Surgical Science Sweden AB Aktie

Welcome to Surgical Science Q2 Report 2026 presentation. [Operator Instructions] Now I will hand over to the speakers, CEO, Tom Englund; and CFO, Anna Ahlberg. Please go ahead.

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 walk-through of quarter 2 and the numbers, and then we'll open up for questions.

Quarter 2 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 quarter 2 last year, which was an unusually weak comparison quarter. And it's a clear sign that the actions that we have 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 that we've been driving in the simulator business. 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, 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. 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.

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. 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.

All regions grew this quarter. Americas were up 4% versus quarter 2 2025, but I want to add some important context here. Actually, Americas was up around 40% compared to quarter 1 of this year, driven by the strength of the important U.S. market. 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. 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're 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, and we remain committed to building our position in APAC and China over the long term. 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.

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. Ultrasound had another strong quarter, growing 34%. That's a good number, and it reflects a genuine acceleration, I would say, in how health care 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 POCUS 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.

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. Our solutions are genuinely making a difference here, helping clinicians diagnose earlier with more confidence, and that's 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 U.K., the formerly Intelligent Ultrasound, continues to progress. 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. 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 quarter 2 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 overinterpret 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.

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 million to SEK 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 MedTech companies entering robotic surgery at scale 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. 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.

We launched our new world-leading suturing module and procedure simulation for our RobotiX Express 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 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, 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 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.

And 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 the 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 and finally grew compared to the comparison quarter, and we see clear progress in both product development and customer dialogues. 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. 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, 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.

Let me talk about margins and what's driving the improvement that we see. The gross margin expansion to 69% this quarter reflects 2 strong -- 2 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 the sales cycles close, and we'll see more benefit from those price increases in the second half of the year.

And 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 5 distinct market segments, all of which have very low penetration today.

We are in the early innings of a long game and quarter 2 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 a proportional increase in cost per unit. And 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 a 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 health care 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.

And with that, I will hand over to Anna to walk through the financials.

Thank you, Tom. And yes, starting by underlining that we are very pleased to report another solid quarter and a good first half year. And again, then we had sales of SEK 255 million for the quarter, up 22% in SEK and 25% in local currencies. So really strong even though then 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 U.S. dollars.

For the first quarter against Q1 last year, the SEK-USD average rate was down 14%. 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. However, the Israeli Shekel is also a very important currency for us and then in terms of costs.

And here, we saw the U.S. dollar weakening considerably during the quarter, which then affects us negatively. Looking at the 2 business areas then 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 first half year.

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 year with an increase of 45%. And again, really strong sales for the half year to Eastern Europe.

Revenue in the Americas region then up 4% compared with the same period last year. However, as Tom also mentioned, the U.S. 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 U.S. market.

And then 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 FX effects and license revenues then SEK 85 million, an increase of 44% compared with the same period in the preceding year. 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 U.S. dollars. 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.

Also, this is the first quarter with renewals of dV5 subscriptions. The first customers that got their dV5s with a full digital package were in Q2 2025, and these packages were now up for renewal after 1 year. 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. And we -- our estimate was that this would have a negative impact on our license revenues of between SEK 60 million and SEK 90 million 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. 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 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. 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. And this sales 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. 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. And so it means that the plan is still to largely complete this project during this year.

And 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 U.S. 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 U.S. 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 U.S. dollar and also our production and associated wage costs are not in U.S. 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 April 1 as the review date, except for Sweden, which has January 1. And in total, this effect is approximately SEK 3.5 million per quarter.

Sales costs, 19% of sales, down from 28% last year. During this quarter, we received the first refund relating to custom duties in the U.S., approximately SEK 1.2 million, 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 cost include consulting costs, approximately SEK 1.1 million 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. And as we previously communicated, we expect the relisting to take place next year.

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. And again, this -- the costs 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. And as I previously mentioned then, during the quarter, the Israeli Shekel strengthened against the dollar.

Exchange rate on June 30 was approximately 6% higher than going out of Q1. And since the majority of trade receivables in our Israeli company is in U.S. 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 U.S. dollar against the shekel.

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%. If we then adjust our P&L for FX effects, EBIT for the first half year was SEK 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. 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 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.

