Sectra AB (publ)

to SecTrust three-month interim report presentation with CEO Torbjörn Kronander and CFO Jessica Holmqvist. Management will start with their presentations and you can ask questions in the chat function during the presentations and management will address them after at the Q&A session. And with that, I will hand over to you, Torbjörn.

All right. Thank you very much. Welcome to our quarter one presentation for this fiscal year. We'll start with the intro and highlights by myself and then Jessica will take over and present the financial developments and figures. I will have a brief sector way forward and then we'll have a Q&A session at the very end. You can use the chat function or you can send in your questions by email. Our business operations sector, to repeat that, is imaging IT. We manage images. We started with only radiology, which is still dominant, but we manage all images of the hospitals in one single system today. We do pathology, radiology, cardiology, dermatology, ophthalmology, and other ologies as well. And then we have secure communications to the right that we'd handle the top level approved encryption devices, mainly for Europe, almost exclusively for Europe and NATO. We are NATO approved since before. We're also selling mainly into Sweden and Netherlands, but also to other countries. And then we have business innovation where we have a greenhouse of future business or smaller business areas that actually do not easily fit into imaging IT and secure communications. And we have four operations there. Highlights from the quarter. Order booking is doubled compared to the previous or equivalent quarter last year, mainly due to successes in the US and Canada. We have grown very well in the US and in Canada, It's almost exclusively software as a service sales in this region. We sell very few licenses there today. All operating areas grow, which is important. And as I said before, we have a huge progress in transition to as a service model. And know that software service can be a little confusing. One model is selling a license up front, which we did historically, and then getting perhaps an upgrade of service revenue from it going forward. The other one is when you have recurring revenue and you charge per user per month. That's a conventional way of doing it. And many companies have that model today. Most companies today is going to pay for usage, which we went the right way. We went from licensed model to pay for usage. Other companies went to pay per user per month, which we skipped. We think that was good. The whole world is going towards pay for usage, but we went to right away. So we are past a transition that many companies will have to do now. Happy customers drive growth. We have happy customers, which is the main reason we have grew. We are rated as the Happiest customer in the US and Canada in several other areas as well. The contract order bookings grew by 130% compared to Q1 last time. Net sales grew a little less by 6%. Now we also have currency effects in that. But it's still a good growth. And profit picture grew by 26% compared to the previous quarter. The transformation as a service model, as I said, cloud recurring revenue is the recurring revenue we get through cloud sales. This is for usage and what I described before. We also have recurring revenue, which is service contracts for the old systems that was once sold by a licensed model. And therefore, we also inform you of the recurring revenue, including that part. But the cloud recurring revenue is the new business model and that has a very good growth of 46%. And before we had large growth figures of their relative growth figures, but now there is a substantial amount to grow from. So now this is begin to make a real impact on what we do. The all over recurring revenue includes the cloud recurring revenue, but also the old service contracts and they are not growing as much. And the churn, which is very important if charge for use is you don't want to lose customers because you never got that upfront. You want customers to stay. And we have a very low 0.7% churn of our recurring revenue. Financial targets for the groups are from the left stability. Our systems are considered one of the most critical systems on both hospitals and nations. We said the highest level security systems for nations. And we also sell, what some people say is the most critical IT system in the hospital, management of images. It definitely is one of the most critical. And you won't buy that from three guys in the garage. You want stability and long-term on your vendor. And therefore, we also want the financial stable, and we have a equity assets ratio target of about 30%. You shouldn't compromise on that one. But we are well above it at 54%. Profitability, we need to make money, of course, on what we do. The target is 15%. But both of these first, and we are at 19%. Both of these first are hygiene targets, as we see it. If we were asking or really trying to increase margin, we could. but that will compromise our future growth. And you can only increase margin once, but you can continue to grow forever. So whatever we have above 15% should ideally be invested in future growth. And if these two are hygiene goals, we have the third one with the main goal, but it's come third in priority. It's growth of profits per share. And that should be over a five-year period, above 50%. So at 115% is what we have currently. We also had a patent agreement last quarter that drove that up a little bit, but that's a one time thing that we go away after 12 months. So we are showing you two figures based In communications, we were actually chosen to secure communications during the NATO Summit this summer. That is a huge honor. If the top leaders of NATO are using our systems for communicating between themselves, they do trust us. And it was a huge, awesome marketing event for us. It was in charge of that and of course we consider Netherlands as one of our home territories for high-level encryption. And we have NATO-approved encryption solutions since before, but of course it's easier when we're part of NATO ourselves. These phones are the highest possible security levels for mobile devices. We also have an international healthcare provider that went live with 20 sites in the UK. We see increasingly that some of the hospital providers operate in many countries. This is an international one who was our customer before, but they also went live with 20 sites in the UK. It went record fast. All sites went live within two weeks after deployment at the first week. And this shows we are increasing efficiency in deployment in this one. It's interesting that we see increasing and see these very, very large international chains buying from us because of course that's larger volumes and larger contracts if we get international business. It's Radjaldi plus mammography in this case. They do about half a million exams per year. And then I will leave over to Jessica, who will tell you a little about the financial development.

