Q3 2026 Elekta AB (publ) Earnings Call

March 5, 2026

Speaker #1: Good morning, everyone. My name is Peter Nyquist. I'm heading up Investor Relations here at Elekta. With me here is J. Sponholt. I have our CFO, Tobias Hgglv, who's doing his last quarter.

Speaker #1: As well as our incoming CFO, Klara Eiriks, who will not present today, but she will be available here in the studio. Tobias and Jakob will present the results as always.

Speaker #1: For the fiscal third quarter, fiscal year 2025–2026, third quarter. We will start the presentation with Jakob giving away the takeaways from the third quarter.

Speaker #1: As well as an update where we are, Stockholm, I have our CEO, Jakob, in the strategic execution and the change of operating model and the cost savings related to that as well.

Speaker #1: Tobias then will talk about the financials and Elekta's outlook. After the presentation, as always, we will have time for questions and answers. But before we start, I would like to remind you that some of the information that's discussed on this call contains forward-looking statements.

Speaker #1: This can include projections regarding revenue, operating result, cash flow, as well as product and product development. These statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in the statements.

Speaker #1: With that said, I would like to give the word to you, Jakob. Tobias, Jakob.

Speaker #2: Thank you, Peter. Thanks. And welcome to all of you. So, before I get into the quarter, let me just share some overall reflections. It's a solid quarter, but Elekta—we still are not trading at what I believe is the long-term potential of the company.

Speaker #2: So that calls for a clear strategy. It calls for decisiveness. It calls for execution—buyers to action, bold decisions—and I would say we are on that journey.

Speaker #2: I would say, specifically related to the change in our operating model, I really appreciate the support from leaders within Elekta, Elekta colleagues. We're changing a lot—we're changing the structure, we're changing layers, and we are letting go of people who are highly valued and deeply competent.

Speaker #2: But we have to change. Coming back to my point that we are not trading at full potential. But the support in getting there has been spectacular.

Speaker #2: And as I'll outline, essentially by the end of this week, we are running consultations in the UK. We will be concluded with the change we outlined at the end of November.

Speaker #2: That's very good. And then, big thanks to you, Tobias. You have ensured that we have had a very orderly transition in leadership within the finance function.

Speaker #2: To you, Klara, and welcome to you at this call. We look forward to you presenting the numbers at our Q4 and annual accounts.

Speaker #2: But let me then turn to what this call is really about—our Q3. As I said, it's a solid quarter. We have to recognize significant impact from FX, and we will also see impact coming into Q4.

Speaker #2: And then, clearly, also in line with the guidance we gave at Q2, a significant impact in reported EBIT from a restructuring charge of a bit more than SEK 400 million.

Speaker #2: We stand by the guidance that it will be less than $500 million. On orders, I would say good. Book-to-bill up 1.17; it was 1.15 last year.

Speaker #2: Keep in mind that typically, Q3 is a good order intake quarter because we roll on a lot of the service contracts—particularly in Europe—that give in quarter.

Speaker #2: And then we saw—and I'll come back to China—we did see order growth. We did see revenue growth, so that's pleasing. But it was also expected.

Speaker #2: On the US, I'll come back to that. But there, year-to-date, we have seen good orders coming in. It was also much needed. And then we continued the momentum in Europe.

Speaker #2: So, all in all, when I look at the book-to-bill rolling 12-month of 1.09, I think it's healthy. We would like to see it higher, but it's healthy.

Speaker #2: In terms of organic growth, we are at 2%. We continue to see good momentum in Europe. And as I said, China is returning to growth. We see both orders and revenue with double-digit growth, probably around 10% in China for the second half of the year.

Speaker #2: And then, what our Chinese general manager and Ming outlined in the strategy update, we do see the market bouncing back almost to pre-anti-corruption levels in terms of units.

Speaker #2: Gross margin at 38.3%. Supported by product launches and also pricing. We actually do see a bit of tailwind on that mix and pricing, but headwind on the cost.

Speaker #2: And that's a big focus area. I'll come back to that later on. But, of course, it's going to be a significant focus area for us going forward.

Speaker #2: EBIT margin at 11.9%, a bit higher than last year, but just keep in mind we're on a comparable basis. We get headwind from less capitalization, more stand by the view that we expect amortization, relatively speaking.

Speaker #2: So, adjusting for it, the EBIT cash margin that we look at a lot at Elekta is significantly higher. And you will outline that, Tobias, on a rolling 12-month basis.

Speaker #2: It's really good news. I can say my sincere hope is that, coming into next year, the EBIT cash and the reported EBIT will be roughly the same number—meaning that our amortization and capitalization will be a match.

Speaker #2: Let's see if we get there. In terms of cash flow, less good than last quarter, same quarter last year, but we should keep in mind that overall, year to date, we see good cash flow improvement.

