Q2 2026 Surgical Science Sweden AB Earnings Call

August 19, 2026

Speaker #2: This call is being recorded.

Speaker #3: You're line is muted.

Speaker #2: Call recording is on.

Speaker #4: Welcome to the Surgical Science Q2 2026 report presentation. During the Q&A session, participants can ask questions by pressing the pound key (5) on their telephone keypad.

Operator 2: Welcome to Surgical Science Q2 2026 presentation. During the Q&A session, participants can ask questions by pressing pound key five on their telephone keypad. During the Q&A, we kindly ask participants to limit yourselves to two questions at first. If you have additional questions, please queue up again by pressing pound key five. Now, I will hand over to the speakers, CEO Tom Englund and CFO Anna Ahlberg. Please go ahead.

Operator: Welcome to Surgical Science Q2 2026 Presentation. During the Q&A session, participants can ask questions by pressing pound key five on their telephone keypad. During the Q&A, we kindly ask participants to limit yourselves to two questions at first. If you have additional questions, please queue up again by pressing pound key five. Now, I will hand over to the speakers, CEO Tom Englund and CFO Anna Ahlberg. Please go ahead.

Speaker #4: During the Q&A, we kindly ask participants to limit yourselves to two questions at first. If you have additional questions, please queue up again by pressing the pound key, 5.

Speaker #4: Now, I will hand over to the speakers, CEO Tom Englin and CFO Anna Ullberg. Please, go ahead.

Speaker #5: Hi everyone, and welcome to this earnings call for Surgical Science for the second quarter of 2026. My name is Tom Englund; I'm the CEO, and with me today is our CFO, Anna Ahlberg.

Tom Englund: Hi, everyone, and welcome to this earnings call for Surgical Science for the second quarter of 2026. My name is Tom Englund, I'm the CEO, and with me today is our CFO, Anna Ahlberg. We'll start with a walkthrough of Q2 and the numbers, and then we'll open up for questions. Q2 was a strong quarter, and I want to say that clearly upfront. We exceeded our financial targets on growth. Profitability was in line with our financial target, and license revenues were strong. Revenue came in at SEK 255 million, up 22% reported and 25% in local currencies. Adjusted EBIT reached SEK 38 million with a margin of 15%, which is a significant recovery from Q2 last year, which was an unusually weak comparison quarter. It's a clear sign that the actions that we've taken to improve profitability and our customer offering are working.

Speaker #5: We'll start with a walkthrough of Q2 and the numbers, and then we'll open up for questions. Q2 was a strong quarter, and I want to say that clearly up front.

Speaker #5: We exceeded our financial targets on growth. Profitability was in line with our financial target, and license revenues were strong. Revenue came in at SEK 255 million, up 22% reported and 25% in local currencies.

Speaker #5: Adjusted EBIT reached SEK 38 million, with a margin of 15%, which is a significant recovery from Q2 last year, an unusually weak comparison quarter.

Speaker #5: And it's a clear sign that the actions we've taken to improve profitability and our customer offering are working. The gross margin improved to 69%, up from 65% in the same period last year.

Tom Englund: It's a clear sign that the actions that we've taken to improve profitability and our customer offering are working. The gross margin improved to 69%, up from 65% in the same period last year. This reflects both the stronger mix of license revenues and the profitability improvements that we've seen and have been driving in the simulator business. Gross margin, excluding licenses, also improved several percentage points, and I'll come back to what's behind that later. License revenues for the quarter were SEK 85 million, up 44% year-over-year, and that's a strong number and reflects the momentum in the robotics market and the breadth of our customer base beyond Intuitive.

Tom Englund: The gross margin improved to 69%, up from 65% in the same period last year. This reflects both the stronger mix of license revenues and the profitability improvements that we've seen and have been driving in the simulator business. Gross margin, excluding licenses, also improved several percentage points, and I'll come back to what's behind that later. License revenues for the quarter were SEK 85 million, up 44% year-over-year, and that's a strong number and reflects the momentum in the robotics market and the breadth of our customer base beyond Intuitive. Looking at the H1 as a whole, revenues are up 7% reported and 11% in local currencies. Currency-adjusted EBIT for H1 was 15%, right at our target level, and operating cash flow for the H1 was SEK 81 million, well ahead of the same period last year.

Speaker #5: This reflects both the stronger mix of license revenues and the profitability improvements that we've seen and that we've been driving in the simulator business.

Speaker #5: And gross margin, excluding licenses, also improved several percentage points. And I'll come back to what's behind that later. License revenues for the quarter were SEK 85 million, up 44% year over year.

Speaker #5: And that's a strong number and reflects the momentum in the robotics market and the breadth of our customer base beyond Intuitive. Looking at the first half as a whole, revenues are up 7% reported and 11% in local currencies.

Tom Englund: Looking at the H1 as a whole, revenues are up 7% reported and 11% in local currencies. Currency-adjusted EBIT for H1 was 15%, right at our target level, and operating cash flow for the H1 was SEK 81 million, well ahead of the same period last year. The business is performing well, and I feel good about where we are headed. Let me take you through the different parts of the business. Educational products grew 19% year-over-year, or 24% in local currencies. That is a good result, and I am genuinely pleased with what we are seeing across the different regions. All regions grew this quarter. Americas were up 4% versus Q2 2025. I want to add some important context here.

Speaker #5: Currency-adjusted EBIT for H1 was 15%, right at our target level, and operating cash flow for the first half was SEK 81 million, well ahead of the same period last year.

Speaker #5: So, the business is performing well, and I feel good about where we're headed. Now, let me take you through the different parts of the business.

Tom Englund: The business is performing well, and I feel good about where we are headed. Let me take you through the different parts of the business. Educational products grew 19% year-over-year, or 24% in local currencies. That is a good result, and I am genuinely pleased with what we are seeing across the different regions. All regions grew this quarter. Americas were up 4% versus Q2 2025. I want to add some important context here. Actually, Americas was up around 40% compared to Q1 of this year, driven by the strength of the important US market. The sequential momentum is strong, and the year-over-year figure alone does not capture the full picture. China continues to be a market that we are managing carefully.

Speaker #5: Educational products grew 19% year over year, or 24% in local currencies. That's a good result, and I'm genuinely pleased with what we're seeing across the different regions.

Speaker #5: All regions grew this quarter. The Americas were up 4% versus Q2 2025, but I want to add some important context here. Actually, the Americas were up around 40% compared to Q1 of this year, driven by the strength of the important US market.

Tom Englund: Actually, Americas was up around 40% compared to Q1 of this year, driven by the strength of the important US market. The sequential momentum is strong, and the year-over-year figure alone does not capture the full picture. China continues to be a market that we are managing carefully. The Chinese government's active support for locally operated and manufactured companies creates a structural headwind for our simulator business, and this has impacted our sales in China, and we are now taking concrete steps to navigate this. That said, the broader APAC region is growing nicely and compensating for the headwind that we see in China. We remain committed to building our position in APAC and China over the long term.

Speaker #5: So, the sequential momentum is strong, and the year-over-year figure alone doesn't capture the full picture. China continues to be a market that we're managing carefully.

Speaker #5: The Chinese government's active support for locally operated and manufactured companies creates a structural headwind for our simulator business. This has impacted our sales in China, and we're now taking concrete steps to navigate this.

Tom Englund: The Chinese government's active support for locally operated and manufactured companies creates a structural headwind for our simulator business, and this has impacted our sales in China, and we are now taking concrete steps to navigate this. That said, the broader APAC region is growing nicely and compensating for the headwind that we see in China. We remain committed to building our position in APAC and China over the long term. A strategic milestone this quarter was the opening of our APAC service hub in Hong Kong, which is part of our deliberate strategy to get closer to our customers, improve our service delivery, and build a stronger local presence in the region. It is the kind of investment that takes time to show up in the numbers, but it is the right move for long-term customer relationships and growth. Ultrasound had another strong quarter, growing 34%.

Speaker #5: That said, the broader APAC region is growing nicely and compensating for the headwind that we see in China. We remain committed to building our position in APAC and China over the long term.

Speaker #5: The strategic milestone this quarter was the opening of our APAC Service Hub in Hong Kong, which is part of our deliberate strategy to get closer to our customers, improve our service delivery, and build a stronger local presence in the region.

Tom Englund: A strategic milestone this quarter was the opening of our APAC service hub in Hong Kong, which is part of our deliberate strategy to get closer to our customers, improve our service delivery, and build a stronger local presence in the region. It is the kind of investment that takes time to show up in the numbers, but it is the right move for long-term customer relationships and growth. Ultrasound had another strong quarter, growing 34%. That is a good number, and it reflects a genuine acceleration, I would say, in how healthcare systems are adopting ultrasound training.

Speaker #5: It's a kind of investment that takes time to show up in the numbers, but it's the right move for long-term customer relationships and growth.

Speaker #5: Ultrasound had another strong quarter, growing 34%. That's a good number, and it reflects a genuine acceleration, I would say, in how healthcare systems are adopting ultrasound training.

Tom Englund: That is a good number, and it reflects a genuine acceleration, I would say, in how healthcare systems are adopting ultrasound training. The tailwind here is structural. Ultrasound is increasingly being used as a point-of-care diagnostic tool at the bedside, in emergency settings, in primary care, and that means that the universe of clinicians who need training is expanding well beyond the traditional specialists. Our focus customers, those that are using ultrasound as a diagnostic instrument at the bedside, continue to grow alongside our traditional customer base. This is exactly the dynamic that we communicated when we made the Intelligent Ultrasound acquisition last year. Women's health remains a strategic priority and continues to perform well. Ultrasound is one of the primary clinical tools for diagnosing conditions that disproportionately affect women, and it has been historically under-resourced when it comes to training.

Speaker #5: The tailwind here is structural. Ultrasound is increasingly being used as a point-of-care diagnostic tool at the bedside, in emergency settings, and in primary care. That means the universe of clinicians who need training is expanding well beyond the traditional specialists.

Tom Englund: The tailwind here is structural. Ultrasound is increasingly being used as a point-of-care diagnostic tool at the bedside, in emergency settings, in primary care, and that means that the universe of clinicians who need training is expanding well beyond the traditional specialists. Our focus customers, those that are using ultrasound as a diagnostic instrument at the bedside, continue to grow alongside our traditional customer base. This is exactly the dynamic that we communicated when we made the Intelligent Ultrasound acquisition last year. Women's health remains a strategic priority and continues to perform well. Ultrasound is one of the primary clinical tools for diagnosing conditions that disproportionately affect women, and it has been historically under-resourced when it comes to training.

Speaker #5: Our focus customers, those that are using ultrasound as a diagnostic instrument at the bedside, continue to grow alongside our traditional customer base. And this is exactly the dynamic that we communicated when we made the Intelligent Ultrasound acquisition last year.

Speaker #5: Women's health remains a strategic priority and continues to perform well. Ultrasound is one of the primary clinical tools for diagnosing conditions that disproportionately affect women, and it has been historically under-resourced when it comes to training.

Speaker #5: Our solutions are genuinely making a difference here, helping clinicians diagnose earlier and with more confidence. That's directly aligned with the purpose of Surgical Science.

Tom Englund: Our solutions are genuinely making a difference here, helping clinicians diagnose earlier with more confidence, and that is directly aligned with the purpose of Surgical Science. This quarter, we also launched new software modules for obstetrics training on the Ultrasound Mentor platform. Integration work with Surgical Science UK, the former Intelligent Ultrasound, continues to progress. We are realizing the synergies step by step, and we remain convinced that the combined technology platform represents a significant opportunity in the years ahead. We believe that ultrasound simulation has the potential to represent a growing share of Surgical Science's total revenues, and Q2 gives us further confidence in that view. Moving over to Industry. Industry revenues grew 24% this quarter, or 27% in local currencies, driven primarily by the very strong performance in license revenues. License revenues came in at SEK 85 million, up significantly from the SEK 59 million in Q2 last year.