Thank you. Good morning and thank you for joining our first quarter call. We're off to a good start this fiscal year with strong order intake and cash flow and continued growth in our recurring revenues. During my presentation, I will focus on the development in these and our other key financial metrics. We doubled the contracted order intake year on year to 1.3 billion, which is a confirmation of high demand in medical IT and cybersecurity. We were particularly successful with contracting in North America in the first quarter, both in the US and Canada. And our book to bill ratio is currently 2.9, heavily influenced by the large Q2 order from last fiscal year. Net sales increased by 6% to 766 million year on year. Adjusting for currency impact, the sales growth rate equaled 12%. And usage is driving the recurring revenue, which increased by 14%. We had a decline in our non-recurring revenue as our customers are increasingly purchase services instead of the traditional software licenses. The share of recurring revenue out of total revenue is currently at 72%, 65% rolling 12, and we continue to report low recurring revenue churn. Progress in the transition to cloud-based service sales is reflected in the growth in cloud recurrent revenue, which was 46% year on year. All operating areas report sales growth year on year. Imaging IT report overall sales growth of 4%. solid growth in recurring revenue and cloud recurring revenue, as both existing customers and new customers increase usage, but at the same time, less non-recurring revenue. In secure communications, we have delivered year-on-year higher volume of products, services, and development assignments to our customers, resulting in a growth rate of 20% year-on-year. From a geographic perspective, sales are growing in the US and Sweden this quarter. Growth is dampened by the development in exchange rates. We note that in local currencies, all markets showed growth in the quarter. Our operating profit rose by 19% to 119 million. And the margin improved to 15.5%. And we see higher personnel costs, partly due to the increased cost we have for our share-based incentive programs. And at the same time, this particular portal, we had lower costs for consultants and travel. We also highlight that the activation of new large sites is expected to only have minor impact on our profitability in this fiscal year. Operating profit, all our operating areas increase profit year on year as well. Imaging IT is up 20% to 140 million. and shows a margin just above 17%. And this is despite the costs for cloud transition and the ongoing preparations for deployments of large customer sites. Secure communications report operating profit of 11 million at a margin of 11.6. And here profitability is currently pampered by an extension of an ongoing development project. And the increased scope of the project as such is positive, but causes delays in serial deliveries and associated revenues. And we had very strong cash flow from operations in the quarter. And in essence, this is explained by profit growth and less capital tied up in current receivables. We received some large payments, upfront payments in the quarter. We also had quarterly invoicing that was settled within the fiscal year quarter. And we also note that in the comparable period, we had some large cash outflows connected to hardware and other project related items. And they were not repeated this quarter. We close the first quarter with a cash balance of 1.4 billion. And we have a proposed dividend of 405 billion. For the annual general meeting next week. Split in an ordinary and an extraordinary dividend. That was all from me.