Speaker #2: And we have paid out roughly SEK 100 million in the quarter linked to restructuring charges. So, if we move on to the next page, on commercial development, Americas' decrease of 6%—fundamentally, of course, not attractive.

Speaker #2: That's why we have a must-win battle to address it. We did outline last time that we were positive on getting EVO approval. I think it's important, as part of our commitment, that we have a good say-do ratio.

Speaker #2: And we were, of course, pleased to see that on the 16th of January, we could announce EVO approval. Year to date, as I said, we have double-digit order growth—substantial double-digit order growth in the US alone.

Speaker #2: That's also needed, because our decrease in revenue reflects a depleted order backlog. So we have a lot of work ahead of us. But, of course, every quarter that goes well, and is growing, is a good—doing well.

Speaker #2: We have sold to customers on the promise of EVO upgrade. That's now happening. And we are building our funnel going forward. But you shouldn't expect that it's just going to be a huge splash going forward because a lot of the orders have been already taking year to date.

Speaker #2: But of course, the customer interest is good going forward. And quarter, and year to date, we have been— we will look at commercializing Elekta EVO the way we have done in Europe.

Speaker #2: We continue to see growth in South America linked to very strong order intake prior years. On expected, China is returning to growth. We do see a little bit slowdown in other large APAC, as I said, and as also Indonesia, where there's a big tender.

Speaker #2: So the market is really awaiting what will happen there. And then on EMEA, we see a good increase and continued strong momentum in Europe. And of course, we need to sustain that going forward.

Speaker #2: And then I'll just flag here, Middle East could potentially impact timing of installation. It's way too early to indicate how many; we have a sense for what are the installations at risk.

Speaker #2: And it's not going to be material, and it will just be a time delay if that happens, from Q4 to Q1. So, all in all, I would say a solid quarter commercially.

Speaker #2: But of course, we would like to see that number go up, and that's what our strategy is all about. Yeah. So, if we take the next slide.

Speaker #2: And look at our must-win battles. This is what we outlined at the end of January. We feel very good about them. They have been working through some.

Speaker #2: We are far on. Some we are less far on. And I'll give you more details on simplifying power speed. But we countries, notably Japan, did this.

Speaker #2: I'll just remind you not to save cost. Of course, we take that in. But we did it to increase velocity of our decision-making within operations, within commercial, and most notably also within our innovation department.

Speaker #2: We are de-layering, we are empowering, we are driving culture. It's part of performance management. I think it's going to deliver a lot of good results.

Speaker #2: And I actually start to feel that the puzzle is getting assembled. We are moving on from having it as an initiative that we needed to execute, onto kind of things are settling down.

Speaker #2: And as I started out by saying, thanks to great work by the leaders and colleagues at Elekta. It's a lot of change we have asked—people to come back. Being an innovation-driven company, we can really benefit from problem-solving together rather than at a distance.

Speaker #2: To focused innovation, there is a lot I could say. But there's also a lot that could be used against us, commercially. But I would highlight that we continue to invest in innovation.

Speaker #2: We believe there is significant need for our solutions going forward. Our current product portfolio will become even better going forward, linked to what we have in our pipeline.

Speaker #2: But we will do it more focused. We will have a stronger commercial lens on it, and we will unfold more of that thought process when we meet at the Capital Market Day in June.

Speaker #2: Then our third initiative, expand in China, win in the US. China is important for Elekta. We are market leaders. We did unfold what does that mean.

Speaker #2: But what really goes into localizing Elekta in China? We are, both from a product point of view, and we have a very, very strong organization.

Speaker #2: We are localizing our supply chain. And then we also consider we have both local products. And we are saying, should we have even a broader 'Made in China' to the office, because we feel for China product portfolio.

Speaker #2: So we actually feel good about our China position, not least also because what we said is that the market is going to recover. And then with Elekta EVO, it's now about competing in the US.

Speaker #2: This is Elekta's biggest opportunity because this is the market where our relative share is the lowest compared to other places. And I believe we have every right to compete in the market.

Speaker #2: That's what I hear from our customers as strong competition. And we are ready. And then, lastly, the fourth on continuous COX reduction. I would really say in today's quite volatile world, it has two dimensions.

Speaker #2: And one is to continue to address our bill of material, our ability to install and service our installed base. So that's on cost—a lot of focus will be on continuous engineering to update our tech stack.

Speaker #2: And we work with our vendors to continuously increase quality and lower cost. But we also focus a lot on pricing to ensure that we can mitigate certain cost increases in today's volatile world.

Speaker #2: So we are establishing the systemic demand for having feel good about that. And we certainly have potential to become more dynamic in how we approach that top-line part of our business.

Speaker #2: So, that's where we are. If we then go into our operating model, I have to say, actually, I think we have done well. And by the end of this week, we will almost have executed all the changes that we outlined to you at the end of November.

