Welcome to the CellaVision audiocast with teleconference Q1 2022. Today, I'm pleased to present CEO Simon Østergaard and CFO Magnus Blixt. For the first part of the call, all participants will be in listen only mode, and afterwards there'll be a question and answer session. I'll now hand the floor to our speakers.
Thank you very much. This is Simon Østergaard speaking here, CEO, and I have Magnus Blixt, our CFO with me. Thank you very much for taking the time to listen in to our first quarterly update here in 2022. We will get right into it, this time around. We will hop into our first quarter, quarterly update, with highlights. We can take the next slide. Yeah, it's a bit slow, but. The key line for our quarterly report here is that we're off to a strong start to 2022, of course. We have net sales of SEK 162 million , which represents a total growth of 21%. The sales increased organically by 15%.
We had currency effect of 6%. As said, a pretty strong quarter, up against the compares of other years. From a strategic perspective, some of the key points here is that I alluded to, we have strong development in Americas. We really see strong traction in Americas, and I'll get back to that. We see that our instruments and also our software is really, really becoming foundational and well established across the hematology labs in the region. We had softer development within EMEA, in particular for instruments, and I'll get back into the details there as well. APAC was relatively weak. Primarily this is where we've been hit by implications from COVID.
We have no underlying belief that there should be any foundational issues in the two regions, but let me talk to that as I give you the regional update. In terms of our strategy updates, we are progressing our work internally, and for some of the new areas and some of our strategic pillars in terms of specialty and new areas, we have recruited managers to lead those teams, and we're onboarding new members. Our recruitments are really progressing as planned to onboard these new initiatives. In terms of the global situation, we've spent quite some calories in mitigating actions to handle supply chain disturbances. We've been working a lot with alternative sourcing partners, which has successfully made us deliver our orders.
We've not been negatively affected by our capabilities and our ability to deliver. However, we have seen logistics issues throughout the quarter, which was a result. Some of it was really freight things stuck in China due to COVID. I think more severe has been implications generally on electronic components. They are super scarce, as we know, across this industry, which also means that it's been necessary to acquire certain components on the spot market, also with somewhat higher cost implications here. We've also in early March decided to suspend all our sales activities in Russia.
We took an early stand here, and we distanced ourselves strongly from the actions taken by Russia and wanted to signal that to our environment and our employees and all our stakeholders, which means that we have dismissed our market support presence in Moscow throughout this quarter. Let's take the next slide, please, and hop into the financial development for the quarter. We talked about the revenue and the organic growth. The next line item is really our gross margin. We landed a gross margin of 71%, equivalent to a gross profit of SEK 116 million , so that's an increase of 24% versus last year's Q1. Our operating expenses are continued to be 41%. However, they increased in actual numbers with 21%.
We had SEK 66 million in operating expenses versus SEK 55 million last year. This translate into an EBITDA of SEK 69 million. That was elevated obviously because of our gross margin and really also the scalable business model we have. When we have a lift on the top line, it really trickles down to our EBITDA level. Gross margin and increased sales is contributing to this increase of 28% in the EBITDA versus last year. EBITDA margin of 36%. We had R&D spends of 17%. It was actually an increase in actual numbers of about SEK 4 million, from SEK 24 million to SEK 28 million, of which we capitalized SEK 10 million.
On the cash flow part, we had an operating cash flow of SEK 38 million. Then we capitalized R&D, and we had some financing expenses, which led to a total cash flow of SEK 15 million. We now are in a position with liquid funds around SEK 147 million. All right. Let's take the next chart, which is really the regional highlights. Excuse me. Let's start with Americas. As said, a very, very strong start to the year. They continued since Q4 here and landed a revenue of SEK 82 million. That's a growth of 97%.
If you look at Americas, they really took a hit back in Q2 2020, just at the onset of the pandemic period, and then they've really gradually worked their way up. Now they are getting to a really, really high level, as compared with previous quarters. The development and the healthy and dynamic market situation continues. We have pretty much 100% access to labs and activities across the U.S. On a personal note, I also speculate that the COVID funding is really generating the more commercial lab environments and appetite to invest. It's good to see. We have positive trends for DC-1.
This was the fifth quarter after our 510(k) of the DC-1 in the U.S. We see it really resonates with our hematology labs in the U.S. Especially also given the proportion, the large proportion of networked labs, so where you have small labs, medium labs associated with larger labs. There is a really an appreciation of the ecosystem that are built over there in the Americas. Going into EMEA, here we had a decline of 9%. We landed the quarter of SEK 62 million. I think it's fair to see it in the light that we're up against a tough compare of SEK 68 million, the highest quarter for Europe. Last year, the quarters ranged from SEK 58 million- SEK 68 million.
It's kind of a stable region. This quarter, we actually had pretty solid hematology reagent growth of 13%. We had pretty solid software sales in the region. We fell a bit short on the instrument delivery, both large and small instruments. That's kind of the reason behind EMEA. That could also be an underlying thing around phasing of orders here. We are a bit sure. Coming to APAC, we also took a negative growth of 26% up against 2021. We did SEK 18 million versus SEK 24 million last year. The majority of the issue here is this is the area where it's somewhat COVID impacted, but especially in China.
