installations this year to Ortega? Yeah, or deliveries at least.

Good. That concludes our Q&A. Thank you all for joining us today and for your questions. If you have any follow-up questions, please don't hesitate to reach out to us. We look forward to seeing you again on November 3rd for our Q3 results. Have a great day. Thank you. Thank you.