Q1 2027 Elekta AB (publ) Earnings Call

August 27, 2026

Speaker #1: Good morning, everyone, and welcome to Elekta's Q1 for the fiscal year 2026–2027. With me here in the studio in Stockholm, I have our CEO, Jakob J.

Peter Nyquist: Good morning, everyone, and welcome to Elekta's Q1 for the fiscal year of 2026-2027. With me here in the studio in Stockholm, I have our CEO, Jakob Just-Bomholt, and our CFO, Klara Eiritz. As usual, we will start off with Jakob bringing in the highlights from the quarter and some strategic updates. Then Klara will bring you more details around the financials. After the presentation, we will, as usual, have time for Q&A. Before we start, I want to remind you that some of the information discussed in this call contains forward-looking statements. This can include projections regarding revenue, operating results, cash flow, as well as products and product developments. These statements involve risk and uncertainties that may cause actual results to differ materially from those set up in these statements. With that said, I would like to hand over to you, Jakob. Please, Jakob.

Speaker #1: Bomholt, and our CFO, Klara Eiriz. As usual, we will start off with Jakob bringing in the highlights from the quarter and some strategic updates.

Speaker #1: Then Klara will bring you more details around the financials. And after the presentation, we will, as usual, have time for Q&A. But before we start, I want to remind you that some of the information discussed in this call contains forward-looking statements.

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

Speaker #1: With that said, I would like to hand over to you, Jakob. So please, Jakob.

Speaker #2: Yeah, thank you very much, Peter. And welcome to all of you. Let me start by giving and sharing some key reflections on Q1. We have been very clear: I believe Elekta is not trading at its full potential.

Jakob Just-Bomholt: Yeah. Thank you very much, Peter, and welcome to all of you. Let me start by giving and sharing some key reflections on Q1. We have been very clear, I believe. Elekta is not trading at full potential. We want to action that, and to that end, we have established a three-phase turnaround plan. This year is really about improving the underlying profitability of the company. Q1 is a step in the right direction, and we expect to see continued progress and execution. Let me just share with you a few highlights. We have now completed the change in operating model. The savings we indicated a few quarters ago has materialized above expectation, more than SEK 500 million. Most importantly, we did it to really enable faster execution.

Speaker #2: We want action on that, and to that end, we have established a three-phase turnaround plan. And this year is really about improving the underlying profitability of the company.

Speaker #2: Q1 is a step in the right direction, and we expect to see continued progress and execution. Let me just share with you a few highlights.

Speaker #2: We have now completed the change in operating model. The savings we indicated a few quarters ago have materialized—above expectation—more than SEK 500 million.

Speaker #2: But most importantly, we did it to really enable faster execution. And Klara, you will unfold our now five regional P&Ls, as part of that—pushing P&L responsibility further down in the organization.

Jakob Just-Bomholt: Klara, you will unfold our now five regional P&Ls, part of that pushing P&L responsibility further down in the organization. We see significantly improved EBIT margin. Yes, part of that uplift related to tariff, but keep in mind, we also on reported EBIT have a headwind of 109 basis points linked to a more prudent way of accounting for R&D expenses. So the underlying improvement is significant, and that translates into cash flow that improves year-on-year, despite the inventory buildup that we are also going to address. If we turn to sales, yeah, a sales decline of 2% is below our guidance for the year. We reiterate that guidance. That also implies that we expect positive sales growth in Q2, and I am sure we will come back to that in the Q&A.

Speaker #2: We see a significantly improved EBIT margin. Yes, part of that uplift is related to tariffs. But keep in mind, we also, in reported EBIT, have a headwind of 109 basis points linked to a more prudent way of accounting for R&D expenses.

Speaker #2: So the underlying improvement is significant, and that translates into cash flow that improves year-on-year, despite the inventory buildup that we are also going to address.

Speaker #2: If we turn to sales, yes, sales decline of 2% is below our guidance for the year. We reiterate that guidance. That also implies that we expect positive sales growth in Q2.

Speaker #2: And I'm sure we'll come back to that in the Q&A. Just to flag here, initially, China did start out weak in the quarter. I have to say, pretty much in line with our own internal forecast.

Jakob Just-Bomholt: Just to flag here initially, China did start out weak in the quarter, I have to say, pretty much in line with our own internal forecast. It really relates to poor order intake a year ago, linked to poor market circumstances. Our market share, give and take, is unchanged. That also means that we will guide for solid growth in Q2 as we are now having an order backlog that supports revenue growth going forward. I am sure we will also come back to that. So we are on plan. Focus is on improving profitability, but of course, we also have focus on delivering on the top-line guide at fixed currency of 2% to 4%. Let me share some financial results, and then you will give more color, Klara, on it. Book-to-bill of 1.11. Order growth of 3%.

Speaker #2: And it really relates to poor order intake a year ago, linked to poor market circumstances. Our market share, give and take, is unchanged. That also means that we will guide for solid growth in Q2, as we now have an order backlog that supports revenue growth going forward.

Speaker #2: But I'm sure we'll also come back to that. So, we are on plan, focusing on improving profitability. But of course, we also have a focus on delivering on the top-line guide at fixed currency of 2% to 4%.

Speaker #2: So let me share some financial results, and then you'll give more color, Klara, on it. Book-to-bill of 1.11, order growth of 3%. We did see Elekta EVO, particularly in the US, develop as we planned and hoped for.

Jakob Just-Bomholt: We did see Elekta Evo, particularly in the US, develop as we planned and hoped for. I just gave color on the negative net sales growth. Keep in mind, Q1 is by far the smallest quarter of the year. As I said, we expect positive growth in Q2. We see Americas and Europe growing, APJ, China, EMEA declining. I will come back to that. Gross margin is significantly up, and it has been some time ago since we had above 40% in Q1, at 42.6%, but obviously 150 basis points one-off related to tariff refund, and we will get a bit more we expect in Q2, but underlying improvement. That translates into an EBIT margin of 11.2%. EBIT cash margin is actually 11.4%, and an even bigger improvement year-on-year when you look at the tailwind we had from a more aggressive accounting practice a year ago.

Speaker #2: I just gave Klara the negative net sales growth. Keep in mind, Q1 is by far the smallest quarter of the year. And, as I said, we expect positive growth in Q2.

Speaker #2: We see Americas and Europe growing; APJ, China, TMEA declining. I'll come back to that. Then, gross margin is significantly up, and it's been some time since we had above 40% in Q1.

Speaker #2: At 42.6%. But, obviously, 150 basis points came off related to the tariff refund, and we'll get a bit more, we expect, in Q2. But underlying improvement.

Speaker #2: That translates into an EBIT margin of 11.2%. EBIT cash margin is actually 11.4%. And there is an even bigger improvement year-on-year when you look at the tailwind we had from a more aggressive accounting practice a year ago.

Speaker #2: So I think we are quite pleased with that EBIT margin improvement, and then the fact that it translates into cash flow. So the trend we are on in reducing our net debt continues, and we expect that also in the period ahead.

Jakob Just-Bomholt: I think we are quite pleased with that EBIT margin improvement, and then the fact that it translates into cash flow, so the trend we are on in reducing our net debt continues, and we expect that also in the period ahead. That is on the financial outlook. If I then just give you a commercial flavor. Overall, radiotherapy market, when we look at it at a global level, it continues to grow roughly 6%. That also implies back to our revenue guide of 2% to 4%. We are still not growing with the market. That is highly unsatisfactory. We are going to do something about it. As I said, at this stage, focus is on improving profitability. On order intake, a little bit lower than 6%, but still healthy.

Speaker #2: So that's on the financial outlook. If I then just give you a commercial flavor overall, the radiotherapy market, when we look at it at a global level, continues to grow.

Speaker #2: Roughly 6%. That also implies, back to our revenue guide of 2% to 4%, we are still not growing with the market. That's highly unsatisfactory.

Speaker #2: We are going to do something about it. But as I said, at this stage, the focus is on improving profitability. On order intake, it's a little bit lower than 6%, but still healthy.

Speaker #2: So, we start to see a slight impact on some NPIs in the market, and also various impacts on orders around the world. But underlying market growth of 6%, which I consider very healthy.

Jakob Just-Bomholt: We start to see slight impact on some NPIs in the market and also various impact on orders around the world, but underlying market growth of 6%, which I consider very healthy. If we look at Americas, very importantly, we are getting back to growth, and we expect that to continue for a period to come. We did get Elekta Evo approved, as you all know, in January, and that starts to translate into orders. I am not going to share specific order numbers for the US, but it is good. We are happy with progress so far, and we have our online adaptive for pelvis, pending FDA. That would be further tailwind for the US organization. Many more things to be achieved, but the momentum is what we hope for.

Speaker #2: If we look at America’s, very importantly, we are getting back to growth, and we expect that to continue for a period to come. We did get Elekta EVO approved, as you all know, in January.

Speaker #2: And that starts to translate into order. So I'm not going to share specific order numbers for the US, but it's good. I mean, we are happy with the progress so far.

Speaker #2: And we have our online adaptive for pelvis pending FDA approval. There will be further tailwinds for the US organization. Many more things to be achieved.

Speaker #2: But the momentum is what we hope for. On US reimbursement, it's still early days, but it actually looks favorable both for freestanding and hospital systems, with a 3% to 5% reimbursement uplift.

Jakob Just-Bomholt: On US reimbursement, still early days, but it actually looks favorable both for freestanding and hospital systems with a 3% to 5% reimbursement uplift. Let us see where that lands, but so far so good. If we move on APJ, we actually expected to come in stronger. The fundamentals of that region is strong. It is an underserved market. It is very varied from Australia to Vietnam to Indonesia to Japan. But we have just seen specific macro and impacting healthcare spend. So the market is down quite a bit. We do not expect that to be sustainable, and we are holding on to share. But we have now seen that for a period of time. If we then focus on China, I was there last week, reviewing commercial, reviewing outlook, obviously also centralized procurement. As I said, we have seen weak order intake a year to 2 years ago.

Speaker #2: So let's see where that lands. But so far, so good. If we move on, APJ was actually expected to come in stronger.

Speaker #2: The fundamentals of that region are strong. It's an underserved market. It's very varied—from Australia to Vietnam to Indonesia to Japan. But we have just seen specific macro factors impacting healthcare spend.

Speaker #2: So, the market is down quite a bit. We don't expect that to be sustainable, and we are holding on to share. But we have now seen that for a period of time.

Speaker #2: If we then focus on China—I was there last week, reviewing commercial, reviewing outlook, and obviously also centralized procurement. As I said, we have seen weak order intake a year to two years ago.

