Welcome everybody. Come on in and take your seats. We're about to get started. Excellent. Welcome to Sectra's Capital Market Day. We have an exciting day ahead of us. My name is Lisa Everhill. I work with people, culture, and branding-related questions at Sectra. I've been there for some 16 years now. We have some even more exciting people coming along, though, after myself. Before lunch, we will talk about our overall strategies. We'll talk about Sectra Communications and our business innovation initiatives. We'll go into lunch. You'll have an opportunity to actually see some of our solutions up in the demo stations on the two different floors. After lunch, we'll head into Imaging IT. Before lunch, it's our CEO, Torbjörn Kronander. You have the Sectra crew up here if you wann a see them live.
We have Magnus Skogberg, President of Sectra Communications. We have Johan Carlegrim right there, Gustaf Schwang. Torbjörn will represent one of our business innovation initiatives. Throughout the agenda, some playground rules, we'll save questions till after the presentation. After all the different... Each business unit will do a little gathering and Q&A. Note your questions. There are microphones between each two chairs. When given the word, you can just use the microphone and ask your questions. I'll remind you again when we get to that stage. With that being said, I will also, sorry. After lunch, we'll talk about Imaging IT. We'll have Marie Ekström Trägårdh heading the bus iness unit.
We have Fredrik Gustavsson, our CTO, and we have Isaac Zaworski . With that said, Torbjörn, let's get started with our overall strategies.
Hello. It's nice to see you all here. Not so much strategies. I will just do a little intro. For some of you have seen this several times before. It will be kind of boring. Please do not snore aloud. Otherwise, as some of you are new, we decided to take it from the grounds up, how we think and how we organize and how we plan what we're doing. We'll start with the curve. This is a revenue trend from 1978 when Sectra was founded. I was not around. Well, I was around, but I was a new student at university by then. Sectra was founded by a professor and three of his doctoral students to create the encryption systems of the ATMs of Sweden.
Sweden as being a country far up north and is pretty trigger-happy for new technologies. A lot of new technologies has started here, mobile phones not the least, but we also see it in Digital Pathology that we'll become back to later. This is the curve of the revenue. You see we started with the medical around 1991, then there's three dips on that curve. First one was when we lost a big channel, Philips sold our PACS worldwide. That was tough. We managed, and it was a special feeling. We were sold into Eindhoven in Holland finally. Then we had another dip when we sold off our mammography division. We are a software company, we're not a hardware company, it seems extremely difficult to do both in one company.
We see that when the large modality companies, our competitors in PACS, try to do IT, it has not been a raving success, to say the least. We also saw it when we tried to do hardware. Didn't go very well. We sold it to Philips. We lost revenues, but profits went up. The third dip is COVID up there. Okay, a little about who we are and how we think. Who am I? I'm the founder of the medical side of Sectra. I'm the son of a radiologist once. She became a gynecologist later, and then she was alone with two kids, so I more or less grew up in a radial department. That's where we went up to after school, which of course she was coming home at eight o'clock at night or something like that.
I'm the largest owner today, by votes, but Jan-Olof Brüer, my predecessor, is about the same. I have a few more than him. I have been the CEO and president of all of Sectra. I started in medical. I was managing medical until 2011-2012, and when I took over as CEO, Jan-Olof had other plans, and after, I think, 27 years as president, he wanted to do something else, and I took over that. It was not actually my plan to take over this, but I didn't want to have another manager above me, except for Jan-Olof, so that's what ended up. I was a naval officer in the reserve in the Swedish Navy. I grew up in Gotland. A Master of Science in Electrical Engineering or Medical Technology and Ph.D.
in Information Theory, which is signal processing. MBA from Handelshögskolan and also Honorary Doctor of Medicine. Sailor, most things that float. Pilot of most things that fly. I have eight kids, of which six are my own. This is my background. Contents of this presentation, we will have an overview, a little about the overall goals, how we think. Current market position. Sorry about that. See if I can go back there. A little about future opportunities and then question. The questions will come after the next speaker. Don't ask me questions, please. Well, not now. Do it later, otherwise we'll break the plan for this. The main business lines of Sectra is IT security still. That's where we started. That where we came from, Sectra San for secure transmission.
We still do extremely advanced encryption systems. Magnus Skogberg will talk about a little later in more detail about that area. It's about 10% of Sectra today, but an important 10%. We have Imaging IT, which is Marie's setting, which is the area that I started up, mainly handling images in hospitals. All images today, regularly only from the beginning. We have our little greenhouse, where we have products that will... something will happen with one day. They can become a complete business line themselves, or they can be incorporated into another area, or they can be spun off, or that they can be shut down. We have examples of all. Among us, we spun off or sold. Digital Pathology came from research and is now part of Imaging IT.
Orthopedic Special Customers grown. We made a corporation or a company out of it last year. Medical Education has also came out of research from the beginning, but it's now grown rapidly around the world. A new one that many of you haven't seen. We started Genomics IT this year, which I'll come back to a little bit later. Fredrik Lysholm, who runs that, he's at home working and doing programming himself, so I will present his part later on. Our philosophy of shareholders is quite simple. If you have a rational strategy in a growing market, and we like growing markets, it's tough to be in a stagnant or stable market. It's difficult to grow, and you more or less have to fight with prices to grow. We try to be in growing markets.
If you have happy customers, and in order to have happy customers, you must have happy employees. It's literally impossible to create happy customers with unhappy employees. That will kind of. You spread that culture out to the customers. They're to be a little expensive at times, because if you have good quality, you have to be, you know, willing to be expensive, otherwise it doesn't match up. Have reasonable cost control and some stubbornness, then shareholders will be happy. It comes in that order, and we've been very specific about that. Some people set shareholders first, and that is not the good way. This is a better way. Let's start with the rational strategy in the growing markets. We work in the markets of, in medicine, and I will start with this.
This is a population pyramid, Sweden. We have too few people down here in order to serve these old folks like me when we get old. The population pyramid should have been a little triangle, it's not. Now, I've done my share, I've got 6, not everyone has, this is a problem. It would be very, very difficult to keep healthcare on a standard we have when a lot of people get old and there's just few people behind it. Sweden is quite good, actually. This is Italy. Now, you want to produce wine and Fiats and a lot of other things as well in Italy. How on earth should you be taking care of all these people? They're still productive. They haven't really hit the fan yet, it will.
When these people average are 70, 80, there will be very few people to take care of them if they're gonna do anything else in Italy but taking care of old people. People say Italy, well, that's, you know, not the biggest economy in Europe. Look at the locomotive, the engine of all economy in Europe. The national economies say if you have a lot of people in productive age between 25 and 60 something, let's say 65, on the, as I am 65. Up to 65, when you do some good for society, that's productive people. If you have a lot of people in that age range span and few dependents, few old and few young, then your economy grows like crazy because you use everything used for production. You don't have dependents to take care of.
The problem with that is as time goes, a lot of people will become dependents, and there will be fewer that take care of them. The U.S. is a little better, there's a huge ethnicity shift in the U.S. The people who make the most money, who stands for a lot, large portion of the economy, they have fewer kids, and people who are migrants, a lot have more kids. It looks in the U.S. as it's such a colossal mix of people, and they are better off actually, a little better off. Still a problem, more like Sweden. What does it lead to? Well, this leads to that we also get older, we live longer, which will lead to that the cost for healthcare will explode.
We in Europe say, we look at the upper curve here, and we say that's the U.S., and then kind of make fun of them because they're not really taking care of this. They have very expensive healthcare, but it's not a difference. They're just ahead of us. Look at the derivative of these curves. All of them are pointing upwards. U.S. is today, I think, at 20% of GDP for healthcare. That won't work. You need to do something else. You cannot, like, approach 100% of GDP for healthcare. It won't work. This will not work. Most people have seen this. If you break this down on age bracket instead, so you look at the cost per capita for 10-year-olds, 20-year-olds, 30-year-olds, it's not such a big difference.
U.S. is still a little more expensive, except for 50-year-olds, where most Germans are right now, where Germany is most expensive. Look what happens after 60. Boom. All countries. Except one very weird country here, where it doesn't grow linearly with increasing age, and that's Sweden. Above 80 in Sweden, we seem to have a little problem because we don't increase it in Sweden. In the general thing, the cost goes up with age. If you're gonna handle the situation, you have to look at the diseases of the aging person. That's where you have... If you're gonna treat those curves, that's where you need to go. Those diseases of the elderly is neurodegenerative disease, Alzheimer, MS, Parkinson, very, very, very expensive. We need to cope with it somehow. We have cardiovascular disease, not heart infarctions, they're quite cheap.
You get well or you die. Chronic heart failure, super expensive. Cancer disease, if we live not long enough, we get cancer. Musculoskeletal disease, grossly underestimated. We don't know why, because it's the most expensive area, but it might be connected to it's mainly women disease. It's undertreated and underrepresented, super expensive. Vision, we've added vision. The last time we spoke of this, we didn't have vision here, but we have actually got a request from Kaiser Permanente in the U.S. to create an ophthalmology system for them. That is not now rolled out all over Kaiser, which is like a country in Europe. But we also discovered it's vision. If you can't see, you're very expensive. That needs to be handled as well.
If we're gonna attack the growing cost of society, we have to attack these five. That's where we should be. We do medical imaging as a base, we're of course, we need to treat pediatrics and children's stuff as well, but we should be very good in diagnosis in these areas. That's where we're going with all the medical side of Sectra. Vision, hearing is new. The mission statement in the medical, to increase effectiveness, because that's where the money will be of healthcare, while maintaining or increasing quality in patient care. We do not have as a goal to increase the quality, but that's very often what happens when we do things. The main thing is to increase effectiveness. A few... 10...
5- 10 years ago, you didn't hear the argument on cost in the U.S., for instance. We heard it here, but not in the U.S. Today, every customer we speak to in the U.S., even the most wealthy and the richest of the hospital providers, healthcare providers, everyone talks about cost. It's a massive change after COVID. In cybersecurity, this drives the market in medicine. It's a market that has to grow. In cybersecurity, of course, we have the general situation in Europe, we have Ukraine. Everyone all of a sudden is much more aware of that, you know, we thought there would be no more wars in Europe ever. That was naive. Unfortunately, politicians tend to be naive sometimes, but most of us didn't think this would happen. Now we're there. We have a war, very short distance from here.
Of course, everyone's more scared. This drives the market. Add to this in general society, we have an increasing dependence of IT. Everything is depending on IT. Ransomware is attacking. Most people are aware of phishing today, there is enormous cost in IT for cybersecurity. We have entire country. North Korea have thousands of very smart people making money for North Korea via ransomware. We know it's very difficult to prove. North Korea doesn't care. They need money, they use... That's, you know, the national scale of attacking civils, or civil companies in the Western world. Attackers are getting smarter and smarter and more. This is not anymore three guys in a garage, you know, leaving X-ray was here on some webpage somewhere. This is organized cybercrimes.
It's mafia or even countries, as I said, who actually attack to get money. There's even a help desk. Some of these ransomware companies, they're on the dark net. You pay, you get the key back. You are not able to restore your systems with a key. There's a help desk. You can call a help desk. They will help you because you paid. This is not three guys in a garage anymore. Secure communications and critical infrastructure are a core of this situation. We need to have encryption for communications. We need to protect the most critical functions of society. We see what the Russians do in Ukraine now. Now they're bombing it. If you can destroy that with over IT, of course, it's very efficient. No, no one can even prove what you do.
It's a little too scary, what we've built in society today. We also see synergies between these two. In normal, if a company gets a ransomware attack, you know, it's a long way before you pay, because normally you say, "We will not pay. We will not teach people that you can make money by ransomware attacks. We take double the cost, but you will not pay the crooks." That's money only. The problem is when a hospital gets attacked, people die. People die, patients die. Then you can't reason in that way. That, of course, leads to that a lot of, especially U.S. customers, U.S. hospitals today have ready-made Bitcoin accounts. They pay out immediately when they have an attack. Guess who knows that? The cyber crooks, of course. The mafia knows the hospitals pay. My...
Healthcare today is by far the most attacked industry or area in society for cyberattacks. There we have synergies. We were awarded at the RSNA, which is a large radiological show last year, to be the most cybersecure company of all our competitors. 10 years ago, people, our customers in, for here or in the U.S., they said, "That's not important for us." You guys say, "Why do you do this in the same company?" You know, have cybersecurity and healthcare. Now we have synergies, and they are growing. There's like 200 questions in RFP today about cybersecurity questions to us when we sell medicine. There are synergies now and benefits. It's more of a reputational and knowledge-based synergies.
The products we sell in communications are not used in hospitals, but we have a lot of benefits because we know how to build secure systems. Nothing is 100% secure though, but we are securer than most. Leading the purpose of Sectra Communications, protect our society from cybercrime, from individuals, but also from nations, because that's a span we see today. The interesting thing with both of these, as I said from the get, growth is easy in a growing market, and especially good if it's a market that has to grow. If it's a recession or high tax or whatever, they have to grow anyways. Both our main markets are markets like that. Healthcare has to grow because that population pyramid will not change if we have a low tide in economy.
Cybersecurity is growing all the time because we're becoming more and more industrial or digitized in society. That's the background. We now add a Genomics IT, which we have now have products. We have no demos yet, but that's also a heavily growth market because it's so important in oncology and cancer care. For diagnostics in cancer care, it's super important. This is kind of the background how we think about things. Again, if you have a rational strategy in a growing market, you have a good foundation for your company building for growth in the future. That's why we have these markets. You need happy customers. We have been awarded, the most happy customers in the entire United States, large hospitals for nine years in a row.
The jury's out if it's gonna be a tenth, we don't know that yet. That's kind of makes us a little proud, right? We're sitting a little company in Sweden, Stockholm, Örebro, Linköping, and we have created the happiest customers in the entire U.S. market in large hospitals, which is our main market, also in small hospitals, which was not a main market from the beginning, culture of the companies, we take care of our customers. We have the happiest customers in large companies, large hospitals in U.S. for ninth year in a row. We have small hospitals for quite a few years, and we have the happiest customers in Canada with a huge margin, and we have the happiest customers in Australia and New Zealand. We are second in Europe. We need to fix that.
We working on it. We are second in pathology, and we have more customers in pathology than others, but we're very close, so we'll work on this as well. These are the markets where we compete. This shows we are succeeding. KLAS is a company, independent company in the U.S. who actually sells reports. Before you buy large IT systems for healthcare, you want to know if they are okay. KLAS spends all the time calling customers, saying, "What IT systems do you have? Are you happy with it?" Very extensively. A lot of dimensions to that. There are management. Do you see management? Do the company nickel and dime you? Does the systems work as promoted? Is the service okay? All aspects. They rank all the vendors, and we're number one in these two.
In Sectra Communications, there is no KLAS. There is no independent company around us that can evaluate. We do our own measurements. It's a little difficult in communications because we're not even allowed to know who's using our phones, for instance. We have no clue. We sell like thousands of these phones to EU. Where EU puts them, we cannot, we're not allowed to know. It's some of these guys are the people who had a telephone before, used it once and dropped it in the wastebasket. They have now our phones instead, so we don't know. We have internal measurements as good as we can do, and they indicate the same type in business innovation and in communications. We have the cultures all over the company, but we don't have external measurements for that. This makes our day.
This is a comment in KLAS reports. They can also give comments about the vendors. Look at this CEO, president of a large U.S. hospital corporation. "Sectra has gone above and beyond, I cannot say enough good things about them. Sectra found out that they had made a mistake," which is okay. Everyone makes a mistake. "They worked hard to make it right. "I'll be a Sectra customer for life." You see a lot of those in these reports, that's what all the culture is about. We care about customers. We spend this well. We're quite greedy, et cetera. We don't want to spend money for unnecessary things. When a customer is in trouble, it's okay. You spend, you fix it. You just fix it. That's how you create happy customers.