Speaker #5: This quarter, we also launched new software modules for obstetrics training on the Ultrasound Mentor platform. Integration work with Surgical Science UK, formerly Intelligent Ultrasound, continues to progress.

Speaker #5: We're realizing the synergies step by step, and we remain convinced that the combined technology platform represents a significant opportunity in the years ahead. We believe that ultrasound simulation has the potential to represent a growing share of Surgical Science's total revenues, and Q2 gives us further confidence in that view.

Speaker #5: Moving over to Industry. Industry revenues grew 24% this quarter, or 27% in local currencies, driven primarily by the very strong performance in license revenues.

Tom Englund: Moving over to Industry. Industry revenues grew 24% this quarter, or 27% in local currencies, driven primarily by the very strong performance in license revenues. License revenues came in at SEK 85 million, up significantly from the SEK 59 million in Q2 last year. The revenues came from a number of robotics customers, and this diversity is something that I want to highlight. We work with almost all of the leading robotic surgery companies, and this means that our robotics customer base is broad and is growing, and the license revenues is a reflection of that. License revenues are lumpy by nature, so I wouldn't over-interpret any single quarter in isolation, but the direction is genuinely and clearly positive.

Speaker #5: License revenues came in at SEK 85 million, up significantly from SEK 59 million in Q2 last year. The revenues came from a number of robotics customers, and this diversity is something that I want to highlight.

Tom Englund: The revenues came from a number of robotics customers, and this diversity is something that I want to highlight. We work with almost all of the leading robotic surgery companies, and this means that our robotics customer base is broad and is growing, and the license revenues is a reflection of that. License revenues are lumpy by nature, so I wouldn't over-interpret any single quarter in isolation, but the direction is genuinely and clearly positive. On the market side, the picture continues to be genuinely exciting. Intuitive had another very strong quarter. Procedure volume grew 16%, and all Intuitive customers that have active My Intuitive Plus annual contracts chose to renew their contracts. That means 100% retention, which tells you something about how deeply the digital offering and simulation is embedded within the Intuitive ecosystem.

Speaker #5: We work with almost all of the leading robotic surgery companies, and this means that our robotics customer base is broad and it's growing. And the license revenues are a reflection of that.

Speaker #5: License revenues are lumpy by nature, so I wouldn't over-interpret any single quarter in isolation. But the direction is genuinely and clearly positive. On the market side, the picture continues to be genuinely exciting.

Tom Englund: On the market side, the picture continues to be genuinely exciting. Intuitive had another very strong quarter. Procedure volume grew 16%, and all Intuitive customers that have active My Intuitive Plus annual contracts chose to renew their contracts. That means 100% retention, which tells you something about how deeply the digital offering and simulation is embedded within the Intuitive ecosystem. Given this continued positive response from end customers for simulation, we estimate that the revenue loss for 2026 that was part of the changed commercial terms with Intuitive will be less than the SEK 60 to 90 million that we initially estimated.

Speaker #5: Intuitive had another very strong quarter. Procedure volume grew 16%, and all Intuitive customers with active MyIntuitive Plus annual contracts chose to renew their contracts.

Speaker #5: That means 100% retention, which tells you something about how deeply the digital offering and simulation is embedded within the Intuitive ecosystem. Given this continued positive response from end customers for simulation, we estimate that the revenue loss for '26 that was part of the changed commercial terms with Intuitive will be less than the SEK 60 to 90 million that we initially estimated.

Tom Englund: Given this continued positive response from end customers for simulation, we estimate that the revenue loss for 2026 that was part of the changed commercial terms with Intuitive will be less than the SEK 60 to 90 million that we initially estimated. Johnson & Johnson received FDA certification for its OTTAVA system across several general surgery procedures earlier than anticipated by analysts. Medtronic started marketing its Hugo system in the United States, and these are large, credible med tech companies entering robotic surgery at scale, and their entry into the US market, the world's largest surgical market, accelerates the broader training and simulation need across the entire ecosystem. More robots means more training needs and more licenses for Surgical Science. This July, we also presented at the SRS, that's the Society of Robotic Surgery, conference in Florida in July.

Speaker #5: Johnson & Johnson received FDA certification for its Ottava system across several general surgery procedures, earlier than anticipated by analysts. Medtronic started marketing its Hugo system in the United States, and these are large, credible medtech companies entering robotic surgery at scale.

Tom Englund: Johnson & Johnson received FDA certification for its OTTAVA system across several general surgery procedures earlier than anticipated by analysts. Medtronic started marketing its Hugo system in the United States, and these are large, credible med tech companies entering robotic surgery at scale, and their entry into the US market, the world's largest surgical market, accelerates the broader training and simulation need across the entire ecosystem. More robots means more training needs and more licenses for Surgical Science. This July, we also presented at the SRS, that's the Society of Robotic Surgery, conference in Florida in July.

Speaker #5: And their entry into the U.S. market, the world's largest surgical market, accelerates the broader training and simulation need across the entire ecosystem. More robots means more training needs, and more licenses for Surgical Science.

Speaker #5: This July, we also presented at the SRS, that's the Society for Robotic Surgery, conference in Florida in July. This conference had a record number of both participants and exhibitors, and we had a very strong interest in our product and services.

Tom Englund: This conference had a record number of both participants and exhibitors, and we had a very strong interest in our product and services. We launched our new world-leading suturing module and procedure simulation for our RobotiX Mentor platform that you can see on the top left picture, and the reception from customers and opinion leaders were excellent. During the quarter, we also reorganized our sales force focus on the Indu segment in the United States. The goal is to sharpen our commercial execution and get closer to customers in what remains the world's largest med tech market. We expect the effects of this change to become visible in the H2 of 2026. Robotics is clearly becoming a central part of surgical medicine.

Speaker #5: We launched our new, world-leading suturing module and procedure simulation for our Robotics Express platform, which you can see in the top left picture. The reception from customers and opinion leaders was excellent.

Speaker #5: During the quarter, we also reorganized our sales force, focused on the industry segment in the United States. The goal is to sharpen our commercial execution and get closer to customers in what remains the world's largest medtech market.

Speaker #5: And we expect the effects of this change to become visible in the second half of 2026. Robotics is clearly becoming a central part of surgical medicine. Robotic procedures are a growing share of total surgical volume, and with many platforms now in the market and more on the way, the demand for scalable, high-quality simulation is going to grow in step with that.

Tom Englund: Robotic procedures are growing share of total surgical volume, and with many platforms now in the market and more on the way, the demand for scalable, high-quality simulation is going to grow in step with that. We see no signs, really, of changes in competitive environment versus Surgical Science. There are no signs of robotic companies developing any advanced real-time procedural soft body simulation that Surgical Science is world leader in. Surgical Science is developing solutions for most of the top 20 robotic surgery companies. Our pipeline is the biggest it's ever been. Our conviction about the long-term opportunity here is unchanged, and if anything, stronger than a year ago. Medical device simulation then finally grew compared to the comparison quarter, and we see clear progress in both product development and customer dialogues.

Speaker #5: And we see no signs, really, of changes in the competitive environment versus Surgical Science. There are no signs of robotic companies developing any advanced real-time procedural soft body simulation that Surgical Science is a world leader in.

Speaker #5: Surgical Science is developing solutions for most of the top 20 robotic surgery companies. Our pipeline is the biggest it’s ever been. Our conviction about the long-term opportunity here is unchanged.

Speaker #5: And, if anything, stronger than a year ago. Medical device simulation finally grew compared to the comparison quarter, and we see clear progress in both product development and customer dialogues.

Speaker #5: While the segment's performance was not in line with other quarters during 2025, the underlying demand from our medtech customers remains solid. More than 70% of customers in active development projects are repeat clients.

Tom Englund: While the segment's performance was not in line with other quarters during 2025, the underlying demand from our med tech customers remains solid. More than 70% of customers in active development projects are repeat clients. That's a retention and loyalty number that tells you about the quality of what we deliver. We work with many of the world's largest med tech companies, and we're a critical supplier in their product development and delivery programs, and we continue to add new customers to the base. This segment moves in lumps. Projects have long lead times, and the mix between development revenue, hardware, and service in any given quarter can vary significantly. What I watch here is the lead indicators, and those remain very positive. We have a strong pipeline, and we expect to see meaningful growth from this segment in the coming quarters.

Speaker #5: That's a retention and loyalty number that tells you about the quality of what we deliver. We work with many of the world's largest medtech companies, and we're a critical supplier in their product development and delivery programs.

Speaker #5: And we continue to add new customers to the base. This segment moves in lumps; projects have long lead times, and the mix between development revenue, hardware, and service in any given quarter can vary significantly.

Speaker #5: What I watch here are the lead indicators, and those remain very positive. We have a strong pipeline, and we expect to see meaningful growth from this segment in the coming quarters.

Tom Englund: What I watch here is the lead indicators, and those remain very positive. We have a strong pipeline, and we expect to see meaningful growth from this segment in the coming quarters. Let me talk about margins and what's driving the improvement that we see. The gross margin expansion to 69% this quarter reflects two things. The strong license revenue mix and the underlying work that we have done to improve our profitability in the simulator business itself. Gross margin, excluding licenses, is now improved by several percentage points from previous quarters, and it reflects the pricing work and operational improvements that we have done.

Speaker #5: Let me talk about margins, and what's driving the improvement that we see. The gross margin expansion to 69% this quarter reflects two strong things.

Tom Englund: Let me talk about margins and what's driving the improvement that we see. The gross margin expansion to 69% this quarter reflects two things. The strong license revenue mix and the underlying work that we have done to improve our profitability in the simulator business itself. Gross margin, excluding licenses, is now improved by several percentage points from previous quarters, and it reflects the pricing work and operational improvements that we have done. We implemented a further price increase on simulators in April this year, and these effects flow through gradually as sales cycles close, and we'll see more benefit from those price increases in the H2 of the year. We see that the underlying business profitability trend is positive and expect further improvements going forward. So let me take a step back and talk about where we're going.

Speaker #5: The strong license revenue mix and the underlying work that we have done to improve our profitability in the simulator business itself—gross margin excluding licenses has now improved by several percentage points from previous quarters.

Speaker #5: And it reflects the pricing work and operational improvements that we have done. We implemented a further price increase on simulators in April this year, and these effects flow through gradually as the sales cycles close.

Tom Englund: We implemented a further price increase on simulators in April this year, and these effects flow through gradually as sales cycles close, and we'll see more benefit from those price increases in the H2 of the year. We see that the underlying business profitability trend is positive and expect further improvements going forward. So let me take a step back and talk about where we're going. The strategy that we laid out in December is about becoming the clear leader in five distinct market segments, all of which have very low penetration today. We're in the early innings of a long game, and Q2 shows us that the approach is working. An example that I find particularly exciting is emergency medical simulation.

Speaker #5: And we'll see more benefit from those price increases in the second half of the year. We see that the underlying business profitability trend is positive and expect further improvements going forward.

Speaker #5: So let me take a step back and talk about where we're going. The strategy that we laid out in December is about becoming the clear leader in five distinct market segments, all of which have very low penetration today.