Speaker #2: That has obviously depleted the order backlog, and that impacted Q1, particularly with the low number of installations. We have guided that we have now had three consecutive quarters of good order intake, and that also is a reason why we say that we expect solid revenue growth coming into Q2.

Jakob Just-Bomholt: That has obviously depleted the order backlog, and that impacted Q1 in particular with the low number of installations. We have guided that we have now had three consecutive quarters of good order intake, and that also is a reason why we say that we expect solid revenue growth coming into Q2. A few words on centralized procurement. I think it's important for you to understand. Clearly, it's a change. It will lead to more price transparency in the market, but we have had centralized procurement in the past. Last year, our fiscal year, roughly 25% of the market was through centralized bidding, and Elekta had a win rate of more than 50%. So we are used to it, and I would say we are also ready for it. Obviously, it is a bit of choppy waters.

Speaker #2: A few words on centralized procurement. I think it's important for you to understand. Clearly, it's a change, and it will lead to more price transparency in the market.

Speaker #2: But we have had centralized procurement in the past. Last year, in our fiscal year, roughly 25% of the market was through centralized bidding, and Elekta had a win rate of more than 50%.

Speaker #2: So, we are used to it, and I would say we also are ready for it. Obviously, it is a bit of choppy waters. Well, is that going to delay certain order intake in our second half of the year?

Jakob Just-Bomholt: Is that going to delay certain order intake our H2 of the year? Maybe, but not necessarily. On the other hand, we see a push from Chinese government to advance CapEx to stimulate the economy and serve the healthcare system. So there are pros and cons. All in all, when we look at our market share, we are in the mid-30s, so slightly down from last year, but we maintain our competitiveness. On Europe, increasing revenue by 5% growth in most countries, so that's good. We are piloting some very important NPI integrated console, really a new workflow on our Harmony platform, and it goes well. Just keep in mind when we come to Q2, last year was a high growth quarter, so the comp is tough. On TMEA, we saw a decrease of 4%. We expected growth here, I have to say.

Speaker #2: Maybe, but not necessarily. On the other hand, we see a push from the Chinese government to advance capex to stimulate the economy and serve the healthcare system.

Speaker #2: So, there are pros and cons. And, all in all, when we look at our market share, we are in the mid-30s—so slightly down from last year.

Speaker #2: But we maintain our competitiveness. On Europe, increasing revenue by 5%. Growth in most countries, so that's good. We are piloting some very important NPI integrated console—really, a new workflow on our Harmony platform.

Speaker #2: And it goes well. Just keep in mind, when we come to the second quarter, last year was a high-growth quarter, so the comp is tough.

Speaker #2: And then, on TMEA, we saw a decrease of 4%. We expected growth here, I have to say. And it's delays, not cancellations—very important.

Jakob Just-Bomholt: It's delays, it's not cancellations, very important. We expect quite a good growth for TMEA for the full year. That will start also come Q2 is our expectation. But we had some specific installations in neighboring countries of Iran that actually not due to Elekta, but other suppliers, they stalled the final installation and hence we couldn't recognize the revenue. But the outlook actually looks surprisingly solid for TMEA, both in terms of orders and revenue. So that's overall on the commercial side. If we then go to where we are in our turnaround, the way we think about it is that we have now concluded phase one. We really had to change a lot of things at Elekta, so we said it's a reset. But then once you reset, you also need to stabilize, and we are happy with where we are.

Speaker #2: We expect quite good growth for TMEA for the full year. That will also start to come in Q2, as is our expectation. But we had some specific installations in neighboring countries of Iran that were actually not due to Elekta, but to other suppliers.

Speaker #2: They stalled the final installation, and hence we couldn't recognize the revenue. But the outlook actually looks surprisingly solid for TMEA, both in terms of orders and revenue.

Speaker #2: So that's overall on the commercial side. And if we then go to where we are in our turnaround, the way we think about it is that we have now concluded phase one.

Speaker #2: We really had to change a lot of things at reset. But then, once you reset, you also need to stabilize. And we are happy with where we are.

Speaker #2: Here, on the first of August, we appointed a new COO of the company, Rodolfo Vasquez, to really drive operational excellence within the company. And we can see that there's quite a lot of potential ahead of us.

Jakob Just-Bomholt: Here, 1 August, we appointed a new COO of the company, Rodolfo Velasco, to really drive operational excellence within the company, and we can see that there's quite a lot of potential ahead of us. So I'm very happy to see we have a complete executive committee to drive the performance. This year, this quarter, we provide additional transparency. It's also how we want to operate the company, so we align internal with the external, and then improve quality of earnings with the more prudent accounting. So I'm happy about that. Focus is really on improving profitability this year. We have been optimizing our portfolio. We are more focused in how we invest.

Speaker #2: So, I'm very happy to see we have a complete executive committee to drive the performance. And then, this year, this quarter, we provide additional transparency.

Speaker #2: It's also how we want to operate the company, so we align internal with external, and then improve quality of earnings with more prudent accounting.

Speaker #2: So, I'm happy about that. The focus is really on improving profitability this year. We have been optimizing our portfolio and are more focused in how we invest.

Speaker #2: We still invest more than 10%—roughly 10%—of revenue in R&D, and have a laser focus on releasing new products to the market, as well as strengthening commercial execution.

Jakob Just-Bomholt: We still invest more than 10%, or roughly 10%, of revenue in R&D, have a laser focus on releasing new products to the market, strengthening commercial execution, also through delegating responsibility and accountability to regions. We have good pricing guidelines now in place that will support us in the period ahead. We are laser focused on COGS reduction program, and you also see some of it translating into improved gross margin. For us, it is about expanding margins, it is about productivity initiatives, and then importantly at this phase is making the required steps towards us translating innovation in market share gains going forward so we can soon get into phase 3, and that is growing at above the market, because that is the future of Elekta bringing innovation to the market.

Speaker #2: Also, through delegating responsibility and accountability to regions. We have good pricing guidelines now in place that will support us in the period ahead. And then we are laser focused on the cost reduction program.

Speaker #2: And you also see some of it translating into improved gross margin. So, for us, it's about expanding margins, it's about productivity initiatives, and then, importantly at this phase, making the required steps towards translating innovation into market share gains going forward.

Speaker #2: So we can soon get into phase three, and that is growing at about the market. Because that is the future of Elekta—bringing innovation to the market.

Speaker #2: So, that's a high-level perspective of where we are. We feel good about it, but we know we have a lot of work ahead of us.

Jakob Just-Bomholt: That is a high level perspective of where we are, and we feel good about it, but we know we have a lot of work ahead of us. With that, Klara, I leave the word to you.

Speaker #2: And with that, Claire, I hand over to you.

Speaker #1: Thank you, Jacob. All right, so let's look into the numbers for Q1 in a bit more detail. Net sales decreased by 2% in constant exchange rates.

Klara Eiritz: Thank you, Jakob. All right, so let us look into the numbers for Q1 in a bit more detail. Net sales decreased by 2% in constant exchange rates. Solution sales decreased by 9%, and we saw growth in both Europe and Americas, however, offset by lower sales in APJ, China, and TMEA. Service sales grew by 5% with growth in all regions. The adjusted gross margin amounted to 42.6%, a considerable improvement from last year's 37%. The improvement is related to growth in software and service price increases, but also lower cost levels, largely related to the change of operating model implemented over the last two quarters. We had refunds of US tariffs imposed under the US International Emergency Economic Powers Act, which had a positive impact of 53 million SEK in the quarter, corresponding to about 150 basis points.

Speaker #1: Solution sales decreased by 9%. We saw growth in both Europe and the Americas. However, this was offset by lower sales in APJ, China, and TMEA. Service sales grew by 5%, with growth in all regions.

Speaker #1: The adjusted gross margin amounted to 42.6%, a considerable improvement from last year’s 37%. The improvement is related to growth in software and service, price increases, but also lower cost levels, largely related to the change of operating model implemented over the last two quarters.

Speaker #1: We had refunds of U.S. tariffs imposed under the U.S. International Emergency Economic Powers Act, which had a positive impact of SEK 53 million in the quarter.

Speaker #1: Corresponding to about 150 basis points. For Q4 numbers, we had a negative FX impact, impacting the gross margin negatively by 20 basis points. The adjusted EBIT margin amounted to 11.2%.

Klara Eiritz: As we anticipated when reporting our Q4 numbers, we had a negative FX impact, impacting the gross margin negatively by 20 basis points. The adjusted EBIT margin amounted to 11.2%, and the year-on-year improvement was primarily driven by earlier mentioned improvements in gross margin, of course, but also lower selling and administration costs driven by the change in operating model. Year-over-year, we had a negative impact of about 190 basis points from lower capitalization of R&D and increased amortization of R&D. That is why we see a larger improvement in EBITC than we see in EBIT. I should also mention that we have no items affecting comparability in the quarter, but we did have 16 million SEK in Q1 as IAC in Q1 last year. So we have an adjusted EBIT for Q1 last year, but not for this year.

Speaker #1: The year-on-year improvement was primarily driven by the previously mentioned improvements in gross margin, of course, but also by lower selling and administration costs, which were driven by the change in operating model.

Speaker #1: Year-over-year, we had a negative impact of about 190 basis points from lower capitalization of R&D and increased amortization of R&D. And that's why we see a larger improvement in EBITDA than we see in EBIT.

Speaker #1: I should also mention that we have no items affecting comparability in the quarter. But we did have SEK 16 million in Q1 as IAC in Q1 last year.

Speaker #1: So, we have an adjusted EBIT for Q1 last year, but not for this year. Net income amounted to SEK 106 million, and adjusted earnings per share amounted to SEK 0.31.

Klara Eiritz: Net income amounted to SEK 106 million and adjusted earnings per share amounted to SEK 0.31. If we move to the next slide here, as of now, our external reporting structure is aligned with how we manage and organize our business internally. Internally, we are organizing five separate regions with full P&L responsibility. We have Americas, China, Europe, TMEA, consisting of Turkey, India, Middle East and Africa, and APJ, Asia Pacific and Japan. Starting now in Q1 2026, 2027, this is also the structure that we will present externally. You all were introduced to this new structure also at the Capital Markets Day. The regions have a P&L with fully loaded costs, so when you add the regions EBIT and group common cost together, you get Elekta's P&L and Elekta's EBIT.

Speaker #1: And if we move to the next slide here, as of now, our external reporting structure is aligned with how we manage and organize our business internally.

Speaker #1: Internally, we are organizing five separate regions with full P&L responsibility. We have the Americas, China, Europe, and TMEA, which consists of Turkey, India, the Middle East, and Africa.

Speaker #1: And APJ – Asia Pacific and Japan. Starting now in Q1 2027, this is also the structure that we will present externally. You were all introduced to this new structure at the Capital Markets Day.

