Surgical Science Sweden AB (publ)

Good morning, everyone. My name is Gisli Hennemark. I'm the CEO of Surgical Science and I will take you through a few general comments about our Q3 report that we released this morning. Then Anna Ahlberg, our CFO, will dwell down a bit on the numbers and then we will open up for questions. Surgical Science has about half of its team in Tel Aviv, Israel. That's about 130 people out of our approximately 260 employees. And what happened on October 7th was a terrible tragedy on so many levels. We are okay physically, but we're not okay on a different level. This has been a trauma for many of our team members and everyone are affected deeply on an emotional level, even if physically okay. However, the business is very much usual in the unusual or abnormal times. And when I say that, I want to go back to, you know, I got the first message early Saturday morning about the terrorist attack. By Saturday late afternoon, we'd been in touch with all of our employees. Sunday, we opened up the office in the Middle East. The work week is Sunday to Thursday. And on Monday morning, we had full production in our Tel Aviv facilities. We ship simulators by air. The Bangurion airport has been open all the time. And we actually shipped even more simulator than we planned to in October. And I'm deeply touched on how this company really have come together and we've supported each other like one company in these difficult times. and people are traveling in and out of tel aviv so in terms of the business impact so far it's very marginal All of our customers pretty much are outside of Israel. So it's a development and assembly. There are big activities there. And the impact is more on some logistical costs are up. We've taken some precautions or hedging by moving finished simulators to our US and Swedish warehouses. And we also have some absence due to colleagues who are called up to serve in the Israeli Defense Forces. But those are primarily the junior, more younger men and women of our company. And it's so far a smaller number of employees. But this has been emotionally a tough month and going forward we actually don't judge who can see any major business impact as of now and I included some pictures there from the team during October in in our Tel Aviv office extremely proud of them now moving on and looking a little bit high level on how we performed as a business in Q3 we can start by looking at the overall growth, 3% in Q3 compared to Q3 in 2022. That sounds a bit anorectic actually, thinking about what surgical science shareholders have been used to for many, many quarters of higher growth than that. But it is actually a growth quarter, because if we look beneath the surface, of those 3% year-over-year growth, we can see that the big drop is in educational products and simulator sales in educational products. That decreased by 12% year-over-year, Q over Q. And actually, groundbreaking $6.7 million order that we received from a leading US hospital chain in May 2022. The bulk of deliveries was made in Q3. It was about 40 million Swedish crowns. And our important Chinese market that we've commented on before kept on being sluggish and slow in Q3 2022. So if you take those 40 million Swedish crowns and you add in an unknown sort of year-over-year drop in China, cool recording is on. Stimulator sales of 15 million Swedish crowns actually means that everything else combined had a very strong growth in Q3 in educational products. Our service revenue has a good, strong, healthy growth of 20%. And most importantly, our license revenues, when the surgical robotics companies are compensating us through royalties and subscriptions from using our IP, they grew by 38% in Q3 compared to 2022. And actually, if we look down at the market leader, Intuitive Surgical, They grew their installed base by 13%. And for us, perhaps the most importantly, the procedural growth, meaning utilizations, how many procedures, how many operations are being done with this installed base, that grew by 19%. And surgical science and our simulation licenses, that grew by 38%. So we keep on outgrowing the market. And if we look up to the right hand side there, we can see that the first three quarters of 2023, we're well ahead of the full year 2022 for licensed revenues. So I would characterize this still as a growth quarter, even if the combined top line growth was not that high. Moving down to more good news is that the gross margin improved not only year over year compared to 2022, but it also improved over the last quarter of Q2 by a percent and a half. And that doesn't sound maybe so much, but still, if we then take into account that license revenue in Q2 2023 was 35% of the overall revenue, And in Q3, it was 26%. That's 9% difference. That means everything else had a much stronger profitability. And here we see price increases starting to bite. We see a more favorable product mix. We see some more development revenues. And we also see that we're able to sell more software on our simulators, improving the average selling price and the gross margin. So I'm very pleased with that. And if we then sort of look at profit margins overall, I mean, they go up. It doesn't matter how you count. If you look at the EBIT of 24% or what we believe is the best measurement of profitability for our company, adjusted EBIT, where we add back. amortizations and potential write-downs to surplus values connected with acquisitions, that was 27%. EBITDA was 31%, so very good profit margins across the line. Actually, if we drill down all the way to profit per share for our shareholders, that grew by a whopping 65% in Q3. We do feel that we are on track for our 2026 goals, despite what is a strong headwind in macroeconomics. It is tougher out there. I think everyone who are involved with selling to healthcare industry can attribute to and tell you about the fact that it is tougher times. But we see some positive signs now in China, where again, our comments are related to educational products, where it has not really taken off after the pandemic. But we start seeing some positive signs there. But there is a higher level of uncertainty moving into Q4 here. Very much related to the overall economy. We typically have a Q4 positive effect. Basically, customers sort of spending their budget if they have any left. And that's sort of the big question here. How much money is left in Q4? But overall, we feel a very positive feeling. And also the accumulated revenue growth for 2023 is still very healthy and well in line with our trajectory towards our 2026 goals. And with that, I'm going to hand over to Anna, who will dig a bit deeper into the numbers, and then we will open up for questions.

