Earnings Call: Q2 2021

Jul 29, 2021

Quarterly report

Half year report will be presented to you by Tim Turnt, our CEO and Henrik Bergentov, the CFO. The presentation will address the 1st 6 months of the 2021 fiscal year, but with a focus on the Q2. Tim will start off with a short introduction and comment on the financial highlights in Q2, followed by an analysis of the sales development before he finishes with commenting on the key events. Henrik will guide you through the financial review and then I will come back to Tim, who will conclude the presentation with a review of the market. I would like to remind everyone that we have changed the format of the Q and A session. In case you wish to ask a question, please press the button with the yellow hand, so that is the raise your hand button. And once you press that button, I'll open the microphone at the end of the presentation for you. Different than before, we will not respond to any questions in the chat, So please use the raise your hand button. Outside of the Q and A session, all microphones are muted. Recording of the webcast will be available on the Ctrip website after the presentation. Therewith, I hand over the word to Tim. Great, Priscilla. Thank you very much. So let's get started with an introduction and the financial highlight of the 2nd quarter. Seerat is active in the field of cancer treatment. Our customers are hospitals that treat cancer with radiation. In modern high precision radiation therapy, accurate tumor alignment is crucial for a safe and successful treatment. C RAT positioning products are supporting this process and are fully integrated in the clinical workflow. Over the past years, C RAT has been growing significantly and generated last year a profitable result at about SEK 200,000,000 in revenue. Looking at the Q2. The effects on our business due to the pandemic continued to ease up, which allowed us to grow revenue at a high pace of 41% and to deliver a record high operating profit For the Q2 and also for the first half of twenty twenty one. We are closing the second quarter with order intake of SEK 72,300,000, reflecting a growth of 16% or 24% in constant currencies year on year. Revenue amounted to SEK 60,500,000, reflecting a growth of 41% or 51 Present in constant currencies compared to the Q2 last year. Order backlog continues to grow, both for the products but also for services. Our operating expenses are well under control, and we can also conclude a gross margin in the higher range of the long term average. The gross margin is positively affected by favorable sales mix as well as high margin service Business becoming a larger part of our total revenue stream. Cost control, combined with the sales growth, Generated operating profit of SEK6 1,000,000 in the quarter and operating margin of 10%. We believe surface tracking is well on its way to become standard of care, and CRAD is in an excellent position to grow with Let's take a closer look at our sales performance. In the second quarter, order intake continued to develop We have joined the region Americas with a plus of 3 77% growth. Here, we see improving results from our cooperation with The partnership enhances our market exposure and consequently allows us to present our products to a larger group of customers. Europe remains on the same level as last year. For the APAC region, we are reporting a decline of 26% in the 2nd quarter, But stable order intake over the 1st 6 months. It should be highlighted that China continues to grow, and the decline It's primarily due to lower order intake from Japan. In general, we noticed some nervousness in the purchasing departments in the APAC region as a consequence of COVID. I want to point out and point your attention to our order intake Our business is subject to a very distinct seasonality pattern, whereas usually, beginning of the year is weak And the second half, and especially Q4, is coming in very strong. This is affecting revenue, but even more order intake. COVID-nineteen is still affecting our business in some regions. We cannot identify, however, budget cuts that have an impact on the purchasing behaviors of our customers. I mentioned the nervousness in the APAC region already, And we noticed that the purchasing process, in some cases, turns out to be longer than the previous COVID times. Looking at the first half of twenty twenty one, we show very solid revenue growth in all our regions. After order intake picked up by the end of last year in North America, and we see those projects now being delivered and creating revenue. EMEA was affected during last year by customers not being able to take deliveries as a consequence of the pandemic. After a very strong Q1 in terms of deliveries to our customers in APAC, we see a small decline in Q2, But still a very solid growth with 30% if we compare the period January to June in 2021 compared to 2020. This slide displays the order intake And revenue by product category for the 1st 6 months this year. We succeeded to grow all our product Categories in order intake as well as in revenue. I want to emphasize the high growth rate in our service business or, as we call it, lifecycle