Earnings Call: Q2 2021

Jul 20, 2021

Welcome to the Television Audiocast with Teleconference Q2 2021. Today, I am pleased to present CEO, Simeon Ostergaard and CFO, Magnus Blixt. For the first half of the call, all participants will be on listen only mode, so there's no need to meet your individual lines. And afterwards, there will be a question and answer session. Speakers, please begin. Thank you very much. Thanks a lot. So I'm Simon Ostergaard, CEO of Cellavision. And as you heard, we have Magnus Blichtl, our CFO, with us today. First of all, I really appreciate your commitment and dedication to join us today despite the summer session with quite some alternatives. But we'll try not to disappoint you. On the next slide, we have just an outline of television. In short, Essentially, the game plan for today is 2 parts. We'll have, First, a section, the 5, 6 slides on television, how we create value and how television serves the market. And then the second part is our future financials that we launched this morning and that we are presenting now. And then finally, we're looking forward to a Q and A session. So if we take the next slide. Excellent. Thank you. Cell emission, so in brief, We have a vision to become the leader in global digitalization and automation of blood analysis. So we're in we're operating in the field of hematology, As a blood based analysis, we have built up a leading position within digital cell morphology over the course of 2 decades. So we certainly contribute to improved patient diagnostics and also laboratory workflows as well as contributing to streamlining and reducing health care costs. So we have a vision of replacing traditional microscopes in laboratories. And I think it's important to emphasize on the microscope piece. It comes with pre analytical analysis, So sample preparation, staining protocols, but also sophisticated image analysis and instruments who can actually Magnify what's on the slides, a blood. And then we have sophisticated artificial intelligence that helps us interpret what is on the slide. So the slide being where we have the blood smeared, which leads us into the opportunity. As you can see on the photo, You see both red blood cells and a white blood cells in the middle, where they've been stained and then artificial intelligence and our algorithm He's enabling us to actually classify cells and to characterize specific types of white blood cells, red blood cells, platelets, etcetera. So that's what we do in a nutshell. We take the next slide. We demonstrate Kind of roughly speaking the market in terms of the major segment that we're serving, which is the Large Labs. At the large labs, we envision that that's around 17,000 labs. It's labs characterized by doing More than 130 samples per day. Essentially, this population of hospitals and labs are doing 2,500,000,000 blood samples on an estimate annually. And they go through what's for cell counting and slide smearing and staining systems with our partners that I'll come back to. And then about 1 out of 7, approximately 15%, they will be flagged for further analysis. And this is where digital cell and morphology comes at play. This is to diagnose diseases like anemia, infections, different types of cancers, Leukemia and Myelomas. And this is where a microscopy analysis is required. So you need to stay in the cells and you need to either do it manually or process the slide in the system provided by Cellavision. We believe we have about 20% to 25%, so let's around 22% of the market converted into digital cell morphology and the remaining part The market is served by manual microscopy. The large labs are supplemented by also labs defined by smaller sample size. So if we take the next slide, we categorize Those into medium labs being between 130 and 30 samples per day, and then you have small labs with a low sample volume per day. We can slice those segments into sub segments. So labs being part of integrated hospital networks, where they are where the labs are associated and affiliated with other labs across different hospitals or privately, a standalone And these are very, very important in the way we view the market and the way we have designed and can utilize our solutions. In this market, as you can see, many more labs, but only 1,500,000,000 block samples. So you have a low volume that is Processed a vast amount of labs. And again, 1 out of 7 is processed, so the addressable market For our technology, it will be around 220,000,000 samples. This is again where both processing, The slight smearing and staining comes at play. It's also done manually in this segment before it actually undergoes a digital thermophology solution. This is the DC1 product that we see marked back in 2019 And that we are launching. Of course, COVID has kind of Extended the loans, if you like. So we are really in the process of learning the segments and selling into the segments. So that's an exciting journey. So approximately, the majority, obviously, of the segment is actually still manual, but we see this as an attractive