Tom Englund: The strategy that we laid out in December is about becoming the clear leader in five distinct market segments, all of which have very low penetration today. We're in the early innings of a long game, and Q2 shows us that the approach is working. An example that I find particularly exciting is emergency medical simulation. The order and project that we announced in early 2025 to a Southeast Asian country is now just months from delivery, and we see similar opportunities across multiple countries. This is a segment with real demand, serious customers, and genuinely differentiated technology from Surgical Science. From an operational standpoint, a significant milestone this quarter was the opening of our new production facility in Tel Aviv. This facility is purpose-built for higher volumes and improved productivity, and it gives us real capacity to scale manufacturing without the proportional increase in cost per unit.

Speaker #5: We're in the early innings of a long game, and Q2 shows us that the approach is working. An example that I find particularly exciting is emergency medical simulation.

Speaker #5: The order and project that we announced in early 2025 to a Southeast Asian country is now just months from delivery, and we see similar opportunities across multiple countries.

Tom Englund: The order and project that we announced in early 2025 to a Southeast Asian country is now just months from delivery, and we see similar opportunities across multiple countries. This is a segment with real demand, serious customers, and genuinely differentiated technology from Surgical Science. From an operational standpoint, a significant milestone this quarter was the opening of our new production facility in Tel Aviv. This facility is purpose-built for higher volumes and improved productivity, and it gives us real capacity to scale manufacturing without the proportional increase in cost per unit. It makes us also more resilient to supply chain pressures. We see further operational improvements ahead that will support continued cost efficiency improvements.

Speaker #5: This is a segment with real demand, serious customers, and genuinely differentiated technology from Surgical Science. From an operational standpoint, a significant milestone this quarter was the opening of our new production facility in Tel Aviv.

Speaker #5: This facility is purpose-built for higher volumes and improved productivity, and it gives us real capacity to scale manufacturing without a proportional increase in cost per unit.

Speaker #5: And it also makes us more resilient to supply chain pressures. We see further operational improvements ahead that will support continued cost efficiency. Surgical Science has no debt, and we ended the quarter with $658 million in cash.

Tom Englund: It makes us also more resilient to supply chain pressures. We see further operational improvements ahead that will support continued cost efficiency improvements. Surgical Science has no debt, and we ended the quarter with SEK 658 million in cash. We have market-leading positions, the products, the customer relationships, and the clinical expertise. That combination is genuinely rare and it gives us real options. The tailwinds are real and they are growing. An aging population, increasingly complex clinical procedures, higher standards for patient safety, a shortage of trained healthcare professionals. All of these are driving demand for simulation every single year. We're building for that world, and I'm confident that we have the right strategy, the right team, and the right assets to get there. With that, I will hand over to Anna to walk through the financials.

Tom Englund: Surgical Science has no debt, and we ended the quarter with SEK 658 million in cash. We have market-leading positions, the products, the customer relationships, and the clinical expertise. That combination is genuinely rare and it gives us real options. The tailwinds are real and they are growing. An aging population, increasingly complex clinical procedures, higher standards for patient safety, a shortage of trained healthcare professionals. All of these are driving demand for simulation every single year. We're building for that world, and I'm confident that we have the right strategy, the right team, and the right assets to get there. With that, I will hand over to Anna to walk through the financials.

Speaker #5: We have a market-leading position: the products, the customer relationships, and the clinical expertise. That combination is genuinely rare, and it gives us real options.

Speaker #5: The tailwinds are real, and they are growing. An aging population, increasingly complex clinical procedures, higher standards for patient safety, and a shortage of trained healthcare professionals—all of these are driving demand for simulation every single year.

Speaker #5: We're building for that world, and I'm confident that we have the right strategy, the right team, and the right assets to get there. And with that, I will hand over to Anna to walk through the financials.

Speaker #1: Thank you, Tom. And yes, starting by underlining that we are very pleased to report another solid quarter and a good first half year. Again, we had sales of $255 million for the quarter, up 22% in SEK and 25% in local currencies.

Anna Ahlberg: Thank you, Tom. Starting by underlining that we are very pleased to report another solid quarter and a good H1. Again, we had sales of SEK 255 million for the quarter, up 22% in SEK and 25% in local currencies. So really strong even though the comparison quarter was a weak quarter. Talking first a bit about currencies. We have, after Q1 2025, seen a significant negative effect from currencies on our overall sales, and also on our result. I will come back to that later. With our just below 80% of revenues in US dollars. For Q1 against Q1 last year, the SEK USD average rate was down 14%. Now for the H1, it was down 9% and that means that we also had some slight positive effects on the numbers in Q2.

Speaker #1: So, really strong, even though the comparison quarter was a weak quarter. Talking first a bit about currencies, we have, after Q1 2025, seen a significant negative effect from currencies on our overall sales.

Speaker #1: And also regarding our results, I will come back to that later. With just below 80% of our revenues in US dollars, for the first quarter—against Q1 last year—the SEK/USD average rate was down 14%.

Speaker #1: And now, then, for the first half-year, it was down 9%, and that means that we also had some slight positive effects on the numbers in Q2.

Speaker #1: However, the Israeli shekel is also a very important currency for us, particularly in terms of costs. Here, we saw the US dollar weakening considerably during the quarter, which then affects us negatively.

Anna Ahlberg: However, the Israeli shekel is also a very important currency for us and then in terms of costs. Here we saw the US dollar weakening considerably during the quarter, which then affects us negatively. Looking at the two business areas, the split for the quarter was 52% for Edu and 48% for Indu. Edu then up 19% or 24% in local currencies, and this is also the business area where we see the strongest growth for the H1. When we look at regions, sales in EMEA increased by 60%, and Eastern European countries accounted for the majority of this increase. EMEA is also the region where we see the strongest development for the H1, with an increase of 45%. Again, really strong sales for the H1 to Eastern Europe.

Speaker #1: Looking at the two business areas, the split for the quarter was 52% for EDU and 48% for INDU. EDU was up 19%, or 24% in local currencies. This is also the business area where we see the strongest growth for the first half of the year.

Speaker #1: And when we look at regions, then, sales in EMEA increased by 60%, and Eastern European countries accounted for the majority of this increase. EMEA is also the region where we see the strongest development for the first half of the year.

Speaker #1: With an increase of 45%, and again, really strong sales for the half-year to Eastern Europe. Revenue in the Americas region was up 4% compared with the same period last year.

Anna Ahlberg: Revenue in the Americas region then up 4% compared with the same period last year. However, as Tom also mentioned, the US was up close to 40% compared with Q1, and we had higher revenues here than for any other quarter in 2025. So that's really nice to see the strength in the US market. The APAC region up 10%, primarily attributable to orders to Pakistan and Taiwan, while China then continues to struggle a bit and was lower compared to Q2 last year. As mentioned, all our product segments were up, and particularly then ultrasound with a 34% increase. Indu was up 24% or 27% excluding effects and license revenues, then SEK 85 million, an increase of 44% compared with the same period in the preceding year. Looking then at our revenue streams, that meant 33% of our total revenues for the quarter were license revenues.

Speaker #1: However, as Tom also mentioned, the US was up close to 40% compared with Q1, and we had higher revenues here than for any other quarter in 2025.

Speaker #1: So that's really nice to see the strength in the US market. And then the APAC region is up 10%, primarily attributable to orders from Pakistan and Taiwan.

Speaker #1: While China then continues to struggle a bit and was lower compared to Q2 last year. As mentioned, all our product segments were up, and particularly then ultrasound with a 34% increase.

Speaker #1: INDU was up 24%, or 27% excluding effects, and license revenues were SEK 85 million, an increase of 44% compared with the same period in the preceding year.

Anna Ahlberg: Indu was up 24% or 27% excluding effects and license revenues, then SEK 85 million, an increase of 44% compared with the same period in the preceding year. Looking then at our revenue streams, that meant 33% of our total revenues for the quarter were license revenues. For the H1, our license revenues from Intuitive, our largest customer, are in line with those for the H1 2025 in US dollars. This is better than what we expected, and this is because the attach rate for da Vinci 5s has been much higher than what we calculated with. Also, this is the first quarter with renewals of da Vinci 5 subscriptions.

Speaker #1: And looking then at our revenue streams, that meant 33% of our total revenues for the quarter were license revenues. For the first half, our license revenues from Intuitive, our largest customer, are in line with those for the first half year 2025 in US dollars.

Anna Ahlberg: For the H1, our license revenues from Intuitive, our largest customer, are in line with those for the H1 2025 in US dollars. This is better than what we expected, and this is because the attach rate for da Vinci 5s has been much higher than what we calculated with. Also, this is the first quarter with renewals of da Vinci 5 subscriptions. The first customers that got their da Vinci 5s with the full digital package were in Q2 2025, and these packages were now up for renewal after one year. For this quarter then all customers have renewed their subscriptions. As I'm sure you know, and as Tom talked about, we previously estimated that the announced memorandum of understanding cancellation meant reverting back to the old agreement between us and Intuitive starting 1 January this year.

Speaker #1: This is better than what we expected, and this is because the attach rate for DV5s has been much higher than what we calculated with.

Speaker #1: Also, this is the first quarter with renewals of DV5 subscriptions. The first customers that got their DV5s with the full digital package were in Q2 2025, and these packages were now up for renewal after one year.

Anna Ahlberg: The first customers that got their da Vinci 5s with the full digital package were in Q2 2025, and these packages were now up for renewal after one year. For this quarter then all customers have renewed their subscriptions. As I'm sure you know, and as Tom talked about, we previously estimated that the announced memorandum of understanding cancellation meant reverting back to the old agreement between us and Intuitive starting 1 January this year. Our estimate was that this would have a negative impact on our license revenues of between 60 million SEK and 90 million SEK for 2026 compared to 2025.

Speaker #1: And for this quarter, then, all customers have renewed their subscriptions. As I'm sure you know—and as Tom talked about—we previously estimated that the announced memorandum of understanding cancellation meant reverting back to the old agreement between us and Intuitive, starting January 1 this year.

Speaker #1: And our estimate was that this would have a negative impact on our license revenues of between SEK 60 and 90 million for 2026, compared to 2025.

Anna Ahlberg: Our estimate was that this would have a negative impact on our license revenues of between 60 million SEK and 90 million SEK for 2026 compared to 2025. It is still too early to say how, for example, renewals and also the attach rate will continue to develop. But for this year, we have then estimated now that we will be below this range when it comes to revenue loss. We also had revenues from several other customers in the quarter. As Tom went through, a lot of very exciting things are happening on the robotics market right now. Simulator sales then, as a whole, they were up 25% compared to Q2 last year, but more flat compared to Q1. For the H1, this revenue stream is up by just over 9%. More for Edu, which was positive, and less for Indu, which is negative.

Speaker #1: It is still too early to say how, for example, renewals and also the attach rate will continue to develop. But for this year, we have now estimated that we will be below this range when it comes to revenue loss.

Anna Ahlberg: It is still too early to say how, for example, renewals and also the attach rate will continue to develop. But for this year, we have then estimated now that we will be below this range when it comes to revenue loss. We also had revenues from several other customers in the quarter. As Tom went through, a lot of very exciting things are happening on the robotics market right now. Simulator sales then, as a whole, they were up 25% compared to Q2 last year, but more flat compared to Q1. For the H1, this revenue stream is up by just over 9%. More for Edu, which was positive, and less for Indu, which is negative. This sale is, again, more lumpy since it is usually tied to larger projects where development is also involved.

Speaker #1: And we also had revenues from several other customers in the quarter, and as Tom went through, a lot of very exciting things are happening in the robotics market right now.

Speaker #1: Simulator sales, then, as a whole were up 25% compared to Q2 last year, but more flat compared to Q1. And so, for the first half-year, this revenue stream is up by just over 9%—more for EDU, which was positive, and less for INDU, which is negative.

