Welcome to Surgical Science Q2 Report 2025 Presentation. During the Q&A session, participants can ask questions by pressing pound key 5 on their telephone keypad. During the Q&A, we kindly ask participants to limit themselves to two questions at first. If you have additional questions, please queue up again by pressing pound key 5. Now, I will hand over to the speakers, CEO Tom Englund and CFO Anna Ahlberg. Please go ahead.
Hi everyone, and welcome to this Q2 presentation for Surgical Science . My name is Tom Englund, CEO of Surgical Science , and with me today I have Anna Ahlberg, our company CFO. We will use our time together today to first present the report, and then we will take questions from the audience. Despite a strong Q1 at the start of the year, we saw more negative financial development during the second quarter, primarily driven by a weaker macroeconomic climate in some of our key markets. Sales was SEK 209 million, or a 2% decrease versus the same quarter last year. Sales grew by 4%, however, in local currencies. The quarter also saw a significant impact from currency effects, affecting the result negatively by around SEK 24 million.
Despite the financial headwinds during the quarter, our company maintained a high execution pace and achieved several important milestones, many of which will have a positive impact already in the next few quarters. I want to present the most important highlights and results of the business during the quarter. After a good start of the year for educational products, with a 32% increase in sales in the first quarter, our second quarter was significantly weaker, with a 12% contraction in sales, both for comparable units excluding Intelligent Ultrasound. A large part of the contraction came from the U.S. due to continued pressure on procurement budgets. There is still an uncertainty around the funding levels for certain funding bodies, which affect our sales, and this is something that we've also communicated in previous reports.
The situation doesn't really cause us to lose opportunities in that the customers say they don't consider buying anymore or buy from competition, but rather the opportunities sit in the pipeline for longer periods of time before closing. This also has the effect that close rates of proposals are more lumpy in nature, and for Q2 that had the effect that many orders came late in the quarter. Some of them were too late for us to be able to ship out to customers within time, and then they ended up in the backlog. Backlog therefore increased with SEK 30 million in both educational products and industry versus the previous quarter. These orders will be shipped during Q3 instead.
One priority for us is to increase production readiness and efficiency to be able to ship out products faster to eliminate big backlog swings, and the impact from this work will be seen already in the coming quarters. China revenue developed negatively during the quarter, primarily driven by late orders ending up in backlog and by continued hesitation by many Chinese customers due to effects from the already mentioned anti-corruption campaign. Europe saw a good development of 22% growth, and we see now continued positive sales development from Europe during the last quarters. The Intelligent Ultrasound integration proceeded according to plan, and we are realizing the expected cost synergies, but we are behind on the plan on the revenue synergies. Our first ultrasound products with content from both Intelligent Ultrasound and Surgical Science will be launched during the third quarter.
Several important initiatives were launched and/or executed during the quarter to support our educational products business and to improve our performance. We launched Partner Path, our new sales concept for distributors, who account for approximately 50% of sales in educational products. The aim of this initiative is to provide even better support to our distributors, cover the market more effectively, and raise awareness of Surgical Science. The program will also have increased sales efficiency and improved profitability as an effect for us. Prices were adjusted during the quarter to offset the stronger Swedish krona, as well as tariffs on products to the U.S. Moving over to industry OEM. Industry OEM had a much weaker quarter than expected, with sales being down 3% after many quarters of sales growth at around 20%.
We consider this result an outlier and not a trend shift, and the result is attributable to a set of specific factors. In general, we see a favorable market demand for industry OEM across the world from both existing and new customers. Simulator sales in industry declined by 36%. We do consider this business to be more lumpy in nature as well, due to that order sizes are quite big and order timing can affect a certain quarter considerably up or down. We did build up a large order book during the quarter and had some large simulator orders late in the quarter that ended up as backlog. License revenue during the quarter was weaker than expected, and there were two specific reasons for this.
One reason was that robotic surgery customers who have just started selling products from which Surgical Science earns a license revenue buy these licenses in packages. There may therefore be timing effects between quarters depending on when these package orders are placed and the licenses are used. In this quarter, revenue from these new customers was unusually low, and this is due to that in many cases the development times and regulatory approvals for our robotics customers have taken longer time than previously estimated. The other reason for the lower license revenue was attributed to a lower renewal rate in the simulation subscriptions from Intuitive on the older generation of robotic systems. Despite this generational shift, our revenue from Intuitive increased in Q2 2025 compared to the same period in the previous year in U.S. dollars.