business. The service contracts are typically a long term commitment from our customers and from CRAD, Where we are invoicing on an annual basis for the services delivered. The growth rate of our positioning products is showing the high interest in our solutions. The global pandemic A significant impact on most industry. Looking at radiation therapy, clinical measures have been taken during the pandemic And certainly accelerated the implementation of high precision treatment techniques, so called stereotactic or hypofractionated treatments. For safe and efficient delivery, customers use surface tracking technology to position and to monitor the patient during treatment. This development makes us confident that the demand of our technology will continue to grow moving forward And will become part of the standard of care for such treatments, meaning that the Majority of all linear accelerators, by default, will be equipped with surface tracking There is I come to the key events during the period And start off with our management team. During the Q2, we have made same changes to our corporate governance structure And as such, strengthened also our management team. Annika and Emily joined the group management team. Annika has assumed the position as Global Director for Services, and is there this responsible for our life cycle business. Annika has extensive experience service business development from various companies, I believe the service business will be an important contributor to our success moving forward. Therefore, we have created this new position. Emilie is overseeing our marketing team. On our way to make this technology standard of care with an advanced radiation therapy, it's crucial to get the customers excited about C. Rad. With her background and a strong focus in digital marketing, she will develop to get the brand CRAD in the customer's mind and service tracking is supposed to be decided. A third addition is Ivan in the U. S. Ivan took over the position As President for our Americas Sales and Service Operation. As part of Ivan taking over, we also consolidated the responsibility for LATAM For the latter market, with Ivan. There is he's overseeing the business basically from Alaska to Capone. The Asian market enjoys a very dynamic development When it comes to the rollout and implementation of advanced radiation therapy, ZERAT had not taken a very active position in the Indian market. As part of our strategic market expansion, however, we have decided to establish Zebra now also in India. We will follow a similar model as what has proven to be successful in China, with a combination of direct sales and this is Rudder. We found a very experienced individual with a thorough background in medtech sales to take over this And market for Seerat. Seerat has been involved in a legal dispute with a former employee. As a matter of fact, it is the 4th dispute with the very same employee or a company that he founded after he left Sievert. Sievert has won all disputes and the most recent lawsuit where the employee claimed compensation for inventions that were filed from CRAD during his time in the CRAD Group. The court in the current case followed entirely Seabed's position and decided the case in Seabed's favor. The verdict states The former employee shall take over SEVA's legal fees of around SEK 2,900,000. The fees have not been paid yet, And the case has been filed with the Swedish enforcement agency. We will not recognize the payback Of the funds before we have actually received them. Last week, Zebra was informed that the employee has appealed the verdict. In such cases, usually, leave to appeal is granted by the court, meaning that it is very likely that the appeal court will pick up this appeal And take you to the next level of jurisdiction. This doesn't change Seurat's position. Our lawyers are confident that the reassessment of the case would not change the decision materially. With that said, I hand over the microphone back to Priscilla. Thank you, Tim. And Henrik will now navigate us through the financial review. Thank you, Brasilia. Frank, you, Tim. So let's start off with taking a closer look at our profit and loss statement by Starting off repeating some of the comments Tim already made on the revenue. Revenue grew with 41% to SEK 60,500,000 in the quarter. In constant currencies, the growth was 51%. And as I said, the APAC revenue decreased with some 8%, Much due to a very strong period last year when major orders were delivered, but still a very strong performance from China in the current quarter. Revenues in America grew with 303%, a result from an order intake that again started to pick up towards The end of 2020 and continuing into 2021 and are now being delivered and thus generating revenue. Revenue in the EMEA region generated growth of 38%, signaling that the pandemic challenges are easing up, Thus, deliveries and installations can actually take place. For the 6 months period, revenue increase was 26% and amounted to SEK120 SEK500,000. In constant currencies, the growth was 29%. The gross margin for the quarter came in at 63%, and I I'll comment a bit further on that on the comment slide. Our