Great, thank you, Gisli. So we go back to the top of the income statement and start with revenues. As we heard, net sales was 210 million Swedish, 423. And again, this is a weaker increase than we have seen before. but measured then against a very strong Q3 last year, with a majority of the US order of 6.7 million US, which we received in May 2022 was accounted for. We had 2.1 million US in Q2 last year, 3.9 then, the majority of the order in Q3, and then 0.7 in Q4 of last year. So the increase then for Q3 this year, the totally reported increase, 3%. And if we then exclude FX effects, it was 1%. We have the majority of our revenues in US dollar, approximately 80%. Looking at the different business areas, educational product sales then was down 9%. But again, if we exclude the US order to the main hospital chain that we received in 2022, sales was actually up 28%. And then also taking into account that China was weak, this means that the total of all other markets was strong. Industry OEM was up 26% and accounted for 40% of our total revenues in Q3 last year, it was 33%. Again, license revenues was up 38%. And both development revenues and simulator sales within industry OEM, they were higher than the previous quarters of this year in 2023. And I will get back to that on the next slide. um first just looking at also the full period january through september year to date we then showed the revenues of 656 million sec and that was an increase with 19 excluding fx 13 and for the respective business area educational products was up 12%, so within our range of 10 to 15% that we have in our financial goals. Industry OEM was up 31%. On this slide, we see the split and development of our four different revenue streams. In the interim report, you also have these revenue streams divided by business area. So a bit more detailed in the report. For the quarter, then we see an increase quarter over quarter for all revenue streams, except simulators. Again, license revenues was up 38%. We had sales of revenues of 56 million SEC. It was lower compared to Q2, but in this case, it is more relevant to compare against the same quarter last year. We have described the lumpiness of these revenues since we have more customers now where we receive the license revenues from, and they purchase the licenses more in batches. So not tied to exactly when the robot with the simulation on is being sold, which makes it a bit more lumpy between the quarters. Also, actually, there is a certain lumpiness also tied to the subscription part. We have different type of revenues within the license revenues, more perpetual tied to the specific robot and more recurring types of subscriptions. And these are also actually a bit bumpy because they are usually up for renewal once a year. And the number of licenses that are up for renewal varies a bit between the quarters. So for the quarter, license revenues was 26% versus 20% in Q3 of last year. Looking at simulator sales, they were on par for industry OEM, if we look at the different business areas, but down then within educational products, as we have discussed. And also for simulator sales within industry OEM, they were a lot stronger if we look at Q1 and Q2 of this year. they were significantly up. Development revenues also then higher again and also higher a bit higher than last year. This is connected to the higher sales of simulators within industry OEM. The development revenues are both tied to robotics projects but also then on software projects tied to sales of simulators to the OEMs. As Gisela mentioned, service revenues grew nicely and they are stable and growing with installed base. Moving then to the cost side, gross margin as mentioned was up 69% versus 67% in Q3 last year. And if we then compare to Q3 last year, we had a larger share of license revenues in this quarter, which has a positive effect. If we compare to Q2, again, as mentioned, then we had a higher share of license revenue. And that usually then affects it very positively. But still, we were able to increase the margin, which we are very, very happy about. The product mix was favorable. with a higher average sales price. And we had good development projects with good margins. On the cost side, it might be a bit more relevant to compare to the previous quarters this year instead of comparing to Q3 last year. So looking at both sales and admin costs, they were both in line with Q2. Looking at R&D, the costs were lower, but it also depends on what we work on during the quarter. When we have more development revenues, which we had in this quarter, we move the costs for doing that work up to COGS, because it's the same team. Also in this quarter, we capitalized some more costs than previous quarters. On the line other, I just want to mention that in this quarter, we had an effect from our options programs. There was a cost of 3.4 million SEK. Q3 bears the full effect for the Swedish part of our new options program, which was approved by the AGM in May. Then we also have an IFRS 2 effect. I won't go into all the details, but But we do have an effect that comes every quarter then related to the Israeli and US parts of the program. EBIT was almost 51 million Swedish crowns for the quarter, which meant then 24%, three percentage points stronger than Q3 last year. Looking at our organization, then we had approximately the same number of employees going out of Q3 as going out of Q2. We were then 259 and we are 260 people. And as talked about, half of them are in Israel. Approximately a quarter are in Sweden and the rest in the US as well as some other countries. Adjusted EBIT, where we have our financial goal of 40% in 2026. We showed an adjusted EBIT of 57 million SEK, which was then a margin of 27% for the quarter. Year-to-date, we have a margin of 26%. Finance, net and taxes. We have no financial loans in the group. So usually this is primarily revaluation items on this line, on the finance net line. However, for this quarter, the majority of this item was interest on our bank balances. The US dollar moved very little going, if we look at June 30th compared to September 30th. which means that the revaluation items were very small in the quarter. Our taxes are to a certain extent affected by the fact that we have no carry forwards, both in Sweden and in the US, which means that the tax rate overall then becomes a bit lower. And that result for the quarter was 47 million SEK. The last slide I want to show you is on cash flow. Cash flow from operating activities for the quarter was 53 million SEK. Changing working capital was negative 15 million. However, we see if we compare to the last quarter that inventory decreased a bit. It has been increasing over the last two quarters due to the fact that we are growing and gearing up for higher production, but it was reduced a bit during Q3. And also very nice to see that accounts receivables actually continues to decrease. The grey line there is accounts receivables as a percentage of of rolling 12-month sales and you see the decreasing trend which is very nice. The fact that changing working capital was negative is due to the fact that short-term liabilities also decreased and by a bit more than. Cash flow from investing activities and from financing activities not much to mention there, nothing out of the ordinary. And we then ended the quarter with a cash position of 606 million Swedish crowns. And with that, I think we can open up for questions.