Speaker #2: So that's in three months, and we are now at 83%. But a pricing desk here in Stockholm—I think the remaining 17% is due to a consultation in the UK, which is happening this week.

Speaker #2: Of course, it's been tough for us within Elekta. But it will serve the company very, very well to clarify roles, responsibilities, who is accountable for what, reduce layers, and identify who has the best knowledge.

Speaker #2: And then move with the buyers to action. So we stand by what we state, that we will have run-rate savings, without jeopardizing commercial or innovation, of more than SEK 500 million.

Speaker #2: Full impact Q1 next year, i.e., from 1st of May. The mix is 30% COX, 70% OPEX. We're still simulating, but that's our best evaluation.

Speaker #2: Restructuring charges to be taken this year are between 450 and 500 million. We have taken 417 here in Q3. And then, as I said, we are moving well.

Speaker #2: And then in parallel, we are now linked to budget and also Clara, with your support. We are now assessing all the discretionary spend because I do think there is potential for Elekta to just be very, very, very prudent in terms of where we allocate resource and cost.

Speaker #2: And that should year. So that's where we are. And then with that, over to you, Tobias. Thank you, Jacob. And good morning, everyone. So let's look in to the third quarter then a little bit more in detail.

Speaker #2: And I think you, Jacob, alluded to several of the points here on the slide. Net sales in the quarter increased by 2%. And we had a growth here in Solutions by 1%.

Speaker #2: And service by 3%. We can see continued strong momentum in Europe, supported by our product launches: Elekta EVO and Elekta One. Also, when looking into our Chinese operations—as you know, these have been impacted—this will also support us going into next year by the anti-corruption campaign here over the last years.

Speaker #2: It's actually returning here to growth in the quarter after two years, which is a very positive signal. Then, moving down in the P&L, looking into the gross margin, we have an improvement here of 120 basis points.

Speaker #2: In the quarter, we have a negative impact from tariffs of 100 basis points, and then furthermore from FX of 130 basis points. But including this, we are improving our gross margin.

Speaker #2: It is supported by the product launches. It is also, as you heard Jacob mention, supported by general price improvements that we see across our products.

Speaker #2: If we then look at the operating margin, we have an improvement here of 20 basis points, amounting to 11.9 percentage points in the quarter. This is driven by the improved gross margin.

Speaker #2: We also can see that we have a lower R&D investments. And also lower admin cost here year over year in the quarter. And what also have lower capitalization of R&D and higher amortizations.

Speaker #2: And if you actually would look at the cash EBIT margin, adjusted cash EBIT margin is actually up 170 basis points in the quarter year over year.

Speaker #2: And then also here, we do have restructuring charges of SEK 417 million, reported as items affecting comparability, which is also then reflected in the earnings per share.

Speaker #2: What we have seen in the quarter is quite a rapid move of the currencies. And here we have outlined the effect here both from operations, and then also sorted out the currency impact.

Speaker #2: So what we see in our P&L is that our net sales are impacted by more than 500 million SEC negative in the quarter from the FX moves.

Speaker #2: And in terms of growth, this corresponds to minus 12%. This is predominantly driven by a stronger Swedish krona versus our main revenue currencies, the US dollar and the euro.

Speaker #2: When you then look further down in the P&L, we have a negative impact on our gross margin of 130 basis points, which I just mentioned.

Speaker #2: And furthermore, here on the operating margin of 180 basis points. And in addition to the translational currency impact, which I just mentioned, this is also driven then by the dollar depreciation versus our main cost currencies in euro and pound.

Speaker #2: If we then look at the cash flow, and Jacob mentioned this, we do have a lower cash flow year over year in the third quarter.

Speaker #2: Still though, year to date, our cash flow is more than SEK 400 million better than last year. We have also had a smoother development of our working capital, especially in inventory development.

Speaker #2: In this slide here, we have sorted out the effect of restructuring provisions, and then here stated more solely the working capital development in the quarter, which was stable.

Speaker #2: Investments are lower than last year, both here in the quarter as well as year to date. Taxes, interest, net, and other are at the same level as Q3 last year.

Speaker #2: The cash flow generation this year has led to us having a net debt decrease of more than SEK 200 million compared to Q3 last year.

Speaker #2: Looking at the trends here, I was talking about the currency impact and the nominal terms. We have seen a slight decline in revenues, although there is currency-adjusted growth here in the quarters.

Speaker #2: But when you look at it—and I was talking about the improved gross margin—there is a steady trend here, strongly supported by the product launches and price improvements.

Speaker #2: And also, which of course then, with the must-win battles that Jacob was on, was further supported by the gross to the gross margin development.

Speaker #2: So, a steady improvement here over the quarters on the gross margin. We also have an improvement here on a 12-month rolling basis on the operating margin improvement.

Speaker #2: And if you then would look again at the cash operating margin, it's a strong improvement here, which has been ongoing quarter by quarter sequentially.