Markit, with some of the sub segments that really caters for our total solution. If we go to the next slide that shows the overview of the hematology workflow. Here, you will see the workflow spelled out between Large Labs and Small Labs. In the segment A for the Large Labs, we have our big solution, the DI solutions. And in the small lab on digital solar volume head to DCU 1 that I just introduced on this slide before. Briefly speaking, you can say we have different value propositions here. If I had to really emphasize one for the large lab, it's around automation via Because it really allows us to remove the human variability and errors. So that's the attractive part of digitizing the entire workflow, which we've managed to do. And then for the smaller segments, there are also connectivity is an important value proposition. It actually also goes for the large labs. Our connectivity and our remote review software, It allows the user to or the owners of the system to work across the integrated hospital labs, But it also allows within the stand alone labs, because here you can have different lab personnel running the samples And the MD interpreting and doing clinical decision making in another totally different geography or location. And then thirdly, there is the value proposition around controlling the pre analytical process. That's why we acquired RAL in 2019. So now we are controlling, as you can see on the lower hand bar in the green, we're controlling the smear making, the staining and the stains, staining protocols with our solutions being well branded. And this is also introducing reliability, accuracy and standardization. So that's another very, very pivotal element to really control what comes into the digital cell morphology. So in total, We are controlling the green, Bahas, if you know, on the green sub processes in this chart. And we believe this is pretty strong that we are catering for these sub segments with total full system solutions based on reagents, Software and Hardware Solutions. Getting into the next slide, we demonstrate and have outlined The market as we see it from the our partners, the partners being the big hematology players who actually hired that only distributing, but most of them are also serving the hematology market will complete rod counters, cell counters, and we go hand in hand with those because Our part of the value chain is kind of downstream there. So we are pursuing an indirect business model, where we are catering for all the different types of labs in the hematology space via these distributors. We are working closely with Our distribution partners, I should say, with our Profound Market Support organization. So we have our own staff located in 18 markets, and they're covering 40 countries, in fact. So we have a pretty sizable footprint, And we've been undergoing a geographical expansion prior to COVID. And then on the You can say on the manufacturing side, in the first part of the value chain, we are also pretty lean. We own all design for all our solutions. However, we have outsourced the assembly of our instruments to a partner here in Sweden, and we are doing in house manufacturing of our agents out of Bordeaux, Martilac in France. We're a team of 180 employees, the majority in Lund, Sweden. We have a pretty sizable footprint in Matila cassette and then we have the market support organization covering these many countries. That's kind of where we are. Let's revisit and let me highlight a few things on the strategic agenda. Yes. Next slide, please. On the strategic agenda, I already mentioned the geographical expansion. That's something that we've maintained or we've been intact Throughout COVID, and there are obviously we have the opportunity to look at where to actually expand further. But also, I think we're using a lot of calories on our segment expansion. So this is getting the most out of our most recent launch, the DC-one. So the value proposition of really serving hospital networks, I'm pleased to say that in that Segment expansion where we go to medium sized labs and smaller labs. I'm pleased to see that the adoption of of DC1 is actually also applicable for the standalone labs. So we kind of see a trend of fifty-fifty between Network Labs and Standalone Labs in Europe, whereas the U. S. It's very characterized by networked hospital networks, which means that the value proposition of DC1 is actually relatively strong there. The second thing I'd emphasize here is our nimble business model. Both You heard me talk about introducing how we are set up on our streamlined supply chain and also on the commercial operational side on how we've developed It's really a key characteristics of television, both working with partners across the value chain, but also internally. We strive for simplicity. So we're really we're having a lot of focus on also having nimble systems and processes in place. On the partnership model or the components, agenda item number 5, I want to stress Again, that our indirect sales model remains a priority for Cellavision. It