Good morning, everyone. Warm welcome to the presentation of Elekta's year-end and fourth quarter, 2022/ 23. My name is Cecilia Ketels. I'm Head of Investor Relations at Elekta. With me, here in Stockholm, I have Gustaf Salford, Elekta's President and CEO. Our CFO, Tobias Hägglöv, will be presenting the results. Today's agenda starts off with Gustaf presenting some highlights of the development. Tobias give you details on the financials. The presentation ends with Gustaf's view on Elekta's outlook. After the presentation, there will, as usual, be time for your questions. Before we start, I want to remind you that some of the information discussed in this call contains forward-looking statement. These can include projections regarding revenue, operating result, cash flow, as well as products and product development.
These statements involve risks and uncertainty that may cause actual results to differ materially from those set forth in the statements. With that said, I hand over to you, Gustaf.
Thank you, Cecilia, and good morning, everyone, here from Stockholm, and really, really thank you for joining our call. I'll just take you a bit through initially, as I usually do, our strategy Access 2025, and what we did in Q4. During this quarter, our last quarter of the fiscal year 22/23, we continued to deliver on our Access 2025 strategy. Our focus was really to drive and secure profitable growth and reduce working capital. We continued to successfully deliver on our Cost-reduction Initiative, and we launched a new software solution suite. All of this is in line with our vision of towards a world where everyone has access to the best cancer care. Let's turn to some of the full year achievements.
What you can see here is really the key parts of our Access 2025 strategy. If you look at the driving adoption across the globe, our strategic milestone to provide access to an additional 300 million people in underserved market, is well on track, and by now, more than 180 million people have gained access to radiation therapy, which is ahead of plan and something we're very proud of. Also, an important part of our strategy is to go direct into the markets, and in February, Elekta acquired our Thailand distributor. If you turn to the customer lifetime companion, in October, at ASTRO, the big trade show in the U.S., Elekta launched Elekta Care 360, which is our portfolio of customer services that really help enhancing clinical operations.
It includes, for example, dosimetry, consultancy services, physics start-up services, and Elekta Care 360 increases our value-added services, and it further strengthen our position as a lifetime companion to our customers. When it comes to accelerating innovation, our new Leksell Gamma Knife, the Elekta S3, was launched this year and is now operating, treating its first patients in the U.K., Japan, and the Netherlands, and very soon in the U.S. When it comes to Elekta Unity comprehensive motion management with true tracking and automated gating, this is a true milestone in the MR-Linac paradigm shift. It was launched in October and received FDA approval in February. Last but not least, Elekta ONE, our comprehensive suite of end-to-end applications, just recently launched at ESTRO in Vienna. I'll come back to that more later in the presentation.
When it comes to partner integration across the cancer care ecosystem, it was in the quarter Elekta entered into joint venture with Sinopharm in China to increase the adoption of radiation therapy to all patients in the country. We were also very, very proud to announce that Mercurius Health equips the Robert Janker Klinik with integrated oncology solutions from Elekta and Philips. This is really enabled by the agreement that we've had with Philips now and our strategic partnership. If we now turn and look at orders and the markets in Q4, the demand for radiotherapy was very healthy, and it supported order backlog growth and a book-to-bill ratio of 1.24. If you look at the markets and the regions, in the Americas, orders were flat compared to last year. North America was slightly down, driven by lower order intake in Canada.
Throughout Latin America, despite all these regional economic challenges, growth continued due to increased demand for patient access to radiotherapy. In EMEA, order intake declined by 4%. Europe had good growth from the Southern European markets together with Poland. However, the Middle East and Africa had negative order development, mainly as a consequence of weak markets in Egypt and Turkey, as these markets continued to be negatively impacted by their domestic macroeconomic situations. Orders in APAC increased by 4%. The three largest countries in APAC, China, Japan, and India, all showed double-digit growth during the fourth quarter. This growth was, however, largely offset by headwinds in the Australian market. We ended the quarter, and that's important to say, with a strong order backlog of SEK 43 billion that will support revenue growth going forward. Let's then turn to revenue.
