[Analyst] (DNB Carnegie): DNB Carnegie. My name is Maria, and I am an analyst here at the bank. Today is 10 November, and the earnings season keeps on rolling on. Now we shift our attention to a company, Mentice. With me here in the studio, I have CEO Frans Venker and CFO Rick van Veen. Welcome.
Rick van Veen: Hi. Good morning.
Frans Venker: Thank you.
[Analyst] (DNB Carnegie): The format is as usual. You do a presentation on the quarter, and then we continue on with a short Q&A session. I remind everyone to ask questions in the chat. The chat is open and live. Please take it away.
Frans Venker: Thank you, Maria. Thanks. It is great to be here. We are standing here actually together with Rick van Veen and myself. We can be quite confident, standing here as Mentice. We have growth over the last five quarters, and that can also be seen in the order intake that we had. So, great quarters that we would like to present here today, as also the financial results, concluding remarks, and then we have questions and answers. Before I do that, I also would like to state that last week I was at a conference in the United States. It is called the TCT, the Transcatheter Cardiovascular Therapeutics meetings, and it is the biggest cardiology meeting in the West when it comes towards interventional image-guided therapy procedures. If you look at it there, I would say that business, first and foremost, is booming.
Frans Venker: You see a lot of activity ongoing when it comes to cardiovascular disease and treating that in a minimally invasive way, and that is really helping us, and we are also growing in that trend. When it comes towards cardiovascular disease treatment, first and foremost, what we see is that the number of product introductions is accelerating, and that helps us also with training and education solutions that we provide for medtech. Also what we see is that AI is actually further accelerating those introductions, but also that we see more companies coming from Asia in order to also play in this cardiovascular space. Image-guided therapy and the minimally invasive procedures that we help from a training and education standpoint, that truly helps us, and that is where we thrive.
Frans Venker: That is also the reason why we are growing over the last 5 quarters and where we also see the order intake growing by more than double digits, I would say, rates. Overall, what I would like to present today is the results. We had SEK 73 million in the quarter when it comes towards sales, so the revenue. That is around 3% year-over-year growth. What we see specifically towards the order intake, also SEK 73 million, but almost 30% year-over-year growth, and that really bodes well also for what is going to come from a revenue standpoint. Rolling 12 months from a sales perspective, we are now at SEK 305 million and coming from SEK 275 million a year ago. EBITDA margins, they contributed towards -8.2%. I would say they came from 10%. They were primarily also affected by quite a few one-offs.
Frans Venker: The operating performance underneath is strong and as expected, but Rick will also provide further details towards what the one-offs were and how we see that going forward. Operating cash flow was strong. If you look at it overall, we finished the quarter with SEK 59 million, where we were coming last year from SEK 40 million, and it was also in positive operating cash flow, so that is also well. Order book totaled SEK 132 million, also growing. SEK 43 million is being scheduled to be delivered in Q4, so we already have a vast amount of the orders that need to be delivered from a revenue standpoint, which is good news. The momentum that we had came from, again, a broad base of medtech companies.
Frans Venker: As I stated also, the conference where I was in the US, many of the companies came to us, and we had interactions with them. We state that from the top 30 companies in medtech, we work with 27 of them, and that was noticeable. They want to do projects with us, simulation and education, but not only in virtual reality so that you get the haptics and basically a look and feel for how a procedure is being done, but also the contextual awareness around it. In order to help and train the staff and make sure we do that further. 5 quarters of growth, so also, especially if you look at the trends over the last 5 quarters, we truly drove a significant improvement towards the revenue growth.
Frans Venker: What we see is that 3% in the Q3, it was primarily due to quite a few deals that actually pushed into Q4, not lost. That was the reason why we're expecting actually a little bit of higher growth towards the Q3, but they are now into Q4, so they will come in, and you'll see that then for the full year as a result. Strong cash position, as I stated as well, SEK 59 million, so we're in a good position there with positive cash flow. New solutions that we're introducing using AI, we call them Vascular Twin Neuro. They are now actively being also acquired in order to not only do simulation and educational standard cases, but it also allows physicians, but also care providers, to create their own cases.
Frans Venker: Complex cases that they would like to train on, and that's what they execute on. The grown order book, what we say, so we're coming from SEK 97 million before, and now we're at SEK 132 million, and of course, that simply bodes well also for what we see from a future standpoint. Finally, also, it is not only medtech that is growing our business, but also the business segment in healthcare systems. Also there, we had SEK 12 million of order intake, and that also bodes well from a growth standpoint, and the funnel is also there in order to make sure that we're achieving growth rates. When it comes to the financials, I would like to hand it over to Rik. Maybe, Rik, you can give a little bit of highlights towards our results.
