Good afternoon from sunny Helsinki, and welcome to Revenio Group Earnings Call. My name is Jouni Toijala. I'm the Group CEO, and with me, we have here as well our Group CFO, Robin Pulkkinen. Today we are going to go through the highlights of the Q2. So I'm going to go through those, then Robin is going to cover the financials and the shareholder structure change, plus the financial guidance. So let's jump to the Q2. So good second quarter for us, exactly according to the plan. Net sales, EUR 25.4 million, so up 14.2% from last year's Q2, and the currency-adjusted growth was 13.5%, so we got a bit of a tailwind from the U.S. dollar.
Operating profit, EUR 5.3 million , 20.6% of net sales, up 12.6%. We had the write-off regarding Ventica here, so Robin is going to go through the adjusted numbers a bit more in detail. EBITDA really good level, so up 25.6%, and as well as in the Q1, so Q2 net cash from operations was extremely good, so EUR 6.5 million , and earnings per share up to 0.155%. If looking the whole first half, so net sales EUR 49.1 million , it's an increase of 7.9%, on currency adjusted terms, 6.1%.
EBIT, EUR 10.4 million, slightly down from the last year. EBITDA up to EUR 13.3 million, and net cash flow extremely good, so from EUR 0.1 million- EUR 11.2 million, and of course, reflecting then to slightly increased earnings per share. Then if we go back to the business highlights for the second quarter 2024. So the sales development in second quarter of the year was strong, and sales growth in the U.S., strong, and if we go for the Europe, Middle East, Africa, and APAC, so the sales growth was very strong. If you look the segments a bit more carefully, so sales of the fundus imaging devices, that was very strong.
Also, tonometers were developing and selling strongly during the Q2. Then if we go further into the devices which were leading the sales, so IC200, including the probes, sold particularly well. Then DRSplus plus the EIDON family was selling really well as well. And then if you recall back to the Q4 last year, so we also updated the new software version for our fundus perimetry called COMPASS. So we saw nice growth percentages on the fundus perimetry side as well. Then we launched a new product called iCare TonoVet Pro . So that was launched during the Q2, and sales is picking up nicely on that one as well. And I let Robin to go through the financial part and also cover in more detail the Ventica write-off.
Over to you, Robin.
Thank you, Jouni. So Jouni covered slightly the numbers there earlier, in the earlier slides. Maybe I'll, I'll give some more color here. So the sales, sales up 14.2%, in the second quarter. When going down to the second line, look at the gross margin, actually very much in line, with the top-line growth. So both growing for the full, full first six months and second quarter in line with the top line, and gross margin also, being very much in the, in the similar level than it was, last year. So there's actually very little surprises there on the margin side. We did have... So Jouni mentioned about the, the write-off.
So during the quarter, we did the write-down for all the non-strategic capitalizations that we had in the balance sheet, mostly related to Ventica, and that was EUR 730,000 . So looking at the operating income, operating profit, the adjusted numbers, maybe a better line to look at if you wanna get the pure business view, how the performance has been. Coincidentally, also last year, in the same quarter, we had the EUR 800,000 one-time project costs that had an impact on the numbers then. So both of those numbers have been adjusted on the adjusted operating profit line. So EUR 6 million for the second quarter and EUR 5.5 million for the 2023 Q2.
Growth approximately 9%, and for the whole year, for whole first six months, there's a small decline still on the adjusted EBIT number. I'll go through the other numbers in the later slides in more detail. So basically, a good quarter, very much, very much like I think we and the market expected. So, so we've also said earlier that we going into the year, Q1 and Q4 were challenging from a comparable point of view, and then, Q2, Q3 were the months or quarters where, where we saw that there's potential for better growth. So basically, looking at the numbers, how they came in, it was very much according to our initial and internal thinking also, how we thought the year would be going. So year to date, so far, going as planned.
FX-adjusted growth, 13.5, like Jouni mentioned, and also nice to see that the Q2 top line also coming back to closer to the trend line. Q2 often has been actually below the trend line in the earlier years as well. 2022 being an exception, one year where that was not the case, so exceptionally good year, 2022, standing out here also on the graph. So looking at the profitability also with a bit of a longer tail, now going back from EUR 5.1 million- EUR 6 million in the second quarter.