In the quarter, we showed double-digit revenue growth with strong performance for both solutions and service. Solutions revenue, as you can see here, was supported by continued improvements in the supply chain situations and strong installation volumes. Service grew with 7%, and it's really growth across all our business lines. I'm very, very pleased to see that the service revenue is growing faster than the installed base growth you can see here on the slide as well. At the end of the period, Elekta had an installed base of approximately 7,150 devices, of which about 5,250 units were Linacs, MR Linacs, or Leksell Gamma Knife systems. For the full year, we delivered 4% revenue growth, which was supported by significant improvements in the global supply chain situation during the second half of the year.
If we turn to one of my favorite topics, Unity, and look at the development of our MR-Linac, we are really proud to see that Elekta Unity systems are in clinical use on four continents, with a total of 75 installed Elekta Unity systems across the world. Clinical Unity systems shows an impressive 99% uptime, and 100% of the Unity treatments are now adapted to the changed position of the target, and 60 are adapted to changes in shape of tumor. It's really clearly demonstrating the Unity's superior technology and capabilities to change patient outcome. More than 40 indications are treated, with prostate cancer being the largest number. We have seen more than 600 peer-reviewed publications and more than 4,000 patients recruited in the MOMENTUM study, making it the powerful foundation for research and innovation.
Now over to the strategic partnership with Sinopharm. This is really about increasing the adoption of radiotherapy, and it's also collaboration with Sinopharm that will help ensure that Chinese patients will have access to the same high-quality, precision radiation therapy, regardless of where they live. It's a joint venture with Sinopharm, they are the largest sales and distribution network in China. It's about increasing adoption of radiotherapy across the country in underserved areas. It's about expanding Elekta service offering, it's also about improving clinical operations at RT centers. In summary, it's about combining the high-quality offering of Elekta with a vast network of Sinopharm. If we turn to the big launch we did at ESTRO, Elekta ONE, and this was after the quarter close in Vienna.
Elekta ONE is a comprehensive suite of end-to-end applications, and it's really offering clinicians more automation, more mobility, and more time to spend with patients. This is really important because Elekta ONE allows our customers to connect their existing product to this new innovative solution with no loss of functionalities, smooth transition to a new platform, and continuous data integrity with MOSAIQ as a backbone. This new Elekta software enables cancer care teams to plan and manage on quality specific workflows more efficiently. The goal is to increase our customers' productivity with around 50% through this enhanced workflow management. With that, now over to Tobias for the financials.
Thank you, Gustaf, good morning, everyone. Starting with the Q4 financials, Elekta's revenue grew strongly in the quarter, driven by a good conversion rate of our order backlog. Net sales increased 10% organically. Geographically, the growth was driven by APAC, with a growth rate of more than 30%. Americas showed 4% growth, with positive development in the U.S. and strong growth in Mexico. Europe had good growth in the quarter, but the Middle East and Africa held back the development in EMEA, summarizing EMEA to -1%. Adjusted gross margin improved to 37.8%. Our adjusted EBIT margin increased to above 16%, with higher sales and lower expenses. Foreign exchange rates had a positive effect on gross as well as on EBIT margin. Finance net rose in the quarter, driven by higher interest expenses and revaluation due to hyperinflation in Turkey.
Our adjusted gross margin improved by 80 basis points compared to Q4 last year. The healthy net sales growth contributed positively with 300 basis points. The strong solution growth, as well as the geographical mix, led to a total negative mix of 280 basis points. Foreign exchange rates had a positive impact of 260 basis points, mainly driven by the strengthening of the US dollar compared to last year. While supply chains conditions have improved and logistics costs are declining, inflationary pressure from higher material and component prices continue to put pressure on our gross margin. The net impact in the quarter was 200 basis points negative. Looking into our expenses in constant currency and adjusted for items affecting comparability.