The lockdowns, they really applied some challenges, both in terms of trade shows and activities, installations, the ability to install. Here, we've been impacted. On a positive note, I think, our reagent expansion is progressing. We are in the process, as you may be well aware in APAC of registering, of labeling, our products across the various countries but also evaluating the products once they are labeled, and then, entering a more commercial phase as we have entered agreement with partners. Now we can tick box the labeling part, after the registration across a number of countries. Our plan is progressing across the countries.
We are ready for commercialization in areas like Hong Kong, Korea, New Zealand, and Singapore, and more countries to come. All right. Let's take the sales per product group on the next slide, which shows our revenue split from instruments and reagents and software, including others, which is where we have our oils, et cetera. On the instrument side, 52% of our total revenue, so SEK 85 million, was coming from instrument sales. Again, really, the majority of it was coming from Americas and also on the small instrument side. I think in terms of the lower instrument sales also for EMEA, I think it's fair to say also this is actually where we have had CE mark since 2019.
We get confirmations for the value proposition of the DC-1. It is going to be rolled out or it's being rolled out across multiple countries. We also believe that there is an opportunity here where we will market it not just as a standalone instrument but really as part of a workflow solution. This is a launch we will kick off over summer here. We are really believing in traction for the DC-1 also in Europe. We have no reason to believe that's not gonna happen. In terms of reagents, we had 15%, so SEK 25 million, of our revenue, 15% of our total revenue in the quarter, was coming from reagents.
Pretty healthy on the hematology reagents 13% also with less FX impact because it's primarily coming in euros. We're working on our expansion plan for APAC, and we're also having conversations as to how to and what regions to penetrate the Americas market with. That's certainly in the works. On the software side, I think it was super positive to see a lot of software is being sold also with traction in America but actually also in Europe. It does not only resonate with the network labs, it really resonates with standalone laboratories 'cause it allows the users to interpret results and get second opinions within the same hospital lab no matter where you make it.
That has been a positive experience in seeing that uptake in software. Let's take the next slide, which is really a wrap-up before our Q&A. What we talked about is that we believe we're off to a pretty strong start. Pretty much the engine this quarter has been Americas, but 15% organic growth, which fits with our financial targets. We're super thrilled that we are actually able to meet our customers again in the large regions. We see trade shows are being planned face-to-face over the summer in July in the U.S. and in September in Italy, and among others, but these are the big ones. We have the ability now to travel and see our partners.
This is really super fruitful also for our abilities to push our strategy forward. Finally, I'll just use the occasion to send out an invite for you to join us here in Lund at our headquarters, where we will host a Capital Markets Day on June 16th in the afternoon. Save the date. You're very welcome. We will elaborate on our strategy, and you'll have the opportunity to meet our executive team. We are looking enormously forward to this opportunity to meet face-to-face also in this context. With that, I suggest we go for a Q&A. Hello. In the back office, can you please open the channel for conversations? Seems like we have a technology glitch.
Thank you. If you have a question, please dial zero one on your telephone keypads now to enter the queue. Once your name's announced, you can ask your question. If you find it's answered before it's your turn to speak, you can dial at zero two to cancel. Our first question comes from the line of Ulrik Trattner at Carnegie. Please go ahead. Your line is open.
Great. Thank you very much. Hi, Simon and Magnus. I have a few questions, if I may. If we start off with Europe. Looking at Europe, it's the second quarter in a row now with negative growth. I know you touched upon that, with less COVID impact during last year. Is there any reason in terms of accessibility to customers that is explaining why sales are down two quarters in a row now?
No, I would say no. It's not. We get the insight that there is accessibility across Europe. That's really not the case. We get good feedback from our solutions. It's, as I said, it's the instruments where that has been down this quarter. There's an appreciation of the solution, also the small one. However, there will likely be a higher marketing effort coming up in the quarters to come, starting with the trade shows that I mentioned. I think that's one thing there. I think on the large systems, there is a bit of phasing. We believe there is a bit of phasing impact for some reason. That's my best explanation. It's not COVID related to the best of our knowledge.
Okay, great. Thanks. On the U.S. market, it looks really strong. For majority of medtech companies, especially the ones in diagnostics, their outlook. International companies, it's really favorable for the second half of this year. It would be helpful to get your view on the outlook for the U.S. market for the remainder of the year, as well as growth of 143% for instruments in the U.S. Could you help us to provide a split between small labs and big labs? Or if you can give us a split between the big systems and the DC-1, that would be very helpful.
Yeah. I'd say in terms of the outlook, generally speaking, we are super satisfied with the momentum. We are getting, you know, confirmation that our offering is, as I said, appreciated and really it resonates with the lab structure. I think I said that in my presentation, but on a personal note, I don't have a lot of data that backs it up, but I get the impression that it's a very healthy economic environment in the lab environment. We've earned quite some money on the COVID side, so there's a healthy lab economy which fuels the appetite to reinvest.
