Earnings Call: H2 2020

Feb 25, 2021

Thank you for standing by, and welcome to the IMAX HS Limited FY 'twenty Results Investor Call. All participants are in a listen only mode. There will be a presentation followed by a question and answer I would now like to hand the conference over to Doctor. Hermann Arango, CEO and Co Founder. Please go ahead. Thank you very much. Good morning and thank you for joining us for the presentation of Imex HS FY I am Doctor. Herman Arango, CEO and Co Founder of IMEXHS. And with me on the call today is Rina Minas, our Chief Financial Officer. Today, I will begin by providing an overview of the 2020 results and our business before handing over to Rina, who will cover the results in more detail. I will then address our strategy and our 2021 outlook before opening up for questions. We are very pleased with our performance in 2020. Slide 5 shows that we achieved good growth across our key financial metrics, both on a reported and constant currency basis. Sales revenue of $10,900,000 was 41% higher year on year and 59% higher on Constant currency basis due to new contract wins and renewals. Recurring revenue of €8,500,000,000 increased by 29% year on year and by 45% on a constant currency basis as we continue to focus on subscription revenue growth. Annualized recurring revenue or ARR was 10,100,000 up 19% year on year and 33% higher on a constant currency basis. Our EBITDA loss of $1,300,000 improved by $3,300,000 year on year and IMXHS is in a sound financial position with closing cash of $10,800,000 at 31 December 2020. Slide 6 provides an operational overview of the full year. Demand for our solutions remained strong, although there was some slowing in decision making among larger operators as a result of the pandemic. A key achievement in 2020 was the launch of Aquila in the cloud in response to COVID-nineteen and the need for a rapid radiology solution for small to medium sized operators. Our expansion into new markets Continued to plan with key appointments made in Australia and the U. S. A. We opened our new office in Miami and secured our 1st U. S. Customer, adding 2 more in February 2021. We received a Visa certification in Brazil, which allows us to operate in LATAM's largest market and CE certification for the EU. In 2020, we also entered into a number of strategic alliances that allow us to offer additional functionalities such as Vitals advanced visualization tools. Slide 7 shows that we continue to make important investments in software development and AI during the year. This included The redesign of Aquila, our radiology information system with multi tenant architecture to create a new business model in Aquila in the cloud. The enrichment of Stella, our AI engine, with new algorithms as well as new functionalities for Bravis such as functional MR rendering and dynamic tractography, BPI. For those of you who are new to the company, I would like to take a few minutes to give you a brief overview of IMEX HS. Slide 8 shows that our global footprint currency covers over 250 sites In 15 countries and over 2,000 radiologists use our imaging solution, which are developed by Software Engineers based in Colombia. Turning to Slide 10, IMXHS is a provider of medical imaging software solutions that are fully web and cloud based. Our Hyuco platform is a critical system that provides solutions for all complexity levels. We have a customer retention rate of over 95% and have never been displaced by a competitor. Turning to Slide 11. Our new business model, Aquilinthe Cloud, continues to generate strong interest and provide a small A medium sized customer with a low cost medical imaging solution. Launched in May, It is a highly scalable business model that is supported by an extensive and growing network of distributor partners. At day 1 December, Acreel and the Cloud had contributed 945,000 in ARR, And we have signed 48 deals by 24 February 2021. Slide 12 shows that our competitive advantage is based on 4 key strengths, which reflect Our accessibility from any device or browser, the disruptive nature of our innovative technology, our flexible and scalable modular solutions that are suitable for all complexity levels and finally, Our affordability, which is enabling us to democratize access to high-tech medical imaging software. Slide 13 shows that our HUCO platform consists of Our core platform, which includes PACS and VNA systems our enterprise imaging system, which customizes a specific workflows for different clinical departments and our advanced post processing elements, which is our most sophisticated layer. Our platform also integrates advanced visualization tools from third parties such as Viral, which is available in the cloud for the first time via the Himuco platform. Slide 14 shows that our leuco that leuco integrates all the steps of our radiology imaging workflow into a single platform, which means it can also measure the metrics of our business and produce statistics in real time. Slide 15 shows our unique streaming technology. Our experience with bandwidth limitations Means that our technology uses server side rendering to stream the pixels to any web enabled device, resulting in fast and efficient image delivery. Turning to Slide 16. We provide radiology services for a small number of contracts to access images for training, algorithms and AI datasets. IMXHS has also developed an AI tool for detection of viral pneumonia and another for natural language processing. I will now hand over to Rina Minas, our CFO, to cover our 2020 financial results in more detail. Thanks, Hamal, and good morning, everyone. I will now run through the FY 'twenty financial performance of the company, starting on Page 18. FY 'twenty revenue of $10,900,000 was up 41% versus TCP, up 59% on a constant currency basis and in line with FY 2020 guidance. Recurring revenue of £8,500,000 was up 29% versus PTP and 45 On a constant currency basis, the strategic focus on driving subscription revenue growth continued with recurring revenue maintaining a growing trend year on year and quarter on quarter