Okay. We will start the presentation. Welcome to Q1 2022 presentation by ContextVision. You will hear from the company CEO, Ola Lindblad, before there will be a Q&A session in the end. If you have any questions to Ola, this can be asked in the question section. As you have noticed, this presentation will go in English instead of Swedish. Ola, the word is yours.
Thank you. Thank you very much, and thanks for having me. I really look forward to share the latest financial results, but also to share some basic company or basic facts about our great company. As Christian was saying, my name is Ola Lindblad, and I do hope here at the end that you will all agree with me on the statement here that says on the slide here that we are on the right path going forward. Before we do anything, I just wanted to share some or tell you a little bit of a story. This is the reality of many of the physicians and radiologists around the world.
They're spending long hours in front of the screens trying to determine if there's something wrong, thus set the diagnosis or even set a treatment. Imagine that you were sitting there and the image that you're looking at is not clear enough, it's not crisp. You can't really do your work. What is then the use for this machine? Does it really matter that it has all the bells and all the whistles that it has the latest stuff in it and latest functionality if it doesn't show the best possible quality in it? That is really where we come in because we are the software company that is focusing solely and only on image quality and working with AI to ensure that the Medical Imaging are as good as possible for our customers, which are the OEMs.
Before I continue digging more into details here, just some brief facts. I'm fully aware that many of you on the call have seen this before and know a lot about the company already. Some of the numbers here have actually changed. Still bear with me. We are, as of right now, about 35 employees. We're still around 50% on the R&D side. With the 35 years of experience coupled with the AI that we have, we are the world-leading independent provider of these kind of services. We're still headquartered in Sweden. I mean, we're a truly global company with sales offices all around the world. With our 60 customers that are spread all around the world, we see ourselves as being a global company.
If you look at our largest revenue generator is really ultrasound, which stands for about 70% of our revenue. That's actually really good because the ultrasound is really one of the biggest expanding businesses within this area because it actually had a CAGR growth of about 5%. It is an increasing business that we are in. The next number is something that we are really proud over because we are in 350,000 systems all around the world. This means that wherever you go around the world and you take an X-ray exam or ultrasound, you can be pretty sure that we are inside the system and making the image better than it would otherwise.
We were turnover about SEK 98 million and an EBIT of about 44%. Obviously, I'm gonna come back to the numbers here later. Then we are listed, as you are aware, on the Oslo Stock Exchange. These were just a brief fact. The question is, what is it we really do? I think this is a very important piece that we also need to sort of understand because how do we fit into the overall process? Because the OEM in this market, they are manufacturing the system, right? They start with their hardware components, with the screens, the wheels, the chassis, the monitors, the probes, and so forth.
They add software to it to make it all linked together. At the end, they do get an ultrasound system in this case. They sell it obviously to the hospital or to the clinic, and then the clinician starts using it. All good and fine. Where do we fit in? Well, we are right here in the software pack or stack, I should say. We are highly integrated into the system, meaning that as we are integrated, we're very hard to get rid of. I mean, we're in there, and we're in there for a long time.
Whenever the OEM has started to use us in their system, it is pretty hard for them to take us out and they wouldn't do it either, but we're really in there, which is obviously really good. Our customers are really the OEMs. Those are our customers. This is how the process looks and you talked about the doctor before and the physician and how that person wanted the image to look better. How much better can it really look like? I brought a few slides here just to give you some examples because I think it's important to see the difference.
If you look at this to start with, this is from an ultrasound 2D image where to the left you have the unprocessed image. It's of a heart. We have processed it with our solution, Rivent, and you can see how much crisper, clearer this image is. Imagine how much more happy the physician should be by looking at this image. That's one. For you on the call that have kids, you might like this slide.
Here is something we call Baby Face, and it's getting more and more popular to do this by the midwives, where you obviously have the unprocessed first, and then you have the processed with our brand-new Rivent 3D solution, where you can see how much more crisp and clear the borders are here and how much more obviously value you can get out of this image. This obviously the 3D solution can be used for many other, I mean, not only for baby faces, can be used for cardiac and others as well. Then this is something we also released a solution or a product called Rivent Mobile.
Because that is what we see a big coming trend, and I am gonna come back to that here in a little bit while. The units are getting smaller and smaller. Right now we see that, I mean, now you have the probes just connected to the iPhone and all of a sudden you have a ultrasound. This is of course in a dire need for having image enhancements, improve the image quality of these because otherwise they're obviously no use. This is something we see a strong market for us here going forward. Then the last slide here is really around the Altumira. Altumira is one of our AI solutions for X-ray.