Basically, typically looking back in the earlier years, the second quarter is always stronger or has been stronger than the first quarter for us, from a profit point of view. Last year was an exception there. So you can see here also that last year, the Q2 was kind of a soft from a performance point of view. So this year, just as a reminder, the cost side for us, the personnel expenses, are expected to grow this year mainly due to the fact that for the 2023 performance, there was very little bonus accruals in the numbers. So hopefully this year, we will deliver as we plan and have guided.
So most likely those costs would go up. And also we do have the, like we mentioned earlier, the EUR 1.5 million-EUR 2 million clinical trial costs, planned this year. Still a bit open, how that's gonna play in the second half. There was very little in Q2, quite a bit in Q1. So towards the end of the year, probably we will have some costs hitting our numbers on the clinical trials. But those plans are still a bit open, and we don't have full visibility into yet how that's gonna play out in the coming months. Cash flow, excellent. Looking at last year, Q1, 0.3 or 300,000+ . Q2 was negative, actually. This year we're above EUR 11 million, for the same two quarters.
There's basically a few reasons. Looking at last year, typically in Q1, the incentive payments are paid out for the whole company, so that typically brings down the Q1 number. This year, there was a lot lower payments related to those. Also the working capital has been improved. The Q2 pure result or net income was higher than the comparable period, playing into there. But maybe one, just a reminder from last year, the Q2 2023 cash flow was impacted also by the Italian subsidiary income tax payments. So the tax system is a bit different there, and we did have some payments related to the earlier years. So not 2023 payments, but for 2022 also. That hit the Q2 numbers last year.
But overall, very good, if not record good, first half for cash flow. Balance sheet remains to get stronger and stronger over the last quarters, approaching 75% equity ratio, net gearing below zero. We paid out the dividends, so based on the AGM on fourth of April, the dividend of EUR 0.38 was paid out. The dividend payout ratio was slightly above 50%, and also that kind of is one of the reasons why the equity ratio has continued to grow. Shareholders, not much change here. William Demant bought some more shares, not a lot, so... But basically, the foreign ownership has grown by 0.7% or 0.8% from Q1, end of Q1.
First five companies or owners are in the same order and same companies that than Q1. A little bit the different order on the from 6- 10, but the ownerships there are also on a very similar level, there's only one clear major shareholder being William Demant, and then the ownership splits into a lot smaller pieces after that. Our guidance remains the same. So Revenio Group exchange rate adjusted net sales are estimated to grow 5%-10% from the previous year, and profitability, excluding non-recurring items, is estimated to remain at a good level. Great.
Thank you, Robin. I think it's time for the questions, please.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key two.
... six on your telephone keypad. The next question comes from Niko Ruokangas from SEB. Please go ahead.
Oh, this is Niko Ruokangas from SEB. Thank you for the presentation. I have a couple of questions, and starting with that, you mentioned in the report that you have seen increasing momentum in PE-driven clients, even though they have not realized to larger orders yet. So, at what level is this segment now compared to, for example, two years back? And when do you expect those larger deliveries to realize?
Hi, Niko. So thanks for the question. If you first go one year back, so it was in a total standstill. Then if you go two years back, they were quite active. And what's the difference now, compared to the last year? So it's a twofold. So, they are more active on putting the RFIs and RFQs out, and then they have been started to order smaller or way smaller amounts. So rolling out way smaller amounts that they used to be two years ago, but slightly higher than one year ago. And that's a current status where we are. So activity is definitely not in the level that it used to be two years ago, but way better activity than one year ago.
All right. So that is not only affecting the growth in Q2, then?
Yeah, that-
Or-
Yeah, if you were thinking that one, so that's fully correct. So we were able to to grow the business strongly in the U.S. and then very strongly in the Europe, Middle East, Africa, and APAC.
Yeah. Yeah. Great, thanks. Then if you look at the demand environment in Q3, as you have now entered Q3, and compare it to Q2, so has there been any changes, or how do you look at the environment for H2?