external expenses for the quarter amounted to SEK 12.7 compared to SEK 8.3 for the quarter last year. And it's worth mentioning here that last year's 2nd quarter external expenses were impacted by the pandemic with virtually no travel or fiscal marketing events taking plans, bringing down Operating expenses. So now they are more on, let's call it, normalized level. Personnel expenses for the quarter amounted to SEK 17.6 compared to SEK400,000 in the quarter last year. As with external expenses, we also had some pandemic effects in the second Quarter last year on personnel expenses in the sense that we received some governmental support in various regions, which reduced Personnel expenses last year. The average number of employees amounted to 62 during the Q2 2021, Same amount as corresponding period last year. At the end of the period, by June 30 this year, We had 64 employees in the group compared to 61 last year. All combined, The operating income for the quarter amounted to SEK 6,000,000 compared to SEK 900,000 last year, A margin of 10% this year compared to 2.1% last year. For the 6 months period, the operating profit amounted to SEK 12.3 Compared to SEK1.9 million last year. Equally full as for the quarter, a margin of 10.2% compared to 2% last year. The increase in the operating income and the improved margins is a function of the growth in revenue with improved gross margins And with limited increase of the operating expenses. This This slide displays our revenue and our gross margin, gross profit despite over a longer period of time. And as said, the reported gross profit margin for the quarter was 63%, meaning in the higher range of what we have delivered historically At the same level as the quarter last year. But as you can see, there's an underlying proven margin improvement over time. However, fluctuations in the gross margin can be expected between the periods as it is dependent on mainly two factors. 1 is the product mix And one is the use of different sales channels. But overall, as the service business grows to be a bigger part of our Revenue, we also expect that, that will elevate the gross margin in the longer term perspective. So the purpose of this slide is to put SeaWorld's growth journey into a context, And that context is a company that has been investing in an organization to generate growth. And these investments have, of course, increased the operating expenses over time. But we can also see that the revenue It's actually growing at a faster pace than our operating expenses, which you can see at the curve for revenue is Steeper upwards leaning as compared to operating expenses, proving that the investments are, in fact, paying off. So this slide is displaying the company's Revenue and operating profit by quarter and over time. And I mean, one takeaway from this slide is that You can all see that the business of CERAT is fairly volatile between the quarter and also expected to be so going forward. And the main reason for that is that Larger single orders will have a material effect in the quarter when they actually are delivered. What we can see here is that we have a clear trend line where Sea Rad is on a growth journey. And this growth journey also reached an important milestone in mid-twenty 18, meaning that we actually have a profitable growth journey With significantly strengthened margins towards the second half of twenty twenty and now continuing into 2021. This is a snapshot of our balance sheet and our cash flow statement for the Q2 and the Hans Piereck with a couple of comments to be made. Starting off the balance sheet, we have some Immaterial assets, but a relatively low level of immaterial assets. The company is completely debt free. We have SEK 140,000,000 in liquid funds and on top of that, a SEK 20,000,000 unused credit facility, All boiling down to a solidity of 77%. Cash flow is positive for Quarter and for the 6 months period, it is a very asset light business with minimal capital expenditure, where As cash generation is over time very much linked to the operating profit made. So this is a slide displaying our order Klag at the end of the second quarter. And as I think you all know, the order backlog represents orders that have been Received, but not yet delivered nor yet invoiced or recognized as revenue. At the end of the quarter, their backlog amounted to SEK352,000,000, 25 percent up from last year's SEK 282,000,000. About half of the order backlog relates to products and the other half relates to service contracts. And when it comes to service contracts, just about SEK 27,000,000 of the order backlog service contracts are expected to be recognized as revenue within the coming 12 month period as service contracts are recognized as revenue over the contract period. Service contracts can be up to 8 years, while the most common contract period is 3 to 5 years. And by that, I'm happy to hand over the microphone to you again, Priscilla. Thank you, Henrik. And we would like to give you some information on the market and company overview. Great. Thanks. So I mean, to give you a bit of a picture of where Seaverat is active and kind of what our playground is. Cancer is among