Speaker #2: Then looking at the cash flow, we have a lower cash flow in Q3. But if you look at the year to date, if you look at the 12-month rolling, it's significantly stronger cash flow over the last 12 months than what we had here a year ago.

Speaker #2: And if we then look at the outlook, we reiterate our 2025/26 outlook. We expect net sales in constant currency to grow year over year.

Speaker #2: And we also expect a negative impact here on earnings and from tariffs in Q4 as well. And the mid-term targets—no change there, they are confirmed.

Speaker #2: So, with that, I would like to, before the Q&A session, say a big thank you to everyone here. Over the years, working with you has been a pleasure.

Speaker #2: And I then hand over the word to you, Jacob.

Speaker #1: Yeah, so the closing remarks should reflect what you just heard. So, solid quarter, solid performance. We have launched even now in the US also.

Speaker #1: We are building up the funnel, good order growth year to date. Obviously, we have strong currency headwind and also increased tariff headwind. Despite that, gross margin is at 38.3%, and as you outlined, Tobias, with an improving trend—and we need to sustain that.

Speaker #1: And then we focus a lot on what we can control as part of our must-win battles. Super important. And we are well on the way of resetting how we operate, how we think, and how we execute within Elekta.

Speaker #1: And by the way, it will also lead to cost reduction of more than 500 million SEC. And then we focus obviously on cash why we can report here year to date an increase of almost half a billion SEC.

Speaker #2: Great, thanks. And before we start with the Q&A, I just want to remind you that we have the Capital Market Days here in Stockholm set for June 17th.

Speaker #2: So, it will be here in Stockholm. More information will be distributed later on. And with that, I think we have one, yes, and this is the calendar for the following report.

Speaker #2: So the next one comes in May 28th, our Q4 earnings report. So with that, I would like to open up for

Speaker #2: questions operators and I think the first question comes from flow generation also.

Speaker #2: UBS, and that's also Kavaya Deshpande. Please.

Speaker #3: Oh, good morning, sir. Can you hear me?

Speaker #2: Yes, we can hear you perfectly. Good morning.

Speaker #3: All right, perfect. Thank you for taking my questions. Two, please, both on China. The first was, would you be able to share how much China order growth actually was in the quarter, and remind us how this compared to Q2 and Q1, please?

Speaker #3: Just because you've been quite specific about the target to grow orders around 10% in H2, so it would be a bit helpful to get some more specificity on the year to date trend.

Speaker #3: And then just more generally, would you be able to remind us, please, why you think the Radiotherapy category in China differs from other capital equipment markets, where we've obviously seen this acceleration in share shifts towards Chinese players over the past year and a bit—specifically to United Imaging, who look like they're getting good traction with their new O-ring Linac and Adaptive Radiotherapy product as well, please.

Speaker #3: Thank you.

Speaker #1: Yeah, yeah. Thanks, Kavaya. Good questions, of course. So we'll stick to the second half. We say double-digit growth on orders, but we have positive growth both on revenue and orders here in Q3.

Speaker #1: So that's good. And it is linked to market recovering. Of course, we have also asked ourselves, why are we an outlier on China versus other medtech companies?

Speaker #1: But I think the short answer is the market is heavily underpenetrated. You have 1.8 linear accelerator per capita. And there's a growing cancer burden in the country.

Speaker #1: So there has now been pent-up demand, and we used to have 300 Linacs. It dropped to 170, and now it could very well be 260, 270 Linacs going forward.

Speaker #1: So, we are not entirely back. Then, in terms of the competitive situation, we also outlined there are a lot of local ring-based competitors, but there's really one who has traction.

Speaker #1: That's United Imaging. Despite, I would say, and also because we have localized our products and our market presence, we remain the market leader.

Speaker #1: We have lost a bit of share, but we remain in the high 30s in terms of market share. And that's also our aspiration going forward.

Speaker #3: Perfect. Thank you very much.

Speaker #1: Thanks, Kavaya. And we'll move to the next question. Kepler Chevreux and that's Oliver Reinberg. Hello, good morning, Oliver.

Speaker #4: Good morning, Oliver.

Speaker #5: Hi, good morning, guys. Quick questions from my side if I may. Firstly, can you just provide us a bit of color on the order intake composition?

Speaker #5: I would assume that a large part is driven by EVO. Can you just confirm that, ideally quantified, and if that’s the case, what kind of product categories have seen any kind of declines?

Speaker #5: That's question number one. Secondly, just looking forward to Q4, we had a very strong comparison in terms of gross margin. I just wondered if you can share any kind of thoughts on that, what to expect going forward now.

Speaker #5: And lastly, just some strategy. Jacob, I just wondered, can you just discuss how you think about the critical size of Elekta overall? I mean, obviously you have to pay for a kind of global marketing, installation, service infrastructure.

Speaker #5: How easy is that and related to that, how do you think about the role of partnerships in the past that was always a discussion of the importance of independence?