Speaker #1: The regions have a P&L with fully loaded costs. So, when you add the regions' EBIT and group common costs together, you get Elekta's P&L and Elekta's EBIT.

Speaker #1: Group common costs consist of central costs associated with our central staff functions. These costs will not be loaded into our regional P&Ls, but instead kept centrally.

Klara Eiritz: Group common costs consists of central costs associated with our central staff functions, and these costs will not be loaded into our regional P&Ls, but instead kept centrally. Previously, in the old external report structure, we only showed three regions with net sales and contribution margin. Now we will report on net sales, gross income, and EBIT for each of the five regions. Let's look at the performance of our five regions. To start with, the gross margin has improved in all five regions, and all regions except TMEA are now above 40%. If we then take the regions one by one, we can see the following. We start with Americas. The EBIT margin for Americas improved year-over-year, driven by, of course, the launch of Elekta Evo and related price increases.

Speaker #1: Previously, in the old external report structure, we only showed three regions with net sales and contribution margin. Now, we will report on net sales, gross income, and EBIT for each of the five regions.

Speaker #1: So, let's look at the performance of our five regions. To start with, the gross margin has improved in all five regions, and all regions except TMEA are now above 40%.

Speaker #1: If we then take the regions one by one, we can see the following. We start with Americas. The EBIT margin for Americas improved year over year, driven by, of course, the launch of Elekta EVO and related price increases.

Speaker #1: In addition, as I mentioned, the refund of U.S. tariffs imposed under the U.S. International Emergency Economic Powers Act had a positive impact of 53%.

Klara Eiritz: In addition, as I mentioned, the refund of US tariffs imposed under the US International Emergency Economic Powers Act had a positive impact of SEK 53 million, corresponding to 490 basis points for the Americas region. For the next quarter, we expect around $3 million US in a second and final tariff refund. Also remember that we continue to pay tariffs in the US, so that continues. The refund is for Q1 and Q2. APJ. Despite lower sales driven by constraints in the healthcare budgets and capital investments that Jakob also mentioned, the EBIT margin was almost in line with last year due to cost initiatives in both gross margin and OpEx. We also see positive movements in terms of price and mixed service sales, to be precise, in APJ.

Speaker #1: Or, sorry, SEK 53 million, corresponding to 490 basis points for the Americas region. For the next quarter, we expect around $3 million in a second and final tariff refund.

Speaker #1: Also remember that we continue to pay tariffs in the US, so that continues. But the refund is for Q1 and Q2. APJ—so despite lower sales, driven by constraints in healthcare budgets and capital investments, that Jacob also mentioned—the EBIT margin was almost in line with last year due to cost initiatives in both gross margin and opex.

Speaker #1: But we also see positive movements in terms of price and mix. Service sales, to be precise, in the APJ region. China's EBIT margin declined as a consequence of the lower volumes.

Klara Eiritz: Region China's EBIT margin declined as a consequence of the lower volumes, but even their gross margin improved due to lower gross margin expenses. We can see that we don't have full coverage of the OpEx in the Chinese region here. We see a drop in EBIT. We need slightly higher volumes in China for EBIT to come up. Then to EMEA. Sorry, Europe. The EBIT margin in Europe improved compared to last year, supported by a favorable development for Nuri and Brachy solutions. Finally, the EBIT margin in EMEA was negative in the first quarter. However, it was an improvement compared to last year, and normally we see a seasonal pattern of gradual improvements towards the end of the year for EMEA, and they have a better starting point this year than last year.

Speaker #1: But even their gross margin improved due to lower gross margin expenses. But we can see that we don't have full coverage of the opex in the Chinese region.

Speaker #1: Here. So we see a drop in EBIT, so we need slightly higher volumes in China for EBIT to come up. And then TMEA—or sorry, Europe.

Speaker #1: The EBIT margin in Europe improved compared to last year, supported by favorable developments for Nuri and Bracky Solutions. And finally, the EBIT margin in TMEA was negative in the first quarter.

Speaker #1: However, it was an improvement compared to last year. And normally, we see a seasonal pattern of gradual improvements towards the end of the year for TMEA.

Speaker #1: And they have a better starting point this year than last year, so we expect that to improve over the course of the year. All right.

Klara Eiritz: We expect that to improve over the course of the year. All right. Let's talk about currency impact. We see a negative currency impact on net sales, mainly due to the strengthening of the Swedish krona against the main revenue currencies, the US dollar and the euro. This impact is then partly offset by the group's significant cost base in US dollars, British pound, and Europe, limiting the effect on bottom-line profitability. Changes in FX had a negative impact on both gross margin and EBIT margin by 20 and 30 basis points, respectively. A few words on cash flow. Free cash flow before dividends and M&A improved by 154 million, reaching a negative SEK 266 million in the first quarter. The year-on-year improvement was primarily driven by an improved EBIT of 176 million, reflecting an underlying improvement in the business.

Speaker #1: Let's talk about currency impact. We see a negative currency impact on net sales, mainly due to the strengthening of the Swedish krona against the main revenue currencies, the US dollar and the euro.

Speaker #1: This impact is then partly offset by the group's significant cost base in US dollars, British pounds, and Europe, limiting the effect on bottom-line profitability.

Speaker #1: Changes in FX had a negative impact on both gross margin and EBIT margin by 20 and 30 basis points, respectively. And then a few words on cash flow.

Speaker #1: Free cash flow before dividends and M&A improved by SEK 154 million, reaching negative SEK 266 million in the first quarter. The year-on-year improvement was primarily driven by an improved EBIT of SEK 176 million, reflecting an underlying improvement in the business.

Speaker #1: We had a negative impact from more unfavorable changes in working capital of SEK 318 million, driven by a seasonal buildup of inventory. We, of course, had that last year also.

Klara Eiritz: We had a negative impact from more unfavorable changes in working capital of 318 million, driven by a seasonal buildup of inventory. We of course had that last year also, but it was higher this year. As planned, we had lower R&D related investments in the second quarter compared to last year, and lower costs for interests and tax compared to last year, driven by a tax refund paid in Q1 this year and positive FX impacts. Okay, let's look at the historic development on a rolling 12-month basis starting off in Q1 last year. If we start with the graph on the left-hand side, we can see that the EBITC margin is up considerably compared to the same period last year, from 9.1% to 12.6%. We can also see a gradual improvement in gross margin with a 12-month rolling gross margin very close to 40%.

Speaker #1: But it was higher this year. And also, as planned, we had lower R&D-related investments in the second quarter compared to last year. We also had lower costs for interest and tax compared to last year, driven by a tax refund paid in Q1 this year.

Speaker #1: And positive FX impacts. Okay, let's look at the historic development on a rolling 12-month basis, starting off in Q1 last year. If we start with the graph on the left-hand side, we can see that the EBITCA margin is up considerably compared to the same period last year, from 9.1% to 12.6%.

Speaker #1: We can also see a gradual improvement in gross margin, with a 12-month rolling gross margin very close to 40%. Finally, on the right-hand side, we see solid development in free cash flow before dividend and M&A.

Klara Eiritz: Finally, on the right-hand side, we see solid development in free cash flow before dividend and M&A. I also want to mention that Elekta on 24 August signed a EUR 100 million credit facility with the European Investment Bank, and this facility is dedicated for R&D project funding and has a six-year maturity. All right. Before I hand back to Jakob, I want to conclude by reconfirming our previously communicated outlook for the fiscal year of 2026-2027. This slide is the exact same one that we presented on our Capital Markets Day on 17 June. For 2026-2027, we continue to expect net sales growth of 2% to 4% in constant currency and an adjusted EBIT margin of 12.5% to 13.5%. By that, I hand back to you, Jakob.

Speaker #1: I also want to mention that Elekta, on August 24th, signed a €100 million credit facility with the European Investment Bank. This facility is dedicated to R&D project funding and has a six-year maturity.

Speaker #1: All right. So before I hand back to Jacob, I want to conclude by reconfirming our previously communicated outlook for the fiscal year 2027.

Speaker #1: This slide is the exact same one that we presented on our Capital Markets Day on June 17th. And for net sales, growth of 2% to 4% in constant currency.

Speaker #1: And an adjusted EBIT margin of 12.5% to 13.5%. And with that, I hand back to you, Jacob.

Speaker #2: Thank you very much. So, let me conclude this call. I look forward to the Q&A. We see Q1 with continued progress in strengthening our financial performance.

Jakob Just-Bomholt: Thank you very much. Yeah, so let me conclude this call. Look forward to Q&A. We see Q1 with continued progress in strengthening our financial performance. Big improvement in terms of gross margin, EBITC margin, and then stronger cash generation. On the top line, yes, sales decline in China as a result of weak markets in recent years, but important for you to take away that based on the order intake we have seen in recent quarters, we expect future growth and certainly in Q2. US sales growth is happening, order intake as expected and hoped for with the Elekta Evo, of course, as the main contributor. That also means based on those events, our sales guide of 2% to 4% stands. Focus is within Elekta to continue to improve the profitability.

Speaker #2: Big improvement in terms of gross margin, EBITC margin, and then stronger cash generation. On the top line, yes, sales declined in China as a result of weak markets.

Speaker #2: In recent years, but important for you to take away that, based on the order intake we have seen in recent quarters, we expect future growth, and certainly in Q2.

Speaker #2: US sales growth is happening, and order intake is as expected and hoped for, with the Elekta EVO, of course, as the main contributor. That also means, based on those events, our sales guidance of 2% to 4% stands.

Speaker #2: And then, the focus within Elekta is to continue to improve profitability. We are still below where we should be, and at the same time, we continue to invest in levers to accelerate our midterm, innovation-driven revenue growth.

Jakob Just-Bomholt: We are still below where we should be, and at the same time, we continue to invest in levers to accelerate our midterm innovation-driven revenue growth. With that, Peter, thanks. Back to you.

Speaker #2: So with that, Peter, thanks. Back to you.

Speaker #1: Thanks, Jacob, and thanks, Clara. So before handing over to Q&A, just a short glimpse at the financial calendar. We will have our next report, Q2, on November 25.

Peter Nyquist: Thanks, Jakob, and thanks, Klara. Before handing over to Q&A, just a short glimpse on the financial calendar. We will have our next report, Q2, 25 November. Before that, actually, we have our AGM coming up next week, Thursday. Operator, we are now ready for the Q&A, so you can open the session, please.

Speaker #1: But before that, actually, we have our ADM coming up next week, Thursday. But operators, we are now ready for the Q&A. So you can open the session, please.

Speaker #3: We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You'll hear a tone to confirm that you have entered the queue.