is totally unchanged. However, we have given notice to one of our partners, notice of termination to Mindray in China, so that we will cease working with Mindray as a distribution partner by early 2022. We've seen signals in the market that Mindray is kind of developing its own solution. And so they really want to compete with our distribution partners by providing the full bloodline from CBC all the way to DCM. So we're seeing missing strategic alignment here, which is why we've taken this decision. Furthermore, I'll emphasize we have had a busy quarter on innovation. We have acquired the exclusive right to an IP portfolio in April. So it's an IP portfolio of FPM for you, typography microscopy. So in technical terms, it's really a high magnification images, which can be retrieved with low magnification optics. So essentially, we're able with this technology to extract more insights and more information at a very, very high speed, but using low magnification optics. In other words, this can actually be a very interesting technology to build Retrieve information, but also build superior workflow solutions, which caters for the workflow across laboratories. So it has a promising prospect, which is why we took control of this portfolio, both for as being the high end and the leader within digital cell morphology. We think it's appropriate for us to exploit this. And it could be potential have a carrier potential in adjacent areas to hematology. So we've started feasibility testing, and we are starting to learn sort of strength and limitations from something that is IP to bringing it to real life in the lab. So that's pretty exciting. So that's one very important component of Q2 outside of the financial. It actually leaves me from this intro It brings me into the financials and the Q2. So let's Shift here and take the next slide where it starts with 2nd quarter highlights. I think it's there. Yes. Sales Landed at SEK135.5 million in Q2. We Obtained an organic growth of 23%, however, with negative 8% headwind from foreign From FX. So essentially, 15 points growth. If we kind of dissect our growth of Q2 and look at the different geographies, I'd say Americas was continuing its trend. We grew 66% versus last year. And so we had almost SEK48 1,000,000 in Q2. I think it's important to emphasize that it's on a low compare. What we saw last year, what you can also see on the chart to the right, if you're online, We had a compare of almost €29,000,000 in Q2. And what you can't see on the chart, but we actually had a revenue of Q1 2020 of $54,100,000 So we really saw a cliff coming from Q1 and then COVID arrived and we were down to almost half. And then what you've seen throughout the quarters is a gradual, a smooth path of recovery And we're continuing that trend in Q2 here, landing at 47.7%. So that's the good news. The other good news for America is that we are seeing increased activity. So we see that from our conversations with The end users, the laboratories, our opportunity to actually have and attend a first live exhibition. So we're seeing things are normalizing. And this is extremely important also as I've talked about the DC-one, a new device for a sock segment where they have not utilized digital cell morphology. So it's extremely important for us to actually have face to face interactions. So that's good. On the APAC side, We decreased 8%. So we landed at $29,900,000 almost 30,000,000 It's up against a pretty tough compare of 32.6% last year. So we are still seeing reasonable performance. However, we are also this is the area or the geography where we are still seeing COVID-nineteen resurgence. We're seeing positive trends, especially if we zoom in again on the DC-one. There's quite this is actually a relatively fragmented market. So this is where we are. We are starting to learn about the different countries, the different markets. We're seeing Quite some interest in Indonesia and Australia. We've highlighted that. In Indonesia, we see partner interests. We've started to train our partners. And we've been listed on the national e catalog so that the hospital system can acquire our solution. So I think this is a good improvement also in Australia. We are really training the end users. They are showing interest. They are actually placing orders. So the demo of the DC1 is a poster child example in Australia where you have these long distances and these network hospital networks. So we think the full value proposition of DC1 can really flourish in that part of the world also. In terms of EI, we were we grew 2%. So we landed at 57,800,000 Again, also in MEI, we had a relatively strong compare year. But I think it's important as When we reflect on the beginning of Q2 versus the end of Q2, we think our we believe our market Activities and the conditions, they have really improved. We're seeing enhanced activity levels and somewhat more flexibility to Communicate and interact with the labs and also to travel in the region. So that's really, really positive. And then as I said, on the DC-one, we've