Speaker #5: Would be helpful to get your thoughts on that. Thanks very much.

Speaker #1: All right. I'll take the very easy one first. Gross margin Q4, we don't give that guidance. I'm sorry. We will stay with our guidance.

Speaker #1: We believe in organic growth. Positive for this year. So, I hope you understand that. In terms of order intake, what I will share is that, of course, we just got the approval in the US in mid-January and our quarter ended January.

Speaker #1: But we have seen a very substantial order growth in the US. It's still too low, but very substantial relative to prior years, linked to the expectation of EVO getting approved.

Speaker #1: And as we got more certain, then we saw that pick up. We are now converting that order backlog from Versa HD into EVO, so that's working.

Speaker #1: We are, by the way, also upgrading to Iris. And then we can just see the funnel opportunity, I would dare to say, quite rapidly expanding in terms of prospective customers.

Speaker #1: Having interest. And of course, we hope to see the same commercial traction in the US and why shouldn't we, as we have seen in Europe and there are roughly two-thirds of what we sell of new solutions are EVO-related.

Speaker #1: So, that gives you a good indication. And it's also a nice system, I have to say. It's versatile, it's adaptive, it's competitive. So we'll continue to build from that.

Speaker #1: Then the last one, in terms of Elekta’s critical size, I would almost say I would love to answer it. It will probably also take 10 minutes.

Speaker #1: And it's certainly a worthwhile topic for Capital Markets Day. But if you will get my helicopter perspective, then relative to our main competitor, of course, we are smaller.

Speaker #1: But I would just dare to say that we are the focused radiation therapy market. And that comes with a lot of benefits. Then we have assessed our product portfolio.

Speaker #1: The product portfolio logic is absolutely sound from bracket to neuro to linear accelerator, CT, MR to supporting software suite. So the logic stands. And we believe we can build that ecosystem that is relevant.

Speaker #1: And then there will be a choice. You can have Elekta's. We are a little bit more open not fully open, but a little bit more open than others.

Speaker #1: Or you can go for a more closed system. And that's good. We want to give customers choice. And then we want to compete for our fair market share.

Speaker #5: Thanks, Jacob. Thanks, Oliver. We'll move to.

Speaker #4: Perfect. Thank you.

Speaker #1: Thanks, Oliver. And we'll move to Handelsbanken and Ludvig Germander. Good morning, Ludvig.

Speaker #4: Good morning, Ludvig.

Speaker #6: Good morning. Thanks for taking my questions. I have a few. I want to start with the cost savings program, please. And you've been talking about it, of course.

Speaker #6: But would you say that the underlying impact from savings during this quarter has been in line with your own expectations, or would you say that for the quarter, it has been above your own expectations in terms of how fast you've been able to get the impact from it?

Speaker #6: That's my first one.

Speaker #1: As expected, very little impact this quarter. It will have a significant impact in Q4. But the model Ludvig we did was really focused on Q1.

Speaker #1: And there we are, I would say, on par with maybe a little bit above our expectations.

Speaker #6: Okay. Thank you. And just to make sure, regarding this restructuring charge of SEK 417 million in the P&L, is it fair to assume that most of this was a cash expense in the quarter as well?

Speaker #1: Oh, most of it is actually provision. But you also have certain degree of payments in the quarter, cash cost. Yeah. So what we guide is roughly 100 million was paid out in the quarter.

Speaker #1: That means the remaining 300 remains to be paid out, and that's in line with the expectation. And then we will have some further provisions to be made.

Speaker #1: So the guidance we have given is 450 to 500, of which we have paid out, if you will, 100.

Speaker #6: Great. Very helpful. So thanks for that. And then just one final on the Middle East situation you mentioned. I know you said it's too early to quantify.

Speaker #6: But would you be willing to give us any context here? Like, how much of sales or orders are related to the region where you see a risk of any delayed installations?

Speaker #6: Just to get some sense on how to think about it.

Speaker #1: Sure. Sure. So I take it with a grain of salt because as you all know, the situation is fluid. But in terms of potentially impacted installations and thereby sale, would be 2% of Q4 sales.

Speaker #1: So I would say it's a very manageable amount. And then we follow in real-time those installations. That number may change. Given where we are and what we see, but I would still dare to say it's manageable.

Speaker #1: Then our perspective may look different in a week's time.

Speaker #5: Thanks.

Speaker #6: Great. Very helpful. Thank you so much.

Speaker #1: Thank you, Ludvig. So we'll move to Mattias Wahlsten at SEB.

Speaker #4: Good morning, Mattias.

Speaker #7: Good morning. Can you hear me?

Speaker #1: Yes, we hear you. Perfect. Thanks.

Speaker #7: Good. First question. Maybe another one that takes 10 minutes to answer. But you talk about commercially driven innovation. In the presentation, so if you could give just an example on what this statement really means, focus on software vis-à-vis hardware, new platforms versus refining current platforms.