Speaker #1: And this sale is again more lumpy, since it's usually tied to larger projects where development is also involved. Development revenues were in line with the first quarter, and weaker than during the second quarter of the previous year.

Anna Ahlberg: This sale is, again, more lumpy since it is usually tied to larger projects where development is also involved. Development revenues were in line with the Q1 and weaker than during the Q2 of the previous year. Again, the project that we have in the Southeast Asian country is proceeding very well. In July, we had a major acceptance test that was conducted and approved. It means that the plan is still to largely complete this project during this year. Service revenues continue to be stable. Looking then at the cost side and margins. Our gross margin for the quarter, 69% versus 65% in Q2 last year. Of course, license revenues then having a positive effect since they were a larger share of total sales than in Q2 last year.

Anna Ahlberg: Development revenues were in line with the Q1 and weaker than during the Q2 of the previous year. Again, the project that we have in the Southeast Asian country is proceeding very well. In July, we had a major acceptance test that was conducted and approved. It means that the plan is still to largely complete this project during this year. Service revenues continue to be stable. Looking then at the cost side and margins. Our gross margin for the quarter, 69% versus 65% in Q2 last year. Of course, license revenues then having a positive effect since they were a larger share of total sales than in Q2 last year. Also, the proportion of direct sales within educational products and primarily then in the US that was higher, also had a positive effect.

Speaker #1: Again, the project that we have in the Southeast Asian countries is proceeding very well. In July, we had a major acceptance test that was conducted and approved.

Speaker #1: And so, it means that the plan is still to largely complete this project during this year. Service revenues continue to be stable. Looking then at the cost side and margins, our gross margin for the quarter was 69%, versus 65% in Q2 last year. Of course, license revenues had a positive effect, since they were a larger share of total sales than in Q2 last year.

Speaker #1: Also, the proportion of direct sales within educational products—and primarily then in the US—that was higher also had a positive effect. Currency effects, a slight positive effect then, as I talked about before, 0.2 percentage points.

Anna Ahlberg: Also, the proportion of direct sales within educational products and primarily then in the US that was higher, also had a positive effect. Currency effects, a slight positive effect then, as I talked about before, 0.2 percentage points. The US dollar for us has less impact on the cost of goods sold than on other cost items, since our input goods are primarily purchased in other currencies than the US dollar, and also our production and associated wage costs are not in US dollars. Price increases then implemented in 2025, for simulators continue to have a positive impact, and then again, we saw a new price increase in April. We also had a good product mix in the quarter. Regarding OpEx, the remuneration review process for 2026 for the group was completed during this quarter, during Q2.

Anna Ahlberg: Currency effects, a slight positive effect then, as I talked about before, 0.2 percentage points. The US dollar for us has less impact on the cost of goods sold than on other cost items, since our input goods are primarily purchased in other currencies than the US dollar, and also our production and associated wage costs are not in US dollars. Price increases then implemented in 2025, for simulators continue to have a positive impact, and then again, we saw a new price increase in April. We also had a good product mix in the quarter. Regarding OpEx, the remuneration review process for 2026 for the group was completed during this quarter, during Q2. All units in our group have 1 April as the review date, except for Sweden, which has 1 January.

Speaker #1: The US dollar for us has less impact on the cost of goods sold than on other cost items, since our input goods are primarily purchased in other currencies than the US dollar, and also our production and associated wage costs are not in US dollars.

Speaker #1: Price increases, then implemented in 2025 for simulators, continue to have a positive impact. And then again, we saw a new price increase in April.

Speaker #1: We also had a good product mix in the quarter. Regarding OPEX, the remuneration review process for 2026 for the group was completed during this quarter, during Q2.

Speaker #1: All units in our group have April 1 as the review date, except for Sweden, which has January 1. In total, this effect is approximately 3.5 million SEK per quarter.

Anna Ahlberg: All units in our group have 1 April as the review date, except for Sweden, which has 1 January. In total, this effect is approximately 3.5 million SEK per quarter. Sales costs, 19% of sales, down from 28% last year. During this quarter, we received the first refund relating to customs duties in the US, approximately 1.2 million SEK, and that was for the corresponding quarter in 2025. We will continue to apply for this as more periods open up. Admin costs, also down 9% of sales, versus 11% last year. This quarter's costs include consulting costs, approximately 1.1 million SEK, relating to the work that we are currently doing to change our listing to the Nasdaq Main Market, and that process is proceeding according to plan. As we previously communicated, we expect the relisting to take place next year.

Anna Ahlberg: In total, this effect is approximately 3.5 million SEK per quarter. Sales costs, 19% of sales, down from 28% last year. During this quarter, we received the first refund relating to customs duties in the US, approximately 1.2 million SEK, and that was for the corresponding quarter in 2025. We will continue to apply for this as more periods open up. Admin costs, also down 9% of sales, versus 11% last year. This quarter's costs include consulting costs, approximately 1.1 million SEK, relating to the work that we are currently doing to change our listing to the Nasdaq Main Market, and that process is proceeding according to plan. As we previously communicated, we expect the relisting to take place next year.

Speaker #1: Sales costs were 19% of sales, down from 28% last year. During this quarter, we received the first refund relating to customs duties in the US, approximately SEK 1.2 million, and that was for the corresponding quarter in 2025.

Speaker #1: We will continue to apply for this as more periods open up. Admin costs are also down—9% of sales, versus 11% last year. This quarter's costs include consulting costs of approximately SEK 1.1 million, relating to the work that we are currently doing to change our listing to the Nasdaq Main Market. That process is proceeding according to plan and, as we previously communicated, we expect the re-listing to take place next year.

Speaker #1: In the quarter, we also had costs attributable to the work to set up legal entities in Hong Kong and in China. R&D costs were 23% of sales; we capitalized a bit more—approximately 14 million versus 10 million in Q2 last year.

Anna Ahlberg: In the quarter, we also had costs attributable to the work to set up legal entities in Hong Kong and in China. R&D costs, 23% of sales. We activated a bit more, approximately SEK 14 million versus SEK 10 million in Q2 last year. Again, the cost on this line, they vary depending on how much development revenue we have because salaries for the portion of development department staff who work on projects that generate development revenues are transferred to cost of goods sold. Other operating income and costs, that mainly consists of revaluation of operating assets and liabilities in foreign currencies. We had a negative impact here on results of SEK 9 million compared to SEK 25 million in Q2 last year. As I previously mentioned, during the quarter, the Israeli shekel strengthened against the dollar. Exchange rate on 30 June was approximately 6% higher than going out of Q1.

Speaker #1: And again, the costs on this line vary depending on how much development revenue we have, because salaries for the portion of development department staff who work on projects that generate development revenues are transferred to cost of goods sold.

Speaker #1: Other operating income and costs mainly consist of the revaluation of operating assets and liabilities in foreign currencies. We had a negative impact here on results of SEK 9 million, compared to SEK 25 million in Q2 last year.

Speaker #1: And as I previously mentioned, during the quarter the Israeli shekel strengthened against the dollar. The exchange rate on June 30 was approximately 6% higher than going out of Q1.

Anna Ahlberg: As I previously mentioned, during the quarter, the Israeli shekel strengthened against the dollar. Exchange rate on 30 June was approximately 6% higher than going out of Q1. Since the majority of trade receivables in our Israeli company is in US dollars, this resulted in a revaluation loss, and that was approximately SEK 6 million. In the comparative quarter, profits were also negatively affected by large currency effects attributable to the same weakening of the US dollar against the shekel. Following this, our operating profit for the quarter was SEK 33 million, corresponding to a margin of 13%. For the first half year, operating profit was SEK 56 million or 11%. If we then adjust our P&L for FX effects, EBIT for the first half year was SEK 68 million or 13%.

Speaker #1: And since the majority of trade receivables in our Israeli company are in US dollars, this resulted in a revaluation loss, and that was approximately $6 million.

Anna Ahlberg: Since the majority of trade receivables in our Israeli company is in US dollars, this resulted in a revaluation loss, and that was approximately SEK 6 million. In the comparative quarter, profits were also negatively affected by large currency effects attributable to the same weakening of the US dollar against the shekel. Following this, our operating profit for the quarter was SEK 33 million, corresponding to a margin of 13%. For the first half year, operating profit was SEK 56 million or 11%. If we then adjust our P&L for FX effects, EBIT for the first half year was SEK 68 million or 13%. The way we do this is that we use the average exchange rates for the first half year last year. Balance sheet items, however, and their impact on other operating income and expenses that we just talked about, they have not been restated.

Speaker #1: In the comparative quarter, profits were also negatively affected by large currency effects attributable to the same weakening—weakening of the US dollar against the shekel.

Speaker #1: So, following this, our operating profit for the quarter was SEK 33 million, corresponding to a margin of 13%. And for the first half-year, operating profit was SEK 56 million, or 11%.

Speaker #1: If we then adjust our P&L for FX effects, EBIT for the first half-year was 68 million, or 13%. And the way we do this is that we use the average exchange rates then for the first half-year last year.

Anna Ahlberg: The way we do this is that we use the average exchange rates for the first half year last year. Balance sheet items, however, and their impact on other operating income and expenses that we just talked about, they have not been restated. Organization-wise, number of employees at the end of the period was 319. That was eight less than going out of Q2 last year. The majority of this change is attributable to the restructuring of the sales force that we did following the acquisition of Intelligent Ultrasound last year.

Speaker #1: Balance sheet items, however, and their impact on other operating income and expenses that we just talked about, have not been restated. Organization-wise, the number of employees at the end of the period was 319.

Anna Ahlberg: Organization-wise, number of employees at the end of the period was 319. That was eight less than going out of Q2 last year. The majority of this change is attributable to the restructuring of the sales force that we did following the acquisition of Intelligent Ultrasound last year. As mentioned, during the quarter, we have opened our new service hub in Hong Kong, and we are continuing to invest in this part of the world also in terms of adjusted EBIT then where we have our financial goal of 15%, and that is then EBIT exclusive of amortizations on surplus values related to acquisitions. Here, we saw SEK 38 million for the quarter, and that is a margin of 15% and in line with our financial goals. If we adjust for FX effects the same way as we did for EBIT, it was SEK 34 million or 14%.

Speaker #1: That was 8 less than going out of Q2 last year. The majority of this change is attributable to the restructuring of the sales force that we did following the acquisition of Intelligent Ultrasound last year.

Speaker #1: And as mentioned, during the quarter we have opened our new service hub in Hong Kong, and we are continuing to invest in this part of the world, also in terms.

Anna Ahlberg: As mentioned, during the quarter, we have opened our new service hub in Hong Kong, and we are continuing to invest in this part of the world also in terms of adjusted EBIT then where we have our financial goal of 15%, and that is then EBIT exclusive of amortizations on surplus values related to acquisitions. Here, we saw SEK 38 million for the quarter, and that is a margin of 15% and in line with our financial goals. If we adjust for FX effects the same way as we did for EBIT, it was SEK 34 million or 14%. For the first half year, SEK 77 million or 15%, again in line with our financial targets.

Speaker #1: For adjusted EBITDA, where we have our financial goal of 15%, that is then EBIT exclusive of amortizations on surplus values related to acquisitions.

Speaker #1: Here, we saw SEK 38 million for the quarter, and that is a margin of 15%, which is in line with our financial goals. If we adjust for FX effects, the same way as we did for EBIT, it was SEK 34 million, or 14%.

Speaker #1: And for the first half year, 77 million, or 15%, again in line with our financial targets. Finance net and taxes—no loan financing—meaning net financial items mainly consist of interest income on bank deposits. We also have the revaluation of internal loan liabilities to subsidiaries, as well as the effect of IFRS 16 impacting the finance net.