I think the fact that there is money and also the fact that we have something which is super compelling makes me believe that we have positive outlooks for the remainder. With regards to your splits, obviously that's a bit of a tricky question for us, because we are selling indirectly. We cannot at the early stages of an adoption curve of our small instruments, we don't see where do they land. We see that with some delay. We have no doubt that it is the network that really resonates, and this is the majority of the instruments.
They plug and play right into the larger hospitals, and this is the characteristic of the American market. This is also why we see a lot of traction for especially Remote Review software. We see a lot of the installations. They come with a Remote Review, and we see a very healthy appetite to build these networks.
Great. Thank you. On to OpEx expansion. Seeing a recovery from COVID, 21% growth year-over-year, around 41% of sales. Is this the pace that is expected or a level that is expected throughout 2022, especially since you're emphasizing that there's been investment in new therapeutic areas. You just started hiring, filling up the positions. Are these areas, these new expansion areas, intended to expand throughout 2022 as well in terms of investments?
Yes. Magnus Blixt here. Yes, we've seen an increase in OpEx related to increased activities, and that's the level that we should expect going forward. If we look a little bit further out, we can see that we will continue to invest and also accelerate a little bit when it comes to bandwidth within R&D. There we will see a continued increase, I would say, for the rest of the year.
Perfect. Thank you very much. Last question. It looks like you've been managing the supply chain disruption quite well. Just wanted to touch base on this. I noticed that the inventory levels are up, and my guess is that has to do with securing supply in terms of the supply chain disruption. Are you comfortable with the current setup to not run into any disruptions throughout 2022?
It's correct that the inventory increases are related to securing inventory. We have a lot of different critical components and we try to balance. It's a balance of keeping enough inventory, and it's also a balance of actually being able to increase inventory to the levels that we feel secure of. This is a difficult area that needs a lot of attention going forward.
Yeah. Ulrik , I would say, the team is working extremely hard to really exploit multiple areas, or new sources. We're not comfortable. We wanna be honest and saying this is really an uncomfortable situation. However, I appreciate you saying that we've managed it well because I think that's the case. I think the team has done extremely well with alternative sources. It is something we are. That is the thing that keeps us up at night, or awake at night, at least.
Okay, great. That was all questions on my end, and hopefully I'll see you both here at your Capital Markets Day.
Wonderful. Good to see you then.
Thank you. We currently have one further question in the queue. Just as a reminder to participants, if you do wish to ask a question, please dial zero one on your telephone keypads now. That comes from the line of Felix at SFO. Please go ahead. Your line is open.
Hi. Good morning, gentlemen. Thanks a lot for the opportunity to ask questions. The first one would be on the revenue side. Is there anything one-off in there? I remember that you had a larger order or several from the vet side. Is there anything that we should not expect for the next quarter?
There's no one-off in particular to highlight here.
Perfect. Thank you. My next area of interest would be the inventory among your distribution partners. Can you comment on that? Is that on a normal level, or is that elevated or below? Just anything that you could share would be great.
Yeah. That's. It's a bit tricky. I'd say one of our big partners, Sysmex, they completed their annual accounts by the end of March. So that could, you know, speak to. We don't have access to their particular inventory numbers, but that generally could mean that they drive down inventory slightly. So that could have some impact from our partner side. Generally, we don't have visibility into it.
Excellent. Great. Thank you very much. To me then, the way I interpret your comment is that it's good to see the current strength in the market and among your distribution partners to remain. It's not a one-off, it's something that you're confident with to be maintained.
Yeah. That's right, Felix.
Perfect. That's great to hear. I just wanna congratulate on the U.S. market. I think it's the strongest result ever on the instrument side, and it shows that the DC-1 is really being picked up, right? I mean, we've debated a lot over the last year, but now it finally implies that there's demand and customers are willing to pay for it.
No, that's absolutely true. The beauty about the Americas market is that it's once you have something that works, then it's scalable very fast, so across the region. I guess that's what we see. Then I think it's also fair to emphasize that we have quite some traction with the large instruments. That is, we're continuing to adopt labs and have traction there on the large systems. That's really a healthy value driver for us, and then obviously with the software on top.
Yes, absolutely. Just lastly on one comment you made earlier in your speech, I think you talked about higher costs for freight and other stuff, but still the EBIT margin was so strong. I mean, was the majority, I assume, mixed, right? From the higher software sales.
It's mixed, but also we have a tailwind on the FX. That's another kind of contributor to the very healthy gross margin that we see.
Perfect. Thank you very much and good luck with the next quarters.
Thanks a lot.
Thank you. As there are no further questions in the queue at this time, I'll hand back to our speakers for the closing comments.
Yeah. I wanna thank everybody dialing in today to listen in and hear about our what we interpret as a strong quarter, a good start to the year. We will continue to work hard on growing top lines across the different regions. We will continue to mitigate the global supply issue we have amongst electronic components, which is a key focus area for us. Then finally, I also just wanna reiterate the pleasure of meeting our partners, our stakeholders, and not the least, the investment community here in possibly in Lund on June 16th in the afternoon. We can't wait for that after a couple of years in the desert of no human interaction.
It will be wonderful to see you. Thanks a lot for dialing in. Cheers.