For that, you need happy employees. Without happy employees, you cannot create that customer situation because it's like having a broken car, you go to the garage to fix it, and there's an idiot behind the bar. You know, that CEO will not be happy even if they fix the car. But if that's a nice person, you feel like they really care about you getting your car fixed. The impression is like 3x better. In order to do that, you need to have happy employees. That's expensive when you're worth it, and have reasonable cost control. We don't go business class over the Atlantic. Even I go sit in the back seat unless I upgrade with miles or my own money, that's kind of all over the company. We are careful with our money.
We spend it for reasonable things. Starting with happy employees, as I said, happy customers can only be achieved by happy employees. We are very careful about hiring. I have the luxury of being probably one of very few people who work in a company with 1,000 people where I selected everyone myself. If I don't like them, they don't get the job. That's luck. It's good. I have an extremely nice workplace because I like everyone we have. We have five, four, three interviews with everyone. I see everyone still over Teams nowadays. We hire people we like. Hopefully, they will like each other. They shouldn't be similar to us. We need a lot of diversity. We want people that customers like and that they work as a team. We hire for aptitude and ability.
They should be reasonably smart, and we train them for skill. Continues with culture is structure for strategy for breakfast. Some famous guru said that, or Marie who came up with that quote from the beginning. I never remember who, but it's so true. You can try to regulate in a process for everything, it will not work unless you have the heart of the people. We spend a lot on this. You know, with the major teaching we do, it's a very one, very old one. The only rule you find in all religions we ever found, just behave to others as you want them to behave to you. It's a little unusual having a president of an IT company preaching the oldest rule, all religions, but I tell you that takes us a long way.
That is what we try to get into the very heart of all employees, because if we behave to others as we want them to behave to us, it will be fine. It's interesting. All religions we ever found have a version of this rule. It has resulted that we were last year voted number four of the employees of Sweden of all employers as the best workplace. We were number one of all production companies. There were three consultancy companies ahead of us. This is anonymous, you know, we have no control of it, and we were happy about that. This also shows that we have people who like the workplace, and then they will behave good to customers. The best possible cost control comes also from culture. You cannot have process for it. It doesn't work. Liljevalchs International is finally here.
We are transforming from a license-selling company to a recurring revenue company. That's a huge transformation. Most software companies are going through it or have gone through it. It results in delayed income and profits, and we will already see it, but we'll see that. That short-term, this will decrease our growth, it will decrease our profitability. Long-term, it will be grossly benefit. It's very interesting. I pay as a person today to Microsoft. Before, I paid for a little box with licenses. Now, I pay a subscription, and I get upgrades automatically, you know, every other week or so. I pay way more than I did before when I bought that box every three years, but I'm very happy with it. It's a very interesting effect.
Both customers and vendors are benefiting from these solutions to compare to buying a license and then have only support. Usage of customers as well as not losing customers become crucially important in such an environment. They pay you when they use it. They do not pay up front so much anymore. We have very low churn, and we'll come back to that. Usage becomes super important. We have new roles in all Sectra of customer success management. That's a parallel organization to sales. They work mainly with going out to customers. If we see a decrease in usage, we go out there and find out why. To get them to use the system, because that means they have a use of it and a benefit from it, and we get more pay.
The customer success organization, we'll hear that from many presenters today, it's crucial in its new organization parallel to what we had before. Close the link to sales though, but not just people who sell. These are our financial targets for the group. In order, number one is stability of the company, so the assets to equity ratio, that should be about 30%. I was in Stanford University Hospital in Palo Alto, where all the employees of Apple and Google and these place they go with, they get sick, right? We have the PACS. It's kind of nice feeling to have the PACS in Stanford made and delivered from Sweden. I met the CIO, Michael Fey, a very smart person, both IT and medicine.
He said that the most critical system we have in this hospital is you. The medical record system, we can live without for a while if it doesn't work. If the PACS goes down, the acute intake, the acute system, the emergency stops functioning, the entire hospitals come to a grinding halt. You cannot buy such a system from someone you don't trust. He was extremely clear about that you are the most important IT systems we have in the entire hospital. You need to be trustworthy. You cannot be sloppy about. They will not buy it from a company they think might go down the drain financially. We need to have finance in order, stability. We had margin, second highest priority, but we could take up a margin significantly if we wanted, but we want to grow.
15% is a good level if you want to have a sustained business and still spend money for growth. It's hygiene level. This is not the target, it's a hygiene. If we reach 15%, we should all use all the money for growth, and our target for growth is growing profits per share. That means I wouldn't do it. I'm the largest shareholder, but my successor one day, it's a very common thing that you buy other companies with your own stock. Actually, it's more for the benefits of the ego of the management than for shareholders because you buy it too expensive. Now, if you have the measure in EBIT per share, you can't do that. You have to buy things that are better yourself if you're going to buy it with your o wn stock.
That's why we have this rule. The rule and the target there is to grow more than 50% over five years, and we are way above that. We are currently at 84%. If you do all these things, shareholders will be happy. That's our theory, and we believe in it. All management et cetera are shareholders. This has also shown in the share price development. I looked 10 years back, I found a figure of January 31st, we had a price of SEK 7.50 per share. A few days ago, we had SEK 163. That's about 21 times in 12 years, or an average growth of about 29% per year.
It seems that our strategy of thinking of having this order, growing markets that has to grow, happy customers, happy employees, cost control, it seems to work. Thank you very much. That was an introduction. I will now lead over to Lis a again.
Thank you, Lisa. A warm good morning to all of you. It's great to have you here. I'm delighted to this opportunity of presenting our operations within secure communication. Magnus Skogberg is my name. I head this operation. I joined Sectra as of last year. I am gradually tuning into my new role. I must say it's tremendously stimulating. I'm truly impressed by what I have seen so far. I joined a company with a lot of skilled people, knowledgeable people, delivering and producing excellent and world-class products and services in the segments where we operate. I've a long background within defense and security. Before joining Sectra, I was working for the SAAB Group.
Thereby, I have quite a lot of experience from the defense sector, and I'm thinking about the specificities such as the political aspects and regulatory topics of that industry, complex and often sometimes lengthy sales processes, as well as all the long-term programs. Not to forget the close collaboration together with both customers and end users to be able to create the capabilities that they need. I've had various positions within marketing, sales, strategy, and management, and always been working at the intersection of technology and business. Also, I've been into different product areas throughout the years, aviation, fighter aircraft, training and support systems, as well as unmanned systems. Always it has been a lot of high tech and that type of technology.
I have a Master of Science in Industrial Engineering Management and also been studying engineering and management in both France and Germany. There has been a lot of international context in what I have been doing throughout the years. I will use the same setup for my presentation, start off with an overview of what we do, talk about our top-level goals, and then go into the market position we hold and where we're heading for the future. In a nutshell, we're about 130 dedicated and skilled people working to support defense organizations and authorities. We do that by offering advanced encryption products and services to defense organizations. We also offer security services mainly for critical infrastructure segment. We didn't start yesterday.
We have a thorough experience and background of 45 years within cybersecurity. I think it's fair to say that in many ways, we are and we have been pioneers and front runners within our business. We used to say that we provide security that improves both the availability and the efficiency of the critical functions in our society. Going into our advanced encryption products, here we offer a number of different things. Part of our portfolio is about so-called high-insurance cryptographic products. Those are meant to be used for national security. We use here a specific customer purpose-built equipment, where we have the full control of components and all the production chains here.
That means these systems can handle very sensitive information up to the classification level of top secret EU and NATO secret information. The customers in this segment typically are defense organizations, governments, ministries of foreign affairs, ministries of defense, as well as multilateral organizations, EU and NATO. We also serve a segment that are still requesting high security for exchanging information and accessing information between organizations and authorities and within them, as well to enable people working in these organizations to access this information when they are remotely somewhere. Here we have a bigger volume and also other expectations when it comes to price, and there is another price sensitivity. Here we use standardized commercial off-the-shelf equipment.
We make sure to have these secured in various ways, and to make sure also that the systems can be integrated in a smooth way within the existing IT infrastructures of these organizations. When talking about high assurance crypto solutions and communication systems, what we mean by this is that they are approved by the national security agencies. We work closely together with them to make sure that we meet the highest standards. They follow the process from the design throughout the development, and they make thorough assessments and evaluations of risks and vulnerabilities. They look at the security models, what types of design principles we have, and the algorithms used.
They overlook all the security aspects throughout the whole production and development chain, and out come these approved products that can be used to handle national secrets within these organizations. There is also a commercial segment, but we are not targeting that. We are targeting the approved products market. Aside our communication systems, we're also serving a market for critical infrastructure. Here, since some years back, we have developed a technical platform and a service offering to make sure that we can meet and support the ever-growing vulnerabilities when critical infrastructure and traditional industrial control systems are more and more connected to IT networks and even to the internet.
We've seen that, traditional IT security companies, they tend to focus primarily on the IT side, and sometimes lack the appropriate ways to handle an efficient monitoring of the industrial control systems, and that's why we have chosen to go into this segment. We install data loggers and systems to capture the important information. All sensitive information is always remaining at the customer site, and we follow and monitor what's happening in the 24/7 security operations center. Here the customer base traditionally is critical industry, it's process industry and e-energy companies, for instance. Some examples of our products or from the product portfolio. We provide mobile communication systems and the backbone of the product range is the Tiger system. This is a mobile phone for secret level communication.
It's using the standard commercial telecom network, but it can also be using connections through direct ethernet or satellite communication. It's very easy to use, it's stable, it's versatile, this has really become a de facto standard within its niche. We have the network encryption systems, where the security level classification goes up to top secret and EU NATO secret information. These systems are for high data throughput, high speed to connect different data centers, nodes in networks together, and handling the top-level classified information. When it comes to the segment we serve broader for authorities, we use the commercial COTS or available technology. However, we make sure to control the security mechanisms and the integrity of these systems, and that they use the right encryption.
and thereby, we achieve what we need, and we can handle the so-called restricted level information with these devices. The market that we address is defense organizations, and authorities and primarily within EU and NATO countries. Sweden and the Netherlands, they have a special position for us. We look at them as our home countries or home markets. Of course, we're a Swedish company from the beginning working extremely closely with the Swedish authorities. The Netherlands has been a bridgehead into the NATO context, and there we have not only sales activities, but we have operations as well, including production in that country. When it comes to the critical infrastructure business, our market focus is on Sweden.
The overall goals we follow is that we want to be a leading provider of advanced encryption products for defense organizations and authorities. We shall deliver high-end security services for critical infrastructure and industrial IT and OT. Of course, as Torbjörn was talking about before, we need and we must have satisfied and recurring customers to this because that's the way to build the profitable growth over time. Some words on the current market position we have. We have about SEK 200 million as an annual revenue, and 40% out of this is recurring. We have a very stable customer base with low churn. If we look back during the last 10 years, we can see an average revenue growth of about 7%.
The first half of this graph shows a little stagnant situation. However, we need to look at how the world was looking in the ever peace type of thinking we had that. In the second part here, we've seen a much better growth, and the trends are pointing into the future in a nice way. For the encryption products in Sweden, we have a strong position. We are the largest actor. We have about 40% of the market share. In, sorry, in the Netherlands, we're a trustworthy supplier and have been working alongside the customer since many years back. We're the biggest on high assurance crypto in the Netherlands. We are the main provider in Europe of secret level mobile communication.
When it comes to the critical infrastructure, we are a credible provider in Sweden. Still, this segment is in its early days, and we are looking forward to see much more of growth and development going forward. Something that we're really proud of is that we've built a pan-European network where the European External Action Service, the European Commission, and as well the council, they are all using our Tiger system for the highly sensitive communication. Typically, when a minister, top-level minister, or state leaders need to discuss certain things, they pick up the Tiger phone from Sectra, and that's the way they handle the situation. We have quite a broad user base in our specialized niche, and more than 20,000 products are delivered.
30-plus different types of systems are in operational use as we speak, and this by more than 100 different organizations around the world. Looking into the future, what is coming next year, we can see some important and interesting trends and drivers in society that are extremely important to our business. Torbjörn mentioned the digitization of the society. We take for granted to have the right information accessible in a secure way between organizations, between people working in a mobile setting. This is of course driving the needs for secure communication. We have the troublesome situation with different actors, state actors, or other actors on the criminal side with ransomware and so on, that present vulnerabilities to all our IT systems and communication systems.
This is unfortunately on the rise, it's asking for the type of systems we deliver. Then I touched upon the vulnerabilities when the traditional old operational or operational technology or industrial control systems are connected with IT and even internet sometimes. New vulnerability vectors are introduced and this needs to be protected. In essence, all in all in society, there is an increased understanding of security and the awareness is going up. This is kind of an important background to what we are doing each and every day. Defense and security to continue is really on the agenda. We read about it, we hear about it each and every day. Nobody has missed the target for NATO member states to target 2% of GDP in defense spending.
In Sweden, we see that transition from 1.2% to 5, sorry, to 2%, within a 5-year cycle. The same goes for the other important market to us in the Netherlands, going from 1.47%- 2% in roughly the same time span, a lot is happening. We see that not only on the policy side, there is a lot of needs, lots of developments on new systems and capability, we need this in the everyday dialogue with our customers. They need more systems, they need new functionality.
There are increased regulatory requirements. This we see specifically within the critical infrastructure business, where EU regulations and others are pointing out that energy companies and other actors running operations critical for our society are requested not only to safeguard, but to continuously monitor and report on vulnerabilities. Our estimation is that the overall and underlying market growth here is with margin about 10%. The needs are growing for sure. What are we striving for looking ahead? Well, to maintain the pole position we have in the mobile communication on the well, secret level communication. We work a lot with product renewal to stay at the forefront and to broaden the customer base. We develop our offering in the restricted segment, here we expect the biggest growth.
In the critical infrastructure segment, we want to turn investments we made during a number of years into sustainable profitability, and we think there is good potential to do this. Partially, we are looking at doing this through partnership to boost and accelerate the market access. We work with research to stay at the forefront, and some examples of focus areas that we work with is traffic analysis and network protection. It doesn't matter how good our encryption is if antagonists can follow and understand on metadata what communication is being done between what nodes and so on. This is important. Quantum computation is another shift and technology trend in society, and many have been thinking and asking themselves, okay, is this a danger to the encryption algorithms that we use?
We have one of our researchers specifically focusing on this, we feel assured and confident that the systems we have already today, they are quantum-proof. We work with formal methods also of verification to speed up the approval processes of cryptographic systems that often is quite time-consuming and lengthy. We wanna be thought leaders within Europe when it comes to encryption, and we work closely with academia. To summarize, here my last slide, we are helping the ones protecting our society from the top level, state leadership throughout defense organizations and down to critical infrastructure in various ways.
We provide secure data access, where needed, when needed, and we ensure collaboration with our tools and equipment, and make sure that continuity can be there for the critical processes in society. That, ladies and gentlemen, concludes my presentation. Thank you very much for listening.
Thank you, Magnus. At this point, we welcome questions to Magnus about this business area. As I mentioned before, please use the microphone that's next to you so that we all can hear your question. There is one big button on the microphone. Press that, a red light will go on, and that's your green light. Go ahead.
Yeah, thank you. On the critical infrastructure, when that was introduced some years ago, seeing that the potential was kind of of use, but, correct me if I'm wrong, but it seems the uptake has maybe been slower than what was expected. Do you have any comments to that, if it's correct and why?
Yeah
... because it seems the potential should really be huge for that one.