What's interesting with this is it doesn't only give you better images, it also gives you a more efficient way of doing X-rays because if you have eight people here with broken wrists and you take a X-ray, the doctor comes in and takes the X-ray of one obese person, one with an implant and so forth. You see you can get eight different images here, and they all look a little bit different.
When the doctor is gonna look at these, he's gonna look at or she's gonna look at them and say, "Well, here is not clear enough, so I need to retake it because it wasn't set correctly." Imagine at the hospitals, the radiologists had already moved on, their cart is gone onto another department, and we need to call them back, and it takes a few hours and so forth. What we come up with is this Altumira solution, is that actually the AI is seeing, okay, this is a wrist, so that's, let's look at the wrist and make sure we are using this component and say, "Okay, this is a wrist." It uses the sensor to take the right amount of robustness when taking the X-ray.
You can see here on the top part they all look the same. When the physician looks at it's perfect. You don't need to retake it. It is good already, regardless of how the patient looks like. It is really an example of, as I said before, of doing it to do it in a more efficient way and also, of course, get a better image. This was a way of showing A, where we fit in, and then also the value that we are really giving. I next wanted to give you some thoughts on some of the trends that we are seeing that one we are looking at for the future, but also that we are already now really using and helping out to solve.
First one is around the increased efficiency that I talked briefly about before. The world's population, I mean, it is growing, and it's not only that it's growing in terms of more people, but also the middle class is increasing, everyone gets older, average age is increasing, and all this leads to more and more people needs to get access to radiology, to ultrasound. That also drives a big, obviously, challenge for the healthcare system. Because at the same time, you also have a driving force saying that everything needs to be cheaper. You need to look at cost all the time. What we need to do is then to drive efficiency.
By having smarter, better images and also finding ways, just as Altumira in making things more efficient, this is one way of supporting and helping this mega trend, if you wish. There are obviously for the future is gonna come more ideas from our side around this. Next one is digitalization. This has obviously gone on for a long time. I mean, no news. However, the medical market is, as you all know, very highly regulated, so it does take some time in order to get there. What we see is with the cloud-based solution with faster graphic cards, and I mean that enables AI solutions to be much more advanced.
You can also put them in smaller devices, which makes it much more, even the handheld is getting AI components, which are really strong. With data analytics on top of it, and with 5G coming into the picture, you can all of a sudden send images much quicker and much easier. This is something, some of the things that we are looking for in the future when we are saying, "Okay, how, what are the next steps for us," when we're looking into the future. These are our components that we are considering, as you might imagine. Last one, and this is I mean, with new users of ultrasound, especially with the handheld, many are saying that for doctors, they're not starting now, they're not only gonna use.
You're not gonna see doctors only with a stethoscope around their neck. They're gonna have the stethoscope, and then in their pocket, they're gonna have a handheld ultrasound device. A lot of things look like that is gonna become the new reality. That obviously means that there is a big market pickup on the ultrasound. But also what this means is that we're gonna have a lot more users that are not used to using it, meaning that they're maybe not trained enough or that they're not fully versed in using it. With our new Rivent Mobile, it can help, but this also opens the door for future development and how we can help physicians, by different solutions, become more trained or make the solutions more easy to use.
These were just some, I wanted to give you some trends here and just tell you where we are and also a little bit about where or what we're thinking. That was looking in the future. If we look at the market, this is a report that came from Signify Research, where if you look at the left, on the left hand here, you can see the biggest, the 10 biggest vendors in the world right now. You can see that the total here, it actually totals up to that the top 10 actually handles about 90% of the market. It's very consolidated. If you look at even closer, you can see that the top three actually have about 60%, 61% of the market.
Yeah, very consolidated. What's interesting here and why I'm showing this, and I can't tell you here because of NDAs that we have with our customers. I can't tell you which ones that we are working with. What I can say is that we are working with a large amount of these customers, and as of today, the ones that we're not with, we do have ongoing dialogues, or many of them we're having ongoing dialogues with. Then here at the bottom, I wanted to put this in here because you can see the market is divided into three different parts: the cart, the compact, the handheld. You can see the total increase of the market.
As I mentioned before, it's about 4.8%. What's interesting is if you look at the growth here on the handheld, it's actually up to 25%, which obviously is a significant growth. Then you have to bear in mind that the starting point is obviously a lot lower than for the cart and for the compact. From a growth perspective, that is a big growth going forward. My idea was I wanted to. That was looking a little bit at the market and what's going on there. I now wanted to move into more what has happened in Q1 and then dig into some of the numbers.
