Earnings Call: Q1 2021

Apr 28, 2021

Thank you very much, and good morning or good day, everybody on the call. It's a pleasure as CEO for Cell Division to have the opportunity to present our Q1 interim report today. It will be a 2 section presentation. So we'll first have a conference presentation where I will elaborate on who we are, what we do and how and where we play. And this is the basis for the Q1 results that I'm happy to present. And then Magnus and Michael will be happy to have the discussion in the Q and A section. Next slide please. And I honestly think you've been going to press twice. So the first slide, which will come up, It is about creating health care and creating value in health care. So we are in the field of hematology, and our vision is really to become and we are the leader of in global digitalization automation of block analysis, both in the human segment but also in the web segment. We have a world leading position within digital cell morphology, which has been introduced and acquired over the past to dedicate. So in short, our vision is to replace microscopes in laboratories. However, it goes beyond just traditional microscopes. It's really about offering a complete lab workflow and providing diagnostic certainty. On the photo, you can actually see what we do. Our solutions delivers images of stained blood. So we can take high resolution images of block cells. We have algorithms and artificial intelligence that will Manage the interpretation so we can do so, classification and characterization. So that's what we do. If we Take the next slide. We get into the area of where we play. Currently, we have a considerable penetration in the large labs. The large Hematology Labs are defined by labs that are doing more than 130 samples per day. That's how we view the market. And we collaborate and we are very adjacent in the workflow to our distribution partners that I'll talk a bit about later. These are the companies that are doing the block sampling. They're processing their samples through complete block counters. So and the process is or I should say, the market is 2,500,000,000 block samples per year. That's how we that's the size of it. These samples are processed in the cell counters and then approximately 15% of those would to display abnormalities in the cell count. These are blood samples that could be candidates for anemia Infections or certain cancers like leukemia, myeloma. And these are then subject for microscopic analysis. This is where we come into play. We provide the stains and we provide the digital cell morphology analysis. And what you see on the right hand side of this slide is that we've penetrated about 22% of this market. So we are in an upward trajectory and we're up against competition being the conventional traditional microscope and short of 80% today. So there's still a considerable share to and market to tap into. Next slide, please. The same value proposition is also applicable for the medium to the smaller labs. This is not a segment that we've been able to address considerably with our solutions, but we are actually now. That's what you to learn. So we have in this segment about 100,000 labs, onethree of them being medium and then a large pool of small labs doing less than 30 samples per day. We consider this market to be somewhat smaller than the large lab market, dollars 1,500,000,000 of blood samples. And again, working closely, interacting in the workflow with the companies having the cell calendars. However, in this segment, there is a change because we as you can see on some of the on one of the next couple of slides, We are actually also offering in this part a slight smearing and staining system for the low volume segment. So here we are substituting our stains from RAL, branded RAL Diagnostics. So we're actually taking a larger share of the value changing. This is a segment which has not been penetrated. We launched the DC1. We launched in Europe in 20 'nineteen, we got approval for the product in Q4 last quarter, Q4 2020 in the U. S. So we're on our way, and we are in registration process in China. But we have not penetrated the market. However, we are seeing adoption, and I'll get back to that a bit later. Next slide, please. So on the next slide, we talk about our partnering and our business model. We are commercializing our solutions in an indirect business model. And it's based on partnerships with the last hematology players and the distributors in the field, and we have agreements with all the different players. In combination with working with our distribution partners, we also have our own market support organization, who supports both our partners in conveying the value proposition of digital cell morphology. As they're also working with the end user to make sure we really demonstrate the potential of what we offer to the market. Manufacturing wise, we've also chosen and in fact a combination, but it's a partnering model where we have outsourced our manufacturing in Sweden with regards to instruments. While due to the or as part of the acquisition with REL, we actually have our own reagent manufacturing in Bordeaux in the southern part of France. Totally, we are we have 180 people in our