All in all, the operating expenses decreased by 7%, both year-over-year and sequentially, as we continue to see the results of our Cost-reduction Initiative. Selling expenses decreased by 2% year-over-year in the fourth quarter. Sequentially, our selling expenses increased by 3%, driven by higher level of in-person activities and inflationary pressure. Our administrative expenses declined year-over-year, and even more so sequentially. Net R&D expenses declined both year-over-year and sequentially. Gross R&D has continued to decline from the peak in Q1, and on a rolling 12-month basis, gross R&D ended at 13.3% of net sales. Net R&D decreased year-over-year as a result of lower gross R&D spend. Capitalization was in line with Q4 last year, while amortization was slightly higher. For the full year, our revenues grew by 4%.
All regions grew. Sales of solutions as well as services increased year-over-year. Our gross margin has improved, what was negatively impacted by inflation and higher supply chain costs, despite easing supply chain disruption towards the end of the year. Revenue growth and FX contributed positively. All in all, our gross margin amounted to 38.1% for the full year. OpEx decreased by 1% in constant ex-exchange rates, with a sequential decline towards the end of the year. Our EBIT margin came in at 10.3%. Net financial items increased, and income tax rate decreased to below 22%. All in all, adjusted earnings per share increased to 3.11 SEK. We have turned a soft start on the year to improved financial performance in the second half.
Growth rates have increased, operational costs have been addressed, foreign exchange rates have turned to being EBIT margin accretive. The result is an improved operating margin of close to 300 basis points in the fourth quarter. Since the beginning of the year, we have worked with our Cost-reduction Initiative. It has progressed according to plan. Our spending within the year has declined with the estimated SEK 200 million. We have reduced the run rate of spending by SEK 450 million. The cost for implementing these savings amounted to SEK 312 million, with SEK 71 million impacting our gross income. Moving over to the balance sheet, our working capital was substantially reduced in the quarter. Following the strong sales at the end of Q3 and in Q4, inventories decreased. Accounts receivables and accrued income improved, driven by healthy cash collection.
Also, our liabilities improved in the quarter. In the fourth quarter, we delivered a record strong cash flow. EBITDA amounted to above SEK 1 billion. Following the reduction of working capital, cash flow from operating activities amounted to almost SEK 2 billion, resulting in an operational cash conversion of 76% on a rolling twelve-month basis. Our continuous investments amounted to SEK 417 million, mainly driven by investments in our innovation pipeline. All in all, our cash flow after continuous investments was above SEK one and a half billion. Our Net Debt to EBITDA ratio was, by the end of the quarter, below 1. In March, we refinanced maturing debt, which increased our debt portfolio duration to 4.3 years. We are continuing to link the funding to push for our sustainability agenda.
In addition to our sustainability-linked bond, we now also have closed the sustainability-linked revolver. This facility is not only linked to the social KPI of Linacs in underserved markets, but also to our Scope 1 and 2 emissions, as well as the Scope 3 target, regarding suppliers setting own emissions reduction target that are science-based. Including the undrawn revolving facility, our available funds are SEK 6 billion. All in all, we have a strong balance sheet and a solid financial position. The board suggests maintaining the high dividend level from previous year for 2022, 2023. This means SEK 2.40 per share, which represent a payout ratio of 97% of the net income. With that, I hand over to you, Gustaf.
Thank you so much, Tobias, now over to the outlook. Today, we have published our new outlook that goes from the period 2022, 2023 until 2024, 2025, so the 2 next years, I'd say. If you set it in context, during the last years, the radiotherapy market and Elekta's growth and margins has been pressured by supply chain challenges and component shortages. However, we have seen this significant improvement in the second half of 2022, 2023 that we expect to continue. From day, our outlook until 2024, 2025 is, net sales CAGR of above 7%, EBIT margin expansion, and a dividend policy of at least 50% of net profit for the year.