If you wish to ask a question, please dial star five on your telephone keypad To enter the queue, if you wish to withdraw your question, please dial star 5 again on your telephone keypad. The next question comes from Victor Hogberg from Danske Bank. Please go ahead.

Good morning. Could you say something about how you see the robot landscape developing? Any changes versus when you put out your 2026 financial targets the first time almost two years ago? And also any changes compared to when you held your capital market stay in February? I have a couple of follow-ons after that one. Thank you.

Thank you, Victor. We feel that the robotic surgery market is developing well. Of course, economics times or the macroeconomics are a bit different now than a year ago. But we see strong growth. We see strong interest from hospitals. We commented a bit extra around the industry, the robotic assisted surgery industry as a whole in our Q2 report. And there we noted that Asian companies have sort of surprisingly quickly closed a bit of the gap towards their Western counterparts. But this is good news for surgical science because we have several customers in Asia and they also need the best simulation for patient safety of their end users. So there hasn't been a lot of changes or any significant changes despite the headwind in the economy. We were very happy to see when Intuitive reported a few weeks ago that their procedural growth was 19%. I mean, this is the number one thing we look at, how much more operations are being done with robotic assisted surgery. Because if there are a lot of operations, then You need a lot of training basically, and we can also add more content to those customers. And when I say those customers, we have about 15 customers licensing our software for simulation purposes. Like you mentioned, J&J had a short update a couple of days ago, and they will host an event by the end of this year. And they basically said that They plan to initiate in human trials second half for 2024. So I don't think there was a lot of substantially new data there either. So that's it. Any follow-ups there, Victor?

Yeah, thank you. Yeah, more on the finance side and the capitalization stuff. Took quite a large step up sequentially. Was that tied to specific development projects? Development revenue was higher as well. So is this a new level to expect, or would it be more temporary than come down from this level in terms of capitalizations?

Again, it has to do with what we work on in specific quarters. You cannot look at how much we capitalize and say, OK, this is how much you invest in development, because we constantly invest also in the projects that we do where we do not capitalize. So I don't think the level of capitalization is not that high. Yes, it was higher in Q3 and it is of course tied to certain projects. This is not something we discussed because of course the nature of them are such that it's things that we invest in for the future. And as we grow, yes, the level will probably be a bit higher. But yeah, was that answering your question, Victor?

Yeah, it did. Final question for me. In your opening remarks, you said that actually in October, you shipped more simulators than you had planned to out of Tel Aviv. Is that something that's saying something about demand or just the level of commitment?