And as mentioned then 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 people. For adjusted EBIT, 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. And if we adjust for FX effects, the same way as we did for EBIT, it was SEK 34 million or 14%. And 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, and 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 U.S. affecting this quarter. Also, we do have nondeductible amortizations in our P&L, and that's 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. For this quarter, both inventories and accounts receivable increased. And the increase in inventory here, it's partly attributable to a buildup due to the project in 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. And so this relates then to the fact that we had higher license revenues in the quarter.

However, and as Tom mentioned before, for the first half year, cash flow from working capital was positive, and we see AR decreasing. And we also see the gray line there that it's at a good level in relation to sales and continue to be at a good level.

Investing activities, we invested approximately SEK 6 million in the quarter in the construction in our new production facilities in Tel Aviv. For the first half year, we have invested SEK 12 million and in total, approximately SEK 17 million. And as we talked about, these new facilities were commissioned at the end of the second quarter. Nothing to mention around financing activities. And so at June 30, our cash position was SEK 658 million. Back to you, Tom.

Thank you, Anna. So to wrap up, quarter 2 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 and our license revenues were up 44% year-over-year.

All of this demonstrates that the actions that we've taken to improve profitability in 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 opened up our APAC service hub and our new Tel Aviv production facility during this quarter. 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 for how health care 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. And with that, I would like to open up the floor for questions.

[Operator Instructions] The next question comes from Christian Lee from Pareto Securities.

My 2 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? 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? That's my first.

Christian, I can answer that. So first, there was no -- we don't comment on specific customers, as you know, but we had a healthy mix of revenues from different customers in the quarter. So there was not like -- if you take Intuitive aside, so there was not like one major license deal or package deal.

And then 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 it did not -- the renewals did not have a significant effect on the total license revenues this quarter. But it's, of course, a positive news.

Okay. My second question is, now that you have indicated that Intuitive related revenue loss will be below the initial SEK 60 million to SEK 90 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? 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?

So obviously, since we have communicated that the profitability for 2026 will be lower than our financial targets, this is, of course, that 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. 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 and also whether the targets are set too conservatively. I think that it we need to deliver at these levels, not just 1 or 2 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'll revise them and have higher targets. But we are not at that stage yet, and it's only 2 data points here now in the first half of the year.

The next question comes from Simon Larsson from Danske Bank.

I would like to start off on both growth and margins. Because I look at Page 1 now, you've been posting 11% organic growth and 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. 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 '26 target of, I think it's profitability and some growth looks increasingly conservative, at least to me. So are there anything that we should be mindful of something that you're cautious about here going into the rest of the year?

Yes. I think it's important to have a balanced perspective here. And there's definitely areas that we -- 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'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.

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? So 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 educational. So there is a timing element to that. And there, actually, you can't just look at one single quarter then to analyze the performance of the educational business. 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 a kind of a watchout item also here going forward. The P&Ls for our different -- 5 different segments are still relatively small if you look at them individually.

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

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. Individually, it's 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 kind of probability that this will contribute quite well also in the short term to the overall growth of the company.

Yes. Understood. And my final one would also be on the da Vinci 5 and Intuitive. So I think you wrote in the report that you've been a bit surprised by the pool of new dV5 customers that have received simulation post the cancellation of the Memorandum of Understanding. Could you give us any feel or figure for the estimated attachment rate and maybe how much better the attachment rate has been versus your internal expectations just for us to understand a bit the magnitude of that dynamic?

No, we can't really go into those details. We can just say that we -- 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.

And it seems that those estimates were too pessimistic and that the customers of Intuitive that have received the simulation for Surgical Science's are considerably -- that proportion is higher than what we estimated, 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. So to how much lower than SEK 60 million the revenue impact will be for the full year.

The next question comes from Maria Karlsson Osipova from DNB Carnegie.

My wonderful colleagues have had very good questions. So my questions have hopefully be short. If we talk a little bit about China, you mentioned that it was slightly lower than the comparative quarter and that it's not going maybe as good as we all would have hoped there. But Tom, you did mention that you're taking some concrete steps. Could you just describe to us what steps can you take there? And how could that improve your situation?

Yes, it's a couple of different things there 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. And that we're doing in Hong Kong is an example, and the office there is an example for 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 that many times are Chinese and the price points that we offer to these customers. And here, we are very agile and we listen closely.