also emphasized the fact that we actually see purchase orders coming in also from standalone labs. All right. If you go up to the next slide. So that contains kind of the other highlights. Here, Again, as Zets, I think it's expected with a comment around COVID. So we see I know it changes quite a bit across Europe. In general, Europe and Americas, we see activity levels are rising. We are not seeing the same motion across APAC, with some exceptions, as I just mentioned. It's important for us to emphasize that we have not reduced any personnel, And we've had no sizable impact on the supply chain. There is one example that I'll mention a bit later, but that's not That's indirectly due to the pandemic. But we are really setting ourselves up to accelerate and continue the healthy trend we have. On DG1, I've mentioned what I wanted to highlight. I would say though for China, we have previously communicated launch of DC1 in 2021. We have to presume that we foresee that that will next year in 2022 as we have not met the acceptance criteria of particular electromagnetic pulse test out in China. That is something that has been accepted elsewhere, and so we are identifying root cause and repeating that test. But we do expect some delay. The other thing I want to emphasize is around our reagent distribution. I think it's important to say that Our reagent business in Rell is sizable in Europe, and we obviously are at the verge of utilizing our reagents portfolio and capabilities for other regions. APAC is a key region for us, So that's where really where we are focused. We have traction in Hong Kong and South Korea where we have launched. We have registered, evaluated and launched the products. In China, registration is done. Some of our stains, so we expect to launch this year. And then across Southeast Asia, we're still going doing evaluations of our regions. And that is really with the purpose of substituting local competitors and getting that certainty from stains of blood cells utilizing the REL brand. So that's an exciting journey of ours. I think on the rail, we it's also worth emphasizing that we had orders worth SEK3 1,000,000 that kind of slipped into July. So by then, they kind of got out of the quarter It was due to some shortage of indirect materials, so plastic bottles, cartons, etcetera. So you can say non strategic, however, Very much needed. And that was due to a kind of a more general supply delay that we've heard across the industry. So there's shortage for our suppliers here. So we expect to recover from that and get those orders out in July. But that's why the number is actually relatively Otherwise, we are still tracking with mid single digit growth, if you adjust from that on the Relation side. On the sales of the product group, I'd also emphasize our under others, we have our software. We also have spare parts On the software side, we've seen kind of significant growth on in particular, on our remote review. So there's a good appetite for remote review, which as said previously, caters for both the stand alone labs, but also the networks. And it goes head in hand with our DC1 value prop linked to our larger systems. So that's kind of what I wanted to emphasize here. Coming into the next slide, where we actually summarize our P and L. So as said, on top line, we landed the quarter at 23% organic growth with 8 Same headwind. On the gross margin, we maintained a very healthy gross margin of 69%, equivalent to last quarter and 3% higher than a year ago. So a year ago, as I've emphasized, U. S. Was Relatively low in Q2. And here, we have traction on software, which actually translate into a healthy and a good contribution on our gross margin. On the operating expenses, we're at 41% versus 42% the prior year. It's a little low, and we've done some savings also on sales activities, marketing activities due to Still not being ramped up fully. And then all of this To translate it late into the highest EBITDA ever in the history of celebration. So we landed at SEK 47,100,000. And as part of that, this EBITDA, we also capitalized R and D expenses at €9,300,000 versus €6,600,000 last year. So we have had some quite some traction on the R and D programs. On the operating cash flow, healthy, €38,900,000 And there I should say that the total cash It was actually minus €20,000,000 if you read the report. And that is primarily due to our FPM acquisition and also dividend payout. But the underlying operating cash flow is strong. So that's the results of Q2 in a nutshell. The final slide is actually just the historical perspectives from 'sixteen to 2020. And what I just emphasize here is on the chart below where you see our operating expenses from 'nineteen. You see the dip on the light blue curve. And so I just want to emphasize kind of What I've also learned here, we at Cellavision, we have a very nimble model. We are very, very set up for scalability when we see market dynamics are changing. And given our partnering model that I've talked about or introduced this morning, it kind of demonstrates