Market activity within the robotic surgery space was quite high, with important announcements from both Medtronic with their Hugo system and J&J with the OTTAVA robot. During the quarter, we also launched our latest product for educational and industry customers, the RobotiX Express, which you can see on the picture to the right. This is an entry-level platform that makes advanced surgical simulation available to users outside of the operating room. The development philosophy for the product is accessibility to more surgeons, flexibility in configuration and training scenarios, portability, and all of this at an attractive price point. Initial customer response has been very positive, and the system has been launched for sales during August. Development revenues were very high during the quarter and grew by 172%.
This significant uptick was primarily driven by the delivery of products to a Ministry of Defense in a Southeast Asian country, an order which was signed at the beginning of the year. During the quarter, we also signed several other important development projects which will start generating revenue in late 2025 or 2026. Development projects are of strategic importance since they are the first step from where we later can generate either license or simulator revenues. Looking at the gross margins during the quarter, we saw a decline to 65% versus 68% in Q2 2024. The decline was due to weak sales of simulators and negative revenue mix with a lower share of license revenue and the inclusion of Intelligent Ultrasound into the P&L, which has a lower gross margin than Surgical Science.
We're working on a number of initiatives aimed at increasing the gross margin, and we expect to see gradual improvements from this work in the quarters ahead. To conclude, the second quarter was a quarter that we are not happy with. We feel, however, that this result doesn't reflect our everyday reality where we see a very positive development in dialogues with our customers and the work we do for them, as well as the improvements made internally by our team. I'm very happy with the work that the team has been doing in the pace of execution to serve our customers better and improve and develop our company. We have taken important steps forward in our strategic review, and we will be able to finalize the work in the coming months. We also have a high tempo internally on several strategic projects.
First, we execute on a long list of customer projects to provide solutions for our industry customers. We also have a roadmap for new and exciting products for educational products. There, we also focus on the Intelligent Ultrasound integration, our Partner Path program aimed at distributor efficiency, our RobotiX Express launch, and many, many more initiatives. All these initiatives aim at serving our customers better and will also impact our financial result in the short and long term positively. With that, I would like to hand over to Anna.
Thank you, Tom. Starting with sales, as mentioned, for the quarter, we had sales of SEK 209 million, down 2%, where SEK 22 million came from Intelligent Ultrasound, or former Intelligent Ultrasound, I should say. It has now been renamed Surgical Science UK, but I will use the abbreviation IU in this presentation. All IU sales are attributable to the edu products business area and to the ultrasound product group. As Tom mentioned, in local currencies, sales were up 4%. We have approximately 80% of our revenues in U.S. dollars, and this is the first quarter in a very long time that we have had a negative effect from currencies on our overall sales. Going out of Q2, we then had an unusually high backlog or order stock.
The difference between ingoing and outgoing order stock was approximately SEK 30 million, and this is relatively evenly distributed between the business areas and will, as mentioned before, be shipped now during Q3. Looking at the business areas, the split was 53% for edu and 47% for indu. Edu sales were flat or - 20% excluding IU. Asia, and then here specifically, as we heard, China was weaker compared to the same quarter last year. Sales in Europe continued to show strength, and the North and South America region also increased. However, this is also IU's largest market, and if we look at comparable numbers, sales decreased, especially then in the U.S. As we said already in the Q1 report, the outlook for the U.S. market going forward is a bit uncertain.
A lot of leads and discussions, but it remains to be seen at what pace the deals will be closed. We now also have a higher and more permanent tariff rate. We are intending to put the effect for this on the customers, but the full effect still remains to be seen. Indu then down 3%, which is of course very disappointing. This is an area which has shown and should continue to show strong growth, and I will come back to this a bit more on the next slide. Looking at the numbers for the first six months, this means that sales were SEK 460 million. This is an increase of 15% or 18% in local currencies. IU is included with just above SEK 40 million, meaning that sales increased by 5% for comparable units. Edu for the first half year was up 23% or 2% excluding IU.