I think that one of the biggest events for us as a company in Q1 was really the spin-off of INIFY Laboratories. What really happened February 9th here. I mean, it was really the date when we split up the two business units. I mean, up until then, we've had one business unit, Medical Imaging, focusing on exactly what I've been describing before, solid business, pushing this being the core business going on for many years. Then we had the startup business, the INIFY that we're really focusing on a decision support tool for prostate cancer with AI.
In the beginning, there was a lot of synergies between these two when it all started. Then the realization was that the labs that were gonna do this, they weren't digitalized fast enough. Decision was made to let's change the strategy of INIFY, and instead look at the possibility of building a laboratory by using the same tool that was developed. When that decision was made, it was also pretty clear that the synergies between the two business units wasn't really there. Then decision was made that, no, let's split up the business unit. Let's put them in two different companies, so each one can focus on their business.
In early February, as I said before, the split happened. We are really coming on my side and on our side on Medical Imaging. We are obviously very thrilled about this, that we can now fully focus on Medical Imaging. I wanted to. That was probably one of the main things that happened. The other things that happened in Q1 that I wanna mention is I already talked about the first one. Second thing is, obviously, with the spin-off, many of the leadership team left because they moved into the INIFY organization.
We set a new leadership team in place, very strong and experienced one, which I have full faith in and we're gonna move this company in the right direction. We now have a full focus on growing the Medical Imaging, and it's not only—it's sort of the entire company now. I mean, you have to look at it from the R&D, the portfolio management, and all the way down to finance. We all now can focus in on the Medical Imaging side, which is very exciting. Obviously, a strong revenue here in Q1, which I'm gonna come back to. Then what we managed to do also in Q1 was to release both Rivent 3D and Rivent Mobile. Those were some events in Q1 that I did wanna touch upon.
Going into the numbers for Q1. What did we accomplish? Well, we did sales of SEK 27.2 million. If you compare that to the last year's Q1, which was SEK 20.3 million. It's a significant increase in revenue. I'm gonna come back to some of the reasons behind that. Operating result SEK 7.3 million last year with SEK 8.2 million. EBITDA was SEK 9.2 million and slightly lower than the last Q1, and then earnings per share, for obvious reasons, slightly below. Overall, we're really happy about especially, I mean, the sales has really helped us here.
If you look at this, I wanna talk a little bit about the sales. This is a slide showing the quarterly sales all the way from Q1 2019 all the way up to Q1 2022. What you see here is we had a pretty strong trajectory up here. In Q2 2020, the pandemic hit us and hit our basically our customers, meaning that they didn't sell enough systems on their side, meaning that we couldn't sell as many licenses as we hoped for. We have ever since continued here on the upwards trend with a slight decrease here in Q1 last year. We are on a moving up trend here, which we're really happy about.
I should say that the Q1 here, it is. Because usually the first quarter is slightly lower than the other quarters. This quarter, I mean, it is a little bit doped by some currency effect compared to Q1. We also have seen a much stronger market and also some of the new sales. It's somewhat doped with currency, but really the big thing is we have seen an increase on the market. That was sort of overall sales. If we then look at the revenue and the EBITDA on the year perspective, and this is where it gets a bit tricky because when we separate the two companies, we need to get some sort of comparison numbers here.
That is, I shouldn't say too tricky, but the numbers are not really comparable. I'm gonna try to explain here what I mean. From a revenue perspective, each year the revenue has always been through the Medical Imaging Business Unit, so that's gonna stay the same. This continues here in SEK 94.7, SEK 98, and so forth. This is the revenue for this quarter. These are 100% comparable numbers. The EBITDA here, though, is showing the Medical Imaging Business Unit only. SEK 50.3 here is the number for just the Medical Imaging Business Unit, meaning that it doesn't take into account the INIFY Business Unit at all.
That is why you see a drop here from the 50.3% down to 9.3%, 'cause this is really or the 50% mark around here and then down to 34%, which this is. That is really because now we have to carry all the overall costs, all the overhead costs, which we didn't have to do before. We are at the 34% right now and we hope that that's gonna obviously this is the main target to continue to drive that upwards. When you see it, I still wanted to show this for everybody that there is a when you compare these numbers, this is really what it looks like. Moving into the revenue per region.
Here is a slide showing the different regions and the first quarter of the last three years. So really the increase here from last year to this year in Asia has been a number of things. We've had some very interesting new customers coming in. We have increased some share of wallet where we have seen some pickup in the business, so we've managed to increase our share of wallet of our customers that we already have. So those are, I would say, the main areas of increase here. Obviously, yeah, that's it. In Europe, it's pretty steady. I mean, we had some timing effects. That's why it's slightly here above.