No, thank you for asking that, Victor. It's more a matter of commitment, the whole company pulling together. It's also a little bit of a hedge from our side, even though we don't see any impact on our ability to... produce and ship out of Tel Aviv, we have moved some finished simulators to our warehouses in the US and in Sweden. So that increases marginally than, you know, logistics costs. But this is just sort of a precautionary matter to have more simulators closer to the customers. Because again, we have very few customers in Israel, even if we have a lot of our dedicated and talented team in development and also in an assembly there so it no no comment indicating anything about demand related to that okay thank you it is something you hedging this so to say is this something that might drive inventories a bit higher at least in the short term or will it even out with the existing demand so so hopefully not but but but of course that's that's a That's always a bit of risk when you're more than ship towards a forecast. And again, the Tel Aviv airport is open. We have team members traveling out for various activities. But shipping costs are nowhere near what they were during the pandemic. I mean, then it was horribly expensive to chip simulators from Tel Aviv to United States for example. We're nowhere near that but we still want to be on the cautious side and hedge a bit so therefore we've had moved some inventory of finished products to other sites.

Okay thank you I'll get back in line thank you very much.

The next question comes from Ulrich Trapner from Carnegie. Please go ahead.

Great, thank you very much. A few questions on my end. I note that obviously China has been a depressed market for quite some time, but you mentioned in the report that procurement is looking up now in China. just curious on on what you're basing this on and and what your disability is and any challenges here in in the near term from the anti-corruption initiative that is ongoing in china and has been impacting quite a lot of medtech companies and intuitive is are highlighting this as a near-term limiting factor on their end i'm curious to see what what your take is

Yeah, thank you Ulrik. I based this, of course it is a bit anecdotal, but there are several data points and they come from me being there on the ground. I've been to China two times this year after they opened up. The last time was about a month ago. I managed to visit five cities in five days, so it was an intense week. And I spoke to a lot of people. As we all know, and like you also correctly points out, this has affected many med device companies. And it's, you know, after the pandemic, it wasn't, you know, full on throttle that many of us expected. It was slow. It was sluggish. And then on top of that, the government have had an anti-corruption campaign targeted specifically at the healthcare sector. And this means that people like to sit on their hands. Doesn't matter if they are, you know, complicit or not. It's just unnecessary to be subject to that kind of scrutiny or investigation. And I do see signs. I mean, look, this usually starts and ends in Beijing. And I see very clear anecdotal signs and stories from people that I interact with that it is lightening up. Now, I saw there were some questions also in the chat. You know, what will this have an effect in Q4, et cetera? don't know simply don't know i i just see that there is a big demand for our products in china and i'm talking educational products when i make these remarks and we see that it it will move to brighter times for us sales-wise when it comes to industry ovm we see a strong demand from local Chinese surgical robotic manufacturers and that is a bit detached from our sales of simulators that are going to hospitals that have been affected by this sluggish market partly connected to the anti-corruption campaign.

That's some great insight and an additional sort of broader level question on the entire industry another huge topic in the industry the the obesity drugs the glp ones and and their effect on the industry and notes a lot of companies are mentioning this and a lot of are a bit cautious about the prospects on their business on the back off of these weight loss drugs do you have any more insights to to share on this topic beyond what we have currently heard from the larger OEM players in robotic surgery.

Yeah, thank you for that question Ulrik. I think it's a little bit early to say so far, but a few data points. I mean, when it comes to bariatric surgery, like, you know, sort of weight loss surgery, such as gastric bypass and similar. Even being a big revenue driver for many med device companies, it is still a relatively small part of the surgical robotic market. I think Intuity probably have 3-4% of their revenues tied to bariatric surgery. The bariatric surgery that are being done on people who are in a position that they dramatically need to reduce their weight, it's still a very small portion of the overall demand when it comes to obesity. I think it's a little bit too early to say. It's not something that I am losing sleep over at this stage. You still need well-trained surgeons, even if volume for a smaller sub-segment such as bariatric surgery would slightly go down due to more effective drug treatments.

Yeah, I fully agree on that statement. Great to get that insight. On another subject, you mentioned here in Q2 that the average selling price for educational products went down a bit in Q2. Just wondering how that trend is currently looking up. And is this something that I know that there is In general, these are capex sales, but there is, I'm guessing here, an upselling opportunity once the overall macro turns into adding more functionalities on the system's place. So just wondering where we are at in terms of that cycle.