during FY 2020. Turning to Page 19. We finished the year with ARR of 10,100,000 which was 19% up versus prior year and 33% higher on a constant currency basis, reflecting increased demand for our customized solutions, the successful launch of the pillar in the cloud product offering and further driven by contract renewals and extensions. The chart shows annualized recurring revenue, which is currently billing, as well as ARR, which is yet to commence billing in a lighter shade. Moving to Page 20. I will now run through the underlying financial performance of the company, which excludes costs in relation to share based payment expenses and foreign exchange movements. The underlying EBITDA loss of €700,000 improved by €3,800,000 from prior year, excluding the impact of software which commenced on 1st January 2020. Adjusting for $805,000 in capitalized development costs, our EBITDA loss improved by £3,000,000 on a like for like basis. Other sales revenue more than doubled in the year, reflecting the inherently So it's large one off sales. The customers have specific requirements. Our focus continues to be on recurring revenue, But one off sales are an additional revenue stream, which tend to be skewed towards the 4th quarter. Operating expenses were up by 11%, Excluding software capitalization, reflecting increased investment in sales and marketing and costs of expanding into new markets, including the establishment of the U. S. Operations. Net finance expenses include $770,000 for the cost of borrowing of a related party loan, which was repaid during the year. Turning to the next page, balance sheet. We ended the year with cash on hand of £1,800,000 and net assets of £15,500,000 There was an increase in both trade receivables and payables due to strong sales in the last quarter and increased investments as the company expanded into new markets. On Page 22, net cash flow used in operating activities improved by $2,600,000 versus prior year. On 1st January, we capitalized software development costs, resulting in lower operating outflow for development costs. These costs are reflected in cash flow used in investing activities. Net cash flow from financing activities included Proceeds of approximately $8,300,000 raised during October, the issue of new shares. Proceeds from the capital raise will be used to drive future growth, The particular focus is on accelerating expansion in several key markets, including the U. S. A, Brazil and Australia. I will now hand back to Hermann to take you through the FY 'twenty one strategy and outlook. Thank you, Rina. Slide 24 shows that we are well placed to benefit from a number of macro trends In the healthcare sector, we have multiple runaways for growth, whether it is the expansion in our core Latin American markets, The development of new markets in the U. S, Europe and Australia or the levering of our cutting edge technology Turning to our 2021 development Roadmap on Slide 25. We have a number of key priorities. We will enhance our Aquila platform with a new version 4.0 to provide a broader product offering to potential customers in the U. S. And Australia. We will create the Alula Marketplace, the world's first pathology marketplace and develop other medical verticals including a dental, Imaging and the Trina Information System. Finally, we will use our rapidly growing image library for training and testing AI algorithms. Turning to Slide 26 and the 2021 outlook. We will continue to focus on expanding into new geographies and converting The strong interest in our Aquila in the cloud offering. We now have the certifications to build On our business plan for Brazil, with 2 new distributors now in place and plans to develop a new office. Although there has been some impact from the 2nd wave of COVID-nineteen, the outlook has improved for these markets in 2021. We are on track to achieve monthly run rate EBITDA breakeven by December 2021. I will now hand back to the operator to open it up for questions. Thank Your first question comes from Andrew Lilly, a Private Investor. Please go ahead. Hi, Hainan. You mentioned earlier about fantastic result on your $11,000,000 for the year of revenue And the guidance, well done to you and the Tanny. You mentioned earlier about the 2 American clients in February 'twenty one, just sort of what size are those contracts? And then second question is, how is the future pipeline looking? And where are you seeing opportunities? What key target markets? Sure. Well, hello, Andrew. Good to speak to you again. Thank you for recognizing the good results we have Deliver in 2020. And regarding to your question, well, We have been putting good resources in place to growth and to develop the U. S. Market. In effect, we have very good traction already. And the demonstration of this is that we opened the office in the Last quarter of 2020, we already have the first three customers, which are essentially customers for Akila in the cloud. So our small to midsized customers in the average of the revenues these kind of customers are. The plan in the U. S. Is to start from the bottom to the top. So this is the kind of customers we are Approaching currently small to midsize and is a very good demonstration. Our Strategy is succeeding. In terms of the pipeline, the pipeline has been constantly growing. We have not lost any significant deal. And with the launching of Aquila in the cloud, We have been experiencing a significant improvement in the A number of opportunities coming from the bottom end of the market, but also from the new markets. The pipeline in particular for building the cloud in the U. S. Has been growing very fast and has very good traction as well. So we expect to keep on track. These results are very aligned to our strategy. We expect to keep delivering in the same way in 2021. Thank There are no further questions at this time. I'll now hand back to Doctor. Arango for closing remarks. Well, thank you all again for taking the time to join us today. That does conclude our conference for today. Thank you for participating. You may now disconnect.