If we look at the outlook, looking into next year, we believe that the uncertain macroeconomic environment remains, but we expect our improvement trend to continue into Q1. As always, we also believe that long-term market trends to support growth and investment in high-end radiotherapy equipment and margin expansion. If I try to summarize our Q4, we end this fiscal with a very strong quarter, where we have managed to deliver double-digit revenue growth. We show record cash flow, driven by low net working capital and high earnings. We have successfully implemented cost reduction initiatives, driving margins, and we have launched the Elekta ONE software suite at ESTRO, really strengthening our comprehensive product portfolio. Thank you for the last year, and I really look forward to see you now in this fiscal year. Now, over to you, Cecilia, again.
Thank you, Gustaf. Before we open up for questions, I'm happy to welcome you to our CMD that will take place in our facilities in Crawley on June 20th. Please register to this event through the link that was sent out in the invitation press release, either you want to follow this on the web or on site. For those participant on site, we will pick you up with buses at Gatwick, which is very close to our office, and this either if you come by plane or train to the Gatwick station. Now we open up for the Q&A session. Please, operator, can you open up the first person in line?
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. You will hear a tone to confirm that you have entered a queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to use only hands-offs while asking a question. Anyone with a question may press star and one at this time. The first question comes from Kristofer Liljeberg from Carnegie. Please go ahead.
Thank you. First, I just wonder if it possible to quantify this negative effect from Australia, what the orders would have been with the more normal Australia, and for how long you expect this market to remain slow? I also wonder when it comes to the margin guidance, of course, the fiscal year at the end that had large negative effects from hedges. Adjusting for that, I think the underlying EBIT margin would have been around 12.5%. Is that what we should see as a base now when you say margin should improve from here? Thank you.
Thank you, Kristofer. I think I will take the first question, and Tobias will take the second question. If you look at the APAC region, it was really strong growth, as we said in the call, in the three main geographies, China, India, and Japan. It was a very weak development in Australia due to that they working around their reimbursement levels and so on in the country, and that had a bit driven the lower orders there. I don't have the specific numbers excluding Australia, but let us come back with that. For the margin question-
But, but-
Yeah, sorry.
When it comes to orders, I think expectations were for orders to grow at least mid-single digits. When you say that you should grow top line more than 7% organic, or sales more than 7% organically in the coming years, of course, a lot of that comes from converting the backlog. Do you also see orders growing in that range now going forward on a more?
Yeah, we don't.
Annualize
... guide on orders. We see a strong demand, and I think it's also important to look at the order levels. If you look at the order book-to-bill ratio, kind of orders divided by revenue in the quarter, you'll see 1.24. We're still at very healthy order levels to support the revenue guidance of more than 7%. Exactly what the orders will be going forward, that's not something we guide for. We see a healthy market in the coming years as well, supporting the revenue guidance. I think we'll come back more to kind of the market dynamics and looking through region by region and so on at the Capital Markets Day in a couple of weeks' time.
Okay. Thank you.
Nice to talk to you again. Talking about the exchange rates here. You're right that looking into this fiscal year that has passed, we actually have had a negative impact from that reporting line exchange rate differences. Looking into the next year, we will have some negatives here, starting at the year and then flattening out, so that negative impact reported from FX will be less. If you look at the total FX impact hitting most of the P&L rows, FX will be a positive contributor to the year-over-year performance into next year.
My question is, when you say that you would improve the margin, of course, you will have automatically improved margin from less negative hedge effects.
Right.
Would you expect margin to improve if we strip out that accounting effect?
We will have a healthy contribution here from net sales growth and a good cost control. We still see a pressure on the gross margin. All in all, we see a margin expansion into the year, where FX is one of the contributor. Yes.
Okay. Thank you.
Thank you.
Thank you.
The next question comes from Rickard Anderkrans from Handelsbanken. Please go ahead.
Right. Good morning, and thank you for taking my question. Two for me, please. I want to get back a little bit to the EBIT margin guidance there. You know, at the base, I do, sorry. At the base for the EBIT margin expansion ambition is now 3.5 percentage points lower, looking at adjusted EBIT. Should we interpret the new guidance as a significant cut to your EBIT margin ambition for the year 2024-2025? It would just be very helpful to understand the sort of ambition and the delta on the EBIT margin expansion ambition. Starting there. Thank you.