Anna Ahlberg: For the first half year, SEK 77 million or 15%, again in line with our financial targets. Finance net and taxes. No loan financing, meaning net financial items mainly consist of interest income on bank deposits. We also have the revaluation of internal loan liabilities to subsidiaries, as well as the effect of IFRS 16 impacting the finance net. Net profit for the quarter was SEK 21 million, and the tax expense for this quarter was higher than in Q1. That is largely attributable to taxes for the 2025 financial year in the US, affecting this quarter. Also, we do have non-deductible amortizations in our P&L, and that is affecting the effective tax rate for the quarter. These were SEK 5.5 million. Cash flow, SEK 15 million from operating activities, approximately the same as last year. However, in this quarter, we saw negative working capital.

Anna Ahlberg: Finance net and taxes. No loan financing, meaning net financial items mainly consist of interest income on bank deposits. We also have the revaluation of internal loan liabilities to subsidiaries, as well as the effect of IFRS 16 impacting the finance net. Net profit for the quarter was SEK 21 million, and the tax expense for this quarter was higher than in Q1. That is largely attributable to taxes for the 2025 financial year in the US, affecting this quarter. Also, we do have non-deductible amortizations in our P&L, and that is affecting the effective tax rate for the quarter. These were SEK 5.5 million. Cash flow, SEK 15 million from operating activities, approximately the same as last year. However, in this quarter, we saw negative working capital.

Speaker #1: Net profit for the quarter was SEK 21 million, and the tax expense for this quarter was higher than in Q1. That is largely attributable to taxes for the 2025 financial year in the US.

Speaker #1: Affecting this quarter. Also, we do have non-deductible amortizations in our P&L, and that's affecting the effective tax rate for the quarter. These were SEK 5.5 million.

Speaker #1: Cash flow: SEK 15 million from operating activities, approximately the same as last year. However, in this quarter, we saw negative working capital for the quarter—both inventories and accounts receivable increased.

Anna Ahlberg: For this quarter, both inventories and accounts receivable increased. The increase in inventory here, it is partly attributable to a build-up due to the project in a Southeast Asian country. This project is now entering a phase of hardware delivery. Accrued income has also increased, and this item then primarily relates to accrued license revenue that is invoiced and paid in the following quarter. This relates then to the fact that we had higher license revenues in the quarter. However, as Tom mentioned before, for the H1, cash flow from working capital was positive, and we see AR decreasing. We also see the gray line there, that it is at a good level in relation to sales and continue to be at a good level. Investing activities.

Speaker #1: And the increase in inventory here is partly attributable to a build-up due to the project in a Southeast Asian country. This project is now entering a phase of hardware delivery.

Speaker #1: Accrued income has also increased, and this item primarily relates to accrued licence revenue. That is invoiced and paid in the following quarter, and so this relates to the fact that we had higher licence revenues in the quarter.

Speaker #1: However, and as Tom mentioned before, for the first half-year, cash flow from working capital was positive. We see AR decreasing, and we also see the grey line there, that it's at a good level in relation to sales and continues to be at a good level.

Speaker #1: Investing activities: we invested approximately $6 million in the quarter in the construction of our new production facilities in Tel Aviv. For the first half of the year, we have invested $12 million, and in total, approximately $17 million. As we talked about, these new facilities were commissioned at the end of the second quarter.

Anna Ahlberg: Investing activities. We invested approximately SEK 6 million in the quarter in the construction in our new production facilities in Tel Aviv. For the H1, we have invested SEK 12 million, and in total, approximately SEK 17 million. As we talked about, these new facilities were commissioned at the end of the Q2. Nothing to mention around financing activities. At 30 June, our cash position was SEK 658 million. Back to you, Tom.

Anna Ahlberg: We invested approximately SEK 6 million in the quarter in the construction in our new production facilities in Tel Aviv. For the H1, we have invested SEK 12 million, and in total, approximately SEK 17 million. As we talked about, these new facilities were commissioned at the end of the Q2. Nothing to mention around financing activities. At 30 June, our cash position was SEK 658 million. Back to you, Tom.

Speaker #1: Nothing to mention around financing activities, and so at June 30th, our cash position was 658 million. And back to you, Tom.

Speaker #2: Thank you, Anna. So to wrap up, Q2 was a strong quarter for Surgical Science. We had strong revenue growth and adjusted EBIT reached a 15% margin, which is in line with our profitability target.

Tom Englund: Thank you, Anna. To wrap up, Q2 was a strong quarter for Surgical Science. We had strong growth of revenues. Adjusted EBIT reached 15% margin, which is in line with our profitability target. The license revenues were up 44% year over year. All of this demonstrates that the actions that we have taken to improve profitability and the customer offering are delivering results. We have momentum now in educational products across all regions. We have a growing and increasingly diverse robotics ecosystem, with multiple platform companies entering the market at scale. Our ultrasound business is growing and accelerating, and we open up our APAC service hub and our new Tel Aviv production facility during this quarter. Our strategy is delivering both financial and operational results. The opportunity in front of Surgical Science is significant.

Speaker #2: And the license revenues were up 44% year over year. All of this demonstrates that the actions we've taken to improve profitability and the customer offering are delivering results.

Speaker #2: We have momentum now in educational products across all regions. We have a growing and increasingly diverse robotics ecosystem, with multiple platform companies entering the market at scale.

Speaker #2: Our ultrasound business is growing and accelerating, and we opened up our APAC service hub and our new Tel Aviv production facility during this quarter.

Speaker #2: And our strategy is delivering both financial and operational results. The opportunity in front of Surgical Science is significant. Simulation will become a central part of how healthcare trains its professionals.

Tom Englund: Simulation will become a central part for how healthcare trains its professionals, and we intend to lead that shift. Finally, I want to take the opportunity to thank the entire Surgical Science team for their fantastic work and for their continued strong commitment. With that, I would like to open up the floor for questions.

Speaker #2: And we intend to lead that shift. Finally, I want to take the opportunity to thank the entire Surgical Science team for their fantastic work and for their continued strong commitment.

Speaker #2: And with that, I would like to open up the floor for questions.

Speaker #1: If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad.

Operator 2: If you wish to ask a question, please dial #5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial #6 on your telephone keypad. The next question comes from Christian Lee from Pareto Securities. Please go ahead.

Operator: If you wish to ask a question, please dial #5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial #6 on your telephone keypad. The next question comes from Christian Lee from Pareto Securities. Please go ahead.

Speaker #1: The next question comes from Christian Lee from Pareto Securities. Please go ahead.

Speaker #3: Thank you. Good morning, Tom and Anna. My two questions are basically related to the license revenues. So the first one is, if you could give us some color on the composition of license revenue in the second quarter—if you had any larger package deals contributing, or was it more broad-based across customers?

Christian Lee: Thank you. Good morning, Tom and Anna. My two questions are basically related to the license revenues. The first one is if you could give us some color on the composition of license revenue in Q2, if you had any larger package deals contributing or was it more broad-based across customers? Would it be possible to quantify or give us some indication of how much of the revenues were driven by My Intuitive Plus subscription renewals? That's my first. Thank you.

Speaker #3: And would it be possible to quantify or give us some indication of how much of the revenues were driven by My Intuitive subscription renewals?

Speaker #3: That's my first. Thank you.

Speaker #2: So I can, hi, hi Christian. I can answer that. So first, there was no, we don't comment on specific customers, as you know, but we have a, we had a healthy mix of revenues from different customers in the quarter.

Tom Englund: Hi, Christian. I can answer that. First, we don't comment on specific customers, as you know, but we had a healthy mix of revenues from different customers in the quarter. If you take Intuitive aside, there was not one major license deal or package deal. The second question is related to the renewals. It's a relatively small volume of renewals still. Intuitive was clear about that in their earnings call, and the renewals did not have a significant effect on the total license revenues this quarter. But it's of course a positive news.

Speaker #2: So there was not like if you take intuitive aside, so there was not like one major licence deal or package deal. And then the second question is related to the renewals.

Speaker #2: It's a relatively small volume of renewals still. Intuitive was clear about that in their earnings call, and they did not—the renewals did not have a significant effect on the total license revenues this quarter.

Speaker #2: But it's, of course, positive news.

Speaker #3: Thank you. Okay, my second question is: Now that you have indicated that Intuitive-related revenue loss will be below the initial $60 to $90 million estimate, does this mean that you’re, you know, better positioned to hit your 2027 adjusted EBIT margin target of at least 15%? And could you also, more broadly, give us some—given the increasingly positive robotics outlook—do you think that more than 15% is too conservative as a long-term target?

Christian Lee: Thank you. Okay. My second question is, now that you have indicated that Intuitive-related revenue loss will be below the initial $69 million estimate, does this mean that you're in a better position to hit your 2027 adjusted EBIT margin target of at least 15% already this year? Could you also more broadly give some, given the increasingly positive robotics outlook, do you think that the more than 15% is too conservative as a long-term target?

Tom Englund: Mm-hmm. Since we have communicated that the profitability for 2026 will be lower than our financial targets, this is of course the fact that we are now at our financial targets in terms of profitability means that we are ahead of the plan that we have set. Yes, that is a strong positive development, right? However, it is a bit too early to say how the entire year will play out and also whether the targets are set too conservatively. I think that we need to deliver at these levels, not just one or two quarters, but consistently across quarters in order to be able to raise the ambition. But we have been clear also in the capital markets day that when we feel that we are at a situation where we meet the financial targets, then of course we will revise them and have higher targets.

Speaker #2: So obviously, since we have communicated that the profitability for 2026 will be lower than our financial targets, the fact that we're now at our financial targets, in terms of profitability, means that we are ahead of the plan that we have set.

Speaker #2: So yes, that's a good—that's a strong positive development, right? However, it's a bit too early to say how the entire year will play out.

Speaker #2: And also, whether the targets are set too conservatively, I think that we need to deliver at these levels not just for one or two quarters, but consistently across quarters in order to be able to raise the ambition.

Speaker #2: But we have been clear also in the Capital Markets Day that when we feel that we are at a situation where we meet the financial targets, then, of course, we'll revise them and have higher targets.

Speaker #2: But we are not at that stage yet, and it's only two data points here now in the first half of the year.

Tom Englund: But we are not at that stage yet, and it is only two data points here now in the H1 of the year.

Speaker #3: Perfect. Thank you very much. I will get back to the queue.

Christian Lee: Perfect. Thank you very much. I will get back to the queue.

Speaker #2: Thank you, Christian.

Tom Englund: Thank you, Christian.

Speaker #1: The next question comes from Simon Larson from Danske Bank. Please go ahead.

Operator 2: The next question comes from Simon Larson from Danske Bank. Please go ahead.

Operator: The next question comes from Simon Larson from Danske Bank. Please go ahead.

Speaker #4: Yes, good morning, Tom and Anna. I would like to start off on both growth and margins, because if we look at page one now, you've been posting 11% organic growth and a 14% adjusted EBIT margin. And it sounds, listening to you, Tom, that you're pretty positive on the outlook across basically all the business segments.

Simon Larson: Yes. Good morning, Tom and Anna. I would like to start off on both growth and margins, because if we look at page 1 now, you have been posting 11% organic growth and 14% adjusted EBIT margin. It sounds, listening to you, Tom, that you are pretty positive on the outlook across basically all the business segments. Would there be any reason for you to feel cautious now going into the H2 with what you know today? Because as you also said, the 2026 target, although I think its profitability and some growth looks increasingly conservative, at least to me. Are there anything that we should be mindful of something that you feel cautious about here going into the rest of the year?