We had the ear to the ground on the requirements, specific requirements from our Chinese customers. And then, of course, there might be structural things like you mentioned like -- 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. And that's, of course, harder to fight against. But we are doing -- we're putting several measures in place to try and minimize that effect. There's also other things that you can do there. I will not go into details that would have sort of effects on a slightly longer time scale. And that's those type of activities is also something that we review.

All right. And I mean, just to wrap up the discussion you have with my colleagues here just now on -- should Q2 be more like a true picture of demand going ahead for 2026 rather than Q1? Because I mean, we -- 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.

I think you should judge the performance on the last 2 or 3 quarters and then look at kind of 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? And that means that some of the growth numbers are quite considerable compared to that quarter. 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 make us 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 on a slightly longer time scale, we are very positive.

The next question comes from Oscar Bergman from Redeye.

I have a quick 3 questions. The first one is, I mean, given the higher-than-expected dV5 attachment rate, do you expect Intuitive to push its own simulation software more actively going forward? I mean, could it be that they simply have not really done that so far?

Yes. The simulation software from Intuitive and the simulation software from Surgical Science are sold alongside each other together as a bundle, and they don't compete. So they are complementary. So when they push simulation, let's say, they're going to push both Intuitive simulation as well as procedure 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. And 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 offerings such as simulation, such as telesurgery, telepresence as well as case insights and those type of functionalities. And I think that, that bodes well for the general adoption of simulation from Surgical Science across the entire robotics customer base.

Right. Okay. And then on the reorganization of the U.S. sales force, I was wondering if you can elaborate on in 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?

So the dynamics, the sales dynamics between industry and Educational Products are quite different, and we use different sales teams towards these 2 different segments. The Educational Products, they have -- 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.

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, Gore, some of the biggest -- world's biggest MedTech companies. And what we have done is that we have restructured and changed personnel into the industry sales team in the U.S. in order to have a higher hit rate and success within those type of customers. So 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. And what we see now is that this restructured team and new team, let's say, they are now busy building up the pipeline that will generate more revenues here in the coming quarters. And we feel positive about the development and the results so far.

Okay. And then a final question that's 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.

Yes. I think it's a very good question and in general, a strong focus for us to stay close to our customers. And one challenge we have is that we have a diverse set of customers, both geographically, but also different types of customers. 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 5 different segments where robotics is 1 of 5, right?

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. 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.

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 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. And 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're in.

The next question comes from Simon Larsson from Danske Bank.

Just maybe 1 or 2 follow-ups. As you mentioned, Tom, we have seen FDA approvals for both J&J and Medtronic robots here during late last year and now in August for J&J. 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 2 new robots? I suppose it will be more material from next year onwards. I mean we know very little about the business model, obviously, with these customers. But could you give us anything to try to make the picture a bit more clearer?

I think it generally is super positive that there is more strong players in the U.S. market and in the global market, right for robotics. It's going to drive robotics adoption and it's going to drive volume of procedures and volume of robots. And now it's going to take some time until the Hugo and the Ottava systems are kind of seen in high volumes in the U.S. market, for example.

And they have also been very clear with 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. But this means that it's not going to -- these type of -- these 2 announcements is not going to have a material impact on our license revenues for this year 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. I hope that answers your question.

Understood. Yes. 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 dV4 robots and reselling them into maybe more cost-sensitive markets and something that you've 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's something that you've been seeing already this quarter that has affected your sales positively within licenses.

We can't really comment on those specific details by customer, as 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. 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 doesn't mean necessarily 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.

Understood. I'll squeeze a final one in on price increases. You've 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? Or what does that dynamic look like?

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. 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 time. And that's what I mean that there is a lag in the price increases. We are planning to revise prices every year now. So 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 than in the future generally than they do today.

But so it would be fair to assume then that the April price increases haven't fully been reflected in this quarter's numbers basically?

Absolutely. You're absolutely right.

And would you -- is it possible to give us maybe the average price increase that you did materialize in Q2?

It's around 4%, 5%...

The next question comes from Christian Lee from Pareto Securities.