What we are saying, I mean, we will drive a margin expansion, and our ambition is to come back to the levels that we've been at. That is what we'll do here.
Pre-pandemic sort of levels is still reasonable then for 2024, 2025 in your ambition, or how should we interpret it?
We don't provide with the specific dates, but the ambition is absolutely to come back to those levels. Yes. I think there are good reasons for that. If you see... If I may add to that, and if you look at the financial performance throughout this year, and look at where we started here in Q1 and Q2, and then see the progression here into Q3 and Q4, that has been a healthy financial development, driven by healthy net sales. We picked up that growth rate, driven by that we've successfully worked with our Cost-reduction Initiative. We're determined to improve going forward as well.
All right. Thank you. Second question, please. Your MR-Linac competitor is seeing some turbulence at the moment. Do you expect to capture any of that backlog? Have you seen meaningful increase in interest for Unity recently? Also, if I can slip in another one, what's the total order number for Unity compared to the + 120 orders you communicated last year? Thank you.
Thank you, Rickard. I'll take that one because I was just down at ESTRO last week, the big radiation oncology show down in Vienna. I think one of the biggest interests was, of course, Elekta ONE, but the other one was Unity and MR-Linac overall, and MR and RT at the show. I think ViewRay, as you said, they've had a bit of financial difficulties over the last couple of weeks and months here as well. However, for us, I think having Unity as part of our portfolio and driving it forward, is really a key thing for our growth going forward as well. I think that's important.
Throughout the last couple of years, it's been a bit lower Unity volumes, because of pandemic and supply chain and so on. It's significant projects, I see it very positively going forward. To your questions, on the year, we were around 20 Unity orders in the last year. Going forward, I expect higher numbers, of course, compared to that. I think what we see in the sales funnel and opportunity in the market is to support good Unity growth going forward. It's just amazing to see what our customers, partners, clinicians are doing with the machine. Treating, you know, cases that before needed 25 fractions with 2, and also doing sometimes simulation-free treatment.
It's just amazing to be part of this journey, and I also see a positive trend going forward.
Thank you. That's very helpful.
The next question comes from Erik Cassel, from ABG Sundal Collier. Please go ahead.
Hi, good morning. Welcome to Bels. First on cash flow, very good this quarter, I understand that there are different payment terms for the tenders in Italy and Spain. I mean, is this something that has tied up any working capital now, or will that happen more as we come closer to, you know, start of deliveries now after summer?
I would say both. Actually what we have had a collection according to our contracts with regards to the tenders in Spain and we will have further collection. That is part of the cash flow that you see. I would look at it more broadly that we successfully have been driving working capital here, as we stated in the Q3. It also follows the sales pattern here, where we had a strong sales towards the end of Q3 and in Q4, and that we have successfully in a good cooperation with our customers work with.
Yeah, it's according to plan and following the season pattern here.
Okay. You bundle inflation and supply chain costs together now and quote that as a 200 basis points headwind. I mean, is it possible to unbundle that to see how much inflation impact there is here?
Yeah. Actually what you see here in terms of the that component, you are absolutely right that it contains of different items. What we see here is actually that supply chain conditions have improved. Logistics cost are coming down. When you look at the other items in terms of the raw materials as such, is to a large extent components for us, which are discretionary deals. There we have higher prices for these material and component prices. That is what you see here in the net impact impacting the gross margin in the quarter.
I think you can also say that, of course, inflation, results in salary increases.
Yes
as well.
Yes.
Primarily, often in the first quarter of Elekta's fiscal year, because that's where we increase salaries for our employees.
Yes.
We are then working with offsetting some of those effects with the excellence initiatives we have been driving and Cost-reduction Initiative. Also we will continue to focus, of course, on excellence initiatives to offset that effect.
Yes.