scalability for our cost base. So I'm pretty pleased with that. I think that's about it. I think it will be healthy to open up the lines for Q and A. Thank you. And our first question comes from the line of Ulrik Ratner of Carnegie. Please go ahead. Your line is open. Thank you very much. I have a few questions, if I may. We can perhaps please start off with If you can help us understand what the underlying gross margins for the different segments. I know you don't report this, But in my books, it looks like gross margin for the sample prep of around 44% and for the Rest of the sales around SEK 73,500,000,000. Is that something that sounds about right to you? Just to sort of See the trend on the margin side here. Yes. I I can comment on that, Ulrik. Yes. It's correct that we have a lower margin on the reagents side. It's a different kind of business where we have the production versus very high margins on, for example, our softwares, where you produce software and then you have a good repeatability on those. In between there, we have the instruments and spare parts and some consumables as well. So you are in the right neighborhood when it comes to the margins without being exact on the number. Perfect. Thank you very much, Magnus. And just on sort of the rest of the OpEx expenses, and it really looks like Sales expenses is down year on year or flat to slightly down year on year. What should be what should we expect here going forward? Obviously, it looks like there's been some COVID effects. Should we interpret that as this is something that have sort of limited your commercial expansion and this should increase going forward? Or how should we view this? Yes. I think in general, our activities on the sales and marketing, so the expenses Incurred by our market support organizations. They have been lowered because of less traveling, if any, and also not participating in trade shows, etcetera. We do expect to ramp up those activities. We don't want to hinder. So we don't see it attractive as doing the savings. We would rather do the activities. So when we are able to Implement these meaningful activities, we will do so again. Okay, great. And just on to sort of increased Capitalized expenditure for R and D and Product Development. It looks like it's pretty high in the quarter. Should this be abating throughout the rest of the year with the finalization of the U. S. Study? Or As we're looking at sort of Chinese approval and Chinese studies right now that this will be maintained at the same level. As well as you highlight, Simon, during the call that DC1 approval in China will be pushed to 2022. If you can provide us with any hint of what that means in terms of timing, would it be mid year second half or first half of next Jair, when you're expecting the DC-one to be approved in China? Yes, the actual approval is kind of out of our hands In terms of timing, we hope that this will be managed in the 1st part of 2022. We see honestly, we see no reason why not because this is a test that has been conducted in Europe and America as in history. So we think it's about repeatability. So I would shoot for the first half. Great. And the second question on sort of high capitalized R and D activity here. Are we supposed See this as sort of abating for the second half of this year or this sort of the maintained level that we should expect? I think that this is what we should probably expect around this level. We certainly find it attractive to, You can say fuel our innovation pipeline. So I think this is a good base to go from. Okay, great. Thanks. And just last question on my end before I get back into the queue. As you highlighted, you made an acquisition of an IP portfolio of a novel microscope technology. Could you provide us sort of what's your sort of how you view this to be integrated into the Cellavision offering and Some hint of timing when we're to expect a combined or perhaps a novel offering from television combining this Technology or integrating this technology into your complete offering. Yes, I think it's First of all, I think it's extremely important to say that we've acquired the technology and it is In its nature, it's a long term investment. We do believe that The characteristics that it may carry is really, really relevant for a lab environment. It's relevant for hematology because we believe we can extract more information faster, which means we can translate that into workflow advantages. So that's and that's we are investing in this because we don't just see us as a category leader short term. Who see us as the category leader long term in this business. So we think it's natural that we supplement our road map with these long Gerome Opportunities. There is no doubt that we are balancing. We want to be super focused on maintaining and keeping our position within hematology. But there are opportunities in adjacent areas as we also said in the press release and in the report. We will share at an appropriate point of time when our feasibility studies, when we've learned more from