Again, the EMEA region is the one that has shown the strongest development. Indu up 7% for the first six months, and license revenues are up 10%. Looking then at our revenue streams, license revenues was 28% of total revenues for Q2 compared to 32% last year. As Tom talked about, and I will mention it again, it's lumpy for new entrants where many of our customers are still in early phase, and then they purchase their licenses when it's used. For the quarter, this part of the license sales was unusually low. Also, for the quarter, we then saw a decline when it comes to renewals of subscriptions for SimNow with the older generations of Intuitive surgical systems. However, despite this, our revenue from Intuitive increased in Q2 compared to the same period last year in U.S. dollars.
Simulator sales as a whole were down 8% compared to the same quarter last year, and this is then primarily due to indu . Also here, we have said several times before that this is more lumpy than for sales within edu since it's usually tied to larger projects where development is also involved. We do continue to view the segment very positively and have many exciting discussions ongoing within the area. Development revenues up a lot, and as mentioned, primarily due to the project we have for a Ministry of Defense in a Southeast Asian country, but not only. We still had good development revenues. The project that I mentioned is for 18 months, and in total, SEK 52 million. Approximately $1 million, just below $1 million , was recognized for this quarter, and we estimate that approximately $1 million will also be recognized in Q3 on this project.
Service revenues continue to be stable and growing with the installed base. Moving on to costs and EBIT margin for the quarter, Tom already talked about the gross margin being lower at 65% versus 68% last year, and several factors then influencing this. License revenues have the highest margin, and these were, as we saw, then lower as a share of total sales, which affects the margin negatively. With the lower simulator sales, we have fixed costs that are spread over fewer simulators. U.S. sales, as we talked about, were weaker, and that is a direct market, which means it has a higher gross margin for us. There is also the effect from the IU having a lower gross margin on those products.
Regarding OpEx, as we reported in the first quarter, in the first quarter, a smaller portion of the costs for that quarter were included in the consolidated numbers for IU , which was consolidated from February 18. That means, of course, that for this quarter, the full costs are included for the U.K. Sales costs were 28% of sales. There has been a very high level of activity related to trade fairs and conferences in the quarter. Starting in the second quarter, we also saw the effects from tariffs on our simulators that are distributed from production units outside of the U.S., and this was approximately SEK 1 million in the quarter.
As I mentioned, we aimed to pass on this cost to the price of the products as far as possible, but for this quarter, that did not occur because there is always a delay between quotations and then delivery and invoicing. This quarter's expenses also included an item of a more occasional nature, amounting to approximately SEK 2 million, which was attributable to commissions to distributors, and these vary depending on the country in which the sale takes place. Admin costs were 11% of sales, and R&D 25% of sales, where we activated SEK 10 million for the quarter. The costs on this line also vary depending on how much development revenue there is for the quarter, since salaries for the portion of development department staff who have worked on projects that generate development revenue are transferred to cost of goods sold.
That means that more was transferred in this quarter since development revenues were high. When we acquired Intelligent Ultrasound, we said that we estimated rationalizations and cost savings to be between GBP 1.5 million and GBP 2 million on an annual basis. As of Q2 and on an annual basis, these cost savings have been implemented of approximately GBP 1.8 million in relation to the cost structure that existed in IU at the time of the takeover. This is mainly in the form of reduced costs related to the company's previous stock market listing and staff reductions, mainly in respect of sales personnel. For this quarter, Q2, cost savings of approximately SEK 4 million are included. Other operating income and operating costs for this quarter are primarily attributable to the revaluation of operating assets and operating liabilities in foreign currencies.
We had a negative impact on this of approximately SEK 25 million, where the major factor was the weakening of the U.S. dollar against the shekel. As you know, we have large values, and a big part of our balance sheet is in foreign currencies. The largest factor here is the revaluation of intra-group items. We are taking measures to reduce these items to the largest extent possible. Following this, our operating result for the second quarter then amounted to a SEK -22 million, corresponding to a negative EBIT margin of 11%. Included in this is IU with an operating result of a SEK -5 million. We were 327 people in the organization at the end of Q2. This is a decrease if we compare to Q1 when we had 336 people.
With the IU acquisition, we added 48 people, and then we have had a number of redundancies. We do continue to employ people, above all, software developers. However, we are also working intensely with efficiency-improving projects and, of course, employ with caution and big cost consciousness. You can see the split between the sites there down to the right. Adjusted EBIT, we measured that as EBIT exclusive of amortizations on surplus values that are related to acquisitions. For the quarter, adjusted EBIT was a negative 8% compared to 15% last year. For the first half year, then it was 3% compared to 18% last year. We did, in Q1, have acquisition and restructuring costs, and adjusted for this, our adjusted EBIT was SEK 40 million or a margin of 9%.