We are executing according to the plan. So, of course, it's only the one month gone, what comes to the Q3, but it's going according to the plan we set for the first quarter, for the second quarter, and for the third quarter, so executing as we planned. So no hiccups so far for the Q3 or anything. Robin to add?
Yeah. Yeah, it's variation is big between single months, so it's difficult to say how the second half will be going. But yeah, no kind of reason to be kind of alarmed from our end at least. So everything seems to be going pretty much like planned, like Jouni said.
Okay, thanks. Then, a question regarding competition in tonometers. So, well, you say that so far, no reasons to be alarmed, but have you felt your sales or competitive position has been pressured by increased competition? And have you seen increased price competition on that front?
I think it's good to structure this one perhaps in two ways. So, perhaps looking even from the product perspective. So, on the tonometer side, we haven't seen any sign that competition is having an impact to the sales in Europe, because the competition has been on the tonometry side already two years, so no impact Q1, no impact Q2. Then if we go for the U.S., we go for the tonometry side. So we have now had the competition full on during the Q2. So as you can see from the numbers, so no impact to the Q2 numbers.
Competition is pricing more aggressively than we are pricing, but so far, as I said, and as we can see from the numbers, so no impact in the U.S.A. as well. Then what comes to the fundus imaging setup, exactly the same than Q1. So, fundus imaging products and then also the fundus perimetry called Compass. So we have been able to grow the business quite nicely also during the Q2. So no change on that front. And as you can see from the gross margin, so we haven't been getting the growth via lowering the prices. I think that's fair to say, Robin.
Yeah, I understand. Then one last from me. You mentioned about the FDA costs, and that there weren't that much in Q2. So were there any these related costs in Q2, and then how much there is less for H2? And do you expect, for example, the operating cost level in Q3 to be higher than in Q2?
... There's just very little, I don't have the exact number. Around 100,000 is probably a pretty accurate number, how much there was. But we're still working on the exact schedule with the clinical research companies. So it's impossible to give an exact split yet. It also depends a lot how they get the patients in, which is almost impossible to forecast accurately. So sometimes it's easier, sometimes it takes a longer time. But we will advise as we move forward during the year how those are playing out. But so far, the schedule is not fixed yet exactly for the second half.
All right. So but we are talking some plus EUR 1 million to be expected still to realize?
Potentially, or then it's very close to the year end, could be January also. Hard to say exactly then how the schedule plays out, but, around there. Maybe that's a good working number, and then we will correct if it changes.
All right. That's all from me at this point. Thanks.
The next question comes from Jack Reynolds-Clark from RBC Capital Markets. Please go ahead.
Hi there, guys. Thank you for taking the questions. Got going now. So I have three questions, please. So starting with revenue growth. So you talked about the strength across fundus and tonometers. I was wondering if you could give a kind of a rough kind of quantification of the growth between those two segments, and then kind of give a bit, give a bit of color around kind of the contribution to growth from iCare and ILLUME, and HOME2 in Europe. Thank you.
Should I start, Robin, and then you can continue? So, if we start from the fundus imaging, growth on the fundus imaging was very strong. So we have internal guidelines what the very strong and strong means, but hopefully that gives some light anyway. So on the fundus imaging side, the growth was very strong. And if you look the products which were selling well, so DRSplus selling well, EIDON family selling well, and then in that package we also calculate the Compass fundus perimetry. So compared to the last year, so we have had really good growth on the fundus perimetry side as well.
Then, if we look the tonometer side, so the IC200, including the probes, were the growth leaders on that front. And, of course, the solution package, now I'm referring to DRSplus plus the Illume, plus Thirona Retina AI . So we were able to get many new clients in Europe on that front, but then because of the base business, so now referring to the fundus imaging, tonometry and perimetry business grew so much, so I would say yet that the Illume as such is not contributing in terms of the compared to the growth of tonometry and fundus imaging, so not contributing too much yet, but steadily growing.
And then if you look the Home, so Home growth bit like before, so also moving forward, growing, but then the base business, the way bigger base business has been growing extremely well. So it kind of undermines the smaller segments under. But Robin, any... Would you-
No, I think it was-
like to add anything?
