• Revenue: SEK293 million for Q3 2024, up 19% from the same period in 2023.
• Operating Profit: SEK62 million, with an operating margin of 21%.
• License Revenue: SEK133 million, increased by 36% from last year's SEK98 million.
• Order Intake: SEK253 million, a 5% increase from SEK241 million in Q3 2023.
• Cash Flow from Operations: SEK60 million for Q3 2024, compared to SEK124 million in Q3 2023.
• Cash and Cash Equivalents: SEK425 million, with no loans.
• Net Sales for First 9 Months: SEK869 million, a 20% increase from SEK723 million in 2023.
• Operating Profit for First 9 Months: SEK187 million, with an operating margin of 21.5%.
• Backlog: SEK1.7 billion, with SEK471 million expected to generate net sales in the next 12 months.

• Warning! GuruFocus has detected 4 Warning Sign with RSLBF.

Release Date: November 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• RaySearch Laboratories AB (RSLBF) reported its highest ever third-quarter sales, reaching SEK293 million, a 19% increase compared to the same period in 2023.
• The company achieved an operating profit of SEK62 million, with an operating margin of 21%, demonstrating strong financial performance.
• RaySearch Laboratories AB (RSLBF) has a robust financial position with cash and cash equivalents of SEK425 million and no loans.
• The company has successfully expanded its market potential for RayCare by integrating with approximately 4,000 Varian TrueBeam machines worldwide.
• RaySearch Laboratories AB (RSLBF) has seen a steady growth in net sales and operating results over a 12-month perspective, with net sales growing from SEK768 million to SEK1.169 billion by the end of September 2024.

Negative Points

• The order intake for support decreased by 9% from SEK102 million to SEK93 million compared to the same period last year.
• Cash flow from operations decreased to SEK60 million in the quarter compared to last year's SEK124 million, due to changes in operating liabilities.
• Operating expenses increased by 5% from SEK194 million to SEK203 million compared to the same period last year.
• Orders have been tracking slightly below sales in recent quarters, although the company is not concerned about this trend.
• The cash flow for the period amounted to SEK1.7 million, a significant decrease from SEK64 million in the same period last year, attributed to changes in operating liabilities.

Q & A Highlights

Q: Can you comment on the recent lower increase in operating costs and whether this trend will continue, especially in relation to the EBIT margin target for 2026? Also, should we be concerned about orders tracking slightly below sales in recent quarters? A: Johan Lof, CEO: The lower increase in operating costs is due to our strong focus on maintaining a healthy operating margin. We anticipate that RayCare will significantly contribute to revenue in 2025 and 2026, allowing us to adjust operating costs accordingly. As for orders tracking below sales, we are not concerned. We have a strong pipeline and see significant interest in both RayStation and RayCare.

Q: Could you elaborate on the RayStation 2024 launch and its new automation features? What benefits will users see, particularly in terms of time savings? A: Johan Lof, CEO: The RayStation 2024 launch includes advancements in automation, such as improvements in deep learning segmentation and planning, which speed up processes significantly. We are also enhancing automation through scripting and integration with RayCare, aiming to streamline clinical operations.

Q: There has been a significant decrease in operating liabilities affecting cash flow. Could you explain the reasons for this and any potential structural changes in working capital as RayCare sales grow? A: Annika Henriksson, Interim CFO: The decrease is mainly due to prepayments and the timing of deliveries. As RayCare sales increase, we expect current liabilities to rise due to longer implementation times, meaning we receive payments earlier but recognize revenue later.

Q: Regarding RayCare's contribution to sales in 2025, have you already secured orders, or is there an increase in order momentum? A: Johan Lof, CEO: It's both. We have existing orders, such as the Ortega project in Spain, and we are seeing increased order momentum for RayCare, which will contribute to sales starting in 2025.

Q: What is the typical prepayment structure for RayCare deals, and how does it impact revenue recognition? A: Johan Lof, CEO: Prepayments vary by case, but typically, a small percentage, like 10%, is held until the final milestone, which is the acceptance of implementation. This structure means we often receive payments before recognizing the full revenue.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.