Simon Larsson: Yes. Good morning, Tom and Anna. I would like to start off on both growth and margins, because if we look at page 1 now, you have been posting 11% organic growth and 14% adjusted EBIT margin. It sounds, listening to you, Tom, that you are pretty positive on the outlook across basically all the business segments. Would there be any reason for you to feel cautious now going into the H2 with what you know today? Because as you also said, the 2026 target, although I think its profitability and some growth looks increasingly conservative, at least to me. Are there anything that we should be mindful of something that you feel cautious about here going into the rest of the year?

Speaker #4: So, would there be any reason for you to feel cautious now, going into the second half, with what you know today? Because, as you also said, the 2026 target of— I think it’s profitability and some growth —looks increasingly conservative, at least to me.

Speaker #4: Are there any things that we should be mindful of, or anything that you feel cautious about here going into the rest of the year?

Speaker #2: Yes, I think it's important to have a balanced perspective here. And there's definitely areas where we should, you know, be cautious. One is around the license revenues and the development revenues that we have both said can be lumpy.

Tom Englund: Yes, I think it is important to have a balanced perspective here, and there is definitely areas where we should be cautious. One is around the license revenues and the development revenues that we have both said can be lumpy. We have said that both of them can be lumpy by nature. That means that license revenues and development revenues can fluctuate between quarters quite a lot, as we have seen also historically. So that is an area for caution, even though we believe that we have proof points now that the overall general long-term trend is very positive for our Indu market segments. Then on the Edu side, we also have, if you look at it from a kind of an ASP per deal, we are dependent on many quite big deals that can fall between quarters differently, right?

Speaker #2: We have said that both of them can be lumpy by nature. That means that license revenues and development revenues can fluctuate between quarters quite a lot, as we have seen also historically.

Speaker #2: So that's an area for caution, even though we believe that we have proof points now that the overall general long-term trend is very positive for our industrial market segments.

Speaker #2: And then on the educational side, we also have, if you look at it from a kind of an ASP per deal, we are dependent on many quite big deals that can fall between quarters differently, right?

Speaker #2: So whether one or a few deals fall on one side of the quarter or on the other side of the quarter can have quite important effects on the revenue for Educational.

Tom Englund: Whether one or a few deals fall on one side of the quarter, on the other side of the quarter, can have quite important effects on the revenue for Edu. So there is a timing element to that, and there actually, you cannot just look at one single quarter then to analyze the performance of the Edu business. That is a dynamic that we have had in the past, so it is nothing new, but it is definitely good that you bring it up because it is going to be a kind of a watch-out item also here going forward. The P&Ls for our five different segments are still relatively small, if you look at them individually.

Speaker #2: So there is a timing element to that. And actually, you can't just look at one single quarter to analyze the performance of the educational business.

Speaker #2: And that's a dynamic that we've had in the past, so it's nothing new. But it's definitely good that you bring it up, because it's going to be kind of a watch-out item also here going forward.

Speaker #2: The P&Ls for our five different segments are still relatively small if you look at them individually.

Speaker #4: Yeah, yeah, understood. But is it also correct to read what you're saying in the report as, you know, things are looking pretty bright across the business segments, despite this dynamic that you're highlighting?

Simon Larson: Yeah. Understood. Is it also correct to read what you are saying in the report as things are looking pretty bright across the business segments, despite this dynamic that you are highlighting?

Simon Larsson: Yeah. Understood. Is it also correct to read what you are saying in the report as things are looking pretty bright across the business segments, despite this dynamic that you are highlighting?

Speaker #2: Yes, and we feel that, long-term, we have a good probability to achieve good growth and solid profitability within each of the different business segments.

Tom Englund: Yes. We feel that long term, we have a good probability to achieve good growth and solid profitability within each of the different business segments. Individually, it is a little bit difficult to time exactly how strong growth and when it will happen, but then on a compound level, adding them together, that means that there will be more stability and higher probability that this will contribute quite well also in the short term to the overall growth of the company.

Speaker #2: Individually, it's a little bit difficult to time exactly how strong growth will be and when it will happen. But then on a compound level, adding them together means that there will be more stability and a higher probability that this will contribute quite well, also in the short term, to the overall growth of the company.

Speaker #4: Yeah, yeah, understood. And my final one would also be on Da Vinci 5 and Intuitive. I think you wrote in the report that you've been a bit surprised by the proportion of new DB5 customers that have received simulation, post the cancellation of the memorandum of understanding.

Simon Larson: Yeah. Understood. My final one would also be on the da Vinci 5 and Intuitive. I think you wrote in the report that you have been a bit surprised by the proportion of new da Vinci 5 customers that have received simulation post the cancellation of that memorandum of understanding. Could you give us any feel or figure for the estimated attach rate and maybe how much better the attach rate has been versus your internal expectations? Just for us to understand a bit the magnitude of that dynamic.

Simon Larsson: Yeah. Understood. My final one would also be on the da Vinci 5 and Intuitive. I think you wrote in the report that you have been a bit surprised by the proportion of new da Vinci 5 customers that have received simulation post the cancellation of that memorandum of understanding. Could you give us any feel or figure for the estimated attach rate and maybe how much better the attach rate has been versus your internal expectations? Just for us to understand a bit the magnitude of that dynamic.

Speaker #4: Could you give us any feel or figure for, you know, the estimated attachment rate and maybe how much better the attachment rate has been versus your internal expectations, just for us to, yeah, understand a bit the magnitude of that dynamic?

Speaker #2: Oh, no, we can't really go into those details. We can just say that, based on the information that we had back a year ago, we made assumptions for how the revenue would be impacted negatively by the changes in commercial terms between us and Intuitive.

Tom Englund: No, we cannot really go into those details. We can just say that based on the information that we had back a year ago, we made assumptions for how the revenue would be impacted negatively by the changes in commercial terms between us and Intuitive. It seems that those estimates were too pessimistic and that the customers of Intuitive that have received the simulation for Surgical Science are considerably, that that proportion is higher than what we estimated, and we will not go into any more details about exactly how much and so on. That is why we are also not giving any specific numbers to how much lower than SEK 60 million the revenue impact will be for the full year.

Speaker #2: And it seems that those estimates were too pessimistic, and that the customers of Intuitive who have received simulation for Surgical Science are considerably—that proportion is higher than what we estimated.

Speaker #2: And we will not go into any more details about exactly how much and so on. And that's why we're also not giving any specific numbers.

Speaker #2: So, to how much lower than 60 million the revenue impact will be for the full year?

Speaker #4: Yeah, that's understood. Great. I'll get back in line. Thank you.

Simon Larson: Yeah. That is understood. Great. I will get back in line. Thank you.

Simon Larsson: Yeah. That is understood. Great. I will get back in line. Thank you.

Speaker #2: Thank you, Simon.

Tom Englund: Thank you, Simon.

Speaker #1: The next question comes from Maria Carlson Osipova from DNB Carnegie. Please go ahead.

Operator 2: The next question comes from Maria Karlsson Osipova from DNB Carnegie. Please go ahead.

Operator: The next question comes from Maria Karlsson Osipova from DNB Carnegie. Please go ahead.

Speaker #4: Hi, Simon and Anna. Thanks for taking my question here. My wonderful colleagues have had very good questions, so my questions hopefully will be short.

Maria Karlsson Osipova: Hi, Mariana. Thanks for taking my question here. My wonderful colleagues have had very good questions, so my questions hopefully will be short. If we talk a little bit about China, you mentioned that it was slightly lower than the comparative quarter and that it is not going maybe as good as we all would have hoped there. Tom, you did mention that you are taking some concrete steps. Could you just describe to us what steps can you take there, and how could that improve your situation?

Speaker #4: If we talk a little bit about China, you mentioned that it was slightly lower than the compared quarter and that it's not going maybe as well as we all would have hoped there.

Speaker #4: But Tom, you did mention that you're taking some concrete steps. Could you just describe to us what steps you can take there, and how that could improve your situation?

Speaker #2: Yeah, it's a couple of different things there. Concretely, what we can do is invest in our sales team in China and in our local presence in China to be able to serve our customers more closely, and by that, win more business.

Tom Englund: There is a couple of different things very concretely that we can do. We can invest in our sales team in China and in our local presence in China to be able to serve our customers more closely, and by that, win more business. That we are doing in Hong Kong is an example, and the office there is an example for concrete actions that we take. On the innovation side and on the product side, there is a lot we can do, both in the innovation that we deliver to our customers versus the competing customers that many times are Chinese, and the price points that we offer to these customers. Here we are very agile and we listen closely. We have the ear to the ground on the requirements, specific requirements from Chinese customers.

Speaker #2: What we're doing in Hong Kong is an example, and the office there is an example of concrete actions that we take. And then, of course, on the innovation side and on the product side, there is a lot we can do—both in the innovation that we deliver to our customers versus the competing customers, who many times are Chinese.

Speaker #2: And the price points that we offer to these customers—and here we are very agile and we listen closely. We have our ear to the ground on the specific requirements.

Speaker #2: Chinese customers. And then, of course, there might be structural things, like you mentioned—like we also mentioned in the report—that there are certain policies in place that make customers need to choose a local and domestic manufacturer, and that's of course harder to fight against.

Tom Englund: Then, of course, there might be structural things, like you mentioned, and we also mentioned in the report that there are certain policies in place that make customers need to choose a local and domestic manufacturer. That is, of course, harder to fight against. But we are putting several measures in place to try and minimize that effect. There are also other things that you can do that I will not go into details that would have sort of effects on a slightly longer timescale. Those type of activities is also something that we review.

Speaker #2: But what we're doing is putting several measures in place to try and minimize that effect. There are also other things that you can do that I won't go into detail about, which would have effects on a slightly longer time scale. Those types of activities are also something that we review.

Speaker #4: All right, thanks for the comment on that. And I mean, just to wrap up the discussion you had with my colleagues here just now—should Q2 be more of a true picture of demand going ahead for 2026 rather than Q1?

Maria Karlsson Osipova: All right. Thanks for the comment on that. Just to wrap up the discussion you had with my colleagues here just now on should Q2 be more of like a true picture of demand going ahead for 2026 rather than Q1? Because now we see growth in all segments, and Q1 was a bit more mixed. So if you could just conclude with one short message going into H2.

Speaker #4: Because, I mean, now we see growth in all segments, whereas Q1 was a bit more mixed. So, if you could just conclude with one short message going into H2.

Speaker #2: I think you should judge the performance on the last two or three quarters, and then look at some sort of average picture across.

Tom Englund: I think you should judge the performance on the last two or three quarters and look at some sort of average pictures across. I think that one of the things helping us this quarter is a weak comparison quarter of last year, right? That means that some of the growth numbers are quite considerable compared to that quarter. But generally speaking, the picture that we see, we paint in the report, which is a positive picture across our different segments or across our different geographies. We do not see any major things on the rise that make a change our positive view. But then, of course, there will be ups and downs from quarter to quarter. But if you look at the picture in a slightly longer timescale, we are very positive.

Speaker #2: I think that one of the things helping us this quarter is the weak comparison quarter of last year, right? And that means that some of the growth numbers are quite considerable compared to that quarter.

Speaker #2: But generally speaking, the picture that we paint in the report, which is a positive picture across our different segments or across our different geographies, we don't see any major things on the horizon that would make us change our positive view.

Speaker #2: But then, of course, there will be ups and downs from quarter to quarter. But if you look at the picture on a slightly longer time scale, we're very positive.

Speaker #4: Yeah, all right. Thank you very much. I'll get back into the Q2.

Maria Karlsson Osipova: Yeah. All right. Thank you very much. I will get back into the queue if that.