Speaker #7: Etc., etc. That's the first one.

Speaker #1: Yeah. It's also a fundamental question. And we outlined a little bit in the strategy outlook we'll outline more, of course, and find the boundary between what we want to say and what we can't say.

Speaker #1: And so forth. But yes, commercially driven means a little bit less big platform, more modular driven innovation. It's deliberately vague. Sorry about that, Mattias.

Speaker #1: But I would say we reduce the risk profile in our innovation. We increase the traction. And I would say when I and we spend a lot of time over the last four months in assessing our innovation pipeline, I'm also hands-on involved in it.

Speaker #1: I have to say. We put a customer lens on. And a commercial lens on. And you should expect that over the next 20 months, four months, we will significantly enhance portfolio of our CRM, Linux portfolio, and that goes both for hardware and software.

Speaker #1: So I feel very good. That's also why we are willing to fund continued investment. As I said, we are not asking our investors to underwrite an increase in gross R&D; it will come down a little bit.

Speaker #1: But we should be able to see more output. And then, let's not forget, it's not only resources put in—it's also how efficient you are.

Speaker #1: So, we are also structurally addressing the efficiency within our R&D engine, if you will.

Speaker #7: Thank you. Thank you so much. And then you talked a little bit about EVO and the comparison to Europe and so on. But from what you've heard and seen now in terms of customer behavior, customer feedback, what conclusions can be drawn if you compare sort of what you've seen in Europe since sort of late 2024?

Speaker #7: And also, if you could even update on sort of upgrade versus new Linux.

Speaker #1: Yeah. If I take the latter first, then, given that we have sold quite a few units this year with the promise of upgrading technical obsolescence, against a fee, then you can say we have essentially already sold EVOs in the US and will continue to sell EVO.

Speaker #1: Then we are now upgrading. We will build reference sites. We will prove the provide clinical evidence. And it matters a lot that we shouldn't ask a US-based customers I met some of them here three weeks ago, in Holland, but then they had to fly to Europe.

Speaker #1: That's not very efficient. So we are now building our reference sites with EVO so we can demonstrate the value. And then we look at our funnel.

Speaker #1: And so far, so good. But I'm not going to commit to a number—I think it's too early days. But what I would just say is, why wouldn't we see the same demand in the US as we have seen in Europe?

Speaker #1: And there we have just seen a good traction. But I would rather demonstrate it through actions than promise here for the future. But so far, so good, I would say.

Speaker #7: Perfect. And then I will squeeze in one final quick one. So you said book-to-bill was 1.3 in the first half. In the Q2 report for China, could you give that year-to-date figure now?

Speaker #7: Book the bill for China?

Speaker #1: Yeah, it's about 1.1 for China. And so we will end up with a book-to-bill—I'll just do the math here—but it will be above 1.1.

Speaker #1: And that's important milestone because we have seen a depletion in our China backlog. So we actually had a good revenue year after the anti-corruption, but we were depleting the backlog.

Speaker #1: And now we are building the backlog again. And that's why we essentially feel pretty okay about our China position. Recognizing everything that is said in terms of competing, and we are also using it—I would say we very often, as Europeans, are a bit defensive.

Speaker #1: I look at it differently. How can we tap into China's speed? How can we build competitiveness in China? And if we can compete in China—when we can—then we can also take that know-how elsewhere in the world.

Speaker #5: Great. Thanks, Mattias.

Speaker #7: Thank you so much.

Speaker #4: Thank you, Mattias.

Speaker #5: We'll move to Veronica Dubajova from Citi. Hello, and good morning, Veronica.

Speaker #8: Hi, guys. Good morning, and thank you for taking my questions. I'm going to keep it to two, please. My first one is just to understand the sort of process of converting some of the older orders in the US to EVO.

Speaker #8: Can you sort of maybe talk through, from a customer perspective, how that works and also just from an accounting perspective when you do trigger that conversion?

Speaker #8: Does that show up in the gross order number, or is it just because it's a conversion of an older order—there's no incremental impact on that?

Speaker #8: If you could just touch upon how that works. That's the first one. And then, obviously, you guys are pushing ahead with the restructuring with the strategic changes.

Speaker #8: And so it'd be great to sort of just get a little bit of a pulse on the organization and what's the feedback. Where does morale sit?

Speaker #8: Anything that sort of is worrying you in terms of how the organization is dealing with the changes that you've put into place? Thank you so much.

Speaker #1: Yeah, I can do that. So, if we talk about the upgrade to EVO, that will now happen, and there will be an incremental charge. I don't want to share the specifics, but it's substantial.

Speaker #1: And then it will be triggered, from a revenue recognition point of view, when we install the units. That's typically when we recognize the revenue.

Speaker #1: So that's how it's going to go. In terms of restructuring, as I started out by saying, I have to say, I've just been super impressed.