Yeah. I agree with you. It is a relevant and correct observation. We were expecting a quicker boost in this segment. We have seen some of the effects from the pandemic situation where especially the community-driven organizations within energy companies and so on, they haven't had the abilities, resources to take these kind of bigger steps forward. Also some of the regulations that have been discussed have taken longer time to be introduced. However, that decision was made within EU towards the end of last year, and the implementation needs to be carried out before the end of next year. Yes, it is correct, it has taken slightly longer time than expected.
Would it make sense for you to go outside Sweden, so other Nordic countries or maybe Europe as well?
It would long term make sense. However, we've seen that this market segment is quite national. There are different regulations in each and every country. As you are pointing out, we are seeking to find a kind of the volume that will provide a stable and profitable good business, and we've decided to start our focus in Sweden. Yes, we have our tentacles out, and yes, there are opportunities as well long term in other countries.
Go ahead.
Rutger Schut. I follow Sectra for quite some years from a distance, I must admit. This sector is still rather small, and from time to time, the profitability has been not that satisfactory. Are you being a provider to the European Commission on NATO, does that preclude you from selling to some other parties?
What about the United States and countries like Japan or Australia, New Zealand and so on?
This is, of course, a business of trust, and that means when we work extremely closely together with some of our customers into the top secret level, that will require certain approvals, before export can take place. There are no formal stopping points like that, but we have seen that within the European context, we have a good basis, where we can be, where we can grow. We have looked at opportunities also in other parts of the world, but this is quite a traditional business, where some countries truly focus on their national industry when it comes to cryptographic products, especially on the highest assurance levels. Sweden is a very knowledgeable country within this area with a long heritage from signal intelligence and encryption, going back decades.
The Netherlands is another one in Europe, there are just a bunch of these types of countries. Even if we can sell to some countries, certain areas we see that, no, the national industry is being protected in a way that doesn't make sense for us to go in there and compete. It's always a balance where we do believe that we can find good market opportunities.
Any other questions?
Just to add on to that, France is a special country in many views.
Yeah.
Have you tried to enter that market?
I think it's an excellent example of some of the trickiness you can see. From my previous background, I can just as an analogy say that it's not always easy or it's not easy to sell, for instance, fighter aircraft from Sweden to France. I think France is one of the few crypto countries as well in Europe, where they have a certain industrial base and there is a tradition that they are protecting it. We are not specifically targeting the French market.
Go ahead.
One question regarding the increased spending on defense, et cetera. Can you maybe comment a bit on has that been a constraint for your growth historically, or has it been more of your own ability to not maybe, yeah, been able to meet customers during the last couple of years? I think the growth in the Secure Communications has been a little bit disappointing, at least to me.
I think it's fair to say that the underlying market growth has been quite low during many years within this segment. I can talk from my long experience within the defense business as well. That has kind of put a certain level and a certain blanket on the capabilities and abilities. At the same time, we have been able to have a growth of 7% in average. That is kind of much better than the underlying kind of funding increase that in many cases was going like this, downwards. I can also say that we now see the trend is going quickly in the other direction.
Due to the long processes in this market, it takes time before we see the effect in revenue streams on our side. There is a lot happening in the market right now.
Yeah. Would you say that you have been losing market shares in your segment during the last, let's say, three years? Or have you grown relatively in line with the market or?
We have not been losing, no. We have been growing, as the market, if not, slightly better in certain areas. This is quite a small niche market, so it's a little hard to find the perfect kind of figures to compare with.
Yeah. Then maybe just the last question on, let's say, the synergies between the business areas. I mean, Torbjörn mentioned that hospitals in the U.S., et cetera, are valuing this more and more.
I mean, your business seems I mean, your customers are a bit different, I guess. Can you maybe talk a little bit about how you work with the, with the different segments within Sectra or within the different divisions?
Yeah. Of course, as Torbjörn was mentioning, there are a lot of synergies when it comes to the knowledge base and how we look at security. People are moving once in a while between the different segments, and we use each other to soundboard different experiences and knowledge. At the same time, we are looking into what at what stage and within what areas it may be relevant to more concretely go into applying the product base and the knowledge within our segment into the medical side. We have seen that not yet, that perfect match has been there on the product side.
Thank you, Magnus. Thanks for all your questions. Magnus will, of course, be.
Thank you.
... during lunch if you have additional questions, and you will also have a colleague demoing some of our solutions on the upper floor.
That's correct. Come see us upstairs.
Thank you.
Thank you.
As we're still ahead of lunch, I will say good morning. My name is Gustaf Schwang, I'm heading up the orthopedic division in Sectra. See if we can advance there. I'll start with a little introduction of myself. I'm from Stockholm. I have a Master of Science in vehicles engineering, which was also the beginning of my career working for a company called Nautor Swan, making large sailing yachts. After a bit into my career, my father got cancer, he was treated with radiotherapy. That made him have a quality of life in the end year of his life. That turned me into the passion of what technology can do for mankind. I joined Elekta, radiotherapy company that many of you are familiar with. Worked there for about 10 years.
About five years ago, I joined Sectra. Since then, I've been heading up the orthopedic division. I have a five-year, sorry, five-month-old son, so I'm not really contributing like Torbjörn to the pyramid here. I have a girlfriend and a little dog. I will talk to you about our business line, orthopedics, where I will give you an overview of what it is that we are doing, a bit about our overall goals, the current market position and the future and trends for us in the orthopedic domain. I will start with the mission statement, and it's really about to harness the full power of medical imaging in order to deliver highest efficiency in the market for orthopedic disorders.
The reason why we are a separate business unit and not part of Medical Imaging IT, is that we have a different customer segment, being the orthopaedic surgeons. We're a dedicated team of about 20 people. We have our own sales force. We have a dedicated development team. We have our own marketing. Also, as Torbjörn introduced, customer success management, which is more and more as we are also following the transition into a SaaS kind of delivery, a very important function. A few words about the overall market that we operate in. About 20% of the global population is suffering with some kind of musculoskeletal disorder or discomfort. That's one in every 5. It's actually the third-largest healthcare cost globally, only bypassed by cardiovascular and diabetes.
There's a rising population of elderly people, as we saw in the previous graphs. Musculoskeletal disorders are very much tied to the elderly. It's an elderly's disease. As that is growing, the need for our solutions grow. Of course, there are also lifestyle-related diseases with obesity and others that are affecting the movement apparatus. We, as future patients or current patients, demand higher quality of care, but also it needs to be given at a lower cost. Looking at the total addressable market for orthopedic software, it's estimated at about SEK 5 billion two years from now, and it's growing by average 8% per annum. With some of our solutions that I will give you a very brief introduction to, we are expanding that space as well.
Just looking at the installed base, I presume, otherwise I will get that question, how about selling to the installed base? The serviceable available market is about SEK 350 million to sell into. That is of course steadily growing. We see an overall trend in radiology in general, moving towards the utilization of CT images. The traditional way in our space has been two-dimensional, meaning plain X-rays. That is driven very much on the increased clinical value that a CT-based image provides compared to an X-ray image. It's also driven by the cost of the CT is going down and also the dose that you're exposing the patient for.
That means that our preoperative planning solutions are more and more needed so that you can harness and use this data in the most efficient and best way for treating those patients. We are operating in these markets. In the US is our largest market and also the fastest-growing market. Scandinavia, we are present in basically today almost every hospital that has an orthopedic department. There it's very much about increasing the usage of our solutions. UK is a steadily growing market. In Benelux, we are present at most of the larger university hospitals.
DACH is a rather competitive market for us, but we're there as well. The current market position, I'll start by saying that the American Academy of Orthopaedic Surgeons has established that 60% of the surgical errors in orthopedic procedures are caused by the orthopedic surgeon. The majority of these mistakes and errors could have been handled with preoperative planning so that you come in better prepared. About 10% of all implants that go into our body throughout the lifetime of these patients will have to be changed or revised, taken out and replaced. That's where our tools come in, where we impact safety, accuracy, and efficiency in selecting and deselecting patients, and the ones that we are selecting, they are given the best possible care. A brief overview of our products today. Sectra was actually the founder.
Torbjörn Kronander was the founder of preoperative planning in X-ray. That started in the early 1990s, before you were using these plastic sheets, the old way of X-rays and literally cutting and pasting, putting these together. This was done digital, and that's still the largest portion of our business today. As we're seeing the transition, as I mentioned, into 3D space with CT, our new solutions are becoming more and more used, and it's becoming more and more standard of care, in particular for those more complicated procedures and complicated cases. You need more data, and that's where CT provides more information. About 1/3 of all medical images that are taken today, belongs to the musculoskeletal patient. They're about muscles, bones, cartilage, tendons. This, of course, requires a large focus in this area.
Sectra is actually the only provider today in the market of PACS who provides a completely integrated solution for MSK patients, both for orthopedic surgeons and musculoskeletal radiologists. A measurement for an musculoskeletal radiologist that is complex can sometimes take about 20 minutes up to 30 minutes, which some of our solutions can reduce down to a few minutes by a few clicks. You can really save a lot of time. Our solution can be provided today together, bundled with the Sectra PACS, but we can also sell our solutions in a cloud-based solution. We call it Sectra Preop Online. The postoperative space is perhaps or sometimes when patients come in with pain back to their surgeon and the surgeon has a very hard time to assess whether this pain in the implant or close to the implant is caused by the implant failing.
On a static image, it can be really, really difficult to assess that. As you can see in the middle picture here, the naked eye can really see just a few millimeters or even sub-millimeter movement with the help of our tools. You can select and deselect those patients who are relevant or irrelevant for surgery. CTMA is a way of making sure that new implants brought to the market are safe, and it's replacing the gold standard of bringing new the method that is used today. I'm very proud to say that about almost 230,000 patients were treated based upon plans that we provided our users with last year. That's a big number. We're growing about 30% in average year-over-year.
A bit more than 3,000 monthly active users is what we have today. That's growing about average 22%, indicating that our users are using our systems more and more. That's done by using customer success management and making them comfortable in using our solutions. My final slide is about future opportunities. As being an elderly, or approaching the elderly population, and the rise of the number of orthopedic disorders, it is steadily growing and fast-growing, and something needs to be done because it's so costly. Our solution is to look at how we help them become more data-driven and making this patient pathway more industrialized and efficient. The pathway includes diagnosis, treatment, and also the follow-up, which you've seen in our products here.
We see that those clinical experts today, and clinical staff working with these patients, are often burnt out. There are growing care queues, and we are sure that this can only be handled through technology. AI, evidence-based medicine, personalized medicine. By providing the technology, we can do a left shift, meaning that lesser experienced staff can do more sophisticated procedures. That was all for me. Thank you very much for listening.
Gustaf will come back on stage after we've presented our other, seed for the future, so to speak, and answer any questions that you may have. At this point, we welcome Johan Carlegrim, President for our Medical Education business on stage. Go ahead, Johan.
Thank you so much, Lisa. Hello, everyone. I'm representing our Medical Education division of Sectra. I've been working at Sectra since I was born, or at least since I graduated and slightly before. I did my master thesis within industrial engineering and management at Linköping University at Sectra, and I got stuck, and no one else wants me. I was initially in charge of Sectra's solution to connect different hospitals to each other for collaboration, which grew to become the largest and most profitable software as a service business of Sectra at the time. We led an internationalization of that product from being, at the moment I started, only local to two countries. I've been the last three years at Medical Education, which brings a new focus more into the academia and a new target segment.
I will, as everybody else, give you an overview of what we do within medical education and where we are at the moment, where our focus lies, and what we see moving forward. As I said, our focus is on the academia, on the education of future doctors, nurses, and other healthcare professionals, rather than the ones that are actually already in clinical practice providing care to the patients. However, focused on the academia and the medical education, and the focus on that requires us to really understand what's going on, obviously, in the hospital setting. The advantage of us as a company is that we're positioned in and active in both areas at the same time.
The students of the medical universities are obviously supposed to end up in the hospitals, and they are supposed to do so at a higher rate and with more knowledge than ever before. The connection between the two is very strong and important. When looking at the hospitals, one of the most obvious problems for them at the moment, which is also what we try to work with on and for the clinical staff, is to be able to do more with less. One of the biggest problems for many hospital executives today is staff shortage. They lack the enough staff to provide the care that is necessary, driven by the demographic pyramids that Torbjörn showed before. They need to do more, and that's a problem.
We try to work with effectiveness to resolve that, but obviously bringing in more and more capable, more competent staff to the hospital organizations is also very important to try to mitigate this challenge. Another reason why it's challenging, not only that you need to deliver more care, is that the care is becoming more and more advanced and complicated. This is a chart that tries to explain the increase and explosion of medical knowledge that is happening at the moment. This goes both in the clinical sense but also in the technological sense. The tools from a technological standpoint, Gustaf presented some before, are becoming more and more advanced as well, both for the diagnostics and the treatment.
A doctor that graduates today needs to know a lot more, and they also need to continue to learn a lot more in order for them to meet the needs of their patients today. By 2020, it was estimated that the total available knowledge within medical, doubled every two months or so, and this trend just continues. You need to learn a lot more, and you need to continue to learn throughout your career as a doctor, nurse, or other healthcare professional. This means that the traditional ways of learning medicine, in this way, trying to dissect, an old corpse, is not gonna be sufficient to meet this challenge for medical universities and medical schools. It opens a market which is rather large and growing. It's estimated the total market for medical educat ion in 2022 was $41.6 billion.
Obviously, we can't capture all of that, but it's a very big need that needs to be addressed. From our point of view, we look at the market from a different, a few different perspectives. We try to divide the market into perspectives that we find relevant. Our core segment is medical and veterinary schools and simulation centers. A lot of medicine is today learnt by simulating the scenarios in the hospitals that the students will eventually meet. They try to simulate the patient scenarios, both when it comes to diagnostics and treatment in as real way as possible. Many of our university customers are building what looks like very much a hospital setting for their students to learn with. Often, the patients are extremely real, high-fidelity mannequins, dolls that they play with. For a very important purpose.
They can scream, they can cry, they even have helicopter pads to simulate the urgency when it comes to certain of these scenarios. That is what happens in what we call simulation centers is a very strong growing market. There are about 3,600 medical schools globally. Within veterinary medicine, we see quite strong growth actually. Many people bought their pandemic puppies, the veterinary market is growing also really nicely. Obviously, the veterinarians also need to learn medicine before they start to treat their patients, the animals. There are about 1,000 simulation centers. As I mentioned, this is a more rapidly growing market than the medical schools.
At the moment, if I look at our offer, we estimate that we have an opportunity to get about a quarter of a million kroner from each of our customers today as a subscription, which means that the serviceable addressable market just within this segment for us is well over 1 billion kroner per year. On top of that, fortunately for me, we work also very closely with the hospitals. As I mentioned before, the medical students, they won't be done learning when they graduate. A larger and larger part of the learning for healthcare professionals today happens in the context of the hospitals. Maybe when they are residents, but also when they are specializing or when they are specialists. There are about 3,000 teaching hospitals globally, 1,000 plus only in the U.S. where Isaac focuses.
This adds, if we assume a similar revenue per customer a year, SEK 800 million per year in serviceable addressable market only with our current product offer. I mentioned they need to continue to learn. Actually, the medical education, continuing medical education market is growing quite fast at the moment and is in total estimated to over $12 billion or estimated to grow to $12.0 billion by 2027. There are about 10 million doctors in the world, I've heard more than one of our current users of our PACS systems really asking to get access to our educational solutions as well, to buy their own personal subscription. At the moment, this is an untapped potential, it's a rather large such.