In the Americas, we have seen a few new customers coming in, which is very encouraging. There is a slight revenue effect here as well as obviously, the customers here are paying in U.S. dollars. Really, the new customers has been really exciting to see that they're coming in. That was the region. If you now split the revenue on the modality instead. The modality is really the different segments that we sell. Those are really dependent on or 100% dependent on which customers we're selling to. You can see, for example, let's start with the MR here.
You can see in 2021 Q1, the MR was 4%, and we basically more than doubled it in this quarter. That is due to a large contract that we signed here in this quarter, which means that that affects this number pretty significantly. Same goes with the 17% here on X-ray, which goes from 17% to 22%, and that's all due to a few customers that bought a number of X-ray licenses from us or a stack of licenses, I should say, here in Q1. Which means that those percentages go up and then obviously the ultrasound went down. This is what the modality percentages look like in Q1.
That was looking back a little bit. If we look forward instead, what is it we are looking at and plans for Q2? Well, we're obviously continuing to expand on Medical Imaging. That is our core business. That is really where our bread and butter is, to which we wanna continue pushing that. There is continuing to be a larger addressable market that we wanna get into. We are gonna continue focusing on our strategic customers, the larger ones that you saw on the slide before. We believe that is one of the key areas for us to increase our revenues, to work closer with the larger ones.
The next topic is very encouraging that we now can see that we can start traveling, at least in the Americas and in Europe, and also attend IRL conferences. That's gonna make a big difference to be able to talk to customers so and so forth. Having said that, it's not like we're gonna stop because of the issues in Asia, in China, for example. It's not like we're gonna stop any business because of that. We've been pretty successful in closing business anyway, but it will probably delay some contracting. It's not gonna stop any revenue coming in.
We are obviously having our product strategy and our set roadmap, which we're gonna continue pushing on, to make sure that we get the new products out and make sure that our research focusing and driving in the direction that we already set out. Plans for Q2. I would like to finalize with the. Yeah, next slide here. It's really about the sort of a summary on why is ContextVision interesting. Why would anyone invest in ContextVision? Well, I see it as a couple of things or actually three things. Number one is we are the market leader within this. We have a long history of experience working in the industry, but also with the brand-new tools that are available.
We spend a lot of our surplus, if you wish, on reinvesting into the company, making sure that we are in the forefront of the research. We are very strong financially, as many of you are aware of. Very strong in that sense, and also with people and R&D organization that really is aware and knows what they're doing. Second thing is our long-term customer relationship. We've been working with our customers for many years, and it's both small or medium-sized, but also the large, as I've been saying, talking about before. Our churn and I don't wanna be cocky in this, but our churn in customers has been very low. That is obviously because we provide them with a great value.
We are giving them some great value to them. Now getting an even stronger focus on the strategic customers that we're working with, we're thinking that is, or we strongly believe that is the right way to go. Finally, our products are leading. It does give our customers the really an advantage over their competition. It's really a smart software. It's pretty smart structured as it's really a black box where you then the same black box that all customers have. We then put a customization layer around it to fit each individual customer and each of their specific system. Same tool, but specific customization for each customer, which makes.
I mean, the architecture is smart in that sense, 'cause when we do upgrades, we can do it just for the black box, if you wish. Very smart architecture makes us efficient in the product development and, well, product development costs, and while still then delivering the customer value. Three things. That actually concludes my presentation. I do hope that there's some questions, and I hope I can answer as many as possible of them.
Thank you, Ola. We're ready for the Q&A session. Just so you know, it's possible to ask questions in Norwegian as well, so I can read them out to you. We have got some questions, Ola. The first one is on the INIFY Laboratories process. They ask, do you think about listing INIFY Laboratories during this spring? Do you have any more information regarding the process?
No, I don't. We are right now two totally different companies. All questions around INIFY, I hate to do it, but I just have to defer those to INIFY and Fredrik Palm, who's the CEO, or going to inify.com. Unfortunately, that's all I can answer right now.
That's okay. We move on. It's a question on revenues and the split on segment, geographically. Last year, the Asia segment has seen great growth, while the segment in Europe has seen the opposite effect. Could you elaborate on the development and what you think about the future in the different segments?
There are two answers to that. Number one is which makes the comparison between these numbers a little bit different and hard to actually dig into deeply. Because when we measure revenue, what we do is we look at revenue coming in from the region, regardless of the origin of the company. If a company, for example, is a U.S. company producing their systems in Asia, we count that as Asian revenue. Which means that if a company chooses then to start and move production to Asia or move production to EMEA, we have an increase or a decrease in the regions, which doesn't tell us or you guys that much.
Yeah.