Operator: We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Anyone who has a question may press star and one at this time. The first question is from Ludwig Germundsson, Handelsbanken. Please go ahead.

Speaker #3: If you wish to remove yourself from the question queue, you may press star, then two. Anyone who has a question may press star, then one at this time.

Speaker #3: The first question is from Ludwig Germunder at Handelsbanken. Please go ahead.

Speaker #4: Good morning, Ludwig.

Peter Nyquist: Good morning, Ludwig.

Peter Nyquist: Yes, good morning. Thank you for taking my questions. I have two, please. Firstly, on orders in the US, you were talking a little bit about it, but just wanted to follow up from the CMD in June. You told us that you, by that time, have taken double-digit Elekta Evo orders in the US, I believe of which 25% were slips from competitors. Would you be willing to give some more color on how US orders are progressing and perhaps if you could update us on the themes, you told us at the CMD. My second question would be on top-line growth. You leave the outlook unchanged, and we understand the Q1 is a small quarter. You told us that Q2, you expect to be back on positive growth territory.

Speaker #1: Good morning. Yeah, thank you for taking my questions. I have two, please. Firstly, on orders in the US—you were talking a little bit about it, but I just wanted to follow up from the CMD in June.

Speaker #1: You told us that you, by that time, had taken double-digit EVO orders in the US, and I believe that 25% of those were flips from competitors.

Speaker #1: Would you be willing to give some more color on how US orders are progressing, and perhaps, if you could, update us on the things you told us at the CMD?

Speaker #1: And my second question would be on top-line growth. You leave the outlook unchanged, and we understand that Q1 is a small quarter. You told us that in Q2 you expect to be back in positive growth territory.

Speaker #1: But would you be willing to give some more color on how you expect the trajectory of the organic growth to be throughout the year, please?

Peter Nyquist: But would you be willing to give some more color on how you expect the trajectory of the organic growth to be throughout the year, please?

Speaker #4: Yeah. Yeah. Jacob?

Jakob Just-Bomholt: Yeah.

Peter Nyquist: Jacob?

Speaker #2: Yeah. Thanks, Ludwig. Nothing changed from CMD on the US. We did see double-digit growth—very solid double-digit growth—in the US. I don't want to give the specific numbers here.

Jakob Just-Bomholt: Yeah. Thanks, Ludwig. Nothing changed from CMD on US. We did see double-digit growth, very solid double-digit growth in the US. I don't want to give the specific numbers here. So we are following the plan, and that also is the reason why we say that it will start to turn into revenue. So the revenue growth outlook in US for this year is solid. All in all, we are progressing as we hope for. On top-line growth, we stand by the guidance and what we can say at this stage is we expect a positive growth in Q2, also to an extent that we, as it looks now, will be positive for H1 of the year. That's as far as we will go at this stage.

Speaker #2: So we are following the plan. And that also is the reason why we say that it will start to turn into revenue. So the revenue growth outlook in the US for this year is solid, right?

Speaker #2: And all in all, we are progressing as we hope for. So, on top-line growth, we stand by the guidance. What we can say at this stage is we expect positive growth in Q2, also to an extent that we, as it looks now, will be positive for the first half of the year.

Speaker #2: That's as far as we will go at this stage. But of course, we wouldn't say it if we didn't have a funnel on orders to support us being within the guide of 2% to 4%.

Jakob Just-Bomholt: But of course, we wouldn't say it if we didn't have a funnel on orders to support us being within the guide of 2% to 4%.

Speaker #1: Thanks, Jacob.

Peter Nyquist: Thanks, Jakob. Thanks, Ludwig. We will move to the next question, Philip Ekengren from Nordea. Good morning, Philip.

Speaker #2: Thanks, Ludwig.

Speaker #1: We will move to the next question. Philip Ekengren from Nordea. Good morning, Philip.

Speaker #5: Good morning to you all. So, first, and I'll do them one by one. I also have two. Could you elaborate a bit on what you're seeing in the Chinese market?

Philip Ekengren: Good morning to you all. First, I will do them one by one, I also have two. Could you elaborate a bit on what you are seeing on the Chinese market? What is driving the order growth, and what visibility do you have for order interest for the coming quarters, and also perhaps order conversion?

Speaker #5: So, what's driving the order growth, and what visibility do you have for order interest for the coming quarters? And also, perhaps, order conversion?

Speaker #2: Yeah, yeah. So, the Chinese market—we guided a year ago that we would see a recovery in the market, and that has happened, actually. As you may recall, there was an anti-corruption campaign a couple of years ago that subdued market demand.

Jakob Just-Bomholt: Well, Chinese market, we guided a year ago, we would see a recovery in the market, and that has happened, actually. There was, as you may recall, an anti-corruption campaign a couple of years ago that subdued market demand. Everyone was nervous at going in and entering bidding situation. Situation is now normalizing, which means that the market is coming back to more or less its long-term equilibrium. There is still a very significant market potential because there are roughly 3,000 LINACs installed. There should be at least 5,000. The fundamental of the market growth is happening. Then we have seen that market recovery translating into orders secured for Elekta, and we have seen order intake growth the last three quarters, and they are now turning into installations. Once they turn into installation, we will recognize them as revenue.

Speaker #2: Everyone was nervous going in and entering the bidding situation. The situation is now normalizing, which means that the market is coming back to more or less its long-term equilibrium.

Speaker #2: And there's still a very significant market potential, because there are roughly 3,000 Linux installed. There should be at least 5,000. So, the fundamentals of market growth are happening.

Speaker #2: Then we have seen that market recovery translating into orders secured for Elekta, and we have seen order intake growth the last three quarters. And they are now turning into installations.

Speaker #2: And once they turn into installations, we'll recognize them as revenue. That's why we say we have expectations of solid revenue growth in Q2.

Jakob Just-Bomholt: That is why we say we have expectation of solid revenue growth in Q2. We still think the outlook actually looks okay for us in China, I have to say. Then in terms of market share, we estimate that it was actually the China Association for Medical Devices Industry who put us at 35%, and I think that is give and take. So we are able to defend our market share to a large extent, at least.

Speaker #2: And we still think—we... Yeah, the outlook actually looks okay for us in China, I have to say. And then, in terms of market share, we estimate that it was actually the Chinese Medical Device Association who put us at 35%.

Speaker #2: And I think that's give and take, right? So we are able to defend our market share to a large extent, at least.

Speaker #1: You had a second question, Philip. Is that right?

Peter Nyquist: You had a second question, Philip. Go for it.

Speaker #5: Yes. So, trying to understand how sustainable the gross margin improvement is, could you rank the importance of pricing, software and service mix, and also the structural cost savings?

Philip Ekengren: Yes. Trying to understand how sustainable the gross margin improvement is, could you rank the importance of pricing, software and service mix, and also the structural cost savings?

Speaker #1: Clara.

Peter Nyquist: Klara?

Speaker #3: Yes, so I mean, the service–solution mix is considerably favorable this quarter. But the pricing aspect is also an important lever, both for services and solutions.

Klara Eiritz: Yes. The service solution mix is considerably favorable this quarter. The pricing aspect is also an important lever, both for services and solutions. The mix is definitely very positive this quarter. Then we have, related to the new operating model, we are operating at a lower cost level than we have in the past. It is a mix of those three things.

Speaker #3: But the mix is definitely very positive. This quarter. And then we have I mean, related to the new operating model, we have we are operating at a lower cost level than we have in the past.

Speaker #3: So, it is a mix of those three things.

Speaker #1: Okay.

Peter Nyquist: Okay.

Speaker #5: And if I may, just a follow-up: how sustainable is that going forward?

Philip Ekengren: If I may, just a follow-up. How sustainable is that going forward?

Speaker #3: Well, as you know, the mix goes up and down, right? That will be different from quarter to quarter. The price increases, we view as sustainable, of course, but that also depends a little bit on the mix.

Klara Eiritz: Well, as you know, the mix goes up and down, right? That will be different from quarter to quarter. The price increases we view as sustainable, of course, but that also depends on the mix a little bit. Then we have an underlying lower cost level that we see that we expect to maintain.

Speaker #3: And then we have an underlying lower cost level that we see, and that we expect to maintain.

Speaker #5: Thanks.

Philip Ekengren: Thanks.

Speaker #1: Okay, thanks, Philip. We'll move to Stian Gustafsson at ABG. Good morning, Stian.

Peter Nyquist: Okay, thanks, Philip. We will move to Sten Gustafsson at ABG. Good morning, Sten.

Speaker #6: Yes, good morning, everyone. Coming back to China, I was wondering if you could comment on what you think will happen to pricing and what you saw last year. I think you mentioned—and thanks for that color—that 25% of the business you did in China last year was through centralized procurements.

Sten Gustafsson: Yes, good morning, everyone. Coming back to China, I was wondering if you could comment on what you think will happen to pricing and what you saw last year on, I think you mentioned, and thanks for that color, 25% of the business you did in China last year was through centralized procurements. Did that have any impact on price? With this new increased level of centralized procurements out in the regions or provinces in China, do you think prices will come down significantly, or what is your take on that?

Speaker #6: And did that have any impact on price? And with this new, increased level of centralized procurement out in the regions or provinces in China, do you think prices will come down significantly, or what's your take on that?

Speaker #2: Yeah, thanks for a great question. The truth is, we don't know for sure. What we do know is that there will be increased price transparency.

Jakob Just-Bomholt: Yeah. Thanks for a great question. The truth is we do not know for sure. What we know is that there will be increased price transparency. I think that works both ways. Essentially, the price we give in one province will be available to all 32. Price transparency will also discipline the market actors, because once you give a price here, it commits you elsewhere. That is a positive. You could say price transparency also means you cannot get away with very high prices in one province and not in the other. But if we judge by history, then we actually do not have evidence to say that centralized bidding resulted in lower pricing than you can say the more curated negotiated deals.

Speaker #2: I think that works both ways. So, essentially, the price we give in one province will be available to all 32. Price transparency will also discipline the market actors, because once you give a price here, it commits you elsewhere.

Speaker #2: So that's the positive. You could say price transparency also means you can't get away with very high prices in one province and not in another.

Speaker #2: But if we judge by history, then we actually don't have evidence to say that centralized bidding resulted in lower pricing than, you could say, the more curated negotiated deals.

Speaker #6: Okay, thank you very much. I guess we'll just have to wait and see what happens there. And then, a question on your orders: if I remember correctly, in Q4 there were two specific orders that didn't qualify to be booked given your new, stricter order acceptance criteria.

Sten Gustafsson: Okay. Thank you very much. I guess we will just have to wait and see what happens there. A question on your orders. If I remember correctly, in Q4, there were two specific orders that did not qualify to be booked, given your new stricter order acceptance criteria. Were there any orders in Q1 that you did not book, given your new methodology?