the leading causes of deaths worldwide. Three methods have been established to treat cancer, which is surgery And drug therapy or also chemotherapy and, of course, radiation therapy. C. Rad is active in the field of radiation therapy, And our products are used to improve patient safety and increase efficiency during treatment. The demand for our products is driven by the worldwide implementation of high precision treatment techniques. We believe that this technology is on its way to become standard of care, and here's why. The next two slides give us a bit of an overview. Let's take first a look at the dynamics in the market and then see at the clinical adoption. So what we see out there in the market are several indicators that support our statement That these technologies on space become standard of care. The first one to mention is that in almost all tenders for new linear accelerators here in the Western world, Positioning products are part of the discussion. That doesn't mean that every customer is purchasing surface tracking as part of a linac procurement project, But it is part of the discussion, and there might be reasons to not invest in it. But I mean, there is an interest in this technology. The second very strong point is the major vendors of linear accelerators have, in different ways, started to incorporate positioning products in their product catalog. As you know and as I mentioned, I mean, SeaWorld has engaged in a Very close relationship with Elekta to supply them with surface tracking products so that the Elekta organization can offer this to their customers. And if we look at the latest and greatest technology based on radiation therapy, I would like to name the proton therapy. And proton therapy is kind of the spearhead of precision radiation therapy. And here, we see that essentially, all centers are equipped with surface Tracking. So this is guiding us in the way how high precision radiation therapy is delivered over the next years. If we then make a step back and take a look at the clinical implementation and the clinical adoption. This slide displays The journey that we have taken or rather, the clinics have taken from 2015 to 2020, so to last year, Back in 5 years ago or 6 years ago, this technology, surface tracking technology, was still a very much of a niche application. It was Predominantly used for the treatment of breast cancer patients. Today, there are several indications Where surface tracking can clearly benefit to the quality of the treatment. We assess that 70% of the patients that get radiation therapy At a given center, we benefit or would benefit from surface tracking. And that's, of course, a very important development From a niche application back to or towards a standard. Taking a look at the global opportunity for surface tracking for our positioning technology. Arguably, there are around 12,000 Linux installed worldwide. And if we take a look at the distribution, We can say that around 75% of the installed base of Linux are installed in what we call the advanced markets. So that's North America, East Asia, Western Europe. At the same time, if we say That this technology is on its way to become standard of care. Well, what does that mean? Ultimately, that all linacs are equipped Twist is technology. So maybe it's not 100%, maybe it's 70%, 75%, 80%, something like this. So we assess that opportunity To be around 7,000 Lennox moving forward. Let's zoom in to our position in the market, but then also come back to the market potential. Currently, Seerat has installed worldwide around 6 30 systems. That was roughly in February this year, with another 130 systems in the order book. Then looking at the market potential. With the numbers of linacs that I just mentioned, There is an opportunity of around SEK 5,000,000,000 if we want to equip around 5,000 Lennox. So we said 7,000, so slightly above. Then at the same time, if we break this down on an annual basis, we can say that around 700 linacs are sold today already That are going into this advanced market. If all of these systems are equipped with surface tracking, that would give us a market potential Around SEK 1,000,000,000 on an annual basis. We are not yet there, but that basically displays There is a huge opportunity that we go after. Perhaps a few words about our technology. Why are customers using Our technology. There are different ways how patients are positioned. And what we show here on the picture on the left side, this is an installation together Electa linear accelerator, and you see the red circles there, marking and highlighting the Seabrad system. The advantage the clinical advantages of our technology are: it is a dose free system that is important because it reduces the side effects after the treatment It is noninvasive, with a high level of ease of use, so very much appreciated by the operators. It is Mark Ales translating in direct patient comfort. It has very limited impact on the daily workflow, And that is something where Seabed is particularly strong in. We have integrated our technology very well into the surrounding Systems such as the linear accelerator planning system, the CT and so on. And last