Let's assume we can get each of these doctors to pay us SEK 500 per year to access the tools that I'm soon gonna introduce to you. This adds, I would say, the largest addressable market for us within medical education overall to tap the potential of the learning needs of the already graduated medical students, the doctors out in the hospitals. All in all, we estimate our serviceable addressable market to over SEK 3 billion just based on our current product offer. On top of that, the value for a company to really position itself amongst their future users. You know that maybe Adobe and other large tech companies, they really put a lot of emphasis on trying to get hold of the users well early on in their careers.
Going to the university setting, as at some companies that I know of, valued by a factor of 10 per dollar because they actually create brand awareness, and they create brand loyalty with the users they will have in the future. We use our tools within education to position us as a really exciting company. It's one of the best ways, I think, you'll maybe see outside in the demo area. It's one of the best ways to understand what we're doing as a company. For many of the medical students that have been using our tools, it was the actual reason they chose to become a radiologist or a pathologist because they found that our tools that they would eventually be able to use in those specialties were so exciting and intriguing.
I think for us as a company, on top of the SEK 3 billion per year market potential, I would say brand awareness and brand loyalty is an important reason for us to work with this strategically. The goal for the business unit is to try to use our position working both in the academia and in the clinical space to narrow the gap for the students that want to come into the clinical reality well equipped, to narrow the gap and create a bridge between the academia and the clinical setting. That's where we have a very unique position with our technology and with our company. It's proven that the use of medical images, which is our core competencies within imaging, the ability to see the world's leading technology that can visualize the human body in various ways and disease.
Our customers have proven that with their research. They are academia. They will want to have scientific evidence of it. It's proven that the ability to do so, in this case, see an embryo, helps the students learn faster, learn better, and learn in a way that makes them analytical and learns in a way that make them capable of learning also when they graduate. Our medical images are the core of our product. We deliver all of our products within medical education as a cloud service. This is our Education Portal. In the Portal, we have collected throughout the years, together with our hospitals and also our universities, a very unique library of clinical content. Medical images that each university and each university teacher would never be able to find themselves.
We've gathered that and makes it all available in a cloud portal for all of our customers, and that can be accessed both for the teachers and for their students. Combining that with our state-of-the-art visualization tools is something that provides a platform that we don't have any competitor out there that can even closely match. Our current market position, we have customers that are in a variety of different categories. I mentioned before universities, simulation centers, veterinary education. One of the most exciting opportunities for us is to put our tools directly in the hands of the students. We see that more and more medical education is actually self-directed.
It's not enough for the students to learn in school, they also need to learn when they get home, study for their exam, and they can now access all of these tools and this material online whenever they want, from wherever they want. This is one of our huge opportunities, I would say, to continue down that path. In terms of customer, we have customers in about 60 countries today with our educational platform. We have a large presence in Europe, North America, where obviously with the rest of Sectra is also very present. We also have a big install base in Asia. We have a big install base in South America. One of the benefits of our distribution model is that it's not that difficult for us to deploy our solution in any new country. We're active in about 60 countries today.
Usage-wise, all of us talked about customer success management and the importance of driving usage. Our price model is directly correlated with the usage. How many students and teachers are able to use and are using our platforms in the university setting or wherever they want. We've seen over the last three years that we've had a growth of about 84%. We're almost doubling the usage in three years. This has resulted in also a growth of monthly recurring revenue. All of our revenue is cloud recurring revenue, and has been over the last years. We almost doubled that in the last 12 months, and we see that this trajectory is just continuing. We're seeing that there is a great correlation between usage and also the growth of revenues. When it comes to future opportunities, where does my focus lie at the moment?
Well, I had a foot with the Imaging IT and the hospital side before, that's obviously close to my heart. We see that actually our opportunity with our very sophisticated tools that are even relevant to use for the physicians and the graduated students makes it possible for us to actually go outbound in this circle. Starting from the medical universities, where, for instance, in Sweden, all of the medicine students get an account to Education Portal today. All of the doctors in Sweden will have experience from Sectra and hopefully liked it when they graduate from med school. This is the starting point, we see that we have a very good opportunity to provide value in the hospital teaching setting, and also, as I mentioned before, to the already graduated doctors.
Fortunately for me, I have colleagues out in the hospital setting. The Imaging IT and Orthopedic solutions are already out there. I see that we can both create a position within those segments of the hospitals that can be leveraged by the Imaging IT and Orthopedics business lines, and hopefully drive some sales of the clinical systems. Equally important for me to drive my business is that those positions with the hospitals create a huge opportunity for me to also complement our footprint with those customers with an educational solution. That's the synergies that we start to see more and more of, and that's the potential that I would like to focus on moving forward.
We have an opportunity to act in all of these, and I would say as a company, we're the only one that sits with a foot on both sides, and that's the synergies we try to exploit. Thank you.
Thank you, Johan. As with Gustaf, Johan will be upstairs later during the lunch and show his products, and you can ask more questions. He will also be part of the Q&A session after Torbjörn has presented our newest addition to our greenhouse, which is Genomics IT. Welcome back on stage, Torbjörn.
We thought with better use of Fredrik Lysholm's time, who is based in this area, that he actually makes a product. I'll do this for you in a brief way. Genomics IT research. What do we do in this area, especially in Genomics IT? Why are we starting up something outside of imaging? The background is that this is mainly about cancer. Cancer cases are growing and growing and growing. More or less, all of us will get cancer if we live enough long. Not all, but most of us. It's only a matter of time. Sort of a depressing news, but I don't think it was very new to any one of us. It's a growing concern, and it has to be dealt with. There's a huge transformation in cancer care.
40, 50 years back, you got cancer, you most often died. There was not much you can do about it. If it was, you know, very easy to surgically remove, you removed it. Some miraculously turned, you know, healthy, no one really understood why. That was the situation. Then you introduced a lot of chemo, and you had radiation coming on, and surgery got better and better, so it was treatable. If I went in there with a prostate cancer and some other man in here went in with a prostate cancer, we were treated in the same way. Some of us died, and some of us didn't. It was a little if you're lucky or not. The big change in cancer care is personalized medicine. Personalized medicine is that you don't treat two patients the same way.
You measure the cancer. Some cancers can be treated in one way, some cancers can be treated another way. We have seen incredible improvement in cancer survival. What's it called? What happened? Malign melanoma. Malign melanoma is a skin cancer. Most of us at my age know at least someone who died from it. I know two, three. If you got that in the old days, 95% of patients, they died within five years. Today, they survive 5-year survival, millennial melanoma is 60%. 5%-60%, that's amazing. That's by immunotherapy and personalized medicine. It requires a accurate initial diagnosis, but also continuous monitoring, because as you had now had many treatment, you treat different people in different ways. You need to know if the current treatment works.
After two weeks, something must have happened, or you change to another treatment. That means it becomes continuous monitoring and diagnosis. What happens? After you're healthy, cancer very seldom goes away. There's still a risk after that comes back. You need lifelong monitoring. That means that diagnostics will be used many times for each cancer patient instead of just initially. It will... Diagnostic will grow much faster than therapeutics. Much faster. Diagnosis growth in cancer care is in tremendous growth. We also see that in radial departments, a very large portion of what you do in a radial department is monitoring cancer. Monitoring cancer. Does it work? Is it shrinking? Is it growing? Et cetera. Cancer has transformed from acute deadly disease to chronic disease. We live with it, most of them.
Many die, but not as it used to be. Genomics in cancer care, what's happening there? With mutation, in order to really find the treatment that works for you or you, we need to know the germline genomics. That's your inherited gene or DNA. There are some mutations that are inherited, and most of you might have heard about the BRCA gene. If a woman has a BRCA gene, a mutation, she has an 80% lifelong risk of developing breast cancer or ovarian cancer, 80%. If you have that gene. We don't get it as men, but we progress it to our daughters. Really serious. You can find it by a simple test of that mutation.
You also need to monitor the DNA genomics of the cancer because one of the reasons with cancer is that the control mechanism when you multiply cells doesn't work. There's no error checking that works anymore. The cancer can mutate. Some cancers mutate everything, every new division of cells you have. It become crazy. You have different DNA in every new development of the cancer you have. You need to follow this over the treatment time and see. Very often, you begin treatment with one treatment that works for most of the cancer cells, but one or two it didn't work for. You kill off all the ones that you are sensitive, but the one or two that is still remaining have another mutation, and guess what happens? They, of course, take over.
You can have initial treatment for a cancer in the beginning, a completed other one after two years, three years. You need to see that, and that is done by continuous DNA testing and genomics of the cancer. Many thousand mutations, sorry about the spelling there, needs to be handled. Today, five years ago, or even 15 years ago, say, there was like five different mutations, and most people had it in their head. Now it's thousands. No doctors can have it in their head, and you need to handle that. The proportion of cancer that require genomics analysis is increasing. I need to speed up here. I've talked too much. Workflow of genomics, it's closely related to pathology. It's called molecular pathology, and the pathologists send some cancers to genomic analysis.
It's increasingly complex. More and more mutations, no one can have it in the head, and it's huge growth. It's time, and it's been done with research tools before. It has to become industrialized, and that's where we come in. That's where we come in. We are production company. We are oriented towards clinical production in healthcare. Industrialization is a very good thing. Sounds cool and cold. It's not. It's repeatable, high quality at a low price. That's industry. Genomics now is in a phase where research has to be obsoleted, and you need industrialization in the process. What do we do in genomics? We saw this coming five, six years ago. We began recruiting bioinformatics. It's a special kind of IT in between biology and informatics, and they are, you know, educated in different parts.
We built staff and knowledge over four years. We looked for a customer. All of a sudden, University of Pennsylvania, one of the most famous universities in all the United States, they have an incredible explosion of a genomic analysis. They built a home-built system. It was not industrialized. It was not a production system. They came to us. They are a radiology customer. They will become a pathology customer. Already got the orders, not implemented yet. They wanted also genomics. Now we had a paying customer, then is when we act. We don't want to do things on our own. We too often make something completely useless if we do that. We need a customer with us in the boat.
It has potential to significantly improve cancer care because the speed is also of an essence. Cancers are not still. Plan to go live, we have a product together with them that will take it into clinical use when we're done, and the plan is to have it available for them to use 2024. We have an extremely interesting situation with one of the most prominent universities or hospitals in the world working with this system, and they know what they want because they built something in before. Massive interest from the market. Fascinating. When we made that press release, we don't have a product yet. We are developing it right now. We had a very large interest for it. This is a picture, the University of Pennsylvania in Philadelphia. This is what they built themselves.
Very good, well done. Done in an environment that is not really organ. There's no service people. It's a system by Bill. If Bill quits, well, it's a problem with university, and they know that. They know what they want to have. We need to make that into a live, reputable, normal service or product, working closely with our other systems in cancer care. Current situation is good solution, poor integration with other IT systems, lack of review in the, you know, sequencing lab, hard to find all testing results, limited access to multi-structured information. It's a myriad of mixed system. They're using all these different sequencing equipment and stuff that is equivalent to the X-ray machines in, in for PACS, but they're not connected.
It takes too much Excel to move things in between, and the growth of their number of exams is 30% per year. They had to solve it, and they came to us. Current solution is great. It's home brewed. It's depending on people, no formal service, lack of security, audit tracking, things that are needed in clinical system. We are building it, but we have a template to build the towers. It's what they need and develop for their needs. Part of your vision is to have an integrated pathologist workflow, completely integrating pathology that we have already in many places. The new business innovation department we built, we started department because the growth and the need was so large.
We have three PhDs in Bioinformatics that we hired over the last years, one PhD student, four developers, is led by Fredrik Lysholm Høj , a PhD in Bioinformatics himself, also a very good programmer, which is very nice combination to have. The goal, of course, is a clinical product ready by spring 2024, highly efficient workflows to cope with incredible growth of need in the hospitals, integrate diagnostics and tumor boards, which is where you take decisions on cancer these days, scalable in number of exams, number of variants, that's all the mutations you need to keep track of, and the number of hospitals and departments that work together. It's similar to what we do in PACS, but for Genomics now. It's a huge potential going forward, again, the, it might fail.
Sometimes it fails on these areas, but sometimes they go very well. We are enough with one out of five of these tests to go well, but this looks promising. The average growth in Genomics that we estimate right now from the market is 90% annual. I will just mention what we do in research at the very end of this. These are different. I showed that before. These are our greenhouse products. Some of them fail. We had a wonderful product for osteoporosis, probably one of the best ideas we ever had. We had to shut it down. It was impossible to sell it. We have Digital Pathology, came from research. We have Education who came from a PhD dissertation that our research manager did from the beginning for very fast visualization. We have Orthopaedics, IT, et cetera, and research.
Our research people is now eight people. They work closely with our other business line. As I said, Medical Education came from there, Orthopaedics service all the time interaction with research, Imaging IT, pathology came from there. We moved, we spun off mammography. We sold it to Philips, actually. This is what we do in research. It's very closely related to Genomics IT, who came out of there as well. That concludes that part. All right.
Excellent. Thank you. At this point, I will ask Gustaf you want to re-enter the stage, and I'll open up the room for questions about our business innovation operations.
I have a question. This is first about the medical education. In my day, we learned surgery on the patients going and walking along, so to speak, which was not all that satisfactory. I'm convinced that your devices are excellent, but you need then an enthusiastic educationer that sees to that these are utilized in a good fashion. How do you go about to see that?
I would say you're absolutely right. It's I mean, in often cases, it's a quite conservative user group. The professors of the university are not always the ones that jump on board with the latest and greatest amongst the first. That's very true. At the same time, I would say that that's one of our key focus areas to make it exciting for all the different user types we have. I mentioned the students before being an important user group for us because when the students start to demand these types of tools, which has happened amongst a number of our different customers, they have pushed the decision-makers of the university to invest on our tools for their use, even sidestepping or bypassing the educators. I would agree with you that in the general scenario, we need to convince all of them.
We do that by making the tools really easy to use and really clear in how they provide value and make the lives of the teachers easier. We've also examples when we have necessarily not been able to convince the educators, but been able to convince the students that in turn have made our product get a foothold in the university. I would say we can work on multiple fronts with that sort of movement towards our software.
One question on genomics. I'm not quite sure that I understand what you do. I suppose that you are not doing the DNA or RNA analysis. You are putting together the data that someone else picks up or gathers. Is that it?
We do the selection process integrated with pathologists can tell what part of the slide is gonna be sequenced. You don't sequence outside, it's the tumor cells you want sequenced. How many of these you send to DNA sequencing. It's done by some other company's equipment. It's very similar to radiology in that aspect. We take care of the data. We also interface to the databases. There's 1,700 current mutations they keep track of, and that depend, influences medication or treatment in just in Penn. It's too much to have in the head. We have an interface with the databases. We present the mutations on the tumor boards as a decision tool. A tumor board is a lot of different doctors sitting together deciding about the treatment. We can assemble and make the information readily available for that tumor board.
We keep track of the images or the data. It's too much data to handle manually on small notes, et cetera, today.
Go ahead.
Thank you. I have one question to each of you, actually. Start with Gustav. Is it possible to give a figure for your penetration of this solution for the current PACS users today? If they don't use the Sectra product, are they competing available products?
Sure. I mean, in general, what I can say is when we are selling PACS today, they do have an orthopedic department, it makes so much sense to have an integrated system in the workflow. Now also, as I mentioned, solutions for the MSK radiologist, it's the same patient. Have that on the same platform makes a lot of sense, which gives us a unique position, a unique selling point, so to speak. There are other manufacturers of preoperative planning software out there. We, of course, consider ourselves to be innovative and technology leaders in this space. Also by having this combined and bundled solution, we see a great competitive advantage.
It's not used, I guess, by all the orthopedic departments that have, Sectra PACS today.
That's-
What, what's the reason for not using it? They want to do it manually or I don't know.
It could be legacy that they have been using, previous systems or still are. We see a lot of replacement of those, and we're certainly growing our presence.