Rick van Veen: Thank you, Frans. Let me take you to our key metrics for the Q3 performance. First of all, leading metric, of course, is the net sales. As Frans mentioned, we are at SEK 73 million, 2.9% up year over year, 1% if you correct for the slightly favorable FX impact. Order intake also at SEK 73 million, leading for our future revenue, of course, at 27% growth year over year. EBITDA is affected by the one-offs, and we landed in Q3 at -SEK 6 million of EBITDA versus SEK 7.7 million positive in Q3 last year. Order book significantly stronger, 35% up year over year, and then the operational cash flow at SEK 1.2 million, also significantly up versus a year ago, especially due to the favorable developments on the working capital improvements.
Rick van Veen: If you look at the main drivers for the growth, it is the broad base of customers in the MDI segment that is the primary growth driver. If you look at the total numbers, of course, percentage-wise, the significant step-up in the business area healthcare systems is also helping us. The contribution is primarily from the Americas, where we see significant demand, but also APAC, we see growth. You see that the various initiatives we are taking on the R&D side, product, and commercial initiatives are paying off now, especially in the order intake. That should help us in Q4 in delivery of the sales. A little bit more detail on three key metrics. Let's start with the sales. Here you see the five consecutive quarters of growth in a graph that shows the last 12-month sales for each of the quarters, where we are now at SEK 305 million.
Rick van Veen: The growth is MDI-led, and America is the strongest growth driver. In terms of EBITDA, positive on the rolling 12, but Q3 impacted by the one-offs. I will come back on that in a second. All the regions are contributing to the last 12 months net sales growth. So, we see growth both on the MDI side and the healthcare system side, and net-net on all the different regions. Americas up 8% for the last 12 months sales, APAC 29% up, and EMEA 9% up. So consistent performance across the regions. Order intake, here also you see a strong growth in the last quarters, reaching an all-time high, at least for the quarters projected here, at SEK 338 million of order intake now over the last 12 months. Order book, as mentioned before, is also up 35%, with that SEK 43 million expected to convert to revenue in Q4.
Rick van Veen: On the operational expenses, here you can see how the operational expenses have developed over time, where we were consistently at about SEK 67 million in Q1 and Q2. We are in Q3 now above that level, at in total SEK 73.5 million. There is SEK 8.5 million in there for non-recurring accounting adjustments. So we have been doing corrections related to prior periods, both affecting personnel costs for about SEK 5 million and external costs for about SEK 3 million. They will not repeat again going forward. It is clearly a one-off in the quarter, but impacting our results now. But good to understand the overall OPEX. Underlying, if you compare Q3 2026 versus Q3 2025, you also see a bit higher cost, which relates to the improved performance. So performance-based compensation for employees is with that a bit higher.
Rick van Veen: We are also investing in future growth with targeted investments that should pay off going forward. We capitalize less development cost because our development teams have been working a lot on external projects, and with that, we capitalize a bit less, which impacts the total EBITDA results as well. That are, in summary, the highlights on the financial performance, Frans, if you can conclude.
Frans Venker: Great. Now I do the concluding remarks. The business highlights, I would say five consecutive quarters of growth, but especially accompanied by strong order intake. We see that the Americas is really driving the growth in Q3. Where the first half was more or less the growth for EMEA and APAC, now really Americas came in, and you see that it is simply broad-based. I said not only geographically, but also clinically in all the clinical segments, as also what we see now both on the Medical Device Industry side, but also on the healthcare system side. Solid quarters despite the orders moving towards Q4, and also impacted with one-offs for the EBITDA results. We are taking important steps also in order to remain and become an even stronger leader in the image-guided therapy space. We are driving basically high-fidelity simulations for our customers.
Frans Venker: The short term is really focused on execution, making sure that now that we get the orders that went from Q3 to Q4, that we are going to deliver those from a revenue standpoint. But also, the longer term is that we start executing and boosting our growth going further, and making sure that the cost base actually remains quite low. Because only then you can create a wedge in order to drive our profitability up, and we see possibilities for that. Our mid to longer term growth aspirations, they are intact. That is also what we state. In that sense, we are on the right track. We are truly, not only developing the medtech and the healthcare system space, but also supporting now also the automation, what we call the robotics space, for minimally invasive interventions.
Frans Venker: Also there, our expectation is in the next quarters that also the first orders will come in that segment as well. Interesting from a growth standpoint. We really, looking ahead, the efficiency measures that we have taken over the past year, they are paying off. We see strong order intake, and our performance is simply improving, and we are confident for the future with five quarters of growth. Also now with Q4 basically ahead with the funnel, which is strong, I think it will be a good growth going forward, and confidence in order to reach the targets that we have set as Mentice. Thank you, Maria. Thank you, Rick. That is it. Maybe we go towards questions and answers.
[Analyst] (DNB Carnegie): Thank you very much for the presentation. There is still quite a lot to unpack here, I think. Let us start with the order intake. The key phrase here is, like you mentioned, deals pushed, not lost.