Speaker #6: Were there any orders in Q1 that you didn't book, given your new methodology?

Speaker #2: Yeah, there was. But it's almost a topic that we have stopped debating within Elekta because we just say, "Follow the guidelines." And whatever escalations came out, we declined, because for us, it's extremely important not just to deliver good order numbers in a given quarter, but to, over time, build order backlog that is of sound quality.

Jakob Just-Bomholt: Yeah. It is almost a topic that we have stopped debating within Elekta, because we just say, follow the guidelines. Whatever escalations that came our way, we declined, because, for us, it is extremely important not just to deliver good order numbers in a given quarter, but to, over time, build an order backlog that is of sound quality. So absolutely, there were deals here and there, where there will be a degree of uncertainty, and then we err on the side of being prudent.

Speaker #2: So, absolutely, there were deals here and there. There will be a degree of uncertainty, and then we err on the side of being prudent.

Speaker #1: Great. Thanks.

Sten Gustafsson: Great. Thanks.

Jakob Just-Bomholt: Great.

Speaker #5: Great, thank you very much. Thank you.

Peter Nyquist: Thank you very much.

Peter Nyquist: Thanks, Stian.

Sten Gustafsson: Thank you.

Speaker #1: We'll move to Tobias Hägglöf or Veronica Tobias Hägglöf at Citi. Good morning, Veronica.

Peter Nyquist: We'll move to Veronika Dubajova at Citi. Good morning, Veronika.

Speaker #7: Good morning, and thank you for taking my questions. I hope you can hear me okay. Hi. I kind of want to delve a little bit more into the order or revenue growth dynamic, if that's okay.

Veronika Dubajova: Good morning, and thank you for taking my questions. I hope you can hear me okay. I want to delve a little bit more into the order of revenue growth dynamic, if that's okay. Obviously, you guys are maintaining the guide, but if I look at the 12-month rolling order growth, it is still at -3%. Can you maybe help us understand how you can go from that -3% order growth to that 2% to 4% revenue? I guess, what are the regions that are most important as we think about that growth acceleration through the remainder of the year? Maybe if you can quantify some of your expectations around that would be super helpful. Then apologies, I'm going to go back to the gross margin. Again, just trying to separate out the pieces.

Speaker #7: Obviously, you guys are maintaining the guide. But if I look at the 12-month rolling order growth, it is still at minus 3%. Can you maybe help us understand how you can go from that minus 3% order growth to that 2 to 4% revenue growth?

Speaker #7: And I guess, what are the regions that are most important as we think about that growth acceleration through the remainder of the year? And maybe, if you can, kind of quantify some of your expectations around that.

Speaker #7: That would be super helpful. And then apologies, I'm going to go back to the gross margin. Again, just trying to separate out the pieces.

Speaker #7: And I guess you did have a pretty significant inventory build-up, which obviously should have been a tailwind to the gross margin as well. So, I'm trying to understand whether that was a contributor.

Veronika Dubajova: I guess you did have a pretty significant inventory build-out, which obviously should have been a tailwind to the gross margin as well. So trying to understand whether that was a contributor. I guess if you guys can give us any guidance for the gross margin for the year, or at least help us anchor it relative to last year, whether you would expect that gross margin on aggregate to be flat, up, or down. That might be a good starting point as we think about modeling out the remainder of the year. The final third one, I am sorry, I know I said two, but I am going to squeeze in a third one. Why no change to the margin guidance if we are anticipating more tariff refunds? Thank you.

Speaker #7: And I guess, if you guys can give us any guidance for the gross margin for the year, or at least help us kind of anchor it relative to last year—whether you would expect that gross margin, on aggregate, to be flat, up, or down—that might be a good starting point as we think about modeling out the remainder of the year.

Speaker #7: And then the final—third one. I'm sorry, I know I said two, but I'm going to squeeze in a third one. Why no change to the margin guidance if we are anticipating more tariffs?

Speaker #7: Tariff refunds. Thank you.

Speaker #2: All right. I'll take the first, and then you take the last two. And of course, Veronica, when it's you, three questions is absolutely okay.

Jakob Just-Bomholt: All right. I take the first, then you take the last two. Of course, Veronika, when it is you, three questions is absolutely okay. Keep in mind, we have a book-to-bill of 1.05. That is really how I think you should reflect on when you look at future revenue. When you look at the comparison on order intake, rolling 12 months versus the previous, we are applying stricter criteria, invariably, there is going to be a consequence of that change. So the revenue guide stands. If I would just give you a little bit of color of how we think and the visibility we have at the moment is, likely, TMEA is going to be the fastest growing region. I would also expect Region Americas would potentially come in second. Then we, as it looks right now, have a good chance to see all regions growing.

Speaker #2: Keep in mind, we have a book-to-bill of 1.05. That's really how I think you should reflect when you look at future revenue. Because when you look at the comparison on order intake—rolling 12 months versus the previous—and we are applying stricter criteria, invariably, there is going to be a consequence of that change.

Speaker #2: So the revenue guide stands. If I would just give you a little bit of color on how we think and the visibility we have at the moment, it's likely EMEA is going to be the fastest-growing region.

Speaker #2: I would also expect the region Americas would potentially come in second. And then we, as it looks right now, have a good chance to see all regions growing.

Speaker #2: And then on gross margin, and...

Jakob Just-Bomholt: Then on gross margin and-

Speaker #3: Yeah, I think something to remember about the gross margin also is that we had a very positive geographic mix this quarter, right, with a lot of revenue in the Americas and Europe.

Klara Eiritz: Yeah.

Jakob Just-Bomholt: Yeah.

Klara Eiritz: I think something to remember about the gross margin, also, is that we have a very positive geographic mix this quarter, with a lot of revenue in Americas and Europe. So that is something to consider. The inventory piece is not a huge part of what we see on the gross margin. At the same time, we have. Sorry. Your question about tariffs was more for the guidance, right?

Speaker #3: So, that's something to consider. Even the inventory piece is not a huge part of what we see on the gross margin. But at the same time, I mean, we have—sorry, yeah, your question about tariffs was more for the guidance, right?

Speaker #3: And there.

Speaker #7: Yes, yeah. But if you—yeah, separately, on the gross margin, yeah. So, the inventory build-out was not a big contributor to the gross margin this quarter.

Veronika Dubajova: Yes.

Klara Eiritz: Yes.

Veronika Dubajova: But separately on the gross margin, yeah. So the inventory build-out was not a big contributor to the gross margin this quarter.

Speaker #2: No.

Jakob Just-Bomholt: No.

Speaker #3: No.

Klara Eiritz: No.

Veronika Dubajova: Okay.

Speaker #7: Okay.

Speaker #2: And then maybe I can build on, Clara, on top of that. So we are actually starting to see a nice inflow—that's more on current orders—on price uptick.

Jakob Just-Bomholt: And then maybe I can build on, Klara, on top of. So we are actually starting to see a nice inflow that is more on current orders on the price uptick. So I think it is good. I think I shared with you, we have implemented new pricing frameworks, and we are starting to see that gradually flow into the gross margin. And then on our operating model, we have been quite positively surprised about our service and order fulfillment costs coming down. And it really links to now regions taking full ownership of their P&L. And that is very supportive. And then on the-

Speaker #2: So I think it's good. I think I shared with you that we have implemented new pricing frameworks, and we are starting to see that gradually flow into the gross margin.

Speaker #2: And then, on our operating model, we have been quite positively surprised about our service and order fulfillment costs coming down. And it really links to regions now taking full ownership of their P&L, and that's very supportive.

Speaker #3: Yeah.

Speaker #2: And then on the.

Veronika Dubajova: Yes, and then on the full year guidance.

Speaker #7: Yeah. And then on the full-year—yeah, on the full-year guidance.

Speaker #3: Yeah. I mean, we stick to the guidance that we have. When we issued the guidance, the tariff refund situation was quite uncertain.

Jakob Just-Bomholt: Yeah. We stick to the guidance that we have. When we did the guidance, the tariff refund situation was quite uncertain, but we stick to our guidance. Things can go in the opposite direction also. We have the tungsten prices, we have the FX, of course. So we stick to this guidance, and it is a range. So we expect to be within that range. Great. Thanks.

Speaker #3: But we stick to our guidance. I mean, we have things going the opposite direction also. I mean, we have the tungsten prices. We have FX, of course.

Speaker #3: So, we stick to this guidance. And it is a range, so we expect to be within that range.

Speaker #1: Great. Thanks.

Veronika Dubajova: All right. Thank you guys so much.

Speaker #7: All right. Thank you, guys, so much.

Speaker #1: Thanks, Veronica. We'll move to Mattias Wahlsten at SEB. Good morning, Mattias.

Peter Nyquist: Thanks, Veronika. We'll move to Mattias Vadsten at SEB. Good morning, Mattias.

Speaker #5: Good morning. Can you hear me?

Mattias Vadsten: Good morning. Can you hear me?

Speaker #1: Yes. Perfect.

Jakob Just-Bomholt: Yes. Perfect.

Speaker #5: Perfect, thanks for taking my questions. First one: you said in the presentation that the US, you're quite clear it's performing in line with expectations. I'm just trying to understand.

Mattias Vadsten: Perfect. Thanks for taking my questions. First one, you said in the presentation that US, you're quite clear it's performing in line with expectations. I'm just trying to understand, so Americas +2% here, of course, only one quarter, but +1% in Q4. That's two quarters. Is it then either that orders to sales in the US take more time than you thought, or are there other markets outside of US performing below expectations? Because I presume this is not the growth rate that you're aiming for in Americas.

Speaker #5: So, Americas, plus 2% here. Of course, only one quarter, but plus 1% in Q4. That's two quarters. So is it then either that orders to sales in the US take more time than you thought, or are there other markets outside of the US performing below expectations?

Speaker #5: Because I presume this is not a growth rate that you're aiming for in the Americas.

Speaker #2: Yeah, it's linked to two things. Hi, Mattias. One is order intake that is developing as we hope for, and then our revenue outlook, because we are starting to see that orders that came from the FDA approval in January will start materializing into revenue from next quarter onwards.

Jakob Just-Bomholt: Yeah, it's linked to two things, hi Mattias. One is order intake that is developing as we hope for, and then our revenue outlook, because we are starting to see that orders that came from the FDA approval in January will start materializing into revenue from next quarter onwards.

Speaker #5: Okay. And so the markets outside of the US in the Americas are nothing to dwell on.

Mattias Vadsten: Okay, and so the markets outside of the US in Americas are nothing to dwell on?