Finance net and taxes, we have no loan financing, and the net financial items for this quarter then mainly consisted of interest income on bank deposits and also a revaluation of an intra-group loan, both positive items, and then a small negative from the IFRS 16 effect. Tax expense - 1, and the net result then SEK -20 million. Cash flow from operating activities was SEK 16 million for the quarter compared to SEK 30 million last year. We had some larger tax payments that we made in Sweden, but we then had good cash flow from working capital, was SEK +20 million compared to SEK -17 million last year.
Inventory increased, but accounts receivable decreased during the quarter, and this can also be seen from the gray line there in the chart, where we continue to be at a very good level with our accounts receivable as a percentage of rolling 12 months sales. Cash flow from investing and financing activities, nothing really to mention there, and cash at June 30th then ended at SEK 610 million. Tom?
Thank you, Anna. To conclude then, during this quarter, the second quarter of 2025, our company took important steps in the right direction, and our team had a very high internal rate of execution. As I said before, the second quarter was a quarter that we are not happy with, but we feel, however, that the result doesn't reflect our everyday reality, where we see a very positive development in dialogues with our customers and the work that we do for them, as well as the improvements made internally by our team. Market penetration for Surgical Science is still low, and the total addressable market for medical simulation is still very large. There are hundreds of thousands of medical professionals globally who could benefit from simulation from Surgical Science throughout their medical careers.
We feel an energy within the entire company from all the ongoing and engaging customer dialogues and from the important value that we provide with our products and solutions. With that, I would like to open the floor for questions.
If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Viktor Högberg from Danske Bank. Please go ahead.
Good morning. It was a smaller part of the Q2 sales missed. The churn or the non-renewals of the licenses for older generation simulators in Intuitive was higher than we had guessed, and you also had expected in the single quarter. Yet you reached the 2026 targets. You're implying that this year was transitory or that you fit in large enough cushion into the 2026 targets to account for something like this. Yes, could you help us understand the building blocks to reaching the 2026 targets despite all this? The market is obviously doubting the prospects, given that since January, you've said that the new deal with Intuitive will not see negative financial effects. What you could help us with, what your visibility is, what your assumptions are, and if this is something that is material or not material for the target reachability. That's the first question. Thank you.
That's a long question, Viktor. To start with the renewals from Intuitive, we have a situation where Intuitive is changing platforms from DV5 to DV4 , and we're a supplier to both platforms with simulation. We saw a lower renewal rate on the existing DV4 platform during the quarter, as you say. We have to acknowledge that we don't have full visibility into exactly the pipeline and the CRM system of Intuitive, and there are several different factors that can affect the renewal rates, such as, for example, how quickly the DV5s can be activated with simulation, the sales effort from the Intuitive team, and certain other considerations as well, which means that I don't think we should judge the result or the renewal rates on one quarter alone, but rather look at it on a longer scale.
We are working very, very closely with Intuitive primarily on the longer-term roadmap to make simulation an even more integral part of their platforms and of the surgeon's everyday workflows. That is as much as we can say. Of course, Intuitive is also a public company, and some of the numbers that we would like to discuss, we can't really in this context. Regarding the other second part of your question, which is the question about the financial targets and how this relates to the financial targets, we have not built our financial targets on a specific revenue from one specific customer, but rather looked at it kind of on a general market development and from a kind of a bigger development within the different buckets that we had, either educational products and industry or the five different market segments that we work on.
As we have stated several times during the presentation, the quarter two result is a result that we're not happy with, but it's also not indicative from the positive development that we see in the different areas of the business, both within industry OEM as well as educational products. We have some macroeconomic factors that are affecting us. We also have some specific timing-related things regarding the backlog that we discussed that, of course, can make the results swing from one quarter to the next. What we need to focus on is, of course, to deliver great value to our customers, deliver fantastic new innovative products, and then we will be able to reach the financial targets. That is how we see this. It's not something that we should judge.
We should not judge the financial targets from one quarter from the next, but rather kind of the general development and trend of the company.
Thank you. Follow up on that. The retroactive revenues for the DV5s delivered in 2024, any update on when you expect that? Is it still for the second half of this year or slipping into 2026? Just thinking of what that is part of the 2026 delivery in your mind.