No, I think it was a good, good answer.
Great. That's super clear. Then my second question is just on guidance for the full year. So does the kind of strength that you've had in Q2 kind of imply that the upper end of that 5%-10% revenue growth guidance range could be more achievable for the full year? And then could you kind of share any detail about what kind of good profitability looks like?
That's similar that Jouni was referring to on the top line growth. Unfortunately, we haven't opened our objectives. Basically, it's... Well, we said it's good now, and we've said, yeah, it's been good for many years. So it's a quite wide range, but I can't give exact number what the range is. It's something we use internally only, which we haven't opened.
Yeah. Fair enough. I thought I would try anyway. And then my third question is around the FDA trial for Illume. So could you share kind of the feedback that I think you were due to get just after the previous call? And are you still expecting marketing approval in H2 of 2025?
Yeah. So, if recapping, our strategy related to the retina screening in the U.S.A., so it's a twofold. So the number one part of it is that we want to guarantee with many AI players that our DRS Plus fundus imaging device works with all the AI-dominant AI platform. So that track has been going a long time, and hopefully, we are going to see some movement on that one, hopefully during the Q1 2025. But it, it's a slightly black box for us because we are not applying for the FDA approval. So it, it's not too sure, but we are transparently going that one again through in our next earnings call.
And then second part of the strategy is, to apply the FDA approval, for Illume, DRS plus, plus the Thirona Retina AI, and we are going to submit that application by ourselves. There, the schedule is still the same, so working towards the second half 2025.
Fantastic. Super clear. Thanks for taking the questions.
The next question comes from Joni Sandvall from Nordea. Please go ahead.
Yeah, thanks. Thanks for the presentation. Maybe still a question on the margins. I know that this could be a tough one, but is this... Now you are just shy of 23% on EBIT, EBIT margin level, not just EBIT margin level. So is this a good level, or should we expect a normal seasonal pickup during the H2 on margins?
If you look at the objectives we use, then yes, it's in a good level. But basically, the business is very scalable. So assuming that second half, I think, has always been better than the first half, that would kind of led you to assume that the profitability would also be higher. Especially like the Q4 is typically we do probably 30%-40% of our EBIT in Q4. I don't, I don't have the exact number, but that's a big part of the whole year profits that we make typically in the last quarter.
Yeah, okay. Thanks. Then, you had now the Tonovet Pro launch during the Q2. If we are excluding the MAIA microperimeter, how many new product launches should we expect during the H2?
That's an interesting question. So unfortunately, Joni, very good question, but not able to answer to that one. So let's keep our eyes and ears open, and then let's do the counting when we go towards the end of first half. So sorry-
Yeah, that, that's clear.
Not able to answer, but good question.
Yeah.
I would be-
Yeah
... really happy to answer, but unfortunately, I can't. But let's keep our eyes and ears open for that.
Okay. And then maybe second tough one, the EUR 8 million contingent liability that you have in your books, and I know that it's you are aiming to give some info during the Q3, but any news on this front?
Yeah, I think that we are coming back at the latest on October related to that one. So when we are coming with the Q3 earnings release. So that's the kind of the back side of the comms. So we come back as soon as we know-
Okay. Okay
... and we continue to inform. Anything, Robin, to add on that one?
No, yeah, no, I think you said on the books contingent, but it's, it's actually off the books, so it's not in the balance sheet liability.
Yeah. Yeah.
Yeah.
Yeah. Okay, maybe a question about the larger German deal that you announced in 2023. Can you give any color on these deliveries and possible split, you know, how those have been affecting now Q2? Should we expect still positive impact from here in H2?
We have been steadily delivering, so of course, the one part of the growth of that deal has been visible on the first half. But I mean, it's only the one part of the growth. So, hopefully looking that we are going to be still having deliveries during the second half and even 2025, but that's the status currently. So, but just to mention that it's only the one part of coming growth, because there's a growth from U.S., growth from APAC, and that was a European deal. So but it's going according to the set plan, so no surprises on that one.