[Analyst] (DNB Carnegie): But is that the primary These slipped deals, are they related just to timing and delivery, or are there any other developments you see out there in the market, like customer scope, their budgets, anything else that we should think about maybe?
Frans Venker: Yeah. First of all, the order intake was quite a growth. We saw almost 27% growth. So that was quite good. To deliver it immediately then towards revenue, that is what we couldn't do, and we had a few deals actually that slipped. That is purely related on the hospital side. I don't want to blame it there. It is simply working with the hospitals, but also the medtech companies in order to get them over the finish line and get them to revenue. That is what didn't work out. Usually also in Q3, it all comes down towards September month, because that is when the vacation is then over, and we were not able to move them towards revenue. So I would state this is simply the nature of the business.
Frans Venker: Sometimes you get them before the end of the quarter, and here we didn't, so they pushed, not lost, and they simply should come back into Q4. So, I don't see any concerns into this.
[Analyst] (DNB Carnegie): Yeah. We'll get back to hospitals in a little bit.
Frans Venker: Sure.
[Analyst] (DNB Carnegie): But still on order intake, help us understand here. This all depended on entirely new projects, or broad-based, or extensions maybe on the projects that you already have? Any follow-up work there maybe?
Frans Venker: Now, what we see is that, as a company, we are quite established now. So, it is not that our orders are dependent on a few big customers. It is actually a large variety of customers, not only the larger medtech companies, but also the smaller startups or the mid-size companies. And that is, of course, super encouraging, because that gives us a stable base in order to grow. We become less volatile. So that is first and foremost. The second piece is what we see is also that the orders are coming from a broad base of clinical segments. Our strongholds are cardiology, structural heart, if it comes to electrophysiology, which has everything to do with the conduction and the rhythm of the heart, if it comes towards cardiac rhythm management, or our aortic or peripheral capabilities, or neuro. So we see it as a broad base of clinical procedures.
Frans Venker: But most encouraging is also that we not only see it in the United States, but we also see it in Asia Pacific, as also in EMEA companies. Specifically in APAC, there are quite a bit of medtech companies now starting up, India, China, and they are also interested in our training and education solutions because of our realism, where we are truly unique. So, our capabilities from a solution standpoint really stand out towards the competition, and that is why they choose us in order to work with us, in order to see how we can help them in order to drive procedures safe and effectively. So, it is encouraging from all regards.
[Analyst] (DNB Carnegie): Let us dig a little deeper into segments and splits. EMEA declined substantially, but you did have a very strong H1 of the year.
Frans Venker: Yeah.
[Analyst] (DNB Carnegie): My question was on what the pipeline looks like going forward. There is actually a question here in the chat, how does the pipeline compare to last year?
Frans Venker: No, I would like to put it also in perspective. If you look at EMEA, as also Asia Pacific, if you look at the last three quarters, they grew like 20%. It is sometimes also lumpy from a quarterly standpoint. So 20% growth is quite substantial and beating our mid to longer term targets that we would have set. In that sense, we are confident that also the 20% we can maintain, both globally. In that sense, the funnel is strong, and I would like to leave it at that.
[Analyst] (DNB Carnegie): All right. On another segment split here, MDI, broadly flat, but order intake is up, as you already mentioned. Beyond all of the moved orders, is there anything else that may explain the gap there?
Frans Venker: The orders actually were, they are not necessarily a gap. It was, I would say, overall also quite strong over the last quarters. We see not only in virtual reality the growth, but now also in different fields that we are driving. We are going towards what we call augmented reality, so that you get a three-dimensional perspective also on the entire procedure. Not only on the haptics and doing the procedure itself, but also the supporting staff, but also understanding the anatomy with it. We see significant interest also in that domain from medtech. From an order intake standpoint, we are confident that this is broad-based, but also broad-based geographically going forward. Anything to add or?
Rick van Veen: No, you are all right. Yep.
[Analyst] (DNB Carnegie): Yeah. I did promise to get back to hospitals, and on the HCS segment.
Frans Venker: Yeah
[Analyst] (DNB Carnegie): We said in our initial comment that this may be the first real sign of improvement.
Frans Venker: Yeah.
[Analyst] (DNB Carnegie): Do you agree with that? Are we wrong?
Frans Venker: No, we agree. Healthcare systems is a segment where the sales, what is it, processes
Rick van Veen: Cycle.
Frans Venker: cycle, that is the word, how to say, are a little bit longer. In that regard, it takes longer for also salespeople to get up to speed. What you see is that we introduced a lot of new people last year, and they really start to produce now. I would say this is light at the end of the tunnel, I would say, and we see, I would say, full light coming in that sense, that we can sustain the growth. Of course, it is one of our smaller business segments, so the majority of the absolute growth is coming from medtech, but healthcare systems is now also contributing towards the growth rates that we are aiming for.
