Good morning, and welcome, everyone. My name is Rikard Engberg, and I'm an equity research analyst here at Erik Penser Bank. With me, I have Göran Malmberg, CEO of Mentice, who has released their Q3 earnings today. Göran, welcome.
Thank you so much, Rikard. So I will start the presentation. I think we can skip the introduction. So first, I mean, we have another really, really good quarter, so it's a pleasure to be able to go through a little bit more of the details here. So first, a couple of highlights. Net sales, as you've seen, up to almost SEK 64 million, significant increase from last year. And you can also see, typically, Q3 is a little bit slower quarter. It's a summer, summer quarter, but it's really nice to see that we've been able to really continue with the strong performance from the first and second quarter. Order intake is following and in the same level, slightly higher growth, compared to last year.
Generally, you can see that the industry is the driver for what we're doing. But we can also see a year-over-year in quarter, Europe and EMEA had a really, really strong quarter. Continuing to improving the order book, I mean, 13% improvement from last year. And we can see here, which you can see in the report, that we have close to SEK 40 million, which is scheduled for the fourth quarter in 2023. Really nice to see that we can produce incremental EBITDA margin in the third quarter in addition to what we did in the first and second. So we are at a really good position now. We talk about that on the next slide.
And I think probably the most positive component here on this slide is the operational cash flow, where we added SEK 40 million plus in the third quarter. Net income, I mean, at the breakeven, we even again a significant improvement from last year and previous years, I would say. And then consequently, earnings are also at the breakeven. So for the first nine months, year to date, we are now above SEK 200 million, and we should remember that we did SEK 217 million for the full year last year. So we are over 90% compared to the full year, 2022.
Order intake, as well, over SEK 200 million, compared to SEK 250, SEK 252, to be exact, for the full 2022. So that's as well over 80% of the full last year. Continuous strong performance throughout the first three quarters for medical device. Americas, as well, even if Americas had a less strong Q3, still they did really well. But if you look over the first nine months, they are significantly above last year. And they actually have surpassed the full last year for 2022. APAC region, as we talked about before, had a slower start, mostly related to a slow start in China, which is the sort of the dominating country or region in the APAC region.
But we had a really strong Q3 for for APAC, which sort of have worked us back, so we are on a much more balanced situation also for APAC. So that's, that's really nice to see. We have, I mean, both Americas and Europe, a really strong performance compared to last year, and we can see a trend that we're working us back in, in the APAC region. EBITDA margin, SEK 22 million, I mean, a significant improvement from last year. So over SEK 37 million positive compared to the same position last year, just, just over 10% of EBITDA margin. A really nice position, and again, we should remember that traditionally, Mentice works up most of the, of the, margin or EBITDA, or profitability in the fourth quarter.
That's not gonna happen this year, so but really, this is a good position we have, where we have generated a margin or profit earnings for the first three quarters. Net income at breakeven, again, significant improvement compared to last year. Cash flow, as we said, fantastic. Really, really nice to see that we are generating cash to this level. Obviously, this is as a consequence of a strong performance in the last three quarters or last four quarters, really, where we see that that's now getting a result or providing us with results. Earnings not much to talk about. So summary of this, really pleased to see how we perform for the first nine months.
You can see the driver is really overall business growth, I would say. Americas, which is predominantly a medical device. Europe is a good mix between hospital and industry, and I would say the same for APAC. It's a mix of hospital and device industry. We can see, we talked about this, a year ago, and that we changed the direction of the company, where we said we need, we need to focus on profitable growth, just not growth. We can see now over the last four quarters, we have significantly improved the productivity. One internal measurement I use is revenue per employee, and we have improved that with over 30%, compared to the last same period, last year.
That's, that's really, really nice to see that we can execute, and there's obviously multiple components there. But it's, it's, it's really in summary, we have kept the cost level on a, on a fairly steady level. We have worked a lot with productivity internally, but also we have, we have a really nice product mix. We can see we, we are able to grow top line, but we grow with the right kind of products. So that's the sort of summary of what we have there. Cash flow, I already talked about, so that's, that I think we can leave. Going into a little bit more of detail on the order intake, we see we have an overall strong trend here.
We see that the medical device is clearly showing an upward trend, and the highest point ever on the rolling four-quarter basis. We can see that healthcare had a really strong Q3, which is nice, 23%-24% growth year-over-year. We have Strategic Alliances variation. I will talk about a little bit about that later. But we had some very positive activities here in the end of Q3, but also beginning of Q4. Net sales similar here, I mean, 25% in the quarter, but really year-on-year, we are for the full year to date, sorry, for the first nine months, we are over 30% above last year.