organization, Just over 100 here in Sweden, 50 in France and the remaining part supporting our partners in the countries. And that is a presence of 18 markets. But in fact, we support 40 markets. We have presence a physical presence in 18 Which leads me on to the next slide, please, where it Kind of displays our strategic agenda. Below our strategic agenda topics or themes, we have strategic initiatives and we have strategic actions. If I here, we will just show the high level display and number 1. Number 2 talks about geographic expansion in the left hand upper corner and segment expansion. This is actually you can say we've pursued a 3 pronged strategy, both geographic expansion, expansion across the lab sizes as I talked about when explaining about the market, but also now not only being and offering a solution based on software and hardware, but also actually having charge of the regions. So we have the full systems solution. Innovation wise, that is that strategy is now reflected in our capabilities. So we can do innovation on the full system solution hardware, software, applications reagents, which means we actually control the entire workflow to provide an improved diagnostic certainty. And we are intending to do this and focus our innovation agenda, both short term, medium term, but also long term. On the lower hand corner, we have our examples of our nimble business model that I already explained on the previous slides. So in in terms of our supply chain and our go to market model with partnerships. It's about simplicity. It's about high quality. And because we are respectful of the way we play and the diagnostic industry we play in and also the way we reach the entire hematology market with our partnerships. Overall, in the green buckets, you see our kind of ambitions of having 15% organic growth per year over an economic side. And also on the profitability, we Take pride in having exceeding 20% profitability, which has certainly been the case if you look in the past. Next slide, please. And you can press thrice because that leaves The concluding slide that summarizes my introduction to Cellavici, which is about the overview of the hematology workflow. On this slide, you will see how our business model and our offerings allows us to connect with complete block counters, although the company is offering the block counters yes, this is likely across the different lab sizes as we've talked about today. And also what is very, very pivotal here is that not only can we address, we can say, horizontally The large labs and the small and midsized labs now, we can also bundle them together with connectivity. So we can really serve We integrated hospital networks with our solutions for smaller labs, larger labs and bundle them together with remote renew software and other value driving components. So essentially, television It has taken a large share with Anew with our distribution partners and we're delivering diagnostic certainty and wireless workflow with reliability, accuracy and standardization. So that's kind of the intro. And now I think we should jump into the financial results for 2021 Q1. So I'm happy to I'll just have a sip. I'm happy to present the result of ending at SEK134 1,000,000 for Q1. It's a result that reflects organic growth of 7%, but it also reflects a foreign exchange impact of negative 7%, which gives us pretty much a flat year over year comparison. If we dive into the different regions, starting with Americas. This is where we have seen a decreased minus 23% against last year, which was a tough baseline in the light that Q1 was pre COVID. However, if we really go down to the chart on the right hand side and look at the blue bar in the bottom for Americas, We can see that actually in the U. S, COVID kind of impacted Q2 significantly. It was a bit right away into Q2. And then ever since then, we've had an awkward trend ever since or in 2020, and we are seeing that continuing. So that's really the positive news that we are seeing traction. We still have high attachment rates. So when our partners are placing their sale account as then we are attached in those deals. So we still see 9% attachment rate, which is really a healthy sign. I've talked about the DC-one serving the small customers. And as I said in the previous quarter, we got 510 for DC-one in the U. S. And it has a strong potential in the U. S. We have a strong pipeline for DC1 when we correspond with our partners. And the DC1 really has a strong value proposition, which is tailored to the U. S. Lab and hospital structure. It's about integrated hospital networks over there, and it's also about hospital consolidation. So it really to fix the value prop for the U. S. So we are very, very excited about the opportunity to grow the business via DC1 as well. We don't have a lot of sales of reagents. So our round product line is in process and getting introduced. So in brief, I'd say 2020 was about contract management. And here, we are entering the phase of testing, tryouts demonstrating the strength of the Stains with customers to drive adoption and to train our distributors. So that's an exciting growth driver there. Going into APAC, here we our sales decreased 6%, down to 24,000,000 still