Speaker #2: No, that's exactly right. I mean, the way I would suggest you think about it is that there is a timing issue. Of course, every installation is different.

Jakob Just-Bomholt: No, that's exactly right. The way I would suggest you think about it is that there is a timing issue. Of course, every installation is different, but we really expect revenue growth to increase in Q2 versus Q1.

Speaker #2: But we really expect revenue growth to increase in Q2 versus Q1.

Speaker #5: Okay, thank you. You made some helpful comments on reimbursement in regards to the US. So, maybe could you comment if, let's say, in the last 12-month period, the reimbursement situation has been a headwind? I mean, we've seen some headlines regarding reimbursement to R3 clinics.

Mattias Vadsten: Okay, thank you. Then, you made some helpful comments on reimbursement, in regard to the US. Maybe could you comment if, let's say, in the last 12 months period, if the reimbursement situation has been a headwind. We've seen some headlines regarding reimbursement to R3 clinics lately. If you would want to elaborate on the increase that you talked about going forward.

Speaker #5: Lately. And then, if you would want to elaborate on the increase that you talked about going forward.

Speaker #2: Yeah, it's still very early days, so these are not final codes. But the first proposal indicates a little bit more for freestanding—up to a 5% reimbursement increase.

Jakob Just-Bomholt: Yeah. It's still very early days, so it's not final codes. But the first proposal indicates a little bit more for freestanding, up to 5% reimbursement increase and, for hospital systems, to the tune of 2.5%, 3%. But keep in mind it's early, and we'll know more over the next one to two months. Last year, it was obviously a headwind. I think we also flagged that in a call that there are challenges on the reimbursement environment. If that is now partially reversed, of course, it's going to be a tailwind in the market. But let's see how it plays out, and then very importantly, it continues to support adaptive treatment. So there is an incentive to drive more complex treatments, and that's good for Elekta. Thanks.

Speaker #2: And for hospital systems, to the tune of 2.5–3%. But keep in mind it's early, and we'll know more over the next one to two. Last year, it was obviously a headwind.

Speaker #2: I think we also flagged that in a call, that there are challenges in the reimbursement environment. If that is now partially reversed, of course it’s going to be a tailwind in the market.

Speaker #2: But let's see how it plays out. And then, very importantly, it continues to support adaptive treatment. Furthermore, there is an incentive to drive more complex treatments, and that's good for Elekta.

Speaker #1: Thanks.

Mattias Vadsten: Thanks so much.

Speaker #5: Thank you so much.

Speaker #1: Thank you, Jakob. Thank you, Mattias. We move to Kavya Deshpande at UBS. Good morning, Kavya.

Peter Nyquist: Thank you, Jakob. Thank you, Mattias. We move to Kavya Deshpande at UBS. Good morning, Kavya.

Speaker #6: Good morning. Thank you for taking my questions. My first one is about the revenue decline in China. If I understood correctly, I think you said this was a reflection of a weaker order backdrop in the past.

Kavya Deshpande: Good morning. Thank you for taking my questions. My first one was on the revenue decline in China. If I understood correctly, I think you said this is a reflection of a weaker order backdrop in the past. I was wondering if you could give us some more color on what the order to installation period in China is today. Last year, I think you called out a China book-to-bill ratio of around 1.3 times in both Q1 and Q2, and we know orders grew in H2. Should we be looking at this revenue decline as a reflection of even older order weakness before that, or were there any installation delays impacting as well?

Speaker #6: I was wondering if you could give us some more color on what the order-to-installation period in China is today. Because last year, I think you called out a China book-to-bill ratio of around 1.3 times in both Q1 and Q2.

Speaker #6: And we know orders grew in H2. So, should we be looking at this revenue decline as a reflection of even older order weakness before that?

Speaker #6: Or were there any installation delays impacting as well? And then my second question was on COGS inflation, and just what you're seeing around tungsten and memory chip pricing.

Kavya Deshpande: My second question was on COGS inflation and just what you are seeing around tungsten and memory chip pricing, and what kind of headwinds you have baked into your guidance for those elements this year. Thank you.

Speaker #6: And what kind of headwinds have you got baked into your guidance for those elements this year? Thank you.

Speaker #1: Thanks for starting with you, Jakob.

Jakob Just-Bomholt: Thanks. Let us start with you, Jakob. All right. The revenue decline in China, I would rather see it as a quality choppiness, if you will, given that we will expect the number of installations to come back to a normalized level next quarter. It was a reflection of weaker order intake. If you go back on our numbers, we actually see the market, and thereby also our order intake declined substantially. Our revenue declined significantly less. That implied that we had a negative book-to-bill ratio for a period of time, and that just happened in Q1 to catch up with us. As I said, we expect solid growth for Q2, and we actually expect growth going forward in China. I think the uncertainty is more plus-minus is what happens our second half on orders.

Speaker #2: Yeah. All right. Okay. So, the revenue decline in China—I would rather see it as quarterly choppiness, if you will, given that we expect the number of installations to come back to a normalized level next quarter.

Speaker #2: And then it was a reflection of weaker order intake. If you go back on our numbers, we actually see the market, and thereby also our order intake, declined.

Speaker #2: Substantially, our revenue declined significantly less. That implied that we had a negative book-to-bill ratio for a period of time, and that just happened in Q1 to catch up with us.

Speaker #2: But as I said, we expect solid growth for Q2, and we actually expect growth going forward in China. And then I think the uncertainty is more.

Speaker #2: Plus minus is what happens in our second half on orders. But based on our commercial outlook, we still believe that the market will continue to recover in line with the expectations we have shared with you.

Jakob Just-Bomholt: Based on our commercial outlook, we still believe that the market will continue to recover in line with the expectations we have shared with you. Great. COGS deflation, maybe, Klara? Yes. If we see COGS inflation of around 3%.

Speaker #1: Great. And COGS deflation—maybe, Clara?

Speaker #3: Yes. I mean, we see COGS inflation around 3%. But as you know, we see this as a very key focus area for us going forward, with our must-win battle for our COGS reduction program that will be driven in the capable hands of Rodolfo now going forward.

Klara Eiritz: But as you know, we see this as a very key focus area for us going forward with our Must-Win Battle for our COGS reduction program that will be driven in the capable hands of Rodolfo now going forward. So, we have more to do in that area. We haven't seen really the effects come through from that yet. So, we have more to do there. When it comes to tungsten, I am not going to give the exact levels that we assumed when we did the guidance, but tungsten prices have come down, but they are still higher than last year, and they could still go up and down for the remainder of the year. We do not speculate, I think, into that. But they have come down. That we can all see. But still higher than last year.

Speaker #3: So we have more to do in that area. We haven't really seen the effects come through from that yet, so we have more to do there.

Speaker #3: When it comes to tungsten, I'm not going to give the exact levels that we assumed when we did the guidance. But, I mean, tungsten prices have come down, but they're still higher than last year.

Speaker #3: And they could still go up and down for the remainder of the year, right? We don't speculate, I think, on that. But they have come down.

Speaker #3: That we can all see, but it's still higher than last year.

Speaker #6: Okay. Thank you very much.

Kavya Deshpande: Okay. Thank you very much.

Speaker #1: Thanks, Kavya. Let's move further in the queue. Christopher Lilleberg at DNB Carnegie. Good morning, Christopher.

Peter Nyquist: Thanks, Kavya. Let us move further in the queue. Christoffer Lilleberg at DNB Carnegie. Good morning, Christoffer.

Speaker #7: Good morning. Three questions. The first one, just wondered—the stricter criteria you have around order bookings, was that still having a negative impact on the order growth here in Q1?

Christoffer Lilleberg: Morning. Three questions. The first one, just wondered, the stricter criteria you have around the order bookings, was that still having a negative impact on the order growth here in Q1? If I remember correctly, you implemented the new stricter rules later in last quarter or last fiscal year.

Kristofer Liljeberg: Morning. Three questions. The first one, just wondered, the stricter criteria you have around the order bookings, was that still having a negative impact on the order growth here in Q1? If I remember correctly, you implemented the new stricter rules later in last quarter or last fiscal year.

Speaker #7: If I remember correctly, you implemented new, stricter rules later in the last quarter—or last fiscal year.

Speaker #2: Yeah, yeah. So, from a nominal point of view, no. Because we could say, yeah, we have certain orders based on the old criteria that would have taken in Q4, that slipped into Q1.

Jakob Just-Bomholt: Yeah. From a nominal point of view, no, because we could say, we have certain orders based on the old criteria that would've taken in Q4 that slipped into Q1, but vice versa, based on the current criteria slipped onwards. In terms of year-on-year impact, probably we haven't quantified it. But I'll just want to leave you with, we are very committed to having a very tight order intake criteria. And we have also anchored that in certain incentives for top management, so everyone are keenly aware of that order we take in should have a very high likelihood of turning into profitable revenue going forward. Your second question, Christoffer?

Speaker #2: But vice versa. Based on the current criteria, it slipped onwards. In terms of year-on-year impact, we probably haven't quantified it. But I just want to leave you with: we are very committed to having very tight order intake criteria, and we have also anchored that in certain incentives for top management.

Speaker #2: So everyone is keenly aware that the orders we take in should have a very, very high likelihood of turning into profitable revenue going forward.

Speaker #1: Christopher?

Speaker #7: Yeah. Thank you for that. Yeah. Yeah. So coming back to the gross margin. So the favorable mix you had here in Q1, does that mean that you won't have the same typical seasonal pattern as before with Q1 being the weakest for gross margin?

Christoffer Lilleberg: Thank you for that. Yeah. Coming back to the gross margin, so the favorable mix you had there in Q1, does that mean that you won't have the same typical seasonal pattern as before with Q1 being the weakest for gross margin?

Kristofer Liljeberg: Thank you for that. Yeah. Coming back to the gross margin, so the favorable mix you had there in Q1, does that mean that you won't have the same typical seasonal pattern as before with Q1 being the weakest for gross margin?

Speaker #3: Well, I mean, we'll see about the product mix and the geographical mix going forward. But remember the tariff reimbursement—I mean, that certainly helped Q1 when it comes to gross margin.

Klara Eiritz: Well, we'll see about the product mix and the geographical mix going forward, but remember the tariff reimbursement, that certainly helped Q1 when it comes to gross margin.

Speaker #7: Yeah, of course. But if we adjust for tariffs, you still have a 41.1% gross margin. It's very high for being a first quarter.

Christoffer Lilleberg: Yeah, but of course, but if you adjust for tariffs, you still have 41.1% gross margin.

Kristofer Liljeberg: Yeah, but of course, but if you adjust for tariffs, you still have 41.1% gross margin.

Christoffer Lilleberg: It is very high for being a Q1.