practicalities, because one thing is an IP on paper, Another thing is the engineering effort, and that's also why Solution acquired this technology because we not only Can have an assessment of the IP. We also have the capability to actually materialize and capitalize on such a piece of IP. So we are working on feasibility studies and developing learning this technology from its strength and its weaknesses. So we will and at some point in time, when we find new applications, we will launch that as we find both Appropriate and relevant. So that's the game plan. Great. Well, thank you very much, Both Simeon and Magnus, and I'll just get back into the queue. Thanks, Ulrich. Thanks for dialing in and your questions. Thank you. Our next question comes from the line of Karl Oskar Bredingen of Berenberg. Please go ahead. Your line is open. Good morning, everyone. I just wondered if we can touch upon the Mindray distribution agreement in terms of how this changes the Pan Asian growth strategy and which other key distributors you have in this area to be successful and in particular in China because if I remember the Mindray one was a strategic partnership with Euroguys to venture into China. So if you can just shed a little bit more light on How you view this, yes, Pan Asian expansion given the announcement this morning? Yes. No, that's thanks, Karl Oscar. So essentially, This doesn't change the market dynamic as to how Mindray or how they compete. They are still competing within the entire bloodline. And the entire bloodline entails both the CDC, but also the DCM, the digital So they're up against our other distribution partners to win the deals of the entire bot cell line. But now they are showing signs that they also want to eventually take control of Digital Cellmorphology. And this is why we find ourselves in a situation where We are not strategically aligned anymore because we also have all the other distribution partners that we work with, And we sell television via those. Mindray will now, I guess, be able to, at some point, to launch a solution that competes with the solution. So that's How we see it? As you say, Carlos Car, it's in China. We don't want to be complacent at all. We take all type of competition. We welcome all types of competition, in fact, because we're on a journey. We're on a journey where we are adopting digital cell morphology. So we don't necessarily see it as a bad thing that there are more voices that can demonstrate and persuade the labs to go digital. We're still the high end solution, and we want to protect that position via a number of activities. So we don't think there is any change to that. But the strategic alignment of the 2 companies doesn't kind of They cannot coexist in the ecosystem where we operate. That makes sense. Thank you. You You mentioned that D2-one has been well received in Australia and Indonesia. And you mentioned that the rollout in EMEA offers a strong value proposition as a standalone instrument to or the instrument to stand alone hospitals. Could you shed more light on maybe units sold? You reiterated this with your last with an update. You probably were a round number. If you could just maybe give us some quantifiable data here or maybe just reiterate what you have Previously seen this, that's right. Catch up. Yes. We're seeing the same we're continuing the line of adoption. I think in the last quarter, we saw sales In Q1, we saw sales equivalent to 2 quarters of sales of 2020. So we're kind of Seeing a pretty recent we are kind of continuing on that trajectory. So that's so we're still in a We don't comment specifically on the number of units, but it's we are seeing healthy double digit numbers The instruments leaving the door. Armand? Is that double instruments leaving the door, Armand? Yes, leading the door, I mean, per quarter. Okay, per quarter. And just last one on gross profit, that Trail that you mentioned towards 69% last 2 quarters now was an average of 66% in Q2 to Q4 in 2020. Is this more of the new normal now? Are you seeing sort of increased interest for remote software or add on software solutions in a COVID and more remote environment? Or is this more seasonal variation? We feel that the gross margin can fluctuate a little bit depending on the product mix. And So we should not see that as a stable or permanent number, but it is true that we see a little bit better adoption For example, the software for Remote Review Access also in Europe. So we've seen an increase, And we'll see in the future if that will persist or not. It's perhaps a bit too early to say. Okay. Thank you very much. That's all for me for now. Thank you. And currently, we have one further question in the queue. And that question comes from the line of Bradley Ware at ABG VG Sundal Collier. Please go ahead. Your line is open. Thanks. Hi, Simon and Magnus. Congratulations on a solid Q2 result. Thanks. I've just got a couple of questions please, if I may. The first one is more of an anecdotal one. It's You commented in the Americas that you attended 1 live exhibition in June