to markets being China and Japan. We saw some removal of old placements in Japan, which contributed Gave a good healthy contribution to our quarter. And then going into DG1 for APAC, which is also an interesting product to share in that market. It does represent a new value proposition in APAC. APAC is more fragmented. It's not as obvious as compared to U. S. I just talked about. There are less integrated hospital networks. And there could also be we are learning about the price sensitivity versus quality parameters in APAC. So this is a market where we certainly started our adoption. I would say we in Q1, we sold 50 to present of the total sales in 2020. So we are on a good trajectory. There is certain interest, but it comes in various shapes and also the different countries. We see Australia, Korea and India, especially on the COVID, which actually hinders our opportunity to go to the labs, demonstrate it, because of that, we human needs a physical presence. So that's the short version on APAC. Coming into EMEA. Here sales grew by 24% to and an all time high quarter of $68,000,000 And that's on top of a very good quarter in Q4. And so we're obviously very pleased with that. The main drivers here were France and Germany. Nordics and VENELUX also had to see contributions here. When we analyzed the markets, there were no sort of, strictly speaking, one off per se. However, for Germany, we did see some tender sizable tender deliverables, tenders that have been won in 2020 early 2020. So it's a long not only a long sales cycle, but it's also a long delivery cycles for our products. And so we saw some tailwind from Germany in this quarter, which also means that when we look forward and we discuss with our partners, there is optimism around France, but there is less optimism, a bit more insecurity as to what the market will bring for Germany. And that goes also for the other markets. The fact of the COVID with the potential new lockdowns can actually hamper our sales activity. So that's the biggest risk we see in Europe, different countries, different levels of vaccinations. So that's where we are on that. I think there's one good thing I also want to emphasize on Europe. We had a strong quarter with Rail. In fact, we had 10% growth in Q1 year over year in local currency and euros, which then translates into 3% growth in SEK. However, another good quarter. Okay. Next slide, please. So here, taking together a few key themes. So here, we've highlighted a section on COVID because it has impacted us and it is still impacting us and will do so in this year. Looking back, COVID came in Q1, and momentum was actually lost over the course of 6 months, except for U. S. Where we kind of saw this steep drop. We in this recovery phase where we have vaccination that vaccination is a leading indicator as to when we see business activities coming up. We also expect that there will be at the timing. It will take time for us to regain the activities, the access to the labs. However, we're doing everything we possibly can also to educate our partners and train them. So time is certainly not wasted, but airtime It's something we're looking forward to. The option for DC1. It's in Europe. That's where we've seen a really, really good traction. Also in Q1, for Europe, we saw 50% sales of what of the total sales in 2020. And remember, we had CE Mark for Europe the entire 2020. So adoption is it does have a traction. U. S, as I said, strong potential for TC-1. And we've started. We see traction in APAC. But there are much more to learn about those segments in APAC in the structure. China, yes, tests and evaluations are ongoing. You can say briefly, We did a lot of documentation throughout last year, and this year is about the testing. So it's also a partnership with the authorities out there. So that's work ongoing in terms of testing type testing and clinical trial. I will jump down to I'll speak a bit about reagents in a sec. But finally, yes, I just want to say it's been a pleasure also to my team members. It's been a pleasure joining and being the CEO now for 2 months and really getting on the inside of Cellavision. It's a very, very strong company, strong capabilities, strong culture across RAL and television. 2 reasonable olds. RAL also very old legacy. But combining those is really I think it's a very, very winning model in diagnostics because we now have software and hardware reagents expertise to build our full system solutions and control them. My focus will certainly be on innovation and commercialization. We on the innovation piece, I'll emphasize that we need to Stay and remain relevant short term to medium term. So we are really working. There's a strong road map here at Selection. We are obviously, refining and expanding on that. And then we want to lead long term innovations to balance our road map. A good example of this, even though it's Q1 reporting, but just after closing Q1, we finalized our due diligence on the exclusive rights or the IP of the FPM, the full year titrographic microscopy Technology, so that's a long term investment that is giving us the exclusive rights to this technology. It provides us or allows us to actually build high resolution images to compose