Release Date: September 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Strong performance in all operating areas despite typically weak first quarter.
- Rapid transition to a service model, with cloud recurring revenue growing by 42%.
- High customer satisfaction with a churn rate of only 0.4%.
- Net sales grew by 24% and profit per share increased to SEK0.42.
- Secure communications segment saw considerable growth due to increased awareness and need for secure communication products.
Negative Points
- Contracted order bookings were down by 79% compared to the previous year.
- Large investments required for transitioning to a service model, impacting short-term profits.
- Cash flow from operations was negative at SEK57 million for the first quarter.
- Business Innovation segment reported slower sales growth of only 5%.
- Challenges in cloud implementations due to varying regulations in different geographies, particularly in Europe.
Q & A Highlights
Q: What are you going to do with the communication business?
A: Growth it as with everything else, et cetera. And happy customers, and that's about what we can discussed. (Torbjorn Kronander, CEO)
Q: One of the operational bottlenecks is cloud implementations. Would you say that you are able to ramp up the tempo to onboard a greater number of hospitals or should we expect the rate of at least two hospitals per month to continue going forward?
A: We are improving rapidly, and cloud is also then to set very much in that direction. But we need electronic training material. We want support going make automatic. So a huge progress in that area. We're not there yet, but we are working on it and we have come quite a long way. (Torbjorn Kronander, CEO)
Q: Does the rate of cloud implementations in terms of number of hospitals per month differ among geographies, IG, is it faster in the US than in Europe?
A: Cloud is still hampered in Europe by the EU regulations GDPR which have different interpretations in different countries. In the US and the UK, it was okay with using the Microsoft's and the Googles and Amazons, and we'll see a much more rapid progress there. (Torbjorn Kronander, CEO)
Q: Is there a difference in the exam volume growth among clients in Europe versus the US? If that is the case, could you please help us understand why there may be a difference?
A: We don't see a clear trend different, I means mainly is that more and more people get old and old people have much more exams and that there is little by (inaudible) , we don't see any clear trend that there would be a difference in the different markets. (Torbjorn Kronander, CEO)
Q: What is driving the growth in nonrecurring revenues? Is this something we should expect to continue?
A: Well, not all revenue from our SaaS contracts is recurring. For example, revenues generated during implementation and for migration of data that's nonrecurring revenue. And those revenues will -- we will have those revenues going forward as well. And then we also have the communications side of the business. We have a much lower share of recurring revenue. (Jessica Holmquist, CFO)
Q: Based on your work with customer size of your implementation team, et cetera. When do you foresee we could see acceleration in go-live in cloud sales?
A: It's already happening, as I've said before. (Torbjorn Kronander, CEO)
Q: Could you talk about the pipeline for new larger cloud contracts, anything that could materialize in this fiscal year?
A: We can't disclose things that are in discussion, but there is a solid pipeline, as I said in the introduction, all the customers, both large and small that are interested, and we hope to get a substantial part of them. (Torbjorn Kronander, CEO)
Q: Could you talk a bit about how important a step the FDA clearance supporting [dicamba is]? Has there been any noticeable acceleration for digital pathology following this?
A: It's a general trend that people want to use standards. We saw that in radiology in the 90s, the big modality vendors tried to create the close department. So they had an extra machine and they wanted to do the packs. And then, of course, what you want to buy the next x-ray machine, they see huge advantage or even impossible to buy a competitive competing device. (Torbjorn Kronander, CEO)
Q: Increase in the number of employees are slow has slowed somewhat last few quarter. Is this temporary or a first time that the massive ramp up needed to handle new contracts is coming to an end?
A: I don't think we grow as fast as we did before, but we will still grow especially in some markets where we have a lot of the orders. If we had huge orders like the one we got one year ago that needs to be implemented and that to expect. (Torbjorn Kronander, CEO)
Q: Could you comment on timing for larger new contracts that will go live coming quarters?
A: We are gradually -- when we got -- when we get very large orders like billions. There is normally a bunch of hospitals or there is a bunch of hospitals below that might be hundreds of hospitals, and that is not something you take live over one day, you start with there. (Torbjorn Kronander, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