No, we said before, now we don't have a specific update on that. We said before that the aim for them is to do the retrofits as quickly as possible, but it might be also into 2026 a bit.
On the edu side, I'm just thinking about the profitability or the gross margin effect from the Partner Path distributor program you talked about today. You say you're going to see gradual development [audio distortion].
Victor, we cannot hear you.
Can you hear us, and can we move on to the next question, please?
The next question comes from Ulrik Trattner from DNB Carnegie. Please go ahead.
Thank you very much. Two questions on my end. The first one, you touched upon this, but what type of feedback are you getting from Intuitive in terms of the reasoning behind not renewing their subscriptions? I mean, it wasn't an add-on when they bought it initially. Are they calling this more of a pain trade on the cost side on their end, or is the need for simulation sort of less so now versus historically, or are these predominantly customers that are transitioning from old platform to the DV5 where it's already integrated and thus potentially not needing to renew their licenses?
Yeah, it's a combination of the factors that you just mentioned, Ulrik, I would say. We have some visibility and dialogue with this about Intuitive, but also they don't necessarily know all the details and can quantify the different factors very accurately. It definitely has to do with the fact that you're transitioning from an old system to a new system, and of course, certain customers would rather have simulation on the new system than the old system. It could also be different types of functionality in the entire digital package between the systems that can make a customer choose the one or the other. There are a number of factors, and I think you're describing them quite accurately, that kind of all affect them. Once again, we have limited visibility into the reasoning behind Intuitive's customers.
You have to kind of take those comments with a grain of salt, and you can't really put accurate numbers onto the different explanation factors.
Okay, great. Thank you, Tom. My second question relates to your margin targets for 2026. OpEx have now outgrown top line for six consecutive quarters, even if we were to adjust for restructuring and different kinds of one-offs. We have six quarters left before we are ending 2026, and you should achieve 25 %- 30% margin. Can you help us provide a bridge to your guidance? Is this purely sort of an achievement of like growing top line without costing costs? That would be very helpful to just get some sense on how you're thinking here.
Yeah, it's a good question. I think it's basically two different components. One is, of course, that the financial targets are dependent upon a certain level of license revenues here, right? Both from existing as well as new customers that have a more attractive gross margin than the rest of the business. That's one important factor to achieving the goals. The other one is, of course, general improvements in the rest of the business, the simulator business for educational products as well as industry OEM. There is a range of different things we are doing, both to increase top line and revenue, as well as becoming more efficient and working on the cost side.
That's what I try to outline also in the report, more specifically about the things that we're doing to increase prices, improve profitability from distribution, launch new products, work on our general expenses, both R&D, sales, and marketing, and so on. It's a range of different levers that we pull now to be able to improve the profitability of the rest of the business, excluding licenses for robotics companies. Hope that answers your question.
Great. That was very, very helpful. That was my two questions, and now I'll get back into the queue.
The next question comes from Christian Lee from Pareto Securities. Please go ahead.
Thank you for taking my questions. My first one is a follow-up on Viktor's question. If you could please clarify, given that you seem to be upbeat about the coming quarters, do you expect to achieve your sales target for 2026 through mainly organic growth, or do you see that you need support from an inorganic addition?
The targets were built on achieving organic growth, Christian. Yes, that's what we're doing. Of course, we have an active M&A agenda, but we wouldn't sort of not pursue M&As to achieve a certain financial goal. We pursue M&As because we see synergies within the different parts of the business from an external company. It could be technical synergies, it could be product synergies, it could be customer relations, as well as competencies. That's how we judge M&As, and the timing that can happen within the frame of the financial targets or outside, that doesn't really affect us. It's important to note that we have made an acquisition in Intelligent Ultrasound, and that affected our margins negatively. Of course, we have to accommodate for that in the P&L and, of course, improve from there.
That sort of changes the kind of perspective a bit, financial profile a bit, I should say.
Okay, thank you. You described the second quarter sales from industry OEM as an outlier. How should we think about the license revenue in the third quarter? Do you expect some rebound and that the DV5 licenses are starting to compensate for the lower renewal of subscriptions?