Kristofer Liljeberg: It is very high for being a Q1.

Speaker #3: Yeah. It is.

Klara Eiritz: Yeah, it is.

Christoffer Lilleberg: And typically, Q1 is the weakest gross margin quarter for Elekta.

Kristofer Liljeberg: And typically, Q1 is the weakest gross margin quarter for Elekta.

Speaker #7: And typically, Q1 is the weakest gross margin quarter for Elekta.

Klara Eiritz: Mm-hmm. Depends on the product mix and the geographical mix going forward.

Speaker #3: It depends on the product mix and the geographical mix going forward.

Speaker #2: I'm going to say, Christopher, this particular quarter—back to the revenue guide—we do not plan to repeat. We had growth in region Europe and region Americas, which are the highest gross margin.

Jakob Just-Bomholt: You could say, Christoffer, this particular quarter that we, back to the revenue guide, do not plan to repeat. We had growth in region Europe and region Americas, which are the highest gross margin. We also had a slightly higher service to solution ratio than what we normally have in a given quarter. On the other hand, you are absolutely right. We expect strong sequential growth, and that in itself is supportive of gross margin. I think it is mixed back, but we do not want to guide on gross margin. We stand by the EBIT margin guidance that we gave here, 12.5% to 13.5%. When we gave that guidance, as you say, Klara, we did not include the tariff refunds, so as we see it, that comes on top.

Speaker #2: And then we also had a slightly higher service-to-solution ratio than what we normally have in a given quarter. On the other hand, you’re absolutely right.

Speaker #2: We expect strong sequential growth, and that in itself is supportive of gross margin. So, I think it's a mixed bag, but we don't want to guide on gross margin.

Speaker #2: We stand by the EBIT margin guidance that we gave here 12 and a half to 13 and a half. And when we gave that guidance, as you say, Clara, we didn't include tariff refunds.

Speaker #2: So, as we see it, that comes on top.

Speaker #7: Okay. And the final one, also on the gross margin. But to me, why is the gross margin so much lower there?

Christoffer Lilleberg: Okay. The final one, also on the gross margin, but TMEA, why is the gross margin so much lower there?

Kristofer Liljeberg: Okay. The final one, also on the gross margin, but TMEA, why is the gross margin so much lower there?

Speaker #2: Price pressure—I mean, it's Africa. We also see in India, highly, highly price sensitive. So, historically, we have seen low gross margin. I would also say, linked to very aggressive deal making.

Jakob Just-Bomholt: Price pressure. It is Africa. We also see in India, highly price sensitive. Historically, we have seen low gross margin. I would also say linked to very aggressive deal making, and it is probably the region that is feeling the biggest impact of more price discipline and operational rigor. If I would guide you, it will very likely be the lowest gross margin region, whereas US and Europe, more mature, will be higher.

Speaker #2: And we are—it's probably the region that is feeling the biggest impact of more price discipline and operational rigor. But if I would guide you, it will very likely be the lowest gross margin region.

Speaker #2: Whereas the US and Europe, being more mature, will be higher.

Speaker #7: But do you think it would still be a 10 percentage point difference, sir?

Christoffer Lilleberg: Do you think it would still be a 10 percentage point difference?

Kristofer Liljeberg: Do you think it would still be a 10 percentage point difference?

Jakob Just-Bomholt: I don't want to guide on that here.

Speaker #2: I don't want to guide on that here.

Speaker #7: No. Okay. Fine. Thank you.

Christoffer Lilleberg: Oh, okay. Fine. Thank you.

Kristofer Liljeberg: Oh, okay. Fine. Thank you.

Speaker #1: Thanks, Christopher. We'll move to Julian Dormo at Jefferies. Good morning, Julian.

Peter Nyquist: Thanks, Christoffer. We'll move to Julien Dormois at Jefferies. Good morning, Julien.

Julien Dormois: Hello. Good morning, Jakob. Good morning, Klara, and good morning, Peter. Thanks for taking my two questions. The first one relates to the savings program, which obviously has worked super well. You made comments previously that it would significantly exceed the target of SEK 500 million. I am just curious whether you would be willing to update that number, and tell us what is the current run rate for this. The second question, and sorry for coming back to China, but I think you have said in this call that your market share is now probably around the mid-30s. If I am right, you previously mentioned something more into the tune of 40%. I am just curious how the local competition is behaving there, in the context of the local players being more and more vocal, and also just in the context of centralized procurement.

Speaker #8: Hello, good morning Jacob, good morning Clara, and good morning Peter. Thanks for taking my two questions. The first one relates to the savings program, which obviously has worked super well.

Speaker #8: You made comments previously that it would significantly exceed the target of 500 million SEK. So, just curious whether you would be willing to update that number.

Speaker #8: And tell us, what is the current run rate for this? And the second question—and sorry for coming back to China—but I think you have said in this call that your market share is now probably around the mid-30s.

Speaker #8: If I'm right, you previously mentioned something more in the tune of 40%. So, just curious how the local competition is behaving there, in the context of the local players being more and more vocal, and also obviously in the context of centralized procurement.

Speaker #8: So, how do you think you can defend your share in the coming years? Thank you.

Julien Dormois: How do you think you can defend your share in the coming years? Thank you.

Speaker #3: Yeah. On the savings part, or the lower cost levels as a result of the new operating model, I'm not going to give a precise number, but we are well above the SEK 500 million that we have communicated before.

Klara Eiritz: Well, on the savings part or the lower cost levels as a result of the new operating model, I am not going to give a precise number, but we are well above the SEK 500 million that we have communicated before, and we believe that we are at full run rate speed as of this quarter. We are pretty close to plan when it comes to OpEx, but a little bit ahead of expectations, maybe in gross margin expenses. That is maybe as far as I will go. Then you will have to look in our P&L and compare year-over-year and see what you can find.

Speaker #3: And we believe that we are at full run-rate speed as of this quarter. We're pretty close to plan when it comes to OPEX.

Speaker #3: So, but a little bit ahead of expectations—maybe in gross margin, expenses. So that's maybe as far as I'll go. Then you'll have to look in our P&L and compare year over year and see what you can find.

Speaker #2: And maybe I can build on that, Clara, from an employee perspective.

Jakob Just-Bomholt: Maybe I can build on Klara, from an employee perspective.

Speaker #3: That's right.

Klara Eiritz: That is right.

Speaker #2: Right? Half a year ago, we were 4,500. And now we are 4,000. So.

Jakob Just-Bomholt: Right. Half a year ago, we were 4,500, and now we are 4,000.

Speaker #3: Or even below 4,000. Yeah.

Klara Eiritz: We are even below 4,000.

Jakob Just-Bomholt: Yeah, below.

Speaker #2: Yeah, below. Right? And it's not a goal in itself, but of course, you can do the math in regards to cost savings. So, we exceeded that target.

Klara Eiritz: Yeah.

Jakob Just-Bomholt: Right. It is not a goal in itself, but of course, you can do the math in regards to cost savings, so we exceeded that target. Keep in mind, we did it to really clarify accountability, become more business-savvy, less corporate, and that translate into many other things. Then on China. No, you are absolutely right. We said historically we have been around 40%. We also, in the strategy update, guided towards we would be in the mid-30s, and that is where we are. Is it intense rivalry in China? Yeah. Are we still market leader? Absolutely, we are. Have we built a localized product portfolio? Yes. Can we do more? I think so. Then coming back to centralized procurement, I will just make the reference, which is factual, that of what used to be centralized bidding last year, we had a win rate of more than 50%.

Speaker #2: And keep in mind, we did it to really clarify accountability, become more business savvy, less corporate. And that translates into many other things. And then on China—no, no, you’re absolutely right.

Speaker #2: I mean, as we said historically, we have been around 40%. We also, in the strategy update, guided that we would be in the mid-30s, and that's where we are.

Speaker #2: Is it intense rivalry in China? Yeah. Are we still market leader? Absolutely, we are. Have we built the localized product portfolio? Yes. Can we do more?

Speaker #2: I think so. So, and then coming back to centralized procurement, I'll just make the reference, which is factual, that of what used to be centralized bidding last year, we had a win rate of more than 50%.

Speaker #2: Is that a predictor of the future? You have to make that judgment. But I think we feel pretty assured about the path. Then there are certain things on products, but that's our job.

Jakob Just-Bomholt: Is that a predictor of the future? You have to make that judgment. I think we feel pretty assured about the path. Then there are certain things on products, but that is our job. We will continue to involve to maintain the competitiveness.

Speaker #2: We'll continue to evolve to maintain our competitiveness.

Speaker #1: Thanks, Jacob. Thanks, Julian, for that.

Peter Nyquist: Thanks, Jakob. Thanks, Julien, for that. Thank you. We move to Danske Bank and Erik Cassel. Good morning, Erik.

Speaker #7: Thank you.

Speaker #1: And then we'll move to Danske Bank and Erik Kassel. Good morning, Erik.

Speaker #9: Hello, good morning everyone. I wanted to ask first about the order recognition potential effect. I mean, I remember Clara saying in Q4 that the reported order intake would have been very different if you had the old recognition.

Erik Cassel: Hello. Good morning, everyone. I wanted to ask first on the order recognition potential effect. I remember Klara saying in Q4 that the reported order intake would have been very different if you had the old recognition. Q4 is a big order quarter. I guess as you said, Jakob, that you had some spillover from Q4 orders into Q1. You said that could also affect Q1 into Q2. Since Q4 is such a much larger quarter, is it possible in some way to quantify the effect that could have had on order intake now in Q1, assuming the Q4 phasing, basically saying what the Q4 phasing was, if that is possible.

Speaker #9: And Q4 is a big order quarter. And I guess, as you said, Jacob, that you had some spillover from Q4 orders into Q1.

Speaker #9: But you said that could also affect Q1 into Q2. But since Q4 is such a much larger quarter, is it possible in some way to quantify the sort of effect that could have had on order intake now in Q1, assuming the Q4 phasing?

Speaker #9: Basically saying what the Q4 phasing was, if that's possible.

Jakob Just-Bomholt: I fully understand your point of view, but it would be flaky to do so. We applied the right order criteria with firmness in Q4, and we did the same in Q1. We basically have a number of order intake criteria. Is it prepayment, is it site readiness, is it going to be delivered within 3 years, and so forth. We did that in Q4, and we did that in Q1. I would not want you to think that we had a big flow into Q1 and a small outflow from Q1 to Q2. It is not how we think about it. It is just clean orders coming into Q1.

Speaker #2: I fully understand your point of view, but it would be risky to do so. I mean, we applied the right order criteria, and with firmness in Q4, and we did the same in Q1.