Yeah, thanks, Oleg. In Q2, we did comment on the fact that we saw that our simulators were sold with less modules on on them meaning less software there's always the hardware and some software but then you can also purchase add-on modules and and you can do that when you purchase the equipment initially or you can do it later on and that's what we also said in q2 that even though we saw that the asp was lower at that time we we know that We also have pure software sales, so that is usually then a later effect that you see that goes up. And yes, during Q3, we did see both a favorable product mix, but also we had good software sales. I mean, it's maybe a bit... too early to say if that is a trend that has completely reversed or if it's something we will see because it can also be tied to certain markets. And as you know, within educational products, if you look at different quarters, we often have sales from different countries in different quarters. It's not linear in that way that you sell to all countries in all quarters. So that can also have an effect. But we saw a good, I mean, good, strong software sales in Q3 on the educational products, on the simulators.

Great. This is at least there is no additional decline in average sales price. Is that a fair assumption to make?

Again, it has also to do with product mix, and that can vary between the quarters because our products within educational products do have

different gross margins uh but in q3 we we had a good strong uh software sales on and good asp okay great and on to some number crunching and a follow-up on victor's questions on cap life r d because it's as i mentioned on a it's not much in terms of of absolute numbers but it makes up 24% of EBIT, which is a lot more than it's been historically. Is this a level of cap life R&D and percentage of R&D that we should expect? I know it's lumpy and as well as when you do your modulation for your financial targets to 2026, What type of assumptions do you make in terms of capitalized R&D in terms of percentage of EBIT or in terms of percentage of sales?

That's not what will make us reach the 40% goals. So, I mean, it's not that we are sort of playing with that effect. And as you say, it can be lumpy with 5.5 million SEC more this quarter than last quarter. And it can be both because we work on certain projects. And again, it's projects that we don't talk about because the nature of them is, of course, that it's something for the future. But it can also be external costs in that. So it's not just that our team is working on it. It can also be external. And it has to do with both, of course, software and hardware. parts. As we grow, again, the number will probably be maybe a bit higher, but a bit lumpy between the quarters. Also looking back, I think it was Q1 of last year when we had a bump, but that was also due to the fact that when we acquired Symbionics, the ways of accounting for that was different in that company. So that also had an effect.

Sure. But if we look 12 months ahead and look at the average on percentage of R&D and percentage of EBIT, we should assume that even though it's lumpy, it should not be on the level that we saw here in the third quarter.

It will probably, I mean, move a bit higher than in Q1 and Q2. Okay.

Great. And last question on my end. You now sit on a ton of cash. I can correct slightly above 600 million SEIC. And just wondering how... What's your plan on deploying these? And what's your view on the current sort of M&A prospects? I know that the CAA, they called out their healthcare division and sold that quite recently. I'm guessing you had a look at that transaction. So just curious on your view on your prospects of doing M&A and which areas you would like to strengthen your position or if you feel that you are sufficient the way that you are right now and just building up a big cash position?

Look, when it comes to the cash position, Ulrik, we want to turn it into return for our shareholders. We keep on growing as a company and we keep on investing in the simulation of the future. And we have an M&A agenda that is intact from our strategy work that we did several years ago. But we are not sort of a serial acquirer. that that go out sort of opportunistic opportunistically looking for for targets we we know what fits into our puzzle and what fits into the company that we are building and uh you know it's a matter of having the right timing and also working with the potential additions to our company in a way that they can be fully incorporated and all the key employees can stay. If you look at the acquisitions we've done, all the key employees are still with us and that is very important for us. CAE Healthcare specifically have actually a rather small overlap, primarily in ultrasound simulation with our business. The vast, vast majority comes from patient simulators, which once upon a time was a company called METI that was acquired by CAE. And then healthcare simulation actually has pretty little in common with flight simulation, which is the vast, vast, 95% plus of CAE's operations. Those are actually my only comments. And then, of course, an alternative is also to return cash to our shareholders. But that's a question for our board to make a recommendation and for the shareholders at an AGM to decide upon. We run the company and we see plenty of opportunities to create return on equity, basically, for our shareholders.

Great. Well, that was all questions on my end. I'll get back into the queue, and thanks again for taking my questions.

Thank you. The next question comes from Christian Lee from Pareto Securities. Please go ahead.

Yes. Good morning, and thank you for taking my questions. I have three. My first is a follow-up question from Ulrik regarding your cash position. If a buyback program could be relevant for you, given that the valuation of the stock is down considerably?

Thanks, Christian. Buyback of shares is not possible on First North's growth market, so as long as we are On that list, that is not an option.