Yeah, I think it's interesting when we get these questions from quarter to quarter because I think that you have to look at the robotics business. We start with the robotics business. You have to look at it in a slightly longer context, right? Not just one quarter from one quarter to the next. We have to understand that we are in a big transition here from doing minimally invasive surgery or open surgery towards robotic surgery. There are hundreds of robotics companies now jumping into this market and developing different types of products. It takes time for them to develop these products and bring them to market through all the certification hoops and doing this in a very patient, safe way. What we can affect is, of course, the relationships with these customers and the work that we do for them.
We feel very confident with that, that we provide a lot of value to them. We are dependent upon them reaching the market approvals that they need to be able to go and actively sell this. That is why I, in the reporting that I do, try to outline kind of the key milestones that our robotics customers have been taking in the last couple of months that take them further on to market clearance. It will be dependent. The next coming quarters will be dependent, of course, on the velocity of the DV5 launch for Intuitive and how quickly they can put product in the market. It will be dependent on all these other players being able to push product out.
As we also know, we sell to many of these robotics customers licenses in batches, which is also kind of a factor that you have to take into consideration. You cannot judge, for example, sales from one quarter to the next because revenue can be quite spiky in one quarter and then nothing for a couple of quarters. I think you should look at the robotic development in a slightly longer context than just quarter to quarter. I don't know if you want to add anything to that answer, Anna.
Okay, thank you very much.
As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. The next question comes from Ulrik Trattner from DNB Carnegie. Please go ahead.
Thank you very much. An additional question on my end, just looking at simulator sales within your OEM segment. Part of that has historically been to the non-robotic segment, but it's been a bit of a sort of sharp decline here for the second quarter. Is this related to some type of effect that there's been projects that have matured, or is the demand for simulation outside of robotic surgery sort of lower currently than before, or is there any other reasoning behind the decline?
It's a very good question, and we are not happy with this kind of steep decline in simulator sales in the industry for this quarter, given the strong performance and growth that we've had in the previous quarters. It is not signifying any kind of market slowdown or a change in direction in the development of the market. Many of our projects that we do for our customers, when we then sell simulators, they're quite big in the development phase, and usually the customers place quite big orders also on the simulator side. Depending on the timing of these simulator orders, it can have a very positive or quite negative effect.
I think that there was a timing effect here in the second quarter where we did not have any of these larger simulator sales, which is also why we very explicitly spoke about the backlog increase that we had, both for educational products and industry. We also said that we won several larger orders from med device companies during the quarter. The trend is very clear. Medical devices are digitizing rapidly. All our big customers are growing nicely and are putting out lots of products. For example, a customer like Boston Scientific has 100 product launches per year, and many of them require simulation. We look at this segment in a very attractive way, and we have many engaging and positive customer discussions.
Yeah, remember, development revenues were very good during the quarter, and it was not only attributable to this project in the Southeast Asian country. Although I know I usually say that they are not directly correlated because they're not when it comes to amounts, the number of projects that we are working on is correlated to later on receiving more simulator sales and/or license revenues.
Okay, great. The second question is more of a bigger picture type of question. We all know that you have established a relationship with the majority of the robotic surgery players out there, but there's been an inflow, especially on the capital side, to a lot of challengers in the industry. Have you been able to establish a relationship with these, and are there sort of additional new customers that are part of your portfolio today that weren't part of it like one, two years ago, or are these systems not in your book yet?
No, we feel positively about the robotics customer development. We have explicitly said that we have 15 robotics customers, and the number of customers is also growing. Many are jumping into the fray. Of course, if you say that there are 100 robotics companies, not all, of course, will survive. By being kind of the key supplier for simulation solutions to many companies, we can work with ones that will make it. I think that this is kind of a very positive development where all these new entrants are rapidly democratizing robotic surgery and bringing it to new niches and to hospitals with new price points that weren't available before. What's going to happen is that the entire pie is going to increase. You have to remember that robotic surgery still accounts for only somewhere between 10% and 20% of all the procedures that are done globally.
There's a huge opportunity here for all of them to take part as this market size grows rapidly. It's predicted to grow by between 3x - 4x between now and 2030. I think we should look at all these entrants as something tremendously positive for the market and for patient outcomes. It's, of course, an opportunity for us. We feel confident. We are very kind of aware that we need to deliver every day, but we feel confident about our value proposition to these surgical robotics companies.
Great. Thank you very much again, Tom and Anna. I'll be back in.
Thank you.
The next question comes from Viktor Högberg from Danske Bank. Please go ahead.