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

Our -- the gross margin is impacted by so many factors that we went through. So it has to do with the share of direct sales. It has to do with the revenue streams and their respective share. So as Tom said, if we exclude and look at the simulators because that's where we said that we want to increase our profitability, we see that we have done so.

And again, I think there was a comment also that we increased gross margin with more than license revenues were increased. So 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. But for us, it's very important that we see the other segments, excluding then robotics, increasing their profitability. And that's what we're working on, and we see that.

Okay. That's clear. And my second question is regarding your R&D spending. Do you intend to keep your -- the level of capitalized development costs at a similar level going forward?

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, but that can definitely vary depending on what we work on. I mean 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 -- so again, it depends on what type of projects. So I cannot give you a forecast going forward there. But we don't see any dramatic changes right now in that.

Yes. You had a capitalized development cost of SEK 9 million in the first quarter and then almost SEK 14 million in the second. So what level do you think?

Yes. Again, it can be a bit lumpy. We have some products that are nearly finished that we will -- 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.

Okay, fair enough.

I think we -- 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.

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 acquisitor continues, and 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.

And the cash position.

What was the question around?

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. As you know, we are also in an uplift process. And also there are some new changed rules to 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.

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

Thank you. Bye-bye.

Welcome to Surgical Science Q1 Report 2026 Presentation. [Operator Instructions]

Now I will hand over to the speakers, CEO, Tom Englund; and CFO, Anna Ahlberg. Please go ahead.

Hi, everyone, and welcome to this earnings call for Surgical Science for the first quarter of 2026. My name is Tom Englund. I'm the CEO. And with me today, I have Anna Ahlberg, our CFO.

So we'll start with a walk-through of quarter 1 and the numbers, and then we'll open up for questions. So quarter 1 is a quarter with 2 stories running in parallel. On the surface, reported sales are down 6% to SEK 236 million. But once you strip out the currency headwind that we had and the dollar moved significantly against us, the underlying business grew by 4%. And if you look at cash flow, we generated SEK 65 million from operations, which is a very strong number and significantly better than the same quarter last year. So the business itself is in good shape.

Adjusted EBIT came in at SEK 28 million or 12%. That's in line with last year. And when you adjust for currencies, it's actually around 16%, right at our target level. So the headwind here is, as with the revenue, almost entirely a currency story and not an operational one. Throughout the quarter, we're executing on the strategy we laid out at the Capital Markets Day in December, and I feel good about where we're headed.

So now I want to take you through the different parts of the business. Educational Products grew by 6% or 14% growth in local currencies, and there are some exciting things happening here that I want to highlight. EMEA had an exceptional quarter. Revenue was up 80% or over 80%, driven by a number of strong deals across Eastern Europe. And the U.K., which, as you know, is where our Surgical Science U.K. team operates, posted one of its best quarters ever. Sales in pound sterling for the quarter actually exceeded the total for all of 2025, which is a big statement. And it also tells me that the investment that we have made in building that business is starting to pay off in a meaningful way.

The Americas is a different story right now. We were down about 10% in local currency, and we see a trend in Americas with our active customers that despite pipelines being full, the purchasing decisions by our customers take slightly longer time. There is a certain hesitation in the market, particularly in the U.S., and we think it's tied to the broader macro environment. The silver lining, though, is that the activity is still very high with big pipelines, as I said, especially within ultrasound and robotics, which gives us confidence that the demand is there.

China deserves a specific mention. The government in China is actively pushing to support locally operated and manufactured companies, which creates a headwind for our simulator business in particular. This has an effect that the Chinese sales declined during quarter 1 versus the same quarter last year. However, we are not standing still, and we are taking concrete steps to address this, but it's a structural shift that we need to navigate carefully. The quarter saw several important product launches within our [ endovascular ] simulation portfolio for pulmonary embolism and ICE 3D or 3-dimensional intracardiac ultrasound. The product and R&D teams are working with an exciting product pipeline with the aim of broadening and improving our strong portfolio even further and also to increase the penetration in this very underpenetrated market. So I want to speak a bit about ultrasound. Ultrasound had a strong quarter, and I'm particularly pleased with the momentum that we are seeing in ultrasound. The adoption of ultrasound across clinical settings is accelerating, and we are well positioned to capture that.