It's just more of a moving. Our customers are moving their production. It gives some ideas, but it's not. Sometimes it's hard to really understand the differences. I mean, that answers part of it. If you take that away, we still see that. We believe that Europe is gonna probably stay pretty. I mean, it's not gonna be the huge growth engine for us, to be honest. Asia can still grow, I believe so, but I think the biggest growth is really gonna come from the Americas market. That's where we see it. I mean, there is, yeah, there is a big potential there.
Okay. Thank you. There are some questions on margins. We can start with the cost level. Is the cost level quite fixed? Do you think you can increase the sales without also increase the cost level?
I believe we can. It's not a one-to-one match there, I believe. No, I believe we can. I don't see a
Because of inflation and stuff like that. Do you think, like, you can push it on to the customers as well, the increase in costs?
I think maybe we can push some onto the customer, but I don't see a we need to increase the whole organization's costs in order to increase revenue. I think we can, yeah, I think there are other things we can do. No.
Okay. Thank you. Then there's something regarding traveling and your ambition to increase traveling, do you think that will affect the margins and what magnitude, if it does?
Of course, it's gonna affect margin.
Hard question.
Yeah, of course it is to some extent. I mean, it's still gonna be, how I should say. We have local representation in the U.S., so that's gonna be handled a lot from there. The European travel is gonna be. I mean, it's not. That's not gonna be a major effect on the margin side. For Asia, we're still not seeing any travel to Asia until maybe late spring or yeah, after summer, any major travel. I mean, of course, it's gonna have some effect, but I think it's not gonna have a major right now, as I see it.
Understand. Then some on cash flow. The first one is about dividends. Now that you don't have to finance the INIFY business anymore, what do you think about the dividend policy going forward?
Yeah. It's one of those. I mean, we see ourselves as being an innovation company, and we're gonna be an innovation company. That's really how we see ourselves. A lot of them, I mean, we see money coming back and put into the R&D in order to keep our products up to speed and drive the development really on our side. Of course, if all that investment is done and there's still money left, the board will look into seeing if there is money to spend. That's gonna be a discussion. I'm not gonna say yes. I'm not gonna say no, but there is potential for it. Yes.
Quite similar question. What do you think about the CapEx as percent of revenue going forward, as you just talked about?
I mean, because of the focus on the Medical Imaging, I think we need to increase our CapEx going forward. I wrote about that in the report. We actually increased our R&D organization here over the first quarter. I believe we have a very strong team in place, which means that we're looking for a stronger CapEx here going forward.
Do you think that increase in number of employees will continue in 2022?
We'll see. There are some plans in starting or continuing increase than what the end result is gonna look like. I'll leave that for now. There we have—I mean, you can look at the homepage. There is a number of open positions still out there. There might be more here coming in the future.
One more question. Do you have any totally new products on the drawing board, or will it only be upgrades of existing products the next couple of years?
No, it won't be just upgrades. There are discussions and thinking and ideas that are tossing around at the moment. No. I mean, I'm trying to convey a message that, I mean, we're not gonna just sit still and doing, increasing our business lightly. I mean, we wanna be in the forefront. We wanna be driving this business forward. You can't do that by just doing small increments. You need to do bigger things. Think bigger, think wider, think more disruptive. I think that's the only way you can be really successful here. No, it's not only gonna be small increments.
Going back to revenues, for a bit. You talked about churn. Could you give some figures on the churn rates for the years, or is it like, it's low?
On the churn, as in terms of, losing customers?
Yeah.
Yeah. zero.
zero? That's great. Okay.
Um-
Yeah. Continue.
No. We do have a very close relationship with our customers. Of course, it happens. As I said, I don't wanna be cocky on this. Absolutely not. It requires a lot of hard work to keep this close collaboration with them. We have been very successful in keeping our customers really.
That's really great. Another on revenues. How much is your total market growing each year?
Yeah. Total market and
Total market potential, if that's.
Yeah. I would say that the total market potential is growing just as much as the total market, hence the 5%. Of course, we can always take additional market share because our biggest competitors are obviously our customers. If we can convince them to use us instead of their own departments, that's where we can grow our market share. That's obviously why we wanna get closer to the larger customers, 'cause that's really where the volume is. We have, let's say if we have the 5% that the general market on ultrasound is growing, and then we wanna drive increased market share on top of that.
Okay. I think we're near the end. Looks like we're through. If there's not any more questions coming in, let's just wait for some seconds. Okay, I think I'll wrap it up. Thank you so much, Ola Lindblad, for the presentation and the great answers on the questions. Thank you to the ones that listened in and the ones that asked questions, of course. Yeah. Thank you so much, and have a great day.
Thank you, and have a great weekend.
Have a great weekend.
Okay. Bye-bye.
Bye-bye.