Speaker #2: So, we basically have a number of order intake criteria. It's a prepayment. It's site readiness. Is it going to be delivered within three years?

Speaker #2: And so forth. We did that in Q4, and we did that in Q1. No, so I wouldn't want you to think that we had a big flow into Q1 and a small outflow from Q1 to Q2.

Speaker #2: It's not how we think about it. It's just clean orders coming into Q1.

Speaker #9: Okay, thank you. And then I have a question for Clara. I appreciate that you gave some color on the inventory build effect on gross margins.

Erik Cassel: Okay, thank you. I have a question to Klara. I appreciate that you gave some color on the inventory build effect on gross margins. I also wanted to ask, since I guess we are seeing broadly higher cost now as well, did the standard quarter end update of standard costs that you do increase the carrying value of inventory now at the end of Q1, and did that have some sort of positive effect on gross margins as well?

Speaker #9: But I also wanted to ask, since I guess we're seeing broadly higher costs now as well, did the sort of standard quarter-end update of standard costs that you do increase the carrying value of inventory now at the end of Q1?

Speaker #9: And did that have some sort of positive effect on gross margins as well?

Speaker #3: No.

Klara Eiritz: No.

Speaker #9: Yeah.

Erik Cassel: Yeah.

Speaker #8: Short answer, no.

Peter Nyquist: Short answer, no.

Speaker #9: Okay, okay, good. And then I just wanted to ask, to sort of assess the, say, underlying gross margin improvements that we're seeing—if we assume that we now, for the rest of the year, see a more normalized service-to-solutions mix and geographical mix—do you still think that the gross margin improvement is going to be noticeable, so to say?

Erik Cassel: Okay, good. I just wanted to ask to assess the underlying gross margin improvements that we are seeing. If we assume that we now, for the rest of the year, see a more normalized service to solutions mix, and geographical mix, do you still think that the gross margin improvement is going to be noticeable, so to say?

Speaker #3: I mean, like Jacob said, we don't guide on gross margin. But we've also said, I mean, the new operating model has had effects not only in OPEX, but also in the gross margin.

Klara Eiritz: Like Jakob said, we do not guide on gross margin. Like we have also said, the new operating model has had effects not only in OpEx but also in the gross margin, and there is a sustainability aspect to that, right? We do not expect to go away.

Speaker #3: And there’s a sustainability aspect to that, right? So that we don’t expect it to go away.

Speaker #1: Great. Thanks, Eric. We'll move to the next question. Yuan Onerus at SB1 Markets. Good morning, Yuan.

Peter Nyquist: Great. Thanks, Erik.

Erik Cassel: Okay. Thank you.

Peter Nyquist: We will move to the next question. Johan Unnerus at SB1 Markets. Good morning, Johan.

Speaker #10: Yes. Good morning. Thanks for taking our questions. To then follow up there on China—you said you had a local offer. Is it possible to give a flavor of, in the central procurement channel process?

Johan Unnerus: Yes, good morning. Thanks for taking our questions. To then follow up there on China, you said you had a local offer. Is it possible to give a flavor of in the central procurement channel process, is the solution mix different versus private? I am thinking in terms of proportional premium versus mid versus lower end solutions.

Speaker #10: Is the solution mix different versus private? I'm thinking in terms of the proportion of premium versus mid versus lower, and the solutions.

Speaker #2: So I would say we have adapted our product portfolio, not least on the software, to fit to Chinese demand. The biggest difference between China and the rest of the world is on service attachment rate, which is lower in China.

Jakob Just-Bomholt: I would say we have adapted our product portfolio, not least on the software, to fit to Chinese demand. The biggest difference between China and rest of the world is on service attachment rate, which is lower in China. It is an upside for us when we get it fixed, but it is also a little bit difficult in the short term. It is roughly around 30% service attachment rate. It is much higher, close to 100% in the more mature markets. But other than that, it is the global portfolio, but really catered with local software. Then we see that adaptive is taking off in China.

Speaker #2: It's an upside for us when we get it fixed. But it's also a little bit difficult in the short term. It's roughly around a 30% service attachment rate.

Speaker #2: It's much higher—close to 100%—in the more mature markets. But other than that, it's the global portfolio, really catered in with local software.

Speaker #2: Then we see that Adaptive is taking off in China.

Speaker #10: So, I'm thinking it's more precise that the 70% that's outside central procurement is not distinctly different from the Linac you're selling, offering, or winning in central procurement deals.

Johan Unnerus: I am thinking to be more precise than the 70% that is outside central procurements is not distinctly different from the LINACs you are selling, offering or winning in central procurement deals.

Speaker #2: No. That's correct.

Jakob Just-Bomholt: Nope, that is correct.

Peter Nyquist: Good.

Speaker #10: Good.

Speaker #1: You had a second question? Yeah.

Peter Nyquist: You had a second question? Yes.

Speaker #10: Yeah. The other question is, then you're moving into the third stage. When you hire, assuming out, so to speak, in your strategy. And you're pointing at distinctly higher growth already in Q2.

Johan Unnerus: Yeah. The other question is then you are moving into the third stage, when you are higher zooming out, so to speak, in your strategy, and you are pointing out distinctly higher growth already Q2. Are you prepared to say that you are moving into the third stage already this year, or is this something for your next year?

Speaker #10: Are you prepared to say that you're moving into the third stage already this year, or is this something for your next year?

Jakob Just-Bomholt: Well, of course, we continuously take stock. But I would say this year it is about improving profitability so we do not become a one-hit wonder, and we can just see that there are so many things, fortunately, we can operationalize and become better at executing. So we are in phase 2 this year, and then I refer to our guide. So that is 2% to 4% revenue growth this year, and then our midterm guidance, and we have no reason to believe that those guidances will not be fulfilled.

Speaker #2: Of course, we continuously take stock. But I would say this year it's about improving profitability, so we do not become a one-hit wonder. And we can just see that there are so many things, fortunately, that we can operationalize and become better at executing.

Speaker #2: So we are in phase two this year. And then I refer to our guide, so that is 2% to 4% revenue growth this year.

Speaker #2: And then our midterm guidance. And we have no reason to believe that those guidances will not be fulfilled.

Speaker #1: Thanks.

Peter Nyquist: Thanks.

Johan Unnerus: Yeah. Very good.

Speaker #10: Yeah. Very good.

Speaker #1: Thanks, Yuan. We'll move into the last question of today's call. That is from Richard Felton at Goldman Sachs. Good morning, Richard.

Peter Nyquist: Thank you. We will move into the last question of today's call, that is from Richard Felton at Goldman Sachs. Good morning, Richard.

Speaker #9: Thank you. Good morning. Thanks for squeezing me in. Two, please. The first one: I just wanted to follow up on the APJ region, which was soft during the quarter.

Richard Felton: Thank you. Good morning. Thanks for squeezing me in. Two, please. The first one, just wanted to follow up on the APJ region, which was soft during the quarter. I know you call out constraints in healthcare budgets and capital investment. Are there any markets specifically in that region where those pressures are more acute? How should we think about that trending through the rest of the year? Is there any easing of those constraints, or do you still see subdued trends for the APJ markets for the rest of fiscal 2027? The second one, it is a follow-up on inventory. Could you say what was driving the step-up in inventory in Q1? Was that raw material inflation pressure or a build-up of finished goods? Thank you.

Speaker #9: I know you call out constraints in healthcare budgets and capital investment. Are there any markets, specifically in that region, where those pressures are more acute?

Speaker #9: And then how should we think about that trending through the rest of the year? Is there any easing of those constraints, or do you still see sort of subdued trends for the APJ markets for the rest of fiscal '27?

Speaker #9: And then the second one, it's a follow-up on inventory. Could you say what was driving the step-up in inventory in Q1? Was that due to raw material inflation pressure, or a build-up of finished goods?

Speaker #9: Thank you.

Speaker #1: So you start with APJ, and then Clara, you can take the next question.

Peter Nyquist: You start with APJ, and then Klara, you can take the-

Jakob Just-Bomholt: Yeah, let me do a double click on three countries. Indonesia, we have a big government tender, and that subdues the market a bit, and let's see what is going to be the outcome. We saw anti-corruption clampdown in Vietnam, so that, as you saw also in China, makes the market a bit cautious. The recovery in Japan, I have to say, came a bit slower than we expected Q1. Checking in, we still believe that the market will recover from roughly 40 units to 60 units this year. As I said, we started Q1 slower. The way I would encourage you to think about it, I still think we will be soft Q2, and then we will continue to see some acceleration.

Speaker #2: Yeah, so let me do a double-click on three countries. Indonesia—we have a big government tender, and that subdues the market a bit. And let's see what is going to be the outcome.

Speaker #2: Then we saw the anti-corruption clampdown in Vietnam. So that, as you saw, also made us a bit cautious. And then the recovery in Japan, I have to say, came a bit slower than we expected in Q1.

Speaker #2: Checking in, we still believe that the market will recover from roughly 40 units to 60 units this year. But as I said, we started Q1 slower.

Speaker #2: The way I would encourage you to think about it, I still think we will be soft in Q2, and then we will continue to see some acceleration.

Speaker #2: But I have to say, personally, I think Elekta—as ever—we have every reason to be fairly bullish on the long-term outlook for APJ, because it's a hugely underserved market and radiotherapy is highly cost-efficient.

Jakob Just-Bomholt: I have to say, personally, I think Elekta has every reason to be fairly bullish on the long-term outlook for APJ because it is a hugely underserved market, and radiotherapy is highly cost efficient. In terms of share, we have held on to a very respectable market share. It is just a market that has been down temporarily, but we do not believe it is a permanent reduction in demand.

Speaker #2: In terms of share, we have held on to a very respectable market share. It's just the market that has been down temporarily, but we don't believe it's a permanent reduction in demand.

Speaker #1: Thanks, Jacob. And then I guess the profile of the inventory—finished goods, or...

Peter Nyquist: Thanks, Jakob. What is the profile of the inventory, finished goods or

Speaker #3: Yeah, it's both, I would say. It's volume-driven, but there's also a bit of raw material cost in there as well, or component cost.

Klara Eiritz: Yeah, it is both, I would say. It is volume driven, but there is also a bit of raw material cost in there as well, or component cost.

Speaker #1: Great.

Peter Nyquist: Great.

Speaker #9: Great. Thank you very much.

Richard Felton: Great. Thank you very much.

Speaker #1: Thanks, Richard. With that, last question. We are then concluding this call for the first quarter of the fiscal year 2026/27. Thank you all for participating and asking these questions.

Peter Nyquist: Thanks, Richard. With that last question, we are then concluding this call for Q1 of the fiscal year 2026/2027. Thank you all for participating and asking these questions. Goodbye.