high resolution imaging as it is, but using low magnification optics. In other words, we can extract information from these photos with low magnification optics, the existing optics out there if you like. And we can do it with high speed. So this really speaks to a diagnostic workflow, which is very, very interesting for the future. It's on feasibility testing now. And as we've said, this has potential. This is why we are excited about it, but we are still in a very, very early phase. We are doing CCB test and we are doing prototyping of it. But this is an example of how we want to build on the foundation we have today. Furthermore, commercialization. I think we've done very well. The team has done very well in acquiring RAL. It's a great team. And the adoption of the products and bundling it together with our other solution is on the agenda for us to build these ultimate diagnostic solutions. And then the DC wanted to auction that ties together the networks and the value probably in a smaller both smaller labs and less with the less samples is really, really key. So we have very, very important agenda points or topics on our strategic agenda here. Let's go to the next slide. So here we have the development. And as you can see, The number was SEK134 1,000,000 for the quarter, pretty much equivalent to Q1 last year. And as already said, negative growth, plus 7, minus 7 with an FX impact. And if we look at the gross margin, it's actually pretty strong at 69%. It's on par with Q1. We had and we've had improvements if we compare with Q2, Q3, Q4 last year. So So we had a better product mix with additional instruments, but also we had an increase in software, which is driving profitability upwards. And that was primarily in the U. S. And especially the remote reviews, which fits with the integrated network Hospital Networks. And then so this actually translates into the highest EBITDA of SEK 46,200,000. Chek. So that's a great results. It actually also translate into a very, very strong cash flow operating cash flow of $26,000,000 which is higher than the compare of $15,000,000 the year before. And furthermore, the total cash flow, when we go deeper down. It's $8,800,000 up against minus $5,200,000 last year. And on top of this, it's actually despite the fact that we decreased our index by approximately SEK6 1,000,000. So it's a very strong quarterly also on the cash flows. To the next slide. Here, we display the development of our company for the past 5 years and also having a rolling 12 month on the very right hand side. So we have been growing In average, 15%, but obviously, 2020 was a historical unprecedented year, has taken us somewhat down. What I really want to point out here to summarize is the business model. The example we see, especially when we look at the operating Spencer is on the chart down there, the light blue line. And we see our flexibility in our business model. And it's COVID comes in, in early 2020, and we could instantaneously do tight cost control and be agile to actually level off our operating expenses, which meant that we could maintain good margins. We've had no layoffs. We're still ready to drive our agenda forward. We've kept new hires on a lower level, but we are ready, which is really a good platform for the future. I think we're almost at least 30 minutes mark that was allocated here. So I actually suggest we Porsche here, I'll stop here, and then we enter the Q and A. And Matus and myself will be happy to answer any questions you may have. Thank you. We have a question from the line of Ulrik Truttner from Carnegie. Please go ahead. Thank you very much. Hi, Simon and Magnus. I have a few, but I'll start off and just cut me off There are too many of those. EMEA Development, obviously, very strong, highest sales recorded for you guys. But as you mentioned, there were some tender deliveries in Germany. Could you help us decipher What else is driving growth in EMEA? And is there anything left on that tender to be delivered? And is there any further Tender deliveries expected in the next few quarters. I'd say generally, it is a tender based business. So we continuously have tenders that come and go. This tender that I explicitly spelled out was a sizable tender and that is coming to an end. So that was something that contributed for Q1, but which will not continue. So that's on the tender piece, Ulrik. I think what drives growth here is that we still expect we have on the rail side, on the region side, we have a strong footprint. We still and by then, a stronger, higher base of our reagents on RAL. And we see unhindered traction in Europe, which where you asked about. But this is also the growth driver, especially for APAC and Americas where we hardly had any sales. On the DC-one, I said, lesser growth driver for Europe, certainly, highest adoption, I said. And actually, we also expect that, that will glue in because we also have some level of integrated hospital networks in Europe and that will bring also the demand for our larger VM platforms. Great. So if we were just to move to Americas and We have received quite positive comments from other medtech companies with high exposure into the Americas on capital equipment. Is there anything