I think that's another driver in the gross margin, as well as SG&A and R&D cost and so on.
Mm.
Um, and as-
Okay.
Yes, sir.
Okay. I guess I won't get a number on it. Can I ask instead, like, is there more to come through from lower freight cost and, you know, all the, I guess, those 300-400 BIPS that supply chain cost was a headwind last year? Is it possible to see, you know, more freight costs coming down more and becoming more of a tailwind, or have you seen the full effects of that normalizing yet?
I think we have a favorable trend here in terms of supply chain and logistics. That is a positive trend in it. Also take into consideration the salary inflation that will come here in Q1. Those items that you mentioned, we have a favorable trend on them.
When we talk to our logistics providers and look at the logistics cost, I think you will see both an improvement versus last quarter, so to say, and last year's 1st quarter, going into the next year. Just to give a bit more flavor on your question. I also want to come back to Kristofer's question. We just checked what APAC order growth was, excluding Australia in the quarter, and that was +14, compared to then what we report for the whole region of +4 in the report. + 14% for APAC, excluding Australia.
Okay, perfect. Thank you very much.
Thank you.
Thank you.
The next question comes from Veronika Dubajova from Citi. Please go ahead.
Hi, Gustaf. Hi, Tobias, thank you, guys, for taking my questions. I have two, please. One, I just want to go back to that midterm margin ambition. I mean, obviously, in the past, you were a lot more precise, and if I go back to the guidance you'd given back at the end of fiscal 2021, the ambition was to get to that 14%, you know, improve versus that 14% margin that you achieved that year. I'm just trying to clarify, I think, Tobias, your comments about wanting to return to the pre-COVID margin. When you say that, are you talking about the 14%, or are you talking about the pre-COVID margin, which was more like 10%-12%? I guess if that is still the ambition, why have you removed it from the midterm guidance?
I'll ask that, then I'll have a follow-up after that. Maybe we can get that out of the way first.
Hi, Veronica. A bit more flavor on the guidance, and of course, it's a very important topic, how we see the growth and the margin expansion going forward. As said, strong growth, more than 7%. Margin expansion, you've seen it in the second half. We look into the first quarter, we see a good trend into that, a strong development. Going into the next year, same message, strong margin expansion, and then also in the, in the second year. We want to come back to the previous levels, where we started this kind of period, and higher, and then we don't have an exact date for that, and a certain percentage. I hope that gives you kind of confidence and in our guidance on the margin expansion going forward.
As we say, many of the trends we see now impacting our gross margin, but also EBIT margins are favorable. You have seen also our Cost-reduction Initiative really bite in the costs in Q3 and Q4 last year. We will of course, give more input on the drivers for this at the Capital Markets Day in, what is it? three weeks time. I think that's an area to. That would be a big topic at that day.
I appreciate it. That's really helpful color, because I'm just surprised. I mean, if you are feeling more constructive on gross margin, if you have, you know, delivery on these cost savings, why are we not getting that commitment to that 14% margin?
For us
What's the, yeah, what's the offset? Yeah.
Yeah. I think what we really, really focus on, Veronika, is quarter by quarter improvement in everything we do, from the top line to the gross margin to the EBIT. That's what we want to show. We want to work with prices, we want to work with installation, we want to work with Cost-reduction Initiative, we want to improve the gross margin, as well as driving efficiencies in our R&D and SG&A organizations. I think that is the message we want to send out, and that's what you will see over the coming quarters. Then we will come back, and we'll come back to higher levels as well. That's how we see the plan for the next coming two years.
Okay. That's very helpful. If I can just ask on the shape of the margin improvement as you think about fiscal 2024 versus fiscal 2025. Is it even paced? Is it front-loaded or back-ended loaded? I'll jump back into the queue.
Again, I think it's quarter-over-quarter, that's how we focus. You know how Elekta is product-based, so it's not a smooth line, but it will be year-over-year improvements.
Okay. Thank you, guys. Appreciate it.
Thank you.