Speaker #1: The next question comes from Oscar Bergman from Redeye. Please go ahead.

Operator 2: The next question comes from Oscar Bergman from Redeye. Please go ahead.

Operator: The next question comes from Oscar Bergman from Redeye. Please go ahead.

Speaker #5: Hello everyone. I just got a quick three questions. The first one is, I mean, given the higher than expected DB5 attachment rate, do you expect Intuitive to push its own simulation software more actively going forward?

Oscar Bergman: Hello, everyone. I just got three quick questions. The first one is given the higher than expected da Vinci 5 attach rate, do you expect Intuitive to push its own simulation software more actively going forward? Could it be that they simply have not really done that so far?

Speaker #5: I mean, could it be that they simply have not really done that so far?

Speaker #2: Yes, the simulation software from Intuitive and the simulation software from Surgical Science are sold alongside each other as a bundle—and they don't compete.

Tom Englund: The simulation software from Intuitive and the simulation software from Surgical Science are sold alongside each other together as a bundle, and they do not compete. They are complementary. So when they push simulation, let us say, they are going to push both Intuitive simulation as well as procedure simulation from Surgical Science. I think that every robotics surgery manufacturer right now is investing quite heavily into the digital offering, because that is an area where you can create differentiation between the different robotic platforms. Simulation is a central piece of that digital offering. So I think if one thing is that Intuitive and other players will invest more into the digital offering, such as simulation, such as telesurgery, telepresence, as well as case insights and those type of functionalities.

Speaker #2: So. Complementary. So when they push simulation, let's say, they're going to push both Intuitive simulation as well as procedural simulation from Surgical Science. And I think that from every robotics surgery manufacturer right now are investing quite heavily into the digital offering because that's an area where you can see where you can create differentiation between the different robotic platforms.

Speaker #2: And simulation as a central piece is a central piece of that digital offering. So, I think, if one thing is that Intuitive and other players will invest more into the digital offering, such as simulation, telesurgery, telepresence, as well as case insights and those type of functionalities.

Speaker #2: And I think that that bodes well for the general adoption of simulation from Surgical Science across the entire robotics customer base.

Tom Englund: I think that bodes well for the general adoption of simulation from Surgical Science across the entire robotics customer base.

Speaker #5: Right. Okay, thanks. And then, on the reorganization of the US Salesforce, I'm just wondering if you can elaborate in more concrete terms on what you have done, and if there are any risks to this reorganization or any bottlenecks that could impact sales negatively in the short term.

Oscar Bergman: Right. Okay, thanks. On the reorganization of the US sales force, I am just wondering if you can elaborate on what, in more concrete terms, what you have done, and if there are any risks to this reorganization or any bottlenecks that could impact sales negatively in the short term.

Speaker #2: Yeah, so the dynamics, the sales dynamics, between industry and educational products are quite different, and we use different sales teams towards these two different segments.

Tom Englund: The sales dynamics between Indu and Edu products are quite different, and we use different sales teams towards these two different segments. The Edu products, they rely on regional sales managers, account managers, and distributors who are regionally based and sell our entire product offering towards hospitals and sim centers. On the Indu side, we have key account managers that work with our much fewer customers, but usually much bigger customers. Here we are speaking about customers like Medtronic, Johnson & Johnson, Gore, some of the world's biggest med tech companies. What we have done is that we have restructured and changed personnel into the Indu sales team in the US in order to have a higher hit rate and success within those type of customers.

Speaker #2: The educational products they have rely on regional sales managers, account managers, and distributors who are regionally based and sell our entire product offering to hospitals and SIM centers.

Speaker #2: And on the industry side, we have key account managers that work with our much fewer customers, but usually much bigger customers. Here, we are speaking about customers like Medtronic, Johnson & Johnson, Go, or some of the world's biggest med tech companies.

Speaker #2: What we have done is that we have restructured and changed personnel in the industry sales team in the US in order to have a higher hit rate and more success with those types of customers.

Speaker #2: So, finding people—employees—who have the necessary networks and relationships that can make us successful in these large companies, and of course also have the competence and background that can help us succeed better in this segment.

Tom Englund: Finding people, employees who have the necessary networks and relationships that can make us successful in these large companies, and of course, also competence and background that can make us succeed better in this segment. What we see now is that this restructured team and new team, let us say, they are now busy building up the pipeline that will generate more revenues here in the coming quarters. We feel positive about the development and the results so far.

Speaker #2: And what we see now is that this restructured team and new team, let's say, are now busy building up the pipeline that will generate more revenues here in the coming quarters.

Speaker #2: And we feel positive about the development and the results so far.

Speaker #5: Okay, thanks. And I just have a final question that's more of a general nature, really. I just wonder, how do you ensure that you stay close enough to your OEM customers to pick up on any early signals that they might be considering developing parts or the entire software in-house?

Oscar Bergman: Okay, thanks. I guess my final question is more of a general nature, really. Just wondering, how do you ensure that you stay close enough to your OEM customers to pick up on any early signals that they might be considering developing parts or the entire software in-house? Because I know this is a question that a lot of investors are asking themselves.

Speaker #5: Because I know this is a question that a lot of investors are asking themselves.

Speaker #2: Yeah, I think it's a very good question, and a general strong focus for us to stay close to our customers. One challenge we have is that we have a diverse set of customers, both geographically, but also different types of customers.

Tom Englund: Yeah, I think it is a very good question and in general, a strong focus for us to stay close to our customers. One challenge we have is that we have a diverse set of customers, both geographically, but also different types of customers. What we have done then is to make sure that we have personnel who are dedicated for the different types of customers, and that is the entire segment-based strategy that we have put in place where we have defined five different segments where robotics is one of five. For those segments, we treat them as market segments where we have dedicated personnel for product development and marketing, and sometimes also sales, as I just mentioned.

Speaker #2: And what we have done then is to make sure that we have personnel who are dedicated for the different types of customers. And that's the entire segment-based strategy that we have put in place, where we have defined five different segments, where robotics is one of the five, right?

Speaker #2: And for those segments, we treat them as market segments where we have dedicated personnel for product development and marketing, and sometimes also sales, as I just mentioned.

Speaker #2: And that then makes it so that we can stay close to our customers, and we can also stay relevant and stay competent in front of our customers, since we have this kind of differentiation in our internal organization.

Tom Englund: That then makes it so that we can stay close to our customers, and we can also stay relevant and stay competent in front of our customers, since we have this kind of differentiation in our internal organization. Then, of course, we just have to be very fast-footed because there is a lot of development. If you look at the robotics market and the pictures that I showed there from the Society of Robotic Surgery, the innovation pace is just tremendous. So we also have to stay very close and update ourselves very frequently, both with our customers but also with the market demands. It helps that we have a very high capacity team at Surgical Science who is used to this kind of innovation and is used to this fast pace and has a long experience from the different segments that we are in.

Speaker #2: And then, of course, we just have to be very fast-footed, because there's a lot of development. If you look at the robotics market, and the pictures that I showed there from the Society for Robotic Surgery, the pace of innovation is just tremendous.

Speaker #2: So we also have to stay very close and update ourselves very frequently, both with our customers but also with the market demands. It helps that we have a very high-capacity team at Surgical Science who is used to this kind of innovation, is used to this fast pace, and has long experience from the different segments that we're in.

Tom Englund: It helps that we have a very high capacity team at Surgical Science who is used to this kind of innovation and is used to this fast pace and has a long experience from the different segments that we are in.

Speaker #5: Okay. All right. Thank you very much.

Oscar Bergman: Okay. All right. Thank you very much.

Speaker #1: The next question comes from Simon Larson from Danske Bank. Please go ahead.

Operator 2: The next question comes from Simon Larson from Danske Bank. Please go ahead.

Operator: The next question comes from Simon Larson from Danske Bank. Please go ahead.

Speaker #4: Yeah, hi again. Just maybe one or two follow-ups. As you mentioned, Tom, we have seen FDA approvals for both J&J and Medtronic's robots here during late last year, and now in August for J&J.

Simon Larson: Yeah. Hi again. Just maybe one or two follow-ups. As you mentioned, Tom, we have seen FDA approvals for both Johnson & Johnson and Medtronic's robots here during late last year, and now in August for Johnson & Johnson. Could you help us in any way to try to depict or for us to understand the financial impact from the launches of these two new robots? I suppose it maybe will be more material from next year onwards. We know very little about the business model, obviously, with these customers. Could you give us anything to try to just make the picture a bit more clearer?

Simon Larsson: Yeah. Hi again. Just maybe one or two follow-ups. As you mentioned, Tom, we have seen FDA approvals for both Johnson & Johnson and Medtronic's robots here during late last year, and now in August for Johnson & Johnson. Could you help us in any way to try to depict or for us to understand the financial impact from the launches of these two new robots? I suppose it maybe will be more material from next year onwards. We know very little about the business model, obviously, with these customers. Could you give us anything to try to just make the picture a bit more clearer?

Speaker #4: Could you help us in any way to sort of try to depict, or for us to understand, the financial impact from the launches of these two new robots?

Speaker #4: I suppose it maybe will be more material from next year onwards. I mean, we know very little about the business model, obviously, with these customers.

Speaker #4: But could you give us anything to try to make the picture a bit more clear?

Speaker #2: I think it generally is super positive that there are more strong players in the US market, and in the global market, right, for robotics.

Tom Englund: I think it generally is super positive that there is more strong players in the US market and in the global market for robotics. It is going to drive robotics adoption, and it is going to drive volume of procedures and volume of robots. Now it is going to take some time until the Hugo and the OTTAVA systems are seen in high volumes in the US market, for example. They have also been very clear that they are conservative in the rollout of these systems because they want to do it in a patient-safe way and they want to make sure that they get the approval from key opinion leaders and certifying bodies. This means that these two announcements is not going to have a material impact on our license revenues for this year, and not much also for next year.

Speaker #2: It's going to drive robotics adoption, and it's going to drive the volume of procedures and the volume of robots. Now, it's going to take some time until the Hugo and the Ottawa systems are seen in high volumes in the US market, for example.

Speaker #2: And they have also been very clear that they are conservative in the rollout of these systems because they want to do it in a patient-safe way, and they want to make sure that they get approval from key opinion leaders and certifying bodies.

Speaker #2: So this means that it's not going to these type of these two announcements is not going to have a material impact on our license revenues for this year.

Tom Englund: This means that these two announcements is not going to have a material impact on our license revenues for this year, and not much also for next year. It is going to be years where they establish their presence in order to build volume for the coming years.

Speaker #2: And not much also for next year. But it's going to be years where they establish their presence in order to build volume for the coming years.

Tom Englund: It is going to be years where they establish their presence in order to build volume for the coming years.

Speaker #2: I hope that answers your question.

Simon Larson: Good.

Simon Larsson: Good.

Tom Englund: I hope that answers your question.

Simon Larson: Understood. Yeah, it does. Maybe the final one, something that you have been talking about previously is the trade-in program that Intuitive is running with refurbished da Vinci 4 robots and reselling them into maybe more cost-sensitive markets, something that you have been quite positive on, your ability to sell simulation onto those systems. I just noticed that the refurbished systems increased quite sharply for Intuitive in Q2. So wondering if that is something that you have been seeing already this quarter that has affected your sales positively within licenses.

Simon Larsson: Understood. Yeah, it does. Maybe the final one, something that you have been talking about previously is the trade-in program that Intuitive is running with refurbished da Vinci 4 robots and reselling them into maybe more cost-sensitive markets, something that you have been quite positive on, your ability to sell simulation onto those systems. I just noticed that the refurbished systems increased quite sharply for Intuitive in Q2. So wondering if that is something that you have been seeing already this quarter that has affected your sales positively within licenses.