specific that why your sales is down, especially for systems sales to be down close to 60% in the quarter. And when do you expect it to be back to normalized levels? And perhaps is there Still some delays in terms of the sales cycles as you are reliable on distributors. And as we could also then just to keep our focus on the U. S. Market. And you quite recently reintroduced the RAL product offering in the U. S. What has been the initial feedback on the reagents in the U. S. The initial feedback. So there we've really spent last year also having the contract management around our portfolio and having that discussion with our partners. And now it's about testing and tryouts of the reagents. So it's for hematologists and menis, they want to see the stain themselves. That has been challenged. That's challenging in an environment where we've not been able to access the labs. So that has hindered kind of progress on that. So we've done internal work, but not that much external work specifically for If we go to the decline, I would say, if you look at the trajectory, it's a steady increase we see over the course of the quarters. And with vaccination of well 35%, 40% of the population having had the first shot, which we think that also translate into access to labs. What we hear from our partners is that certain hospitals it is actually possible to go, but we're not at the level where we used to be. So there's still online meetings and so forth. And that's that format, the virtual meetings are okay for an established business or if we have, and say a sales call related to our larger instruments, but it's harder with new innovations like the RAL portfolio for the U. S. Or for the DC or the DC1. That's where you want to see it, want to demonstrate it. So that's what drives So we still think that throughout 2020, we expect also with the pipeline we hear from our partners that we will have this gradual increase. Okay. Clear. Thank you. And on to APAC. We're going to start off. You mentioned the delays for the EC1 in launching into China. Can you Please help us clarify when we are expected to have the DC-one cleared and approved on the Chinese market. About looking at the entire APAC region. Would you consider the situation being worse than it was 1 year ago As well as we have also seen in Q1, and I know it's hard to do a quarter on quarter comparison for you guys, but We're seeing a sequential decline in sales for APAC. Should that be more viewed as Q4 was Especially strong or has the situation become more problematic for you guys? I think if we start with the DC-one going into China, that's The exercise we have to do there is very dependent on external, the authorities to do the type Ting and also the clinical trials, which has to be conducted in China. That's the first thing. So that is kind of is that after 2021 or are we coming into 2022? That's the question. On top of that, I would say specifically for China, they are not integrated, hot strong networks to the same extent as we see in actually in the Americas but and partly in Europe. That's not the case in China. So this is where we also got to to learn as we have the product and start testing having the conversations with the customers out there what is the market opportunity for the product in China. What segments can we the Class II, Class I class, can we actually address it? And is the pricing acceptable? So that's something we are looking at if we're looking at China. Across the region, we've highlighted the countries where we really see impact from COVID getting access in places like India as obvious, Korea, Australia. However, we still get the input that it's a very, very compelling product with EC1. So we are very excited about it. But again, a new product being introduced in a market where you cannot demonstrate it. It's challenging. So that calls for some you can see on clarity as to how and when we build momentum in that small in those fragmented markets. Okay, great. Just going back to you mentioned that there potential could be sort of price Discussions for DC1 in China. Are you evaluating pricing the DC1 lower into APAC In comparison to EMEA and Americas, that would deviate from your Historical pricing of your portfolio, right? Now this is a conversation we will have also with our partners, how it seems remember, the way we sell It's in a total solution for the hematology lab. So this is something we address essentially country by country with the partners. Okay, great. Two last questions on my end, please. Can we just talk about production capacity for RAL? It's been more of a stable business and we're seeing volume picking up. Is there any bottlenecks in your current production capacity, Which needs to be addressed in order to align with your ambition on the products of RAL growing in the next few years. Yes. We are actually expanding our manufacturing footprint in France to cope with volume increase and also to standardize some processes. And that's an ongoing project where we will see well, we are expanding the factory as we speak in the planning phase, which will and we'll see some investments coming in this year with potentially a small spillover to 2022. So we're certainly it's a great question, Ulrik, and