Hi, just on the licenses follow-up. Other robotics customers buying in batches, we've seen that for the previous years, not worrying in itself. We are wondering, was lower now in Q2. Was Q1 boosted, so to say? Maybe the truth is somewhere between these two quarters, or was Q1 a normal quarter for these customers? Just help us to understand what the potential baseline could be.
Yeah, I mean, we don't give forecasts for specific quarters. Of course, yes, it was higher. Again, a combination of them being higher and Intuitive was also higher. That meant that number was higher than this quarter. It was the highest we've ever had. Again, we see a lot of positive development on the market also for our new customers. This quarter wasn't unusually low in that regard. I mean, we don't give forecasts for specific quarters or how it will look in Q3 or Q4. Again, we are very, very positive on the market.
Okay, thank you. Just a follow-up. I think you didn't cover it already. The profitability or the gross margin effect in educational products thanks to the Partner Path distributor program. These are gradual improvements. What kind of magnitude are we talking about? This is something that would be seen on a group level eventually?
I think the Partner Path is a very exciting program. We now have the strongest distributor network from all medical simulation companies globally. We invest, we want to invest a lot in this distributor program to make sales growth both for our distributors and for us. The Partner Path, what it really does is that it's a set of different things that we want to achieve at one point. It's a portal for the distributors to be able to take part in marketing activities and marketing content. It's a joint CRM system, so we can better judge the opportunities of our distributors, and we can better sort of support them throughout the sales process and guide them and make the sales come quicker. It's also a differentiated distributor discount ladder where the higher the engagement you have with Surgical Science, the bigger the discount will be.
That will definitely relatively quickly drive profitability because we will not have kind of general discounts for all distributors, but rather lower discounts for lower performing and lower volume distributors and higher discounts for the other ones. That actually will drive. All the three that I just mentioned will affect the P&L in different ways, but all of them will affect it positively.
Okay, the discount, that is an immediate effect.
It's being rolled out here in this and the next towards the end of the year. Of course, you have to remember that there's a certain lag also in the order process where we put out quotes and then we wait and then we win them. It will be a gradual impact, positive impact here in the end of this year and the beginning of next year.
Thank you very much.
We also have a few written questions, primarily around robotics. I think we answered some of them, but there's one question if there are indications that robotic companies will develop their own simulation systems in the future. That is a question that we received a lot more before, I would say, than today. It doesn't really make sense for these companies to do the type of advanced simulation that we have been working on investing in for 25 years. It's an important strategic question for these companies, but it's not a huge part of their COGS. It also has to do with IP, where we never give out our IP, meaning that all our customers can benefit from everything we do, sort of, meaning that we have a large, today, a large development organization that can tend to these customers in a very efficient and good way.
Of course, it's always for us to stay on top, being the technology leader, and we are working on that every day. Tom talked about the RobotiX Express, for example, as a new part of this change. I think also, of course, this new agreement with Intuitive showed that there is trust in us as a supplier of medical simulation for these companies. The following question there was also around the subscription-based licensing models and if we will move more in that direction. This is also about the customer journey for these companies, where the new entrants usually start with what we call more basic skills, and then you add content and move to more advanced procedures, also when these companies get approvals for different types of indications. This is the sort of short answer that moving along this customer journey also moves towards more subscription-based licensing models.
There is a description in the annual report which discusses this more in detail.
There is another factor that will also drive licensing revenues to become more subscription-based, and that is that experienced surgeons, they will use simulation, advanced simulations to a higher extent tomorrow than they're doing today, pretty much the same way as the professional athletes are training all the time. They're not just training when they're young. They're always honing specific skills or specific critical parts in whatever they do, right? If you look at the surgeon as a professional athlete that continuously needs to train, they also have to continuously use advanced simulation. That is also going to drive kind of this repeated use, and that's going to speak in favor for a subscription-based value delivery, if you like. That's the second factor. Of course, it will take some time, but we see it very clearly in the market.
There is also a question around if all DV5 systems are equipped with our software. The first systems that were delivered in 2024 did not have simulation, or they did not have the digital package. That is what we discussed previously around the retrofits, that they will all have the digital package. Yes, the DV5 systems will all be equipped with our software when they go out. With that, I think we answered also the written questions, and we have no more people in the queue asking questions.
To conclude, I would like to thank you all for listening and wish everybody a great day. Bye-bye.
Thank you, bye.