Speaker #1: All around, with the behaviors from, I would say, owners to leadership to employees, we knew we needed to change. And then, at the same time, we empathized because change is tough.

Speaker #1: And it is not only in terms of fewer people. It's also the way of working. And I have to say, I've just seen so many people who work including a few here in this room until very last day as massively impressive.

Speaker #1: I think the morale is good where we—you could say the biggest impact on morale is actually we have implemented a four-day in-the-office policy, where we do that because Elekta, our purpose is so important.

Speaker #1: We need to innovate for customers or patients around the world. It's more than two million patients being treated on our ecosystem, you can say, and we feel that we need to increase momentum and velocity, and part of that is inspiring each other.

Speaker #1: But all in all, I have to say, I'm very pleased with where we are. We haven't lost focus on commercial, on customer, on cost, and so forth.

Speaker #1: But I have to say, there's a lot more to do. So, the mushroom battles we have outlined are really meant for the next 24 months.

Speaker #1: And as I said, as part of that mushroom battle one, we are now addressing our discretionary spend. And we are just going through line by line.

Speaker #1: And that's important because we only want to spend money where it adds value—either for our customers, patients, or investors.

Speaker #8: Thank you for that, Jeff. And just to clarify, so when you upgrade, I don't know, a Versa to EVO, what's the impact on the order backlog?

Speaker #8: Do you recognize the whole order, the price uplift, how does that work?

Speaker #1: Yeah. Then once we upgrade, we recognize it in the order backlog. And when we install it, we recognize it in revenue. And obviously, it's quite—

Speaker #8: Yeah.

Speaker #1: Quite good margins. Yeah.

Speaker #8: Yeah, but from an order perspective?

Speaker #1: Yeah. So when we then commit to the order, then there is an order backlog increase. But the way you should think about it, you will not see it in the yeah.

Speaker #1: You will see it, but it's not going to be that significant in the total order backlog number.

Speaker #7: And it's the upgrade value. It's not like with double counting here, Veronica. If that's your question.

Speaker #8: Okay. Perfect. That's just what I was trying to get at. Okay. Thank you guys so much. Yeah. I appreciate it. Thank you.

Speaker #5: Thanks, Veronica. The next question will come from Christopher Lilleberg at Carnegie. Good morning, Christopher.

Speaker #4: Morning, Christopher.

Speaker #9: Morning. Three questions. The first one is you said that you're looking at other costs besides the restructuring program. So should we interpret that as you expect or that you see potential for more savings than the 500 million in the next fiscal year?

Speaker #1: Hi, Christopher. You should interpret what we have said as: we are committed to a run rate of more than 500 million SEK. And now we'll just—we are running through the machine.

Speaker #1: And then let's see where we get to.

Speaker #9: Okay. And I understand you don't want to be specific, but just to clarify, do you expect China and U.S. sales growth to be positive now in the fourth quarter, given what's happening with better order momentum?

Speaker #1: I think the only thing I'll say on China is we have guided towards second half growth, right? Double-digit growth probably around 10%. On US, I will put that under the overall group umbrella and say we guide at a positive organic growth for the year.

Speaker #1: I know we are vague. I hope we can be more precise, but I'll stick to the guidance here now.

Speaker #9: Yeah, okay. But when you said 10% in China, is that for orders or sales?

Speaker #1: Both.

Speaker #9: Oh, both. Okay. That makes sense. And then my final question, I noticed you said here that you would like cash EBIT to be in line with reported EBIT, i.e., a much less positive effect from capitalized R&D.

Jakob Just-Bomholt: People pay upfront and so forth. I think it's not only from a revenue and EBIT, it's also from a cash perspective favorable that we get our fair market share.

Speaker #1: People pay upfront and so forth. So I think it's not only from a revenue and EBIT, it's also from a cash perspective favorable that we get our fair market share.

Speaker #2: Is it fair to say that dynamic is in line with what’s to be expected in the Lean IT hardware market in general, or could it be?

[Company Representative] (Elekta AB): Is it fair to say that that dynamic is in line with what to be expected in the LINAC hardware market in general, or could it be after?

[Analyst]: Is it fair to say that that dynamic is in line with what to be expected in the LINAC hardware market in general, or could it be after?

Speaker #1: I think if it relates to EVO, we are on expectations, but I still would say we need a bit more time. We got approval mid-January.

Jakob Just-Bomholt: I think if it relates to Evo, we are on expectations. I still would say we need a bit more time. We got approval mid-January. We have received quite a few orders. You saw order intake Q3 linked to Evo. That's good. I look at year-to-date. I can see a substantial increase in US-based, not America-based, but US-based orders. I like that. Let's see how we sustain it over the next couple of quarters and our ability to then convert funnel into actual wins. That's what I'm looking at.