you point towards a key strategic initiative and enabler for us that we are focusing on to support the growth of RAL. Great. Thanks. And last question, just a quick one. Two part question on the new FPM technology. And it's just will the falls are €29,000,000 to say, be paid in full during Q2? And is there any Integration related costs to buying this technology over the next few quarters. So we'll pay 90% of the amount in Q2. And then the remaining 10% will be in 2022. Great. And any Integration related costs or it will just be integrated into next development projects? Yes, I'm sure can you hear me? Integrated you mean other costs related on top of the call? Yes. Exactly, yes. Our services, yes. We have some, I'd say, insignificant costs related to the transaction that we will carry in our P and L. Okay. That's great. Thank you very much, Simon, for taking the question. And I'll just go back to you. We have a question from the line of Karl Oscar Breidenen from Berenberg. Please go ahead. Hi. Good morning, everyone. So you mentioned that you see that the activity level is starting to pick up. Can you talk a little bit about When throughout the quarter you started to be able to do physical meetings in several jurisdictions that you were successful in and How you've seen the pipeline sort of escalate? Has there been a lot of postponed projects in the pipeline that are now starting to pick up again? And are you seeing that To which extent are you seeing that activity thread increasing going forward? Yes. It's If we go back to Europe, it's kind of weird. In the southern part, we can actually visit and see customers. But in the northern part, also in Germany and France, we don't travel. We don't have access to labs. So it's not totally correlated with our sales numbers and that's back to the fact that the sales cycle is out of sync. When do we see the customer Does not translate into a sales number in the same quarter. So that's one done. So Europe is really fragmented. We've actually seen most activity in the South. Believe it or not, we were kind of surprised when we learned this. Whereas U. S. Is gradually it's really it follows our the Activity level gradually being able to see the labs that is coming on board. I think there is a bit of confidence over there as well given the vaccinations. So I think that's kind of correlates with that. It's as we hear from our partners and from our market support organization, we are not at 100% yet. It could be at 50% We're on an uphill sorry, upwards trajectory in terms of visits and face to face demonstrations. That's kind of the short version for you and Americas. Okay. Thank you. So just a small positive development in the gross margin, was there anything particularly related to that? Or is that just more a Quarterly one off. We had a good product mix, so that contributed. And then we also, as you see, one of the slides, we actually show the sales per product group. So we had a significant increase in software, which translate into gross margin as well, good gross margin. So that was actually a contributor for the improved GM. So dependent on the mix, then we don't hope it's a one off. Thank you. That is it for me now. I'll just get back into the queue. Thank you. Pleasure. We have a question from the line of Felix Zinnen from SFO. Please go ahead. Hi, Simon. Magnus. Great to meet you, Simon, for the first time. Welcome to the company. We've refollowed since 4 years now very closely, and obviously, Plasco and Magnus You've done an excellent job of that, Tom. So it's great to see you come in with fresh eyes and an ambition to take the company to the next level. So given that we meet here for the first time, maybe you can just start and reflect again on your career experience so far, In particular, with regards to driving revenue growth and execution and also related to an indirect business model I like this one. That would be great. Yes. So career wise, the indirect business model is certainly not new to me. I've been managing a business with Agilent Technologies 4, 5 years back in the days where we also were commercializing products in an indirect model with the majority of the IVG players. So I think it allows for a very, very new setup with fast action. And I saw the same benefits of the way and the good decisions that the solution has taken over time. So that's a plus. I say from my experience in pathology, this is also a business. It's tissue based diagnostics, but it resembles that what we do here at Solutions significantly. Here it's the format or the sample is blocked whereas in tissue based it's obviously tissue. But the nature of the business is very similar, placing instruments, having reagents, a consumption and a recurrent This is Mauro. So I think here at CeraVeition with the acquisition of Voral, we are getting the opportunity to to contribute and add to our revenue stream with more recurrent characters. That's both software, but it's certainly also the potential with relating to business. And that's something I've been working extensively with. Here, we don't control the end customer in the set of our television. We are working with our distribution partners, which is different from my previous experience