but not least, the patient compliance is very high This technology compared to other positioning technologies, and that really allows the standardization of our technology in the clinical workflows. With that said, I want to swing over and speak a little bit about our service business. I mentioned it, and Henrik mentioned it as well in his slides. I mean, the service business is becoming a larger part of our larger share taking a larger share of our Revenue stream. We consider the service business to be very important moving forward because on the one hand, it builds up a long term relationship It's the customer that goes much beyond the initial product sales, but also allows us to charge the customer for the services that we provide. We have different service models, and that depends a little bit on What level of service the customers are asking for, also how we approach the market if we have distributors or if we go direct. But in general, we have seen a very high growth rate Over the past years on the service business, and as the installed base is growing, plus new systems are sold to the market, it is an ongoing Business. We see huge interest in the U. S, where today, 92 plus percent of the customers have signed up for service contracts. So We can say almost everyone has a service contract. EMEA is not quite there, but there we see also in constantly increasing adoption of service contracts. Customers simply want to outsource the service that has in the past been done by their own staff and now either it needs to be outsourced if The regulatory body requires it or simply the staff is not available anymore to do it, so they outsource it to the suppliers. In the APAC region, we see a bit of a different picture. And here, we need to take a closer look at the various markets. If we look at Japan, for example, a very advanced Market Australia, on the same level, very advanced market, usually customers go with the service contract in some shape and form. But then there are other markets, and I would like to name China here, where customers are not used to Sign up for service contract. So there is still an opportunity for us to fine tune our value proposition. And as the market is evolving, I'm sure that the interest in service contracts is also increasing. Service contracts usually are long term commitments. In principle, we allow up to 8 years. There may be a few exceptions, But the minorities of the customers is signing up for 3 to 5 years. So as Henrik indicated in his presentation, this is Basically, in the order book and will be invoiced over the next years. When we look at our strategy, I think There are different elements, and I think we spoke about our product. It is on its way to become standard of care. We spoke about sales excellence. I think one important part for us is now to get the experience that we have from those customers that have successfully implemented Technology out to customers that are interested and have not yet experienced the technology. And then, of course, Service excellence. I spoke about the service contracts, which we consider to be a very important pillar moving forward. With that, I would like to close our presentation. Perhaps a few comments here. We do have Scheduled for the 2nd September presentation at the Pareto Healthcare Conference. So if you would like to attend this, please Register this Pareto. Otherwise, we are publishing our Q3 report by the 28th October And then the year end report beginning of next year in January. With that said, I hand over Back to Jose. Thank you, Tim. Now we have reached the Q and A session. So as I mentioned before, if you would wish to ask a question, under the panel, you could see that there's a raise your hand A button, you can just click on it, and I will unmute you, and you'll be able to ask your question. So we have one question. I will unmute the first person. Well, thanks for your question. And I mean, I get your question, but there is no, I mean, such decision taken at this point. So that's the only comment I can make on that. And if that were to happen, you will, of course, be duly informed. A few more questions, Jose. Okay. Moving on to the next person. Good morning. This is Jacob Lemke here at ABG. So first, When we look at the installation volumes you had in the quarter, should we view this as that your markets are broadly Turn from the pandemic? Or is there sort of still any markets where you have reduced hospital installation access? I think overall, we can say it has resumed and returned back to normal. I think every now and then here Yes. There are certain changes in the standard processes. But overall, we look up on the situation Positively, again. What I mentioned in my presentation, and that's primarily for the Asian markets, I mean sometimes, we see a bit of a nervousness in the procurement departments, where decisions might take a little bit longer than what we used To see, in pre COVID times, we have also seen that, in general, the decision making process This will take more time due to more people being involved, more people need to sign off for investments. I think That is something what will still take some time to resume