Okay. Therefore, you show the slide, the recurring revenue. How much of your sales is recurring today? Is that all of it or is recurring a smaller part of Sectra?
It's definitely growing to become the majority of our business, but it came from a lower level a few years ago. It's definitely gonna be the main business, a main part of the sales.
It's not majority today.
I don't know. Do we disclose that?
We probably shouldn't, to be frank. It's a significant part, and it's growing. As we haven't disclosed the percentage yet, we can't do it here either.
Okay. You showed those different customer groups. Is it evenly split between these three or is one of them bigger?
I would say that the core of our installed base resides in the medical universities today and the simulation centers. I would say that we see a lot of untapped potential in the more hospital-close education. That's what I said in the end there. That's where I see we have a lot of room to grow. Most of our installed base today are in the university setting.
Thank you. Then for the Genomics IT projects, are you aware of any competing similar type of projects out there?
No one that integrate with Digital Pathology. Since then, we became a thought leader in the cancer diagnosis field now. We invited the scientific, you know, meetings to present what we do. There's no one who do Digital Pathology and radiology and also genomics in the same system today, not even radiology and pathology in the same system. We have vendors selling both, but then it's two systems, and that's not good for hospitals. Now, genomics, we're alone. There are a lot of people, a lot of pharma companies and medical equipment companies like Roche and these people, they want to do it, but they're not IT companies, and they do not have Digital Pathology in the same system. We are workflow. We industry-oriented.
We need to prove to customers they become more efficient because they need to do more and more with the doctors they have. They cannot find doctors, and that's where we are. Right now, there's no one else.
Thank you to all of you, and you will be, as I've mentioned before, here during lunch. If you have additional questions you don't wanna ask in the big forum, you can go ahead and do so.
Thank you, Lisa. My name is, as you said, Marie Ekström Trägårdh, head of Sectra Imaging IT Solutions. I would say it's great to be here. Who am I then? Well, I've been working at Sectra for 25 years now. I guess I'm one of the oldest.
Employee we have, even Torbjörn Kronander is of course older than me. I started at Sectra 1996, and I in fact started at Sectra Communications, building crypto products for the private industry. My background is in computer science and healthcare, and I have interest in both, I will say, because IT is something that it is my, one of my main interests. You work a lot when you have position as we have, and then to do something meaningful while the time you work is super important for me. I really think I can combine these two, my interest with my working life in healthcare. 1999, Sectra acquired a company, a RIS company, Radiology Information System in Örebro. At that time, I become the president of that company, and since then, I've been in different management positions.
2011, Torbjörn decided that we should join the product divisions together with all the country operations because it's quite easy that you create silos. As you've heard, culture is super important for us. We want everyone working for us to strive for the same goals. That's why we put together the computer divisions together with all the country operations, and I got the honor to become manager for that division, calling Sectra Imaging IT Solutions. At that time, we also saw a trend in Scandinavia that our customer wanted to have more different kind of images into their archives. That's how we also, at that time, enter in the enterprise imaging market. What I will talk about today is pretty much the same again as the other half, although I will dig a little bit deeper into how we are organized at Imaging today.
As we said, we have our product and service department. That's the headquarter, where we build our product, we have the product management, we have the product development, and we're also running our cloud operations. That division is, or part of our organization, is run by Mats Björnemo. Then we have sales and marketing. We also steer that from our headquarter run by Fredrik Gustavsson to make sure that we're selling the same solution, not promising too much, and have control over our sales funnel, what we're doing there, as well as our marketing. Our partner organization also belongs to Fredrik's organization. Then we have our newest part, and that's the customer success management organization. We work in the same way globally. That's why we have a global matrix organization led by Linköping.
Otherwise, again, culture is super important. We need to work with a customer the same way in all countries, and we need to have control and check that we are going okay with customer satisfaction. Thus, we have created that department. These three parts create mostly the headquarter. We have subsidiaries out in three regions. We have North America, Scandinavia, and we call it rest of the world. That's our three regions, and that's a way of us to have control. It's easier to have three regions than to have 11 spread subsidiaries. In North America is Canada and U.S., and Isaac, you will tell us more about U.S., and I will tell you a bit about Canada. We have Scandinavia, our home market, where we have Denmark, Norway, Sweden. Finland is handled by one of our partners.
Then we have something we call rest of the world. There we have Australia, New Zealand. We have Benelux, that's Holland and Belgium. We have DACH, Germany, Switzerland, Austria. Portugal also handling parts of Spain. Then U.K. This is the countries where we have our subsidiaries, legal units. But the one who really decides here is the customer. To take. We are a customer-driven organization. Whatever we do, we do it together with a customer. We don't invent anything behind a desk in Linköping without interacting with our customers. Customer is key, and that's our core value, I will say. We also have a vision at IMIT that's saying that in every fifth year, we will double the number of exam we do.
We focus, as Torbjörn said, to the diseases that creates the most burden on healthcare today, and that's cancer diseases, and the old man's disease. To be close to heart our employees, we say that every fifth year, we double the number of patients we help because that's closer to your heart than just a financial number. To be able to control that and running in the same direction in all our subsidiaries, we are almost 900 people, around a third of them in the headquarter, the rest is spread all over the world. It's super important to hold us together. We have three goals. We call them OKR because that's the methodology we're working with. There is, number one, build a sustainable growth. Every company wanna grow, we just not wanna grow. We also wanna do it sustainable and have control.
Customer satisfaction is key when we grow. That's why the goal lead the customer success, that we check the way we work with a customer and also as we're going in the right direction is super important. Then, of course, cloud. Cloud is coming, cloud really help us to facilitate the other two goals. The growth strategies we have at IMIT is, most of you maybe know this, of course, we aim for organization with high production. Usually, in these clusters, because it usually becomes more and more regions or it's cluster of private hospitals in U.S., they have an university hospital in the middle. That's not always the case, but that's usually the case. The market today that we're looking on in is of course replacement market because most departments are already digitized a couple of years back.
Also the consolidation trend may opens up for a lot of new procurement. This is really the case right now. The way we work with cloud and the way we do our offering, which Fredrik will tell you more about, is something I will say is a true software as a service because we take care of everything for the customer. They just buy a service. They don't have to care about anything else. A lot of other vendors, then you have to buy bit by bit. We take care of the whole solution. That's something I'm proud of because I think that's really best for the customer. We focus on expansion in Europe and U.S., where we have our subsidiaries.
If we go outside that, we work with our partners, which we have spread globally, and I will get back to that as well. This is the growth strategies. This is the fundament that we can grow. This was something that was created at Sectra many years ago, the foundation and the architecture, our platform, our enterprise platform for all of these. Where we have the core functionality handling our archive, no matter if it's on-prem or if it's in cloud, if it's our PACS or VNA, where we can have the tools to integrate the EMR system with different patient ID system or whatever needed, where we can handle privacy and integrity, which becomes more and more important in today's society, as you heard Magnus talking about, unfortunately. We handle workflow management because there's a lot of integration and there's a lot of workflow.
I will get back to workflow because provide our customer, our end users with efficient workflow is super important for today's healthcare. Of course, business continuity. This is the foundation of where our products relies on. We started with radiology imaging a long time ago when Torbjörn was... I was almost not born then, kind of. Orthopaedics, as you heard with the templating, was also early out. We continued with breast imaging and pathology. You can already see here the trend, radiology imaging, breast imaging, and digital pathology is all cancer care. It all goes together. To be able to deliver a full enterprise suite, you need to have cardiology.
That is something we have invested in and are investing in heavily to be able to have a full solution for our customers when it comes to cardiology imaging. Of course, to catch images, it could be a video for a theater, operation theater, or there could be a photo of a skin or whatever. You can do a lot of image capture, of course, and ophthalmology, our newest baby, eye care, I would say. Of course, genomics. This goes hand in hand. To be able to have all images available at the same time and have workflow going seamlessly through this, our platform is built for this. It has been for many years. As everyone knows, AI is coming. How can we use that in our platform?
Well, we have choosing a strategy and a platform we call Amplifier Services. We did that just before the pandemic, where we had a cooperation with a university in Holland, where they have built a platform, we have continued developing that platform, where you can add on AI apps. The apps we choose to have can we do on our own or we do it together with the customer. We're finding out which AI app will be most useful for them, what AI apps can help them in their workflow and in their daily life. We test apps, we integrate the apps in a platform, and we take care of everything concerning finance, invoicing, and everything like that. The customer just have to start using it as a service.
Our AI applications are seamlessly integrated into the workflow because we strongly believe to be efficient, if you're going to use AI and you need to go to another workstation, start up an application, send the images there, that will be difficult and will take too much time. That's why we have integrated it into our platform. This is our way to get use of AI, and I strongly believe that this is a very efficient way for our end users to work with this. What's happening? As I described our organization in the beginning, we have changed it. We did a quite large reorganization two years ago, and that was in fact the first reorganization we have done since 2011, because we believe we should not change too much too often.
What we saw, of course, is our customer is going from on-prem. That means to have Most of our customer had their hardware, they took this, they acquired it, they bought the hardware themselves, they upgrade the system, they take care of everything, and we have a lot of different environment to cope with. That was the situation before the pandemic. Today, we have cloud. I will say most of our opportunities in our sales funnels is about, it's cloud opportunities. That's the direction we're going. We need to change our organization accordingly. This is how we look before the pandemic, I will say. We were a traditional hierarchical organization where we have a large support organization working with many customer. We have a deployment organization installing at many customer sites.
That was how we organized. When you grow, and also when you're going into cloud, you have to become the customer's IT department because they don't have anyone on their own anymore. We are the one, the one delivering the services to them, so we need to know much more about them, and we need to build a close re-relationship. That's really hard to do if you meet with new people every day. That's why we form more like a DevOps optimized organization where we have pods and groups, et cetera, and one group working with a cluster of customer. You get to know the customer, you know the needs of them, you can understand where they're going, you can help them, and they feel safe. We build trust. That's the way we are working.
This is also feedback loops between our headquarter and our pods out in the countries. This is super important to be able to understand what's going on there, and also that the customer feel that they have a relationship with us, that we are a true partner for them. To be able also to handle these pods, not every pod doing in their way, we structure this in a customer success management, meaning that we have one way of working with a customer. We have a structure way of communicate with our customers, saying that each of these pods should have monthly meetings with them, quarterly meetings with them. We're building reports so they can track their tickets. We're building reports so they can track different performance metrics. We make sure that we handle our customer in a very professional way.
This also means that we can be much more proactive. We can see if the customer are using our products in the right way or have they missed something. Today, when the customer are responsible for upgrades and of new releases themselves, it can take up to 2-3 years before our new products get in use. Now we have control in our cloud organization because we do the upgrades. We make sure that we get out our latest releases, and we can also see how our customer are working with our products. Is there something they don't understand? Is there something they don't use? Of course, what we aim for is that we should see trends in their environment before they see it, so they don't need to call us. We see it already. That's the direction we're going when monitoring our systems.
That was a bit about how we are organized. To check, I think Torbjörn has mentioned most of this already. To check that we are in the right direction, we have these KLAS surveys. I was in Utah, where KLAS Research have their headquarters, and got the report together with Isaac and his team of what goes right and what goes wrong. They interview hundreds of customers every year, and they tell us trends. That's something everyone there can get, so it's not only we. Well, they say, "Well, this is a trend we see. This is a behavior you maybe should change," et cetera, et cetera. This started already 2012 when we got our first best-in-KLAS, where they said to us, "You shouldn't just solve a ticket. You should solve the customer problems." We listened to that.
A couple of years back when we have got some of these best-in-KLAS awards, they say to us, "Just because you're number one in KLAS, you have to be humble and don't drop the ball." That's something then I present to our organization, say, "Hey, we are number one here, but we have to stay humble. We can't drop the ball because we just at the moment are best-in-KLAS." That's how we work with culture, and that's how we work with KLAS. That's a lot about us. Let's go to the next part, and that's the current market position. What we aim for today is to have more than 50% of the market in the segments we target and in the countries where we have presence. That's what we aim for today.
To give you some examples, as we said, we're targeting to double the number of exams in five years. As you can see here, it's going better than we have planned for, so we are way above that. The other one, this is the curve showing how we use our Universal Viewer or our end users, the referring clinicians use our referring physicians use our Universal Viewer and also how our Diagnostic Viewer is used. You can really see the trend, how we have a huge increase of usage. I'm quite convinced that this will be even steeper nearby. This is another tool which I'm super proud of. It's the Image Exchange Portal. This are supposed to look like UK. Anyway, in UK, we have all public institute connected to Image Exchange Portal.
That product is a product coming from a very successful acquisition, which we did around 10 years ago, something like that. Burnbank, that was a company, a small company in UK who had developed a product on, because it was local development asked for by NHS. We bought that company, acquired that company alone 10 years ago. We have further developed this product, of course. It's now running in the cloud in a cluster solution. That was not the case when we bought the company, but we bought the network in this case. We have developed further these networks. Now every public hospital are connected. You can imagine how many images and how many patients' exams is going through the whole country. This seems quite natural, but this is not the case.
I would say that in most countries and regions, even inside Sweden, there's a problem transferring imaging between different systems. That's a real problem. I can also imagine how many lives we have saved by handling a trauma from Scotland to a doctor in London in a quite easy way, because this is very easy to work with today. This is also connected to patient portal. You know, patient demands increases, and they want to get part of their journal and their history. Patient can also go in and check their images in our patient in the Image Exchange Portal. Today, we have almost one half a million users. That's quite cool, I think at least. If you go into our other segments then, Scandinavia. We are market leader in Scandinavia. That was our home market.
We also last year won Capital Region of Denmark, which of course opens up for more growth in Denmark. We're still growing though in all countries. That's because of the Sectra One where our customer can broaden their portfolio. If they don't have pathology, they could just add on pathology at the same platform or cardiology or what they need. Even in Norway and Sweden, we grow a lot. Just a comment here is that in Sweden, last five years, all new sales has been cloud-based, but that's our private cloud, not our public cloud. Because of GDPR, you're not allowed to have public cloud yet in Europe.
If you go to rest of the world, where we have gathered the other countries except for North America, we are market leader. We're still growing in United Kingdom, Iberia is both Portugal and Spain, and in the Netherlands, especially in Belgium. That's very nice. We're expanding in rest of the countries, Switzerland, Austria, Belgium, France, Germany, Australia, and New Zealand. The highlights for North America. It's going fast now. I have so much to tell you, so I have to. I'm really proud of what we're doing. U.S. is what Isaac Zaworski is heading. We have been there a long time. 98, we started it up. Today, we have 57 multi-site health systems. That's quite cool because these system, healthcare provider, they're not small. This is Canada.
Canada was earlier belonging to our organization in U.S., since 2017, it's its own unit, we should be able to focus on their needs. We see a really strong growth there right now. The whole market is up for replacement, I would say, in Canada, that's cool. These two countries cooperate a lot. We're looking at North America as one region. In the countries where we don't have presence, we work with partners, as I said before. We have today 20 partners globally. We are quite picky when we decide who to work with because we really want the culture fit. That's super important for us. If the culture doesn't match, we shouldn't go with that partner or reseller. There could difference what kind of partners we choose.
Some of them only works with pathology. Some of them could take the whole enterprise imaging suite. It depends on the partner, of course. In the market where we think there's an opening for us or a gap, so we can come with our solutions and fill. The opportunities really will be facilitated by cloud because when we have a cloud solution, that core is installed by a group of people in Sweden. We can have control over the installation, and then the partner do the deployment, they do the first line support, they do the running operations, but we have control over the core of the installation. That's the same for our subsidiaries as well. When they have on-prem solution, you know, when customer own their own solution, each solution, each site looks different.