[Analyst] (DNB Carnegie): I was going to move on to lower down the P&L
Frans Venker: Yeah
[Analyst] (DNB Carnegie): to talk a little bit about profitability. I see that there actually is a question here on the chat. It says, "It looks like both staffing levels and labor costs are rising. What is causing this increase, and how does it align with your scalability goals?
Frans Venker: That is a very good question. You want to take this?
Rick van Veen: Yes. Indeed, costs are going up a little bit, and that is to enable the growth. We can deliver growth rates of about 20% with our organization, but not without any increase in the investment. We need to invest in some people and also some IT investments, which you see in the P&L already, to grow by 20%, but not at the same rate. We can probably even less than half of the sales growth we need in cost investments to achieve those growth levels. Yes, costs go up, but it should enable an even bigger revenue growth, and with that, a step up in profitability.
Frans Venker: Exactly. That creates the wedge that we are looking for in order to drive the EBITDA improvements.
Rick van Veen: Yep.
Frans Venker: Yeah.
[Analyst] (DNB Carnegie): Maybe some more concrete numbers. Going forward, you are not done hiring to support your growth. What should we think in terms of OPEX going forward then?
Rick van Veen: I typically look at between 25% and 50% of what you do in additional revenue, you need in additional OPEX to grow. It depends a little bit on the mix of sales, what kind of sales we do, but between 25% and 50% of the sales growth is what you need in OPEX growth.
[Analyst] (DNB Carnegie): Here is actually more questions coming in on the OPEX, and it is a little bit of a follow-up on the headcount here. If the growth in headcount ahead also had revenue, is it just wage inflation or number of employees?
Frans Venker: It is a combination.
[Analyst] (DNB Carnegie): That is a very good question.
Rick van Veen: But it is correct. It is both. So, wage increase, yes, we have increased the wages in 2026, so that is what you see. You also have a couple of specific investments in people where we want to expand the growth, and there you need to invest in people as well. So, we have hired a couple more people. Yes.
Frans Venker: I would like to state also that wage increases are simply with the inflation rate. It is not, I would say, so we can hire the right people. We have access also to the right people, both in Gothenburg, but also in the Denver site where we are located from an R&D standpoint, and we are confident that we can get the right people at the right cost structure also.
[Analyst] (DNB Carnegie): Looking back at the chat here again, now we are jumping back a little bit on the segments, on the HCS segment here and the revenue and order book. What is driving the growth in order book in HCS, and is any of it related to Siemens collaboration?
Frans Venker: I can take that. So, no, it is primarily related also to simply working with our sales organization, I would say, targeting larger delivery networks, Integrated Delivery Networks, so IDNs in the US, but also in EMEA and APAC. So, effectively, it is a growth that we drive ourselves, I would say, not only through distributors. Of course, we also work with the imaging companies, both Philips, Siemens, but also, I would say, recently with Canon. In that regard, I would say they also help us significantly with hospital growth. It is simply part of the total equation.
[Analyst] (DNB Carnegie): And there are quite some detailed questions here today in the chat. Next one is about deferred income. How much of it can we realistically expect to unwind in Q4 and going into 2027?
Frans Venker: Do you want to take that one?
Rick van Veen: I did not see the first
[Analyst] (DNB Carnegie): Deferred income is at SEK 160 million, roughly.
Rick van Veen: Yeah.
[Analyst] (DNB Carnegie): How much is realistically of it? How much can we expect of it to unwind into Q4 and then next year?
Rick van Veen: Not a different pattern than in the past. It is a comparable performance. We are not deferring more or less than what we did in the past, so a comparable performance. Yeah.
[Analyst] (DNB Carnegie): Yeah. We are starting to run a little bit out of time. I thought that we usually end on a bit of a visionary note with you guys and most of our companies. So what key developments should our investors keep an eye on in the coming maybe 12 to 24 months?
Frans Venker: For us, it is growth and cost. So making sure that we can drive the growth rates that we have set. It is both order intake as a leading indicator and then towards revenue, making sure that it is broad-based geographically, but clinically, but also between our business segments that we have. Then making sure that our cost structure remains hawkishly low in that sense, that it is not growing with the revenue, so that we have that wedge, that also our profitability goes up. Yeah, we are confident. Look what we have done over the last five quarters. Look at the trends and the rolling 12 months. So that is what our aim is to proceed and focus on going forward. So revenue growth, and it is, as I said, cost structure, keep in check.
[Analyst] (DNB Carnegie): Perfect. Thank you very much for coming here and talking to us.
Frans Venker: Thank you.
[Analyst] (DNB Carnegie): Thank you everyone for listening in and asking the questions.
Frans Venker: Very good. Thank you.