to normal, if we consider the pre COVID times to Normally, simply because, I mean, of course, investments were very much focused on those items that were really Required during the pandemic. But I think overall, yes, we look very optimistic on the market. And with regards to our product, We see less and less impact from COVID restrictions. Okay, great. And my second question was on The APAC market, is there anything in particular that has changed since, I mean, Yes, the second half of last year, where I believe you had pretty strong in both sales and orders. And now that you maybe see not a slowdown, but you speak of this sort of Cautiousness in the purchasing behavior? No, no, but I don't think we can really speak about a slowdown. I mean, if we look The order intake is kind of the leading indicator. I mean, the first half was of the year was still very good. And I think what we always want to highlight and need to highlight also, there's always some volatility in the markets, and not every quarter is Outstanding in every region. But I think overall, the APAC market is a very dynamic market, and The potential for radiation therapy equipment in general, but specifically also for our equipment, is continues to be Very good. I think, I mean, the APAC market is, of course, a very diverse market. We have, as I mentioned, I mean, The Japanese market, which is very much a high end market Australia high end market, which we are also covering in the APAC region. Then China had delivered constant growth rates over the last year, so we had a Very good development over there and continue to have a very good development. Japan is a little bit volatile that we have experienced over the past years, And that is basically what you see now also reflected in the Q2 order intake. But again, Q1 was very good also in the APAC region. Okay. Great. That's good to know. And then I have a question on the life cycle business. So You reported a very strong sequential increase here today. But If we look at the level you expect to invoice the coming 12 months, it's not sort of up. So obviously, just wondering if there's any One off or something in the life cycle revenue report you reported this quarter? Thank you, Jacob. Very good question. The SEK 27,000,000 we expect, those are confirmed service revenue in the coming 12 month period. What comes on top of that is, for one thing, we have service contracts that will expire during this year that we certainly expect To be prolonged, we don't disclose what our renewal rate is, but it is very high and comforting. So those expected renewals are not included in that number, so that will be an add on. And the other factor adding to this that our systems are sold with 1 year warranty period. And after that warranty period expires, many customers are inclined to sign up for service contracts. So that's also what I'm saying that Every warranty that expire this year, we expect to have a decent to good hit ratio on adding service contract that will also boost That number. So the 27% is more that's the guaranteed level of service revenue, but more expected on top. Okay, great. Thank you. And just a last question. Are you at all impacted by the global component shortages ongoing currently? Yes. But I think we have taken measures very early on to mitigate the impact. I mean, It didn't come as a total surprise. So from that perspective, we have tried to build up stock, partly Syrat, partly our Supplier, so that was managed early on. Having this said, I mean, of course, we don't know what the future will bring and how long this is going to last. But for now, we are in a fairly good position. There are no alarm bells right now, and we need to see what the future Okay. Thank you. That was all for me. And Yes. Thank you. Thank you, Jacob. Now I'll move on to the next person. Good morning, Tim. Henrik, I have Few questions. I really like the answer on the service contracts with the renewal period. I think that was a nice addition, and thank you for your presentation. Now my main question is in regards to the distribution agreement that you had with Global in South Korea. So I was just wondering how that's progressing. I'm also wondering a bit more with India. What can we expect from that in the coming 6 to 12 months? Yes. So I mean, Korea was a market We are fairly early on, we had built up a certain representation With the distributor, we are now in the process of reactivating this market over last years, there was not much activity, partly due to us, partly Due to the market, so we are reactivating this. And yes, I mean, like always, entering a new market is well, essentially, a new It's nothing what happens from 1 month to the next, but I think we are in a good position. We have prospects. We have customers That we are in good discussions with, and we definitely see an opportunity there. I mean, Korea is Maybe not a huge market, but also a very advanced market in the APAC region. So from that perspective, I mean, we are convinced about The fact that surface tracking or this technology is required in this market, so that is more a matter of establishing Zebra right now, building up relationship Key opinion