Okay, thank you. My second question is regarding the share of the simulators that are manufactured or assembled in Tel Aviv.

We have three production sites or assembly sites at surgical science. It's Tel Aviv, it's Gothenburg and it's Seattle. Typically the legacy products that came from those three different sites continuing being produced at those three different sites. So that means we have our largest assembly operation in Tel Aviv. But again, we are as a company firm believers in doing full functional integration in order to realize the strategic advantages of putting companies together under the same roof. So the production team and the assembly team are also working together on sharing knowledge, transferring best practices, and also being able to produce and assemble simulators that was once developed at one site at other sites. And this is a great team. It requires uh skills and hard work and so on but it's still you know it's assembly so it's it's uh it's it's not sort of uh you know extremely advanced production of parts or anything like that that we have sub suppliers for uh so that's all i can say regarding that question we haven't disclose exact percentages and so on. But Tel Aviv is definitely a major assembly sites because this is where a lot of the legacy symbionics simulators are coming from.

Okay, excellent, thank you. And given that the timeline for Ottawa regarding the clinical trials in the US is pushed back to late 2024, Are you still confident about reaching your financial sales target for 2026?

Yes, we are, Christian. And J&J is a great customer. We've been working with them for several years. But in terms of reaching our 2026 financial goals, We need to keep on growing educational products between 10 to 15% on average per year. So far, we've been ahead of the curve. And even if Q3 now had a decrease in educational products, we are still at an accumulated level of 12% growth in 2023. When it comes then to surgical robotics, the most important thing for us is that the industry overall grows approximately like we have anticipated. And there we see great signs. Hospitals are acquiring more surgical robots. Surgeons love it. This is the way of the future. This is the way how they want to work. And patient benefits from the better outcomes. So we do not feel dependent on, you know, individual player like J&J launching at the specific time and I think what they said was pretty much in line with known information. They will do an IDF submission and do in human trials the second half of 2024.

Okay that's very clear. Thank you very much. I'll jump back to the queue.

Thank you Christian.

There are no more questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.

All right. I think we have some questions in the chat.

We have some questions in the chat. I think I hope we answered. most of them, but I will pick one or two that I think we did not address specifically. One question is that we gave a short comment that the strong Q1 this year was to some extent boosted from some sales being pushed forward from Q4 2022. We had a backlog going that we then used up part of in Q1. The question is, does that indicate that Q4 in 2022 could have been even better and easier comps ahead of this year?

Yes, theoretically, if we would have delivered all the orders we got in Q4 2022, the sales would have been higher. But to say easier comps, that I would say no to, because we always have a backlog in and out of each quarter. And if we compare today with a year ago, the macroeconomics are a lot tougher today. This is also what I said there in the CEO commentary, and that the uncertainty is is higher at the moment and moving into this end of the year where customers are typically spending their budget if they have budget which gives us then a q4 effect q4 in educational products specifically is usually higher than the other quarters But this year, you know, it's tough. The hospitals are having a tough time. So it increases the uncertainty. So I would sort of say no to easier comps. But you're correct, just sort of fact-wise, that if we would have delivered everything in Q4 in 2022, the sales would have been higher. Thank you.

Thanks. Then there is also a question that I can answer if we can give an indication on how much of sales is recurring. What we have said is that within our license revenues are partly made up of revenues that are more perpetual tied to a specific robot and the simulation packet on that robot. So it's perpetual for the life length of that robot. I mean that's not forever of course. Then we also have a part that is recurring tied into install base or usage. Also of course you might argue that service revenues to a certain extent are of a recurring nature. But no we have not disclosed how that is divided and so that is not something that we comment on more than that. I think the last question here is what the renewal rate on licenses is and I guess that ties into the comment we made on subscriptions that a different number of subscriptions are up for renewal in the different

Yeah, if that question who came from here in the chat is tied to surgical robotics, we are actually, I mean, we know it, of course, and we track it very closely. But this is customer confidential information, and we are not in a position to make comments about renewal rates or churn, potential churn or things like that. unable to answer that question actually.

I think that the other, I hope that the other questions that we have in the chat were answered with the question that we got from

the ones on the phone so with that I think we yeah I would like I would like to thank everyone and thank you for your questions and this was for us the first time that we had a call a quarterly call like this where it's open for for everyone we like to be accessible we like to be transparent we like to present data and also pretend present our interpretation of the data. So stay in touch with us and give us feedback and hopefully we can do it again next quarter. So thank you very much for today.

Thank you.