This also opens up for an better way to provide product support because we have more similarities in our sites than we had had before. Competition. That's something usually the finance market ask about. We have of course, I have divided into two parts. One, local competition and global competition. If we start with the local competition, we see most of our local competitors are active on only one or a few markets. Their variation in portfolios could be different. Some of them are only competing in pathology, some are only competing in radiology. It depends. There's a variation there. We also see that some of them are being bought out by private equity companies, they try to put together different companies into one. That's a challenge to do. We know that.
Some of them we see suffering from this. Short term, we believe that being a true SaaS vendor, working with the broad portfolio we have and the close relation with a customer is our key differentiator, absolutely, and our strength. There's a big step for these, for most of these local actors to become a global actor. Because the step from going locally to global has increased the last year, I will say. There's so many new security and governance hinders on the way. If you take, for example, running a cloud operations, there's so many roles you need to have and fulfill. That requires a lot of resources to be able to commit to the local governance rules. That's why we think the hindering from being a small local actor to become global has increased quite a lot lately, last years.
When you look at the global competition, we see the big ones, the mostly the old modality vendors and X-film companies. They are active in all markets, more markets than we are. They have a very broad offering. What we have seen lately is the split that they go into separate healthcare units, as GE did lately. Short-term, we're still strong in competition with them on the market where we have presence. We also believe that this has shown to be the truth. Customer satisfaction, being adaptable, and also that we can act quite fast if there's something that is needed for the local market. Many of these large vendors losing market share. I think I hop on that.
Bundle deals also could be something, but I will also say here that we can also work with scanner vendors to bundle deals for our customers. Future opportunities. What do we see? Well, Torbjörn, I think, mentioned most of this. Healthcare has a source range. AI and better workflow will be super important. There's a lot of legacy system out in the market which is just waiting to be replaced. IT security drives consolidation and moving to the cloud. The market trends today, we see the consolidation continues. Digital Pathology is really taking off. You can see our press releases, both in Scandinavia, UK, and now in US. Financial pressure drives efficiency again. Brilliant workflow, super important. Sectra One, which Fredrik will talk about, enables a true enterprise imaging. Our way forward, as I'd explained, to summarize it. We're going for a global organization.
We truly believe in customer success management. That is the key. Customer satisfaction, without that, we are nothing. Sectra One Cloud will be important. Efficiency and best practice. With these components and working and staying with what we believe in in our core values, we are geared for success. Most important of all, that is close to all our heart, is the patient. As long as we can build product that is good for the patient, I think we will have a good future. Thank you.
The good part about coming after Marie is that she's done a great intro into the business that we do. I obviously represent the U.S. country operations in the U.S. market here. My intent is to provide an overview in this presentation of how the broader imaging IT business translates into the U.S. market, the peculiarities of the market, the things that we're addressing and really focusing on that are both unique to us, also aligned with our broader global strategy. Just to start out, who am I? I am, as Marie and Torbjörn are the longest serving members of the group represented here, I'm probably the newest member of the group represented here in this group.
I joined Sectra in August of 2021, I am a solid 18 months into my tenure here and moving very quickly. My background, I did my undergrad and graduate work in mechanical engineering, actually. I designed and built race cars and had a lot of fun with it. However, even before that, my entire career going back to when I was 15, working at Xerox doing Six Sigma work, has all been focused on IT, high performance computing and image processing applications. For the last 15 years, I have spent most of my time and effort in the defense and intelligence industry in the United States, actually. Some really strong, interesting synergies and overlap with the communication side of the organization here. Previously, I.
One of the things that actually attracted me most about the opportunity here at Sectra was my previous opportunity. I led the U.S. organization for a Swedish-American joint venture called Vracon, which was a project between Saab and an American company, where we focused on global scale automated production of extremely accurate digital twin technology for interesting activities. For me, I like to describe it to people because not everybody really understands the transition coming out of the defense and intelligence world and coming into the healthcare technology world or the life sciences world.
For me, from day one, when I started talking to Torbjörn, getting an understanding for Sectra, it felt extremely natural at a technology level, being an image processing person who focused on pioneering some of the early applications for broad scale spectrum, spectral analysis for the DoD and military. The image processing core technology side of things is actually very similar between the two domains. The best developers I've ever hired, throughout my career either came from the healthcare world or they went to the healthcare world, without a doubt. At a business level, the level of regulation and bureaucracy across the markets is very similar in both domains as well. It's really just a question of trading satellites and airplanes as sources for imagery down to CTs and MRIs and everything else that we can find.
For me, it's been a fascinating transition into Sectra, and it's been one where not only have I had the opportunity to learn a lot about the market, but I've also been able to bring a lot of my expertise coming out of the small, very active, bleeding edge technology business world, where growth and scale and enterprise deployment in cloud scenarios has been kind of the bread and butter for my life, and that's really core to where Sectra, particularly in the United States market, sits today. The US country operations, so we are the largest Sectra Imaging IT business unit. We, as an organization, primarily focus all of our efforts on delivery and support writ large.
We are the arm of the organization that takes the core technology that's developed by our headquarters, and it's our job to get it to the clinicians as quickly and at as big scale as we possibly can. We represent a market that is not only large, but also rapidly growing. We are in a position in that market where we are very rapidly growing our market share. In addition to that, we're also in a place with the broader market where there's a very active transition ongoing from the kind of legacy enterprise capital software procurement models into a more modern, streamlined, and efficient SaaS, and then ultimately cloud-hosted SaaS model across the board.
For us, our focus is within the broader Imaging IT market in the U.S., our focus is on production hospital organizations. Our sweet spot from a product market fit perspective really is today centered around these relatively large academic, multi-site health systems. Ultimately, that product market fit extends beyond those, kind of that tier of traditional academic medical center, academic medical centers, but also extends out into the next tiers of larger integrated delivery networks and the large for-profit commercial multi-site health systems as well. For us in the U.S., the overall market size is roughly 20 billion SEK or 1.75 billion USD in today's terms.
It's a market that similar to Canada is very ripe for replacement in existing in these existing health systems for sure. For us, our goals as an organization are very simple ultimately and very focused on creating an organization that can scale to meet the demands of the market. We are extraordinarily well-positioned and have been. It's taken a lot of work to get to where we are, but the combination of the market forces and the very active replacement market that's out there, plus our position in that market leave us a huge opportunity in front of us and one where our ability to scale and run as quickly as we can while maintaining all of the core perspectives that make Sectra Sectra.
Our core focus on our customers while maintaining that is key. For us, we represent also within the broader Sectra portfolio, probably the most active and rapid pivot into our cloud-based SaaS offering as well. It's driven by the fact that our market obviously, is more comfortable with our public cloud providers, given they all come from the United States. That's a key part of the strategy. Kinda layered on top of all of those things is the customer success management process that is being championed by our headquarters organization, but really hits the road in our organization and with our deployment and support people.
Our current market position, you've seen this twice now, both from Torbjörn and Marie, and I'm gonna show it to you again just to emphasize how important we think that this recognition is. An award is an award, but what's underneath it is really representative of the fundamental base for our strategy in the market across the board. If you have happy customers, all else will follow, right. In the U.S., we've been best in class for nine years running. This has put us in a position where almost every hospital system, when they go out for procurement for replacement of an existing system, will include Sectra in their process. That's a huge benefit for us on the market. Again, it's taken a lot of hard work and a lot of time to get us to this position.
Being in a place where our name recognition via KLAS Research and the research that they, the kind of trusted research position that they have in the market, really gives us a strong competitive advantage. This is an absolute critical focus for us as an organization continuing moving forward. The market as a whole, so we represent, as Marie said, about 57 multi-site healthcare systems. What that actually translates to is that we are live and active in over 700 sites in the United States, crossing 3+ time zones once we factor in a few sites up in Alaska, which are a lot further away than many people give them credit for.
We represent just over 170 employees today, of which we have successfully hired and onboarded and indoctrinated into the Sectra culture more than 30% of that total in the last year alone. As we've been working as an organization to focus on that ability to scale, the ability to not only recruit and onboard employees, but bring them up to speed and get them productive faster, has been a core component of that focus. Our usage, this shouldn't be surprising at this point in time, given all of my talk about our current market opportunity and our need to scale. We've been growing very rapidly.
There was a long, steady path of us finding our footing in the market. We very clearly hit an inflection point in the pre-COVID era, where we started to really break through into a tier of these healthcare systems that let us grow our ultimately top-line revenue and our total exam count at a different level than we had before. That trend is gonna continue and increase as we continue to take advantage of this place that we're at in the market today. This is another topic that you have probably heard three times in the presentations thus far, which I'm gonna reemphasize as critically important for us in our organization.
We are unique on the market in the United States in our offering of a true SaaS solution where we actually provide not only the software as a subscription service, but also the full infrastructure package for our customers. This has been a very intentional and strategic decision for the organization. It's one that is truly a differentiator for us and it resonates strongly with the customers in the U.S. marketplace for sure. One of the reasons why that's critically important, that the resonance of that model is critically important, is because it's a critical step in our product evolution to enable us to scale more efficiently as an organization. Just hiring people doesn't work, right? We can't go out and scale linearly with people to the number of exams that we're running.
We need to be able to deploy more faster with the same or fewer people per licensed exam that we're doing at any given point in time. So for us, being able to take full control over the infrastructure side of things, where we tended to get a lot of complexity in our deployments and be able to standardize that down into something that is consistent and supportable over time, is going to get us to a level where we will be able to achieve those efficiencies and to be able to really drive that scale. Ultimately, that ends up with us in a position with our customers where we can make them happier.
When we talk about customer success management, a key focus for us and something that we continue to measure is the reality that as we move customers into this model where we're taking more ownership over the whole offering and the whole experience end to end, that those customers are, should be and will be happier overall with a more efficient delivery of support services from our side. Ultimately, this the what you saw from Marie earlier in the context of our entire enterprise platform also provides us with a key differentiator on the market in a time when our healthcare systems that we're selling to are coming into a replacement cycle where they've realized that the what is termed deconstructed approach to PACS has not been successful.
Another kind of unique positioning point for us on the market is we truly focus on having a single platform, common platform upon which all of the functions that clinicians inside of these healthcare organizations need. We take care of the seamless interfaces between all of these different applications. It's all running off of a single consistent back end, so you can get to a place where you can do tumor boards that involve specialists from many different disciplines all interacting on the same data in the same place at once. We can do it in a way where the IT organizations that are customers aren't attempting to solve the headache of integrating disparate software when there are relatively poor standard interfaces across the market.
We're very, we're seeing a lot of signals from our market right now that in the current replacement cycle, most of the large organizations we're interacting with are shifting away from that idea that they can put together best of breed, and instead are increasingly looking for a single vendor who can provide all the solutions and be the one responsible party that they have to work with. That is exactly in our sweet spot as an organization, which again, puts us in a really good place as we look forward from where we are today. Speaking of forward, for us on the future opportunities side of things, I split this up into two pieces. First, from the market position side of things, legacy PACS vendors are shedding market share rapidly. This is across the board.
The big legacy providers still hold a majority of the market share in the United States. They're all on downwards trends as far as their overall market share percentages. That correlates with the fact that our market share continues to increase and what we see from our performance on the market when we're competing head to head with those organizations is that our win rates are very high. Anecdotally, I can share that the KLAS organization, as part of their research, shared with us when we visited them two weeks ago, that of all the procurements that they tracked last year at healthcare organizations in the United States, Sectra was included in the procurement process just under half the time.
Of those procurements that we were included in, we won half the time. That's a pretty strong statement to begin with. I should note that we qualify out a lot of opportunities, so it's not at all surprising that there are some opportunities that we didn't participate in because they didn't fit our profile of these large multi-site hospital systems where our value proposition is the strongest. To win half of the procurements that we're at the table at is a pretty impressive and remarkable feat. The next level down from that is the feedback that they provided as the number one criteria for the deals that we lost, we lost on price. As Torbjörn said up front, it's okay to be expensive.
In a world where we're resource constrained from a deployment and support perspective, making sure that we're getting the highest value customers and utilizing our resources in the most profitable way is a really good place for us to be in our market for sure. There is a broad consolidation trend. This does good things for us in two ways. For our existing install base, we see a lot of organic growth coming out of them buying up smaller sites around them and increasing their usage of our products. Additionally, for the new opportunities that are being presented, increasingly these opportunities are larger multi-site hospital systems that fit better into our core sales strategy for sure.
Then again, as I discussed earlier, the shift away from the deconstructed PACS model places a lot of these new procurements and their strategies squarely in the focus of our core product design. On the innovation side of things, there's a lot of focus inside of our organization now on being able to get through the initial stages of our rollout of this cloud-based SaaS offering and to start realizing the operational efficiencies that we expect coming out of it. That's gonna be a big piece. We see this really significant opportunity in the market around the kind of broader integrated diagnostics discussion. Digital Pathology has finally really started to pick up in the United States. We've been slow. Honestly, the market has been slow.
The Nordics and Scandinavia have been way ahead of us. We're finally at that tipping point where we see the indications from the procurements that are coming up that that market is taking off now. The genomics project that we're just kicking off now provides us with an even more differentiated position in that oncology space where there's huge growth in from the broader market perspective. Finally, AI. This is one of those topics across the board that all of our customers are interested in talking about. There's still a lot of noise in that discussion.
Our position as a platform vendor puts us in a really solid place to be able to get our foot in the door with these customers and create an established position and benefit from the successes that they have with particular AI vendors, but also insulates us from the risk of the high churn and the questionable ROI around any individual algorithm itself. Lots of upside there. With that, I will ha nd it back to you, Lisa.
Good to see you all. Great to be here. I haven't counted the amount of times we've said cloud today, I'll sort of do a bit more in depth on this one. You'll hear it a few more times. Who am I? I'm brief on this one. I'm the CTO on the Imaging IT side. I've been in e-health for about 24 years. I was the CTO at Cambio before. This sort of intermix between EMRs and imaging is of particular interest to me. I have been working with Epic that was mentioned before, striving to make sure we help our customers integrate our solutions in a good way. I'm also driving and spearheading our major partnerships with technology providers such as Microsoft. I'm blessed with five kids.
Torbjörn sets the sort of goal here for solving the demographic challenge. I'm not on par with him yet, but I do my little piece to that. I really thrive in this intersection between business and technology. Computer science background, did programming since five years old, and I did my MBA at Stockholm School of Economics. I really enjoy this phase that we're in with Sectra, with tremendous growth, great opportunities to leverage technology and grow our business. Some of you have heard Sectra One many times as well. This, I wanna maybe stress one thing, that this is our consolidated business model that really allows us to make things easier for customers. It allows us to leverage our different offerings in one un ified way.
Makes it easier for customers to buy our services, consume the services, and to drive usage. We did mention a lot of the different ologies before, but this reduction of complexity is something that we've really been striving for. We wanna make it easier for customers to benefit from the great innovation that we're doing. We haven't mentioned that, but we're actually doing two major releases per year. We have some 300 engineers that are just pumping out innovation, and for us to get that out there in front of customers such as Dr. Kahn, I mean, that's key for success for our customers and for ourselves. What is a huge shift as well is that we're focusing on not only, you know, the traditional way of selling licenses. Here's sort of the software, bye-bye, give me my money.
We're focused on making sure that we deliver value. Aligning with customer value generation through usage-based business models is one way to make sure that we're on the same page.It builds on that cultural structure that we're in the same boat, and that we work together with our partners and customers. Usage-based pricing and the ability for customers to start, you know, we'd heard Dr. Kahn again with the pathology side, they're starting in a bit smaller way, but hopefully they'll be able to grow. They don't need to make this huge upfront decision, but we can get them started. We can help them on that journey of becoming digital. This transformation into usage-based pricing is key. Doesn't work. Yeah, there it is.