where we primarily were selling directly to the Lance. That's the job of our partners, which means that the business model for them is around also price per analysis and price to slide and so forth. That's a different setup for us as we are contributing to our partners. And then the last thing I want to highlight also career wise is, I've always worked in the sphere of business development, innovation and commercialization. So it's kind of been across those areas. And I see the innovation agenda here at Cellavision. It's a super healthy company. We can be very and ambitious on behalf of innovation to maintain our position but not be complacent. I think that's important. We don't want to become complacent. We want to be aggressive and be seen as the leader. And that's some of the activities we're working on and I have a lot of respect for what has been done in the company. As I'm going to tell my folks here in the company later. It's not about building a turnaround, but there are things we really need to get our arms around, and we have all opportunities with the capabilities that are processed in this company. So it's going to be an interesting very, very interesting journey ahead of in the next many years. Excellent. It's great to hear. And you sound very motivated, so I'm very keen to follow That over the next couple of years. And thank you. So another question from probably touches a bit the innovation point of view, One area of the story that excites me very much, but where we've not unfortunately not seen a lot of progress over the last couple of years is the veteran unit space. From what I look at in the market, we see a lot of consolidation in the U. S, in particular, on the lab side. Now it's also starting in Europe. So I think it's a fantastic market to launch our products, cut the costs for the vans, While also raising the standard and the outcome. So your views around that will be Interesting. I think also, Cellavision launched the product together with IDEX Labs. And I would be keen I mean, they have big plans for the hematology side there. So I would be keen to hear about progress and customer feedback. Yes. I think you're right. The vet is actually an interesting segment. And what we've recently heard from our partners in the U. S. Is that throughout COVID, the companion segment has grown. It has really expanded. So it is an interesting sector. And so this is also about building contracts with the labs or a chain of labs. And there's a division. We've been kind of really had one larger relationship, but this is something that is a growth opportunity to look into because we actually have the offering. Certainly, that is an interesting segment. It's never going to grow as big as the human. It's not, but it's certainly not insignificant. Yes. Perfect. Excellent. And then the last one, and I could be touched on it previously, is just again about Service and software, just curious about the visibility. I mean Q1 seems to be a strong quarter and it has been last year as well, but then unfortunately tapered off during the coming quarters. So any hint whether we should expect that to remain stable or accelerate, decelerate sequentially would be fantastic. Thank you. Yes. We actually have Reasonable confidence around Q2. Underneath the reasonable, I would say there is some concerns that we share with our partners on the uncertainties in Europe with the on and off lockdowns. So that's one thing. However, we are not super concerned around Q2. Our mind is also because we are starting to see orders coming in, and it looks healthy. But the question is also, can we maintain it for the full year? And that's a bit early for us to comment on that. Sure. Thank you very much for the color. And then my last question is about APAC. Again, I remember that I think in 2019, you won a bigger Order a tender in Australia that was up for delivery in 2020 2021. So just from a contractual point of view, To remember that correctly, and surely, does that mean that we should expect growth to clearly step up on the instrument side in APAC during the remainder of the year. Thank you. Yes. To my best knowledge, and Magnus may correct me here, There is not clarity on the particular tender you mentioned from 2019 yet in Australia. So that's still pending. So we would love to see that happen, honestly. But we are not there yet. You mean in terms of continuing to deliver or starting to deliver? Starting to deliver. Okay. Okay. Thank you very much. Pleasure. There are no further questions further, so I hand back to the speakers for any closing remarks. Thank you very much. And first of all, thanks for everybody for listening in and providing the meaningful questions. As said in the beginning, it's a pleasure to represent Cellavision here today. I'm looking forward to our Many earnings call in the future. I think we have a great opportunity with the company, and I've been extremely excited coming in to the company, meeting the team, being exposed to the culture, but also seeing that we can actually make a difference for hematology here. So that's exciting. So with that, I will close our Q1 to report presentation, and I'm looking forward to our continued discussions in the future. Thanks.