On the quarter growth, we can see that the organic growth is about 20%, and then we have FX and acquired growth being something like 5% or 5.7% here, to be exact. I think I've talked about this. We can see, as I said, a really good product mix. I mean, we have 55%ish on systems, growing software, growing recurring revenue for software. So I think we're moving in the right direction. The services part is less than 20%. So that's where we want to be, really. Order book, I think I talked about that, SEK 130 million.
I mean, again, I mean, I like to go back a couple of years just to remind myself where we are. I mean, we go back maybe just two years, our order book at this point of the year would be less than half. So the fact that we're building order book is obviously a factor where of how we bring orders in, is also factored by the increasing recurring revenue, which is really working into my ambition or our ambition to have much more done when we come into a new quarter or eventually a new year. So that's nice to see. So SEK 40 million, almost 37.6, is already sort of in the books for the fourth quarter.
Annual revenue, I talked about, so I think I'm gonna leave with that. So as a summary then, 36% growth year to date on net sales. Gross margin, we have maintained a really high gross margin. Always it's a bit of FX effect in this. One and a half, maybe two percent, but we also can see that the underlying product mix and the way we sell is also an indicator of us really focusing on providing profitable business in. EBITDA, SEK 22 million already done after Q3, is a really good position going into the fourth quarter. As we say, I mean, SEK 37 million+ improvement compared to the same period last year.
Obviously, now we are way past the pandemic, and we have we don't have any disturbances, so we can talk about that separately. But I really think it's mostly due or a result of the focus of the profitable growth that we had for the last year. We have kept the cost levels and the full-time equivalent in a very stable way. I mean, we are on plan, slightly higher than last year due to salary increases and things like that. But really, a good control of the cost, I would say, without getting into detail. SEK 75 million in cash is a significant improvement, compared to same period last year, where we were at SEK 27 million. So that's really nice to see.
It gives us a much larger cushion and much more confidence. We can sleep better. So that's really nice to see, and I hope we can demonstrate that we can continue with the same level of performance. So just as a summary, I mean, sort of more of a market and business summary without talking about numbers. As I said, I mean, the focus on profitable growth is clearly paying off. And where we see we have a much stronger cash position, where we have built cash every quarter now since Q4 of last year. And really the improved balance between cost and revenues or income is also really nice to see how that's working out.
We have seen this year, I mean, we obviously yet to see if this is a trend that would be sustained into following years, but it's clear that we have a completely different seasonal profile for this year, much less back heavy. We will probably have a much more distributive business over the full year. But that also gives us a much more comfortable situation compared to previous years, while still we have a high requirement for the fourth quarter. I just have to say that. I just went back and checked the other day and just noticed that looking back to 2020, we are more than double in performance, both on orders and on net sales. So that's something I'm really pleased with.
I mean, 2020, we had a COVID or pandemic year, and 2021, 2022 was sort of a recovering from that. But still, I mean, seeing that we can more than double revenue in three years, that's 26% CAGR. That's something that we are really pleased with. We can see how we're improving our market position. I would say without hesitating that we are the undisputed market leader in this space, in the image-guided interventional therapy area, clearly. And we are gaining market share as we are moving.
We can also see that the combination of product, the portfolio we have, with the combination of VR physical simulation, the performance tool with the products from Ankyras, is clearly perfectly in line with what the market expects, both from a physician and hospital point of view, but as well from industry. So that's really, I mean, nice to see that confirmation from the market and from the clients. Last we can see that the competition is really much different now from a couple of years ago.
I mean, we're obviously competing with on funds with a lot of different technologies, but in the core competition on the high-fidelity VR simulation in the space, I think it's really clear that we are gaining market share, and our competition is not as focused as we are. So it just gives me a really good feeling. I'm really pleased to be able to present this third quarter and really, like, sort of following on the strong performance, both in the first and the second quarter. That was my presentation.
Great, Göran, and I have some questions to follow up that. So can we please start a bit about discussing the gross margin?
Yeah.
It has been really strong during this quarter and the last couple of quarters, and it's on a higher level than historical numbers. So apart from FX-
Yeah
... which you mentioned.
Yeah, yeah.
What's the reason for this development?
I mean, it's, I mean, we've, we talk a lot about how we need to sell systems and software in relationship to custom development, for instance. So we look at that as an internal KPI, and we can see that the product mix has improved a lot over the last year, with a lot of larger orders, so that where the relationship between systems and development is much higher. So I would say that how we do deals, the product mix, and how we sell software is really an underlying reason where we have, I mean, a gross margin around 83.5%-84.5%.
Then, as you said, we have a bit of an FX booster there up to maybe the 86% level, which is not gonna be sustainable probably. But that's where we are. Yeah, absolutely.
Okay, great. And as a reminder, you can always ask questions in the live chat channel. And my next question is, can you please explain the development in the segment Strategic Alliances during the quarter and after the quarter?
Yeah. I mean, we had as you might have seen, a press release for an order just in the start of Q4 for $1 million. That was an SA deal, which is a sort of a further development of relationship with one of the main SA partners in systems that they will use for their own activities and their own marketing and go-to-market activities. So that's a really nice development, which is a really further customization of our products and really something that they will use in their own process to bring their products to the market. So that's clearly in align with our plan.
Generally, we see during the quarters. I mean, one example, we had one, a transaction up in Finland, in Turku, Åbo, where a hospital there purchased a combined system through one of the Strategic Alliances partner-
Yeah
... with both a cath lab or an angio suite X-ray equipment for a full room or rooms actually, where they have also integrated Mentice equipment. And the purpose of that is really to have an integrated cath lab, where they have training and continuous improvement capability in the cath lab. So that demonstrates how the validity of this combination, even if obviously the development overall has not been to my expectation. But we know there's been a lot of disturbance during the pandemic and so on. But I really see a lot of push from the market and a lot of interest, both from the partners and from the end clients.
So we will continue push that envelope and work with those solutions, and, I really see a lot of opportunities there.
and also, can you please develop a bit about the, about the Ankyras during the quarter? How is this-
Absolutely. I mean, there's a lot of work going into that, obviously. I mean, we are obviously still working hard to try to get FDA approval in U.S., and I'm not allowed to talk about timing for that, because then I will get punished afterwards. So I will not. I will refrain from talking about that. But we are moving that process forward in a good way, I can say. But then I think it's activities. We have had two or three neurovascular congresses with really, really good feedback over the last, say, two months, three months.
One of the largest neuro congress in U.S. called SNIS, where we displayed and demonstrated the capability of Ankyras, and we get really good feedback there. So similar in Europe here, last week, we had a congress called SLICE, which is not a neurovascular congress. Same thing, where we had really good feedback from physicians and industry. On the sales side, we are working with I mean, all of the major neurovascular manufacturing companies on the value of the integrated solution. I mean, we're the only company in the world to have an integrated solution, where we are in training solutions, physical simulation, and the precision medicine or the kind of decision tools from Ankyras.
That combination is unique, so our clients see a lot of value in that. From a product development point of view, we are continuing the functionality. We're working a lot with providing online or cloud-based functionality. We're working on expanding the support for devices to make sure we have more devices in the product. We're also working on the algorithm, the core algorithm, to make sure that the realism and the viability of our calculation or assimilation is as good as possible. And we see a lot of interesting developments where we can provide even better tools for doctors. We also seen that we have got two of the patents approved.
So one of the discussions we had when we acquired Ankyras is that they put in patent applications a lot of years ago, but they didn't get those patents approved. So we worked through that, and we have now two approved patents, which makes that makes us the first vendor in the market, or the vendor with the earliest patents and kind of prior art in this industry, which is really also important for our future business in this space, so.
Great. I will break in with two questions from web. We have two questions from Christian Binder.
Yeah
... at Redeye.
Yeah.
The first one... Excuse me if I look at my phone.
Sure.
Can you elaborate on the underlying reasons for this quarter's favorable working capital movements?
I mean, it's a lot related to the strong business intake or the business we have received in the first couple of quarters, and how we have worked on accounts receivable. I mean, a lot of the larger orders we have received in first and second quarter, as we have announced a couple of them, a lot of them really generated cash in the quarter. So it's really a conversion of our accounts receivable into working capital that is the main explanation.
Okay, great. And here's a follow-up question. So recurring system sales have decreased in Q3 and year to date. Can you elaborate on the underlying developments and the dynamics of these developments?
Yeah, I think it's. I don't think we should focus too much on that. I think we should probably more look at rolling numbers. On a rolling trend, we can see that we are increasing. As I said, I mean, the Q3 quarter is a little bit difficult quarter. We had strong hospital sales in the quarter. So I think that if we look from a longer period and probably rolling 12 or so years, we will still see still growth. So I would not categorize that as a decline, really. I think it's just the normal fluctuation of our business.
Okay, great. I don't have any further questions, and as a reminder, you can always ask questions in the live chat. So I have one last questions here from the—no, that was a comment, not a question.
Okay, sure.
So by that, I would say thank you, Göran-
Thank you
... for presenting here at Penser Bank, and thank you everyone for listening and watching.
It's a pleasure. Thank you.