One of the other things that we've talked about that really makes life even easier is not having to go out and buy hardware, manage that hardware, set up an IT organization, manage security, manage Windows patching, manage SQL Server, and all other the interesting components that goes into getting a solution. We're saying you don't need to do that. You can buy this as a service from Sectra. That is, that is so different from what it looked like before. A lot of those issues, again, you heard, what he said, it is key for us that we have this availability, uptime, reliability. These are core systems that we're talking about. It's hard to maintain that level of technical availability.
For us, we're able to do that efficiently and in a scalable way, doing this in a cloud-based solution. This is a huge shift. Again, what we're seeing, huge uptake interest in the market, to the point where we're now clearly over a majority of all our new deals are based on Sectra One or Sectra One Cloud. Marie did mention some sort of insights into our funnel, there is just so much pull right now on this, so it's amazing. We actually thought that this would happen before, faster. We started this journey in Sweden maybe six or seven years ago. The thing was we thought that U.S. would be leading in this case. Usually we see technology leadership in the U.S. It wasn't the case.
It wasn't actually the case in Digital Pathology either. Here we actually, in Sweden, we haven't sold one on-prem solution for six, maybe seven years. It's all cloud. It's all software as a service. This is happening now. If we look at the general perspective on IT technology adoption, Gartner is saying that more than half of all enterprise IT spend will be in the cloud by 2025. This is just to give you an idea, maybe a way for you to start assessing how quickly this might happen. One other perspective that I usually, you know, when I think about this is a customer on average, if you looked at depreciation on the hardware investment to make, it's about five years.
That means, on average, over our customer base, 20% every year will make the decision, "Am I gonna go cloud or I'm gonna go out and buy new hardware?" I think that's a pretty good way to start thinking about how quickly this shift will happen. Very many customers are already today hesitant of making that investment, 'cause what they're doing is that they're buying hardware today that is gonna be old. The elasticity, the ability to grow that Dr. Kahn mentioned with an inherent growth of maybe 8% per year in production volumes, you need to go out and get more hardware. Another thing that we hear from our CIOs that we're talking with is recruiting security people is super hard. This is, I think, again, we talked about the intersection between communications and medical.
We do have processes, knowledge in-house that is hugely beneficial in this perspective. This combined is really leading to what we believe is what we're already seeing, but we're also expecting a continuous increase of adoption in cloud, not only for new customers, but from all our existing customers. All right. That's exciting times. Moving to SaaS from a financial perspective, this is something we've already addressed before, it means recurring revenues. It means the historical way to recognize revenue with an upfront license and then a post-contract service and support maintenance agreement is shifting to a more straight line revenue recognition principle. To exemplify this, we'll run through a basic example where these are more just made-up numbers, just give an idea what this means.
We're looking at the case where we have Software as a Service deal, about $500,000 over six years of time. It's Torbjörn's numbers, I'm not sure why he selected six years rather than maybe five years, that's what we're working with. That's what the example looks like. We want to illustrate is the effect that historically this would have been recognized, now I'm talking about the historical previous model as the dark blue one. Historically, it was a upfront direct revenue that's recognized 1st year. We have this post-contract service and support maintenance piece spread out over time, right? What happens now, this is sort of IFRS 15 revenue recognition principles that we deliver access to the solution over time, hence it's recognized on an annual basis.
We're only looking at the software components and maintenance components in this picture. This is not taking any additional hosting components such as storage, servers, networking into considerations. This is a basic example of what happens with the software component. Everybody with me on this one? Good. One of the beauties of this is that customers get continuous benefits through Sectra One. They get access to all new features continuously. The benefit from Sectra's perspective is that as customers are subscribing to the software over time, if you look at the 16-year projection of total revenues, it's an upside for Sectra as well. Customers get more stuff, and Sectra is making a sort of a slight increase on revenues on this one. It's a win-win.
This is another perspective, same numbers. We're saying this differs a bit. This is not a general truth, but on average, the sort of return or break-even perspective point in time is about 5-6 years if we look at a SaaS model versus an upfront license. It differs depending on markets, depending on price, depending on competition. All right? Everybody with me on this? Super. Recurring revenue, just a reminder of how we define that. We have recurring revenues, everything that we're expecting to recur within 12 months. As a sub-segment of that, total revenue, recurring revenue, right? We're specifically pointing out cloud recurring revenue that we think is a very good indicator of performance in this shift. We wanna call that one out. It's part of our external reporting.
It's an alternative performance measure in the, in the annual reports. This one, we believe it's important to sort of keep track on. It will show what that growth looks like. In that case, we're only bringing in revenue related to our cloud sales. More specifically, we have some delineations here, what's including in that number, we take only revenue that is related to private or public cloud services. It includes Sectra One, Sectra One Cloud, Amplifier, Education, Ortho, so everything that we're delivering on common platforms, essentially. It includes, as I mentioned here, software, infrastructure, and operations. In the numbers that you're seeing, it is the full revenue that we recognize and shows the value of the service that we deliver in full to the customers.
We're excluding things such as professional services, and anything that's basically not recurring, right? Any on-prem installs or on-prem hardware or anything such. Okay? Those are the numbers. Oh, five minutes. My God. This is what we've done so far. How is that even 10 minutes? This is the performance right now. I would just keep your eyes on this one moving forward. It's already showing growth. You know, given my no promises, but if you think about what I said about what we're anticipating on that future speed, it'll show up here. We'll see if I'm right. I'm actually gonna speed up really well 'cause I think the last slide is the funniest one, and I'm gonna make it a bit, sort of wrap this one up.
Some of the effects on the, on the sort of financial side, balance sheet, nothing, 'cause we're essentially in the public cloud. We're not buying any assets. The consequences is that we're recognizing revenue and costs and over time cashflow. We're getting payment typically one month in front, and then we're paying Microsoft one month after consumption. Profit margins, this is a very important thing. We're expecting this over time with economy of scale, and I'll tell you why we expect this to improve over time at the final slide. That's a cliffhanger. It's important distinction between us and some of our competition. Also from a sustainability point of view, it's greatly improving energy efficiency compared to customers running this on their own. Competition-wise, not everybody's cloud is the same.
Some vendors will say this is cloud, but it's essentially the customer's cloud. That's the first option. You sell just licenses, put that in the customer's environment. We don't really think that's cloud. Marie talked about true SaaS. That's not true SaaS. Vendor-controlled private cloud is something that we've been doing in Sweden since Swedish healthcare system haven't been really happy about putting data into American clouds yet. We'll see what happens. We have finally the public cloud option. Those are three important sort of ways to deliver cloud that different vendors will claim cloud. How does this then play out in a competitive perspective? Not mentioning this vendor on, on the, on the left-hand side, maybe on your right-hand side, but I just wanna call out some of the differences.
We've heard this from customers that says, "Well, you know, they said it was cloud, but then I ended up paying a lot of money for services that I didn't really think about." Whereas Sectra says, "Well, we have a transparent, clear, simple business model, no surprises." If you're on the budgeting side, you hate surprises when you're gonna pay this, so we think this is a clear advantage. There is a number of different alternatives. I'm just gonna call out security again as a comparative strength and our organizational ability compared to of some of our competitors. 30 years plus of experience in security does mean something, especially when you're delivering full SaaS. On the final note, this was the cliffhanger, why is Sectra better positioned than some of our competitors to drive long-term profitability? 'Cause a lot of our competitors are doing this.
They're taking the customer cloud environment and put their software in. There is no economy of scale at all. What Sectra does differently is that we're actually building a solution that we're selling to our customers, where we're able to consolidate, where we're able to use resources in a much more efficient manner. That gives us long-term options to drive profitability increase. If need be, we can compete on price. It's a usually different approach. We think it's a material impact, and it's going to be critical in the future. All right. I think that's that. Thank you so much.
Questions, anybody, on Imaging IT Solutions? Go ahead, Farseth.
Yes. I have a couple of questions regarding the market shares in the U.S.
Press the button please.
Oh, sorry. Now, probably you can hear me better. At your CMD last time, I think in 2019, you said that you will be able to take around 2.5 percentage points of market share in the U.S. Now you've come up with a bit of a different how you calculate the total market. I think you said $2 billion. Last time, I think you said $800 million, so it's quite a lot larger now. Can you just give us maybe a progress on how you think you have performed during the last three years versus the market in the U.S. would be quite interesting? If you're taking or losing market share, et cetera.
I can give some high-level concept. Having not been here in 2019, I won't comment on where we're at there. The market size reference there was from Signify Research. It is difficult to size the market. Much of the research coming in-includes some additional capabilities that fall into that broader enterprise imaging IT that aren't necessarily relevant to us. Overall, by our own metrics, we feel our current market share falls in the, say, 5%-10% range, thereabout, depending on which metric you're using to calculate it. Again, we're still relatively small with a whole lot of potential to take away from the established providers who are still much larger than us, but trending downwards for sure.
Okay. Maybe a question on the radiology side. I think you have a competitor, there named Visage that has been winning quite a lot of market shares recently.
Can you just give us a, maybe update on how you think you are competing with them on the, just on the radiology side, because I don't think they have enterprise imaging yet.
Yeah. It's good to have a competitor, and a strong competitor is the first piece there. Very clearly, we as an organization as a whole have taken them as a serious competitor over the last couple of years. We've done an immense amount of investment internally on product functionality to a point where, two years ago, maybe there were some places where in pure radiology functionality, we thought that they were a little bit ahead of us. I think we feel confident in saying that we've overcome those gaps at this point in time. Head-to-head on site with customers in procurements, we're not seeing a meaningful delta between the functionality evaluation.
I think overall, as I mentioned earlier, so in a world where we're winning half of the procurements that we go to tender on, maybe two years ago, the majority of the losses that we would have had would be to Visage. That is no longer the case. The losses are more evenly distributed and more cost-driven, of which Visage usually is not one of the low-cost providers in any of those procurements.
Also to say, to have a bit of self-criticism, just as Fredrik explained, I think we could market that much more.
Yeah.
explaining what a true SaaS vendor means for the customer. I don't think our message has got out to the market in the way we would like it to have. That's something we can improve in.
Yeah.
Okay. Then just the last question regarding the, for Fredrik, really, the SaaS transformation. Do you think that we've seen the most of this already, or will it impact your revenues even more going forward? I think you have said many times that growth will, you know, deaccelerate. I think if you look on the reported figures, at least I don't really agree on that yet.
No. Well, without making any sort of comments here on, on the exact numbers, but what I think you need to realize is, okay, if we were static, if we didn't grow. Rather we had sort of the same sort of behavior, then, then that effect would have been greater. If you take into account that we also have an inherent growth in the business, that sort of compensates some of that, right? Also obviously, this shift did happen already a few years back in Sweden, in the U.K. U.K. has been doing managed service contract for many years. So this is not necessarily sort of happening all over the place. I think, I think really it is hard to, to say.
If we when you consider again that we're growing and we're adding cloud business, then we're adding recurring revenue continuously. It, it's You have to take both those things into consideration when you look at the impact. That, so that's... I just encourage you to think about it in that way as well.
Yeah. Thank you.
Did I see a hand up over here? I think I did before, right?
Yeah, I sort of had the same question about U.S. market share, but maybe if you're not losing out to Visage as much as before, who are you losing to? If you could comment on that. When you lose in the few cases.
Well, just pointing back to the fact that the majority of the deals that we lose are losses on price. If you think about the vendors in the market who are competing on price.
Those are the ones that make up the mix.
Could I massage the figures for North America once more? You said, I believe that you partake in half the tenders and you win half the tenders. There are different sizes. Would it be fair to say that you win 20% of the tenders?
Yeah, just to commen t on this.
Yes.
I think it's important to take these numbers with where they're coming from. These are KLAS numbers.
Yeah.
The observed numbers are the deals where KLAS Research have interviewed a potential customer, and KLAS Research will not interview any purchasing organization or all of your sort of purchases that happ ens in the U.S. It's a sample.
Yeah.
Exactly.
I think it is a good indication, but it is a sample. I think that's important to state here.
Usually the large one.
Yes.
We don't exactly know which.
A totally different question. I know that you focus on Europe and North America, still there is a country with almost the same demographic like you mentioned this morning about Italy, that is China, which really needs an efficient medical systems in the future. In the early days, a company like Elekta was very hesitant to enter the Chinese market. Would they re-engineer their machines and sidestep them? That turned out not to be the case. The Chinese rather buy expensive Elekta machines than their own copies. My question is, would you entertain the idea to enter a market like China in perhaps not the near future, but in, say, five years or so?
I can comment on that. We are in China with education. It's super difficult to sell in China software only. Almost no company that I know of make money in China selling software. The copyright tradition and legislation is quite little. You might end up selling one, you get paid for that, all of a sudden there's 20,000 in China. That has been the tradition. That's one of the reasons why software-only company, it's also very difficult to get well-paid in that culture for software only. They don't think a thing that doesn't weigh a lot of kilos is worth anything. It's a problem. Now the education, we sell the big tables. You can sell these, you get well-paid for it. Selling software, there is hardly any companies that make money in China.
The third reason why we have been hesitant about China is that there is a very clear regulation for the government that in medical technology, the majority of all products should be Chinese, and that's it. It's law in China, which means it's an uphill battle. We have chosen, I don't see if we do software only, we go into China anytime soon. It's a difficult market. In that case, we would probably first go into India, and people think that's a poor country, but there's a lot of people in India, and there is two in a million with an average income above the European average income. That would, I would say in my estimation, we'd first go into India in that case, as we don't sell hardware. Hardware is different.
Maybe just to, just a short comment on that as well, I think imagine, and this is not where we're targeting, but we're building organizational capabilities and structures to leverage SaaS, and that's a global thing. It doesn't matter if it's delivered in India or if it's in the U.S., essentially.
Yeah.
In China, public cloud's also a very difficult thing.
Yeah.
Because they don't have an open internet in all places.
Yeah.
Which makes it even more difficult.
When picking our partners, as I said before, culture is super important. Cloud facilitate it because now we can have it wherever, in Africa, wherever. If we have the same culture, everything's perfect.
We had a question in the back.
Yeah, two questions. The first one is on the SaaS. I mean, you mentioned the sort of benefit of decreasing the sort of upfront decision, or big decision, and then also sort of the consumption-based pricing. Can you maybe talk more on the opportunity to increase the revenue from the customer over time? Meaning like.
Sure.
Increasing for each year, not only like on the-
No. It really goes back to, as I mentioned, with consumption or usage-based pricing that we call it. It really means that the more the customer uses the solution, the more sort of business do we get, right? Take Penn again as an example, since we talked about pathology here. When they start using pathology, as they increase the usage of Digital Pathology, they'll gain more value from that. Then we say sort of part of that value generation sort of comes back to Sectra in terms of charges on our end, right? We participate in value generation increasingly, and a part of that sort of is recognized on our end.
This is true for pathology, this is true for ophthalmology, this is true for going into cardio, ultrasound, you know, medical, any imaging that we're talking about. And so the cross-sell opportunity, and not the least ortho, right? We did talk about penetration rate against the existing customer base. Ortho is huge and we're seeing a huge success when it comes to MSK. It's also a differentiator that's really strong. As long as they start using the things, it'll grow, right? Key to this is customer success management and helping customers realize the benefits, and then business will come.
To your comment on the lower upfront cost, remember that what we're talking about is the upfront cost for the customer, that is the combination of software, which was our traditional market space, plus the hardware investment that they traditionally had to make, which was not budget that we were traditionally participating in. When we say lower upfront cost for the customer, it's lower upfront if you look at the combined ROI for them. We're just getting access to a bigger portion of that budget. For us, it's a bigger portion of the pie to begin with.