Thank you, Veronika.
As a reminder, if you wish to register for a question, please press star 1. The next question comes from Julien Ouaddour from Bank of America. Please go ahead.
Thank you very much. Good morning, everyone. I have a couple. The first one is just a follow-up to Veronica's one. With the previous guide, we had some help just to model the margin. Could you just help us with saying if you expect still to be close to 13% or 14% in 2024, 2025, or just below this level? It's just that we don't really understand why you changed the guidance or rebase or cut the guidance, if you still believe that there's some margin expansion. That's the first one. And then the second one, just on R&D capitalization. You said, in the past, that it should come down, capitalization should come down, amortization up.
Still not really clear, clearly the case today. Could you maybe tell us what you expect for this in terms of R&D over the coming years and next year? Especially, what kind of margin headwind could we expect if you increase amortization for next year? Thank you.
Thank you, Julien. Yeah, I will start with the first question, and Tobias will take the capitalization, amortization one. To the first question, I think it's the same answer and message that I also said to Veronika's question, that it is really about quarter by quarter improvement, back to the levels we were before, and also have an ambition to go higher, of course, in the coming years. It will be year-over-year improvements, and that's how we see kind of a margin expansion journey going forward. To the amortization, capitalization question, Tobias.
Hi, Julien, and thanks for the question here. I mean, if you look ahead here on the development of this item, is that what you can expect here is that in terms of the gross R&D year-over-year, a slight uptick, given the inflationary pressure. In terms of capitalization, that will essentially be on par with current year, and then amortization will increase somewhat. What does that mean then, in terms of the net R&D here moving into next year? That will be slightly higher, both in terms of in total amount, as well as a % of sales, and that impact we will have.
Perfect. Perfect. Thank you. Thank you so much. Sorry again to ask a question about it, but just a very quick follow-up on the first one on the midterm guidance. Would you say it's sort of cut of the midterm guidance or not? I mean, in your view, how do you, like, how do you see it?
No, the midterm guidance was more than expansion.
Okay, yes.
That's where we started Access 2025 journey. We've seen, as I mentioned, lower revenue growth, 4% per year. That's in line with the market. We expected 6%-8% at that point in time. The margin expansion going forward is what we see. Now, I think and believe and support the more than 7% revenue growth in the coming 2 years.
Okay, perfect. Thank you very much. Have a good day.
Thank you.
Thank you.
The next question comes from Victor Forssell, from Nordea. Please go ahead.
Yeah. Thank you so much. just a quick one from my side. I think last quarter you talked a little bit more about the price than you, than you did today. just curious to hear. Will become more supportive if that's already next fiscal year. Any sort of figures that you can provide us with would, of course, be very helpful. At least a bit of discussion around price of especially solutions and not service. Thank you.
Thank you, Victor. Of course, a great question. We've put a lot of emphasis and focus on during the last year because of the inflation. We have seen good improvement in our order backlog and the orders we get in on the price level, really positive to see. That effect will, of course, spill into the next year and years from our backlog. We will continue on this journey with price, into the next year. Of course, to offset the inflation on our COGS and salary increases, and so on. We've seen some of the effect already in this year, but primarily will come into the coming quarters here, with maybe a focus on the second half of the year.
Towards the end of the year, where you see the P&L impact. Yes, that is what you will see.
Thank you. Can you just remind us, when we look at solutions, how much any given year stems from the backlog, and how much is actually incremental orders for that specific year?
I think the majority would be around 80%, I think, on the solution, something like that.
Yes.
That comes from the backlog. If you just look at the solution part, the 60%, let's say, of our 100% revenue.
Mm-hmm.
The majority is from the backlog.
Yep. Yeah, great. Thanks a lot.
Okay. If there are no more questions, we would like to thank you for listening in today. Please don't hesitate to reach out if you have further questions later on. We wish you a good remaining day, and see you on the road. Thank you.
Thank you.
Thank you.
Ladies and gentlemen, the conference is now over. Thank you.