Speaker #4: Yeah, no, it does. It does. And maybe the final one—and something that you've been talking about previously—is the trade-in program that Intuitive is running with refurbished Da Vinci Xi robots and reselling them into maybe more cost-sensitive markets, and something that you've been quite positive on.

Speaker #4: Your ability to sell simulation onto those systems—I just noticed that the refurbished systems increased quite sharply for Intuitive in Q2. So, I’m wondering if that’s something that you’ve been seeing already this quarter that has affected your sales positively within licenses.

Speaker #2: Well, we can't really comment on those specific details by customers, you know. But I think it's a fantastic tool that Intuitive has at their disposal in order to create a differentiated market and have different offerings for different customer types.

Tom Englund: We cannot really comment on those specific details by customers. I think it is a fantastic tool that Intuitive has at their disposal in order to create a differentiated market and have different offerings for different customer types. It also, of course, as you say, represents an opportunity to sell simulation also to the refurbished units. Some cases you could argue that you would not sell so much simulation because those refurbished units can be used as a volume procedural robot that is not used for training. So it does not mean necessarily that the attach rate for all refurbished units might be high. So it is a little bit early to tell exactly how this will play out, but we do not comment on the impact, and it is not significant.

Speaker #2: It also, of course, as you say, represents an opportunity to sell simulation also to the refurbished units. In some cases, you could argue that you would not sell so much simulation because those refurbished units can be used as a volume procedural robot that is not used for training.

Speaker #2: So it doesn't necessarily mean that the attach rate for all refurbished units might be high. So, it's a little bit early to tell exactly how this will play out, but we don't comment on the impact, and it's not significant.

Speaker #4: No, understood, understood. I'll squeeze a final one in on price increases. You've been hiking prices starting last year, I think, and then another price increase here in April.

Simon Larson: No. Understood. I will squeeze a final one in on price increases. You have been hiking prices starting last year, I think, and another price increase here in April. How much has been implemented now across the Edu portfolio, and should we expect this tailwind with price to increase in the coming quarters? What does that dynamic look like?

Simon Larsson: No. Understood. I will squeeze a final one in on price increases. You have been hiking prices starting last year, I think, and another price increase here in April. How much has been implemented now across the Edu portfolio, and should we expect this tailwind with price to increase in the coming quarters? What does that dynamic look like?

Speaker #4: How much has been implemented now across the Edu portfolio, and should we expect this tailwind with price to increase in the coming quarters, or what's that dynamic look like?

Speaker #2: So the price increases have affected the entire product portfolio, so we have revised prices on all our products, both last year and this year.

Tom Englund: The price increases have affected the entire product portfolio. We have revised prices on all our products, both last year and this year. The price increases impact when the tenders or, sorry, the proposals with revised prices are accepted by the customers. This sales cycle, this time can take a couple of months or it can take even longer time. That's what I mean that there's a lag in the price increases. We are planning to revise prices every year now. You're going to see a compound effect once again, then, of the price increases that we've done historically. With higher volume and lower prices, we will also be able to see shorter sales processes, and that means that price increases will carry through quicker in the future generally than they do today.

Speaker #2: And the price increases impact when the tenders or, sorry, the proposals with revised prices are accepted by the customers. And this sales cycle, this time, can take a couple of months, or it can take even longer.

Speaker #2: And that's what I mean when I say there's a lag in the price increases. We are planning to revise prices every year now, so we're going to see a compound effect.

Speaker #2: Once again, of the price increases that we've done historically—with higher volume and lower prices, we will also be able to see shorter sales processes.

Speaker #2: And that means that price increases will carry through quicker than in the future, and generally quicker than they do today.

Speaker #4: So, it would be fair to assume, then, that the April price increases haven't fully been reflected in this quarter's numbers, basically.

Simon Larson: It would be fair to assume then that the April price increases haven't fully been reflected in this quarter's numbers, basically.

Simon Larsson: It would be fair to assume then that the April price increases haven't fully been reflected in this quarter's numbers, basically.

Speaker #2: Absolutely. You're absolutely right.

Tom Englund: Absolutely. You're absolutely right.

Speaker #4: And would you— is it possible to give us maybe the average price increase that you did materialize in Q2?

Simon Larson: Would it be possible to give us maybe the average price increase that you did materialize in Q2?

Simon Larsson: Would it be possible to give us maybe the average price increase that you did materialize in Q2?

Speaker #2: It's around 4 or 5 percent.

Tom Englund: It's around 4%, 5%.

Speaker #4: Okay, perfect. Very good. Thanks so much.

Simon Larson: Okay, perfect. Very good. Thanks so much.

Simon Larsson: Okay, perfect. Very good. Thanks so much.

Speaker #2: Thank you.

Tom Englund: Thank you.

Speaker #1: The next question comes from Christian Lee from Pareto Securities. Please go ahead.

Operator 2: The next question comes from Christian Lee from Pareto Securities. Please go ahead.

Operator: The next question comes from Christian Lee from Pareto Securities. Please go ahead.

Speaker #5: Thank you. I have a question regarding your gross margin of 69% in the second quarter, and you had 68% for the first half of the year.

Christian Lee: Thank you. I have a question regarding your gross margin of 69% in Q2. You had 68% for the H1 of the year, including a negative effect from currency headwinds of 1 percentage point. Given that you have these price increase lag and also perhaps currency tailwinds in the H2, should we consider the 69% gross margin to be sustainable for the rest of the year?

Speaker #5: Including the negative effect from currency headwinds of 1 percentage point. So, given that you have this price increase lag, and also perhaps currency tailwinds in the second half, should we consider the 69% gross margin to be sustainable for the rest of the year?

Speaker #4: You know, the gross margin is impacted by so many factors that we went through. So, it has to do with the share of direct sales.

Anna Ahlberg: The gross margin is impacted by so many factors that we went through. It has to do with the share of direct sales, it has to do with the revenue streams and their respective share. As Tom said, if we exclude and look at the simulators, because that is where we said that we want to increase our profitability, we see that we have done so. Again, I think there was a comment also that we increased gross margin with more than license revenues were increased. We definitely see a positive effect. Then how exactly the group gross margin will be for each quarter, that is then dependent on all these different factors. For us, it is very important that we see the other segments, excluding then robotics, increasing their profitability, and that is what we are working on, and we see that.

Speaker #4: It has to do with the revenue streams and their respective shares. So, as Tom said, if we exclude and look at the simulators—because that's where we said we want to increase our profitability—we see that we have done so.

Speaker #4: And again, I think there was a comment also that we increased gross margin by more than license revenues were increased. So we're definitely seeing a positive effect.

Speaker #4: Then how exactly the group gross margin will be for each quarter, that is then dependent on all these different factors. But for us, it's very important that we see the other segments, excluding then robotics, increasing their profitability.

Speaker #4: And that's what we're working on, and we see that.

Speaker #5: Okay, that's clear. Thank you. And my second question is regarding your R&D spending. Do you intend to keep capitalized development costs at a similar level going forward?

Christian Lee: Okay. That is clear. Thank you. My second question is regarding your R&D spending. Do you intend to keep the level of capitalized development cost at a similar level going forward?

Speaker #4: That is entirely depending on what type of projects we are working on. So, I think you've seen that it's been fairly flat, growing a bit with us growing.

Anna Ahlberg: That is entirely depending on what type of projects we are working on. I think you have seen that it has been fairly flat, growing a bit with us growing. That can definitely vary depending on what we work. We look at our also total R&D spending, including both capitalization as well as how much we then move to COGS, because when we have the paid projects. Again, it depends on what type of projects, so cannot give you a forecast going forward there.

Speaker #4: But that can definitely vary depending on what we work on. We look at our total R&D spending, including both capitalization as well as how much we then move to COGS, because when we have the paid projects.

Speaker #4: So again, it depends on what type of projects. So I cannot give you a forecast going forward there.

Speaker #5: Sure, but.

Christian Lee: Sure.

Speaker #4: But we don't see any dramatic changes right now in that.

Anna Ahlberg: But we don't see any dramatic changes right now in that.

Speaker #5: Yeah. You had a capitalized development cost of 9 million in the first quarter and then almost 14 million in the second. So, what level do you think?

Christian Lee: Yeah. You had a capitalized development cost of $9 million in Q1 and then almost $14 in Q2. So, what level do you think you will maintain going forward?

Anna Ahlberg: Yeah. Again, it can be a bit bumpy. We have some products that are nearly finished that we launch, that we invested in. So, when they have been launched, then it might go down. It will go down to those projects, but then again, it depends on what new projects we have, and that is of course something that we don't sort of share in detail what we are working on.

Speaker #4: Yeah, again, it can be a bit bumpy. We have some products that are nearly finished that we will launch, that we invested in.

Speaker #4: So when they have been launched, then it might go down. It will go down to those projects, but then again, it depends on what new projects we have.

Speaker #4: And that is, of course, something that we don't share in detail—what we are working on.

Speaker #5: Okay, fair enough. Thank you very much.

Christian Lee: Okay. Fair enough. Thank you very much.

Speaker #2: Thank you.

Tom Englund: Thank you.

Speaker #4: Thanks. Looking at the written questions, I think we have covered everything. There is one question remaining—maybe we'll just finish with that—regarding how we see M&A opportunities and other thoughts on how to employ the strong cash position.

Anna Ahlberg: Thanks. Looking at the written questions, I think we covered everything. There is one question around, maybe just finish with that, how we see M&A opportunities and other thoughts on how to employ the strong cash position.

Speaker #2: The M&A opportunities—we continue to work to build the company, not just organically, but also through M&A. And the strategy that we have put forward to be an active acquirer continues.

Tom Englund: The M&A opportunities, we continue to work also to build the company, just that organically, but also through M&A and the strategy that we have put forward to be an active acquiror continues. We work similar to previous quarters, so we work the same way, and we see opportunities for M&A within all the different market segments that we have defined.

Speaker #2: And we work similarly to previous quarters, so we work the same way. And we see opportunities for M&A within all the different market segments that we have defined.

Speaker #4: And the cash position.

Anna Ahlberg: And the cash position.

Speaker #2: What was the question regarding our cash position?

Tom Englund: What was the question around cash position?

Speaker #4: Yeah, how we intend to deploy that, or if there are any—again, as you know, we are cash-flow positive. So, it's more event-driven and going back to what Tom mentioned around M&A.

Anna Ahlberg: How we intend to deploy that or if there are any. Again, as you know, we are cash flow positive, so it's more event driven. Going back to what Tom mentioned around M&A, as you know, we are also in an uplift process. Also there are some new changed rules when it comes to if we can purchase, do buybacks or not. We do not currently have that possibility. But there are different tools that we can then deploy.

Speaker #4: As you know, we are also in an uplift process. And also, there are some new, changed rules when it comes to whether we can purchase Dubai-backs or not.

Speaker #4: We do not currently have that possibility, but there are different tools that we can then deploy.

Speaker #2: Great. Thank you. And that means we have used up our hour together. Thank you for all your questions and for your interest in Surgical Science.

Tom Englund: Great. Thank you. Then we have used up our hour together. Thank you for all your questions and for your interest in Surgical Science. With that, I would like to conclude the meeting. Thank you. Bye-bye.

Speaker #2: And with that, I would like to conclude the meeting. Thank you. Bye-bye.

Speaker #4: Thank you. Bye-bye.

Anna Ahlberg: Thank you. Bye-bye.

Operator 1: The host has ended this call. Goodbye.

Operator: The host has ended this call. Goodbye.

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Q2 2026 Surgical Science Sweden AB Earnings Call

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