Women's health continues to be a big and key focus for us, and I think it's worth pausing on why. Ultrasound is one of the primary tools for diagnosing conditions that disproportionately affect women and it has historically been under-resourced in terms of training. Our solutions are genuinely making a difference, helping clinicians diagnose earlier with more confidence. That's directly in line with the purpose of surgical science. The ultrasound simulation market is also genuinely exciting from a financial perspective due to the high number of potential users and the big size of the potential market. Ultrasound simulation has the opportunity to represent an even larger share of the revenues of Surgical Science in the future.

A milestone this quarter was that we launched the first products built on the shared technology platform between Surgical Science and Surgical Science U.K. or former Intelligent Ultrasound. This is the first tangible output from R&D from the integration of Intelligent Ultrasound and it's a meaningful step. There's still plenty of integration work ahead, but the direction is clear, and we're moving really fast.

Now to Robotics, where the headline number requires some context. Industry revenues were down 17%, and license revenue came in at SEK 68 million versus SEK 84 million in quarter 1 last year. If you look at revenue in local currency, though, the license revenue was only $600,000 or 8% lower than quarter 1 of 2025. License revenues in quarter 1 in USD were actually higher than 2 out of 4 quarters of 2025.

As we have previously communicated, the memorandum of understanding with Intuitive did not result in a signed agreement, and we reverted back to our existing contract at the start of the year. We previously estimated a SEK 60 million to SEK 90 million negative impact on license revenues for '26 versus '25, and that estimate remains unchanged. I want to be clear about what this is and what it is not. It is not a deterioration of relationship with Intuitive, quite the opposite. The collaboration is as strong as it has ever been. What's changed is the commercial structure reverting back to an old agreement, and we're working within that.

Our conviction remains that simulation will be a central component of the digital offerings in the robotic platforms of the future, and surgical science will be at the heart of that. On a market level, the picture is really exciting. The robotics market is very dynamic and fast growing. Intuitive received FDA approval for cardiac procedures. Johnson & Johnson got de novo classification for Opala. Medtronic received U.S. approval for [ Hugo ] in urology. And the commercial competition in the U.S. market for robotic surgery is now real, and that's actually a good thing for Surgical Science because it means more robots, more training needs and more licenses. We also had license revenues from several of our other robotic customers during the quarter, which is a clear sign that players beyond Intuitive are now deploying robots at scale. We are developing simulation solution for most of the top 20 robotics companies. Our pipeline is bigger than it's ever been, and the long-term opportunity here is very big.

Medical Device had a quieter quarter financially. Development revenue at SEK 14 million and simulator sales of SEK 20 million. And this is a business that moves in lumps. Projects have long lead times and the comparison last year was particularly tough because that several customers undertook large-scale fleet upgrades at the same time. We have a clear high ambition within this segment and definitely a growth strategy, and we expect to show solid growth in the future. We should not judge success on 1 quarter alone and look too much at lag indicators. Rather, the underlying lead indicators remain strong.

More than 70% of customers in active development projects are repeat clients. That's a loyalty and retention number that tells you about the quality of what we deliver. We are working with many of the biggest medtech customers globally and are a critical supplier in their deliveries, and we continue to see new clients entering as well. The foundation is solid. As outlined in the strategy, we have a strong focus on improving our gross margins, and we are seeing the effects of our work.

On pricing, the work that we have done here continues to deliver. However, the effects of our price increases are countered by the currency headwind that we have had since so much of our sales is in U.S. dollars. We pushed through another price increase in April. The full effect will show up gradually as sales cycles close throughout the year, but the trend is positive and gives us confidence in margin improvement ahead.

So let me step back and talk about where we're going. The strategy we laid out in December is about becoming a company that truly addresses the full potential of medical simulation across 5 segments, all of which have very low penetration today, and we are in the early innings of a long game. We have no debt, and we have SEK 668 million in cash. We have the market-leading position. We have the products, we have the relationships, and we have the clinical expertise. This combination is genuinely rare, and it gives us real options to invest in growth, to pursue acquisitions and also to return capital when the timing is right. In quarter 2, aside from the work with growing these 5 segments, we will put significant focus on our operational and production structure, particularly on how we scale manufacturing in a way that reduces cost per unit and makes us more resilient to supply chain disruptions.