leader, get them equipped with the ZERAT equipment and then ultimately boost sales activities there. So it's on Correct. However, no big results worth mentioning here now happened so far but on its If you look at India, I mean, India is a very interesting market from many angles, really. First of all, it's a huge market. I mean, the population, 1,400,000,000 people. If we look at The level of radiation therapy or modern radiation therapy in that country, it's still very limited. If you look The growth rates over the past years, they have been high. So it is a very dynamic environment. The investment Budget is there to invest also in modern radiation therapy equipment. And what is very important in those countries is what is the level of education of The clinicians. And what we found was that the level is fairly high. Many of them at the big centers have Either studied in Europe or the U. S. So they are very familiar with state of the art radiation therapy. And their Mission is basically to bring the same level back to India. And again, this combined with the Possibility of making investments, the budget being available, it makes it very interesting for us. Thank you, Henrik, for the question. From our perspective, I mean, we follow a similar model that we have implemented in China, so like a hybrid model with direct sales activities, but also as a distributor. And yes, let's see what the future brings. We are in the learning phase, but I mean, it looks very encouraging already Now after, yes, 3 months. Look forward to it. Wish you a good summer. Thanks, Tiete. Thank you, Oscar. I'll move on to the next Perfect. Do we have more Questions? Yes. Good morning. I'm Johan Johan Sbois from Trinidad. Two questions, please. Could you give us a sense of how you expect the gross margins To improve based on your expectations on how the service component of your revenues should improve over time? And secondly, as regards the external expenses in Q2, which were up at a pretty brisk rate, is there a significant component of legal And is this pertaining to the dispute you had with a former employee in that? And if so, how much? Thank you. So perhaps I'll answer the first question and then Henrik will comment on the second question. The first question and then Henrik will comment on the second question. Just to make sure that I understood the question right because We were cutting off a little bit. So the question was, with regards to the service contract, what we envision or what we assess the potential of the service contract I think it more relates to how you expect the improvement in gross margin to be driven by the What are your own expectations of service revenues as a part of growth? Okay. Good, perfect. I mean, while we have, of course, internally a clear A picture here of what our expectations are. I mean, I might not be able to disclose all the details here and now. But I mean, the service business, in general, is High margin business, that's nothing specific for Zebra. That's a general aspect. And I mean, if we look at, To say the revenue share right now, I mean, we are in the neighborhood of 10% slightly above 10% of our total revenue. If you look at other companies in Our industry, the service business, is more in the neighborhood of 40%, 40 plus percent. So there's still potential. Sure. I mean, there are I mean, 3 degrees of freedom really or 3 dimensions to develop the service business. It's the attachment rate, it's the installed base and Essentially, what you can charge the customer for the services or what the customers are prepared to pay for the services. I mean, the installed base is growing. We spoke about the attachment rates, but it's high in the U. S, which is growing in Europe and APAC. So I mean all the indications are going in the right direction for us To continue to grow our service revenue as well. So I mean, I know it's Not entirely answering your question, but perhaps I gave a few hints that help you to assess the case. Yes. And with regards to your question on legal fees in external expenses, yes, legal fees are a part of external expenses. And if you look at this Rough SEK 3,000,000 that was our cost for this most recent dispute that the court decided will be reimbursed to us. About half of that cost was taken already in 2020 because this case started off in May 2020. So the other half, consequently, Was in 2021. And roughly, I would say that half of that was in Q1 and the other half was in Q2. 2. So perhaps helping you with the mathematics here, just about SEK500,000 In Q2 was related to legal fees. So I mean, clearly, a measurable amount, but not something that completely Rocks that item in the P and L statement. Great. Thank you. Great. Do we have any other I see that Hakan maybe has another question. I'm just going to check. Hi, Hakan. Do you still have questions? Okay. Perhaps while Hakan gets warm, we take the next one. Okay. Then we close this session for today. I would like to thank everyone for taking the time to interrupt the vacations and join us for this meeting today, and I wish you all a great summer. Thank you very much. Bye bye. Thank you. Thank you, everyone. Have a great day. Bye.