Okay. Okay. Maybe one technical question for Robin, about tax rate. What should we expect in 2024 and, and going forward?
That's a good question. Basically, I'd say that we're doing some IP rearrangements within the group, between legal entities, which will enable us to take use of all the costs across the company, also in taxation, if it makes sense. So in my view-
Yep
... in the next coming years, the group income tax rate should go slightly down. Maybe, I don't have exact number, calculate depends on also the roadmap that we have, but, 0%-2%, 0%-1.5% down would be my estimate at this time.
Okay, that's clear. Last one from me: Any news on the M&A front? So, how does your pipeline look on that front?
Actively still working on it. I, there's still slight differences of the view what comes to the valuation. So I think that's still a bit of an issue. So if we compare us to almost all the other players, so I think almost everybody is reporting declined sales and quite low profitability or even break even, or even negative EBIT and still thinking that the valuation should be the same. So I think that's what has been still a bit of a challenge. But we are working with Robin and the team on that front as well. Anything to add, Robin?
No.
Okay. Thanks, Jouni and Robin. That's all from me.
Yeah, thanks, Joni.
The next question comes from Pia Rosqvist-Heinsalmi from Carnegie Investment Bank. Please go ahead.
Hi, Jouni, and hi, Robin. Thank you for the presentation. A couple of questions still left for me. First of all, I'm going back to last year and the trouble or the standstill you experienced with the private equity-driven optician chains. I would like to understand this segment in the U.S. Does it consist of you know Do we talk about many private equity-driven optician chains, or do we talk about a few which which is causing this trouble or caused the trouble for you with stalling sales?
Maybe I'll take that one. So in the U.S. it's, it's not one, it's maybe definitely more than a few. Mm-hmm. I don't know, we only maybe four or five-
Mm-hmm
... chains, basically.
All right, four and four to five chains. All right.
Around there.
Thank you. Yeah. All right, thanks. Then I had the questions regarding the clinical trial spending for Q and for Q3 and Q4, but I think you answered that already. Good. I think that's actually all for me. Thank you.
Thank you, Pia.
The next question comes from Daniel Lepistö from Danske Bank. Please go ahead.
Hi, it's Daniel Lepistö from Danske Bank. I have just one question from my side. Thinking about the sort of a proportion of recurring revenues you have in your business, meaning the probes, software, and the AI. So has this sort of a proportion increased compared to maybe a year or two ago? Or has the sort of devices still overgrown the stack of these recurring revenues? Thanks.
Yeah, I think the probes is, of course, the massive majority of the recurring revenues at this time that we have. It has been, like, going back years and years, it kind of... When we only had tonometers, it was something that when I started nine years ago, it was like 23, 24% of the sales, and it kind of continued to grow roughly to take up 2% more every year. So about 24%- 26% - 28% of the total. Until all the way till today, the probes actually have been growing very strongly, for years, also after we stopped reporting. I can't give you exact number, how much the total share of the recurring is, but it continues to increase.
Okay. Well, that's, that's actually quite helpful. Thanks. That's all from my side.
The next question comes from Niko Ruokangas from SEB. Please go ahead.
Hello, this is Niko Ruokangas. Again, I have one additional question and, and related to Ventica write down. So, as you now write it down, so has there been running any costs related to that, which should now, release costs? Or, or does it affect the P&L side anyhow?
Some minor costs for, like, maintaining the patents, for example. We will probably still continue. It's a valuable technology. Hopefully, one day, at one point, we will still find a new home for that. So it's not like we totally threw it to the garbage. So we will keep the patents alive still and see if we can find alternatives for the business to move forward somewhere else.
We still have a couple of extremely good clinical studies ongoing, which are going to report really good results. That's our view, but those are not generating too much cost, so we only help to provide the devices and that's it, but not having a P&L impact at all.
Yeah.
Okay, understand. That's all from me.
Thank you.
Thank you.
It seems to be that we are done for today. Thank you for participation. Thank you for the great questions, and, and, let's come back when we have a Q3 wrapped up. So thank you. Have a good early autumn.
Thank you.
Thank you. Bye.