Speaker #1: We have received quite a few orders. You saw order intake Q3, linked to EVO, so that's good. I look at year-to-date, and I can see a substantial, substantial increase in US-based, not America-based, but US-based orders.

Speaker #1: I like that. Let's see how we sustain it over the next couple of quarters, and our ability to then convert funnel into actual wins.

Speaker #1: That's what I'm looking at.

Speaker #2: Thanks, Juan. Thanks, Juan. We will now move to the last question for this session, and that will be Ludwig Lundgren at Nordea. So, good morning, Ludwig.

Operator: Thanks, Johan.

[Company Representative] (Elekta AB): Excellent.

[Analyst]: Excellent.

Operator: Thanks, Johan. We will now move to the last question for this session, and that will be Ludwig Lundgren at Nordea. Good morning, Ludwig.

Speaker #4: Good morning, Ludwig.

Jakob Just-Bomholt: Morning, Ludwig.

Ludwig Lundgren: Yeah. Yes, morning. Thank you for taking my questions. A bit of a follow-up to the Evo and the US. I think in Europe, you actually initially saw sales being driven by Iris upgrades for like previous Versa installations, and as these have shorter lead times than new installations. I just wonder if you will expect to see a similar pattern in the US. Also, if you can remind us of the margins of these type of installations.

Ludvig Lundgren: Yeah. Yes, morning. Thank you for taking my questions. A bit of a follow-up to the Evo and the US. I think in Europe, you actually initially saw sales being driven by Iris upgrades for like previous Versa installations, and as these have shorter lead times than new installations. I just wonder if you will expect to see a similar pattern in the US. Also, if you can remind us of the margins of these type of installations.

Speaker #5: Yes, morning. Thank you for taking my questions. So, a bit of a follow-up to the EVO and the US. So, I think in Europe you actually initially saw sales being driven by Irish upgrades for previous Versa installations.

Speaker #5: And as these have shorter lead times than new installations. So I just wonder if you will expect to see a similar pattern in the US, and then also if you can remind us of the margins of these type of installations.

Speaker #1: Yeah, so the margins, I think—let me put it this way—are 80% plus. So they’re obviously attractive. And we are looking at upgrade. It will be less than in Europe from that point of view.

Jakob Just-Bomholt: Yeah. The margins, I think, let me put it this way, 80% plus. They are obviously attractive. We are looking at upgrade. It will be less than in Europe from that point of view. We will do Iris upgrades here in Q4. We also did that last year. When you look at the comp last year, we still stand by, of course, the guidance we have given in terms of organic growth for the year.

Speaker #1: But we will do Irish upgrades here in Q4. And but we also did that last year. So when you look at the comp. Last year, but we still stand by, of course, the guidance we have given in terms of organic growth for the year.

Speaker #2: Okay, understood. And then my final one, just on if you have any updates on the Section 232 investigation, and also if you can comment on these recent US tariff changes and how you expect that to affect your numbers.

Ludwig Lundgren: Okay. Understood. My final one, just on if you have any updates on the Section 232 investigation, and also if you can comment on this recent US tariff changes and how you expect that to affect your numbers.

Ludvig Lundgren: Okay. Understood. My final one, just on if you have any updates on the Section 232 investigation, and also if you can comment on this recent US tariff changes and how you expect that to affect your numbers.

Jakob Just-Bomholt: Yeah. We are evaluating it. We actually report here this quarter a bit higher tariff impact, but it's also linked to selling more in US. In a way it's a positive problem. We are still evaluating and understanding. I think we need a bit more time with everything that's going on.

Speaker #1: We are evaluating it. We actually report here, this quarter, a bit higher tariff impact, but it's also linked to selling more in the US.

Speaker #1: So, anyway, it's a positive problem. But we are still evaluating and understanding, so I think we need a bit more time, with everything that's going on.

Speaker #2: Thanks, Ludwig, for those two questions.

Operator: Thanks, Ludwig, for those two questions.

Speaker #5: Thank you.

Ludwig Lundgren: Thank you.

Ludvig Lundgren: Thank you.

Speaker #2: Maybe before we close the call, any final remarks from your side, Jacob?

Operator: Maybe before we close the call, any final remarks from your side, Jakob?

Jakob Just-Bomholt: Solid quarter. We are busy. We execute a lot. We have to continue the momentum, bias to action, clear strategy. We look forward to Capital Markets Day, where also with your support, Clara, I hope and endorsed by the board, we can outline a financial plan that management stands behind. Thanks.

Speaker #1: Solid quarter. We are busy. We execute a lot. We have to continue the momentum. Buyers to look forward to Capital Market Day where also, with your support, Clara, I hope—endorsed by the board—we can outline a financial plan that management stands behind.

Operator: Thank you very much.

Ludwig Lundgren: Thank you.

Ludvig Lundgren: Thank you.

Q3 2026 Elekta AB (publ) Earnings Call

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