and then you talk about more live exhibitions in the coming quarter. Could you elaborate on that, please? Yes. So that kind of demonstrates that We are out there. We can finally it's kind of allowed to meet given the COVID. And in the coming quarter, We're really hoping that the ACC, which is the American Association For Clinical Chemistry, it's an annual event, takes place. Normally, we believe it's start August this year. It will be at the end of September in Atlanta. That's a major event for the industry and for us at Cellavision as well because here we have the opportunity to actually really meet both users, but also our distribution partners and business relationships. So it's a very, very critical event. We hope we're able to be there. We do believe that AACC will run. It will run actually. But us foreigners coming from the outside of U. S, we are hoping that we will be able to enter the door in the country to join. But that's the biggest show, which was canceled last year. So We hope that, that will be really, really take place. On top of that, the Americas team are actually working closely also with our partners on other more local trade shows across the different states. So we hope that will also be able to be executed upon, now coming out of the coming into the post pandemic phase. Okay, great. I just have 2 other questions, please. I know everyone's touching on this gross margin. Can you talk about the three factors being product mix, currency and capitalized expenses. I think with rail sales down, Are you able to quantify this, for example, the 3 percentage point improvement year on year? I mean, it seems like given the currency headwinds, Is it 3%, 4%, 5 percentage point improvement from product mix? Or how should we understand this, please? It's correct that we've had a currency headwind. A lot of our sales are in euros and dollars. And of course, our reporting currency is in Swedish kronor. So when the kronor is strengthening, then we have a headwind, And that's actually negative for our gross margin then. So we've achieved the improvement despite the headwind. Okay. So I guess it's fair to say FX was a negative contributor to the gross margin this quarter. Capitalized expenses was relatively small, so the difference must be the product mix, which again, we can see instrument sales And software sales have a much higher margin than rail products or consumables. Yes, that is correct. And I can also note here that the capitalized expenses is Reflected in our operating expenses and not in the gross profit. So that could be excluded from the equation. Yes, okay. My final question, and I apologize in advance for this one, but just regarding RAL, perhaps you could just give us I mean, I note that sales for the quarter were down and we understand about the postponed order. They're also down for the year and so they're lagging the group performance. But can you just perhaps tell us what are the expectations for RAL's financial performance this year and perhaps next year? We can see that we've had a fairly stable sales of the RAL products Straight through the pandemic, it's more recurring revenue and less sensitive to fluctuations in the market. These Reagents have sold and they're needed in upturn and downturn in the financials. So we've actually achieved some growth with RAL despite the pandemic. Looking into the future, it's a little bit hard To say the timing, we can more talk about what we're doing. The important thing for us is that we have a very good traction and a very good reputation around these reagents, the stains in Europe. And our hope is to copy that and have the same in the APAC region, but perhaps also in the Americas region. Timing around that is more difficult to say. It's It's easier for us to talk about the actions and the activities that we do. And then hopefully, that will translate into sales in the near future. Okay. Thanks very much. Thank you. And as there are no further questions in the call at this time, I'll hand back to our speakers for the closing comments. Again, thanks to all for listening in despite the season. We're pleased to present some of the key activities, some of the key decisions that we've made throughout Q2. We still we believe we will come out with a strong Q2 of 23% growth And organically, with some FX challenges. However, the underlying signals And kind of the indicators point us in the right direction. So we are very, very optimistic About the coming out of the unprecedented times and also continuing the journey we're on here at Cellavision. As I said, this is my final quarter as the CEO or final sorry, my Q1 starting on 1st March. So now completing this Q1, it's been a pleasure working with the team. It's Been a pleasure working with the Board. And as announced in the CEO comment of our report, we have As we do work with strategy in a very methodical way, and we are really curious about laying the path forward and continuing the growth journey of Cellavision. So with that, I want to again thank you all, and I wish you all a great summer.