Our new production facility in Tel Aviv is expected to go live during the quarter, which is going to be an important milestone for us. The tailwinds are real and they are growing, an aging population, increasingly complex procedures, a shortage of trained health care professionals, higher standards for patient safety, all of these are driving demand for simulation every single year. We are 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.

Thank you, Tom. Yes, we're very pleased to report a solid start to the year. For the quarter, then we had sales of SEK 235 million, down 6% in SEK, but up 4% in local currencies. And 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 U.S. dollars.

For 2025, the full year, the average USD rate was down 7%. But for this first quarter against Q1 last year, it is down with a full 14%. And of course, that affects us. As I have mentioned before, we are doing some things to try and mitigate this. We are raising prices. And as Tom mentioned, we did one more price increase in April. And we also try and quote more countries in euros instead of in U.S. dollars where this is possible. This will not mean a very large change in the ratio between different currencies since a lot of our revenues originate from the U.S. But we see for Q1, there, we had approximately 70% of our revenues in U.S. dollars.

So it's down approximately 7 percentage points if we compare to the full year 2025. And looking at our 2 business areas for the quarter, the split was 55% for EDU and 45% then for INDO. EDU then up a strong quarter, up 6% or 14% in local currencies. For this year, we have updated our revenue segment somewhat. The geographic regions have been adjusted slightly and sales by product segment have replaced sales by product group, and this is then in line with the segments that we have presented in our new strategy. Apart from the Emergency Medicine segment, that is still too small to be reported separately, and we, therefore, now have it included in the Medical Device segment.

So back to regions. Tom already talked about it then EMEA was very, very strong, up over 80% and the Eastern European countries accounted for the majority of this increase. And then the U.K. had a quarter that was stronger than any other quarter in 2025. Revenue in the Americas stem down by 24% compared to Q1 last year, primarily related to the U.S., but excluding currency effects, sales for this region decreased by 10%.

APAC saw a 25% decline, primarily then attributable to China. Also, we had a large order for Pakistan in the prior year quarter. India was also strong for this quarter. INDO, down 17% or 7% then excluding FX effects and license revenues, as Thomas talked about, SEK 68 million, a decrease in SEK of 19%, but 8% then FX adjusted. And if we look at our revenue streams, that means that we had 29% of our revenues were license revenues in the quarter, which we see as a good number. And again, it was as expected that Intuitive was down due to the previously announced MOU cancellation, reverting back to the old agreement between the company starting January 1.

And again, the previous estimate that we had that this will have a negative impact on our license revenues of SEK 60 million to SEK 90 million. That is still our best estimate. However, we did have revenues also from several other countries and customers in this quarter. Simulator sales as a whole was down 2% compared to Q1 last year, and this is then due to our industry business area. As Tom said, it's more lumpy for sales than within [indiscernible] since it's usually tied to larger projects where development is also involved. And our development revenues, they were up a bit compared to last year, but weaker than the previous 3 quarters. And this is then primarily due to the project we have in a Southeast Asian country.

This project saw revenues of only SEK 2 million in this quarter due to a minor restructuring of one of the project's milestones. The total for the project is still the same, even with a smaller addition. But for this quarter, we saw some weaker revenues. And moving on then to our costs and EBIT margin. As mentioned, our gross margin [indiscernible] for the quarter was 66%, 69% if we look at the comparable quarter. License revenues, as we've seen, a lower share of total sales. And then the currency effects, that effect was approximately 2.2 percentage points in the quarter. And here, it's important to note that the lower dollar exchange rate has for us less impact on the goods -- cost of goods sold than on other cost items.

Our input goods are primarily purchased in currencies other than USDs and production and associated wage costs are also not in U.S. dollars. Also for the quarter, the proportion of direct sales within Educational Products and then primarily in the U.S. was lower, and this also then has a dampening effect on the gross margin. So these 3 are the main 3 reasons. And then on the positive side, we have the price increases that we implemented in 2025. And as mentioned, we did another one in April.

Regarding OpEx, sales costs were 21% of sales. In the comparative quarter, we had some restructuring costs attributable to the acquisition of Intelligent Ultrasound, now Surgical Science UK. And then we also did some further restructuring in Q3. And then starting in