Okay. Then my second question is related to genomics just if you have had any other customer feedback or maybe requests other than Penn.
Specific on genomics, I mean, it's as Torbjörn mentioned, and maybe we can take that in your Q&A later as well, Torbjörn, but the interest has been huge.
Yeah.
If we look at RSNA, everybody's interested in, "Oh, so what is it that you're doing?" There is an unmet need for the production-grade solutions.
Okay.
This goes across the old markets, I guess.
Yeah.
Everyone is sitting with a problem UPEM. They have an increase of genomic sequencing 30% per year. They have done it on Excel, and Excel works for 20, 30 patients a month, but not 1,000. You see that all over and sometimes, hopefully, we'll be lucky on timing on this one, which is very difficult, but there is an increasing need of having industrialization in genomics now. The old ways of doing it doesn't work.
Yeah.
The way we said that we can focus on cancer care without having genomics, that's not that trustworthy. When we add genomics, it even makes more power to that, such kind of message and the way we work.
I'll open up for one final question. Anybody? Go ahead.
There's no one else. Coming back to this, the impact from transforming...
Press the button again, please. There you go.
This topic on transition to SaaS and the financial impact, would it be possible to quantify how much this has impacted your sales growth negatively?
We don't have those numbers. It's, as I mentioned, it's hard to say, right? Because there are so many components in this. Again, you know, you're seeing. We don't have those numbers readily available. Again, I urge you to take into consideration when we're talking about this, these are on an individual deal basis, just to make sure you understand the principles applied. You need to factor in the fact that we're growing, we have contracts where we have recurring revenue that's sort of being added. The compounded effect on sort of top line is sort of compensated through inherent growth as well. If you look at just the top line. No, we don't have that sort of delta.
If you look at the US deals you win now, what was the proportion of SaaS? Is that more or less 100%?
this should-
How does that compare with two years ago, five years ago?
Five years ago, we almost did nothing.
Yeah.
this was.
In U.S.
In the U.S., right? This was what I mentioned before. It was late in the U.S.
Yeah.
Zero, essentially. That's not true, because we had John Muir and we had Scottish Rite for Children. We had a few customers that we were already running, but essentially zero. This happened over maybe the last year, one and a half.
Yeah.
Now I essentially, you know, every deal, they're asking for a cloud quote. This just happened over like that.
Yeah.
Yes, we're not yet seeing this. Another thing to just keep in mind, I'm not gonna answer the number size, but what happens is, beyond the Sectra One subscription, there's also hosting fees.
Yep.
Total deal size is growing.
Yeah.
I'm not giving you the proportions 'cause those are varying quite a bit, so we don't wanna give you any sort of wrong indications. Total deal size is growing as well.
Thank you so much.
A big effect in the U.S. has been that hospitals after COVID are running out of cash.
Yeah.
You know, they used to be very liquid, but right now it's a cash problem in the hospitals. Of course, this becomes even more important because they don't have to throw in a huge lump of money in the beginning. They pay after a while, they use it.
Also the way the platform is built, it's very easy for them to add on a newology. Before this, they had to go out to procurement to buy newology. Now they could just start using it. That's a huge difference for a current customer when they expand their portfolios and going into enterprise imaging.
And are you always using this concept of users?
I can say all.
Based pricing or?
So it is-
Yeah.
As I mentioned, it's more than a majority.
Yeah.
This.
Almost
across all markets. We had rapid uptake in the US, Canada, UK, essentially. This is the future. I mean, I think the traditional license model, and we see this across the industry as well, that selling a perpetual license is inherently not necessarily a good thing 'cause customer is not buying something that they're using for 20 years, right? They're buying a function, something that helps them perform radiology diagnostics more efficiently, and we're adding new tools continuously.
Yeah.
It's much better. It's a much better solution, essentially.
Yeah.
It's better for us, better for customer.
Fredrik, Isaac, Marie, thanks a lot.
All right. Thank you.
All right. You look a little bit tired. We'll try to kick you up a little bit. I'll talk about going forward. You know, I spent half an hour on the history, and I'm talking about a quarter for the future. That's the other way around what I normally think. It might take an extra minute or two, just warning you. There's no one else to meet. Where are we going as a company? I will speak mainly about medical here. I will speak a little about security, but not necessarily that communications is not important. It's mainly because it's so self-given where we go in security now, with the demand we see, and mobile security is so large, and critical infrastructure is kind of. That road is laid out quite obviously, so I will not talk much about that.
I said before, we're well-positioned. We think this is important. We are approaching tougher times in the world financially. You know, everyone's talking about recession. We all know whenever one talk of recession, it's gonna happen, right? Because when no one's buying anything, because everyone is generally depressed, then that change up again. Even in a recession, in bad times, we are positioned in markets that has to grow. There's no other way around. They have to grow by external factors. I show you this one. We will not change this. The order will be kept. Start from rational strategy, have happy customers. In order to create happy customers, we have to have happy employees. Then things will be given by themselves, and shareholders, hopefully you, will get a good benefit out of that.
It comes in this order, we'll keep it. Again, the most important thing in our culture vision will also change, not change going forward is the old rule of just behave as you want to be behaved too. I'm telling people, we're interviewing people or getting people into the company and say, "Just behave in the way you would like to be behaving too." If your brand-new car breaks down, and you take it to garage, the guy you meet there because you're angry, because it didn't work, that's. With the attitude you want from that guy or that woman, you behave like that to our customers because it doesn't always work. Things do fail, the big difference is how you behave if it fails. Now you heard from Dr. Kahn, we had no product-related downtime in Europe in over four years, five years, 24 / 7.
There was two issues, downtime, unscheduled downtime in that system. We have extremely good uptimes. That's one of the reasons people like us and buy from us, because when the patch goes down, they are in trouble. Serious, serious trouble. We are increasing the recurring revenue things. We've spoken a lot about that. In communications, we're increasing hardware as a service as well. We are not anymore only selling the phones. We're renting security solutions or renting. They pay as they use it. We just replace the physical phone every two, three years. We have it all in communications as the entire world is moving that direction. We do it. It creates also much more stickiness because customers get used to it. It will increase in importance.
We are reporting more and more of it, and you will see this grow. We will stop reporting order intake because order intake in such an environment is not meaningful, but we'll still keep on reporting order intake for another one and a half year. After that, we will not report order intake anymore because it's meaningless. I mean, McDonald's do not report order intake because the delivery time is like five seconds, right? That's where we go. We have a very low churn. We'll start up reporting churn formally end of this year. We have ideas how we will measure it, but to be a software-as-a-service company, I assure you, we have a very low churn. Our first customers in 1994 are still our customers.
They never had to pay for a forklift upgrade, and they're still very happy with what they had. Mainly, when we lose a customer, it's mainly because that hospital was acquired. The acquiring organization very often imposes their IT on the acquired organization. it's very good to be as we are. We have, as in customers, quite a few acquiring organizations, especially in the U.S., and that is very nice because in each hospital, you just get an email, we just bought another one, and you grow by that means. we have a very low churn, and that's good, but it's not formally reported yet. I show this figure again because it's important. The last two years, three years, we have said this would happen.
There is a gap downward here, there is a huge upside going down the line. I said, our first customers in 94 are still our customers. That's counting on, you know, 30 years soon. This will be more visible going forward. It will have a significant impact from next year. We will not grow as we normally would have grown. We will not turn in the profits we normally would have done. On the larger shareholders, I think this is great, but I don't want it to come as a surprise now. We have spoken about it for a couple of years. It will begin to happen. The good thing is that some of the first ones we got is coming up here.
It will not be as steep as we thought in the beginning, but it will come, especially in the U.S. now, as almost all hospitals in the U.S. discussing with us want a software-as-a-service solution. The good upsides to that as well, that, you know, was mentioned a little bit here. Before, they did an RFP for every new IT system they acquired. They had Radiology, they knew. RFPs are very expensive for the hospitals. They are super complex, a lot of people involved, very costly. If we got our system in with a Software as a Service Sectra One solution for either radiology or pathology, buying the rest from us is a matter of a phone call. We just need to train them. They already have the contract.
We see a lot of hospitals who have our previous solutions who want to extend into neurologists. They don't have to do an RP, they already have a system. They can begin using it in a very low scale to try it out. It works. They just send an email, we want more training, and we're flying. It's a very, very good of getting a foot in the door. We're using it in some countries. France, we would not have entered France by radiology alone. It was a mature market, everything is a lot. We are growing very well in pathology. Next year that radiology department or that hospital wants to have radiology as well, then we're already in. That's a strategy about this. Sorry. I've used this couple of top line.
Where others see a problem, we tend to see opportunity. We have an old quote from a old board member, Gunder Lerenius, who was a board member many years back. He said that, "Where there's change, there's margin." You need to work on that. If you be in markets that change rapidly and be fast, you can make money and create happy customers, of course. Special niches for us is when healthcare must scale up and become industry. Streamline production, industrialization of healthcare is absolutely required. Some people say that that's cold and hard way of doing the healthcare. It's not. It's a way of surviving for healthcare. Repeatable quality in efficient, streamlined process. Now the customer side is beginning to realize that. That's where we come in. When top-level security goes to be mobile. That's the other part in communications.
Because during COVID, all those secret people, so to say, were sitting on their networks before, they had to sit at home. They couldn't do anything because their networks was not encrypted. They're not allowed to do with them. Everyone still wants to sit at home. The mobile thing will increase a lot. As security demands some mobility, that's our soft sweet spot in communications. When Wayne Gretzky, many of you have seen this quote before, I showed it to Börje Ekholm once in Ericsson when he was investor, then he stole it, kind of. I stole it from Wayne Gretzky, so that's fine. Wayne Gretzky was asked to tell why he was the best hockey and the player in the world for eight years in a row. He was not really good in anything.
He was not good at skating, he was not good at shooting, he was best in the field. eight years in a row. A journalist interviewed, "How can you be so good?" He said, "I do not skate where the puck is, I skate where the puck is going to be." We've been good at that. We saw pathology being digitized ways before anyone else. Now everyone's going there. We saw that eight years ago. We see now Genomics coming into the equation. No one else has done it yet. We think that will be the case. Sometimes we're wrong, you have to realize that and shut it down. We've been good at it traditionally. Orthopaedics, we did the first templating software on our system in the world doing software. Because orthopaedist, they had film before.
They took plastic descriptions of the, all the prosthesis, put it on the film, compared it was the right size with film on film. We digitized, and they took these plastic films and put it on a monitor. Whatever the magnification factor was before, it was normally 1.3 to film from the physical body, it was not that on a monitor. You can buy 29 inch, 18 inch, 15 inch. I was yelled at for one hour over orthopedics and this, and then we fixed that. We did that before everyone else. This is where we go. We believe a lot in multi-scale. Diagnostic in the future cannot only deal with only radiology or, or organ or anything. We've been here. This is radiology. You deal with body and organ. We went down into the cell with pathology.
We are now venturing down into the molecule with genomics. There is an area here in between these proteomics that we cannot handle yet, but it's not very big for diagnostics yet. It might become, though. Up here, someone's asked me in the pulse here, I mean, in the archives in the hospital, you have all the images from old patients. The new image coming, new patient has images that are similar to a previous patient somewhere. We can't find it because we have 2 billion images in archives. Well, guess what AI is? AI is a magnifying looking glass into your own archives. When you train AI, you train to be able to use your own archives in a practical way. That's the only thing a supervised AI system does. You can use your own archives, old archives for new patients.
Population health, radiology, pathology, Elmex, that's where we're going long term. I show this picture now for seven, eight years. This is where we're going, we're just completing, and we need to solve this one as well. Eight years ago, radiology and pathology, we were pioneering that. Only vendor with radiology and pathology in the same system. We're still the only vendor who has that in the same system. I come back why that is important. Piece for production. Now we are introducing Genomics IT. Now we are the only vendor to even discuss radiology, pathology, and Genomics in the same system. B for production again. Going from each research IT tools to production. This is a highly growth market. The estimation for products for Genomics in general, that's all over the board, is 19%.
It's growing rapidly. Literally, almost every solid tumors, every solid cancer are now being sequenced at UPenn. Not the same in all the countries, that's the case. Are spot on for where the PACS is going to be, we think. Sometimes we're wrong, we've been quite often right as well. This is another one. We got this from the CIO from a very large hospital organization in the U.S., is that I have 1,000 IT systems in my hospital systems. I can't cope. First, there's 1,000 different systems that can break. As for cybersecurity, if we break one of those, we'll get an intrusion into the whole hospital system. I want fewer because the cybersecurity will increase, the fewer systems you have to protect. That's one reason.
The other reasons is they have to train IT people that they cannot find and they cannot pay for to handle and manage all these systems. It's too expensive, I don't want it. This happened in the EMR space a couple of years back when every department. I think Karolinska, when I went to Karolinska first, had 20 different EMR systems for non-system Swedish. Now there's only one. There's Epic and there's Cerner, here in Stockholm is TakeCare, but it's gonna be replaced by one single system. We see the same. He wants to do the same thing with pixels. He want one EMR, he wants one system for all images and samples. This came from their side, not from us.
We are creating the pixel EMR to run parallel to the normal EMR, and that's the larger market that the SEK 2 billion that we spoke about before. This is a larger market. We don't know how large. AI, finally, will be very important. This is a quote of one of our customers, Professor Kurt Langlotz of Stanford. He's a good friend, and our customer. He's probably the most famous AI researcher radiologist in the world. "AI will not replace radiologists, but a radiologist who use AI will replace the radiologists who don't." I think that's a very good quote. We need a human in the loop still. You know, we replace shovels with an excavation machine. There still needs to be someone to run the excavation machine.
That's their systems we're building because pathology and radiology will become more effective with AI. Still needs diagnosticians in the loop, and we're building their tools for the future. That's another one. Everyone said it was impossible to build pathology that works because images are too large. These images are 150 gigabytes per image sometimes. That's a lot of data to shuffle around the network, but we built it. What would an old Sectra say to the new? See, it's me there, the same haircut, right? All right. At Sectra, there are only few things you need to remember coming to us. We do important things for important customers. If we fail, countries are at risk, patients will die, we do important things for important people. Lives depend on you.
Keep all promises. We don't want to break promises. Sometimes you guys get, you know, a little angry with us because we refuse to promise things for the future, because we want to keep what we promise, then you cannot promise things about the future. We are a team. If you see a problem, you own it. This is kind of the culture in essence we try to progress to our people. You can do whatever you need to do. If a customer is in trouble, we will reimburse you even if it doesn't work, because that's super important we do that. This is sort of We tell that's Sectra culture in a nutshell, combined with do unto others as you want them to do to you. Why should you, as shareholders, I'll do the financial things last.
Why is Sectra a good investment? We are positioned in markets that are forced to grow. Will be no recession in cybersecurity. High customer satisfaction, high employee satisfaction with strong corporate culture to provide that customer satisfaction. A strong brand in markets where brand is and trust is critical. You don't give the most secret things in all of European Union away to someone you don't trust. Brand is critical, and we have a strong... You don't provide a PACS to Stanford that you don't trust, which creates a huge barriers of entry into this market, which is very important. Trust is super important in our markets. We're profitable, we have a strong cash flow, and we have a solid balance sheet. We're rapidly increasing recurring revenue and very low churn. We have sustainable investment, and we have a lot of seeds here.
Any one of those seeds you heard today is a potential SEK 1 billion market or more. Now, not all of them will succeed that much, but there is a little opportunity in all of them. We don't do anything anymore that cannot potentially grow into SEK 1 billion market. All management owns shares at Sectra. That's one of my requirements when we hire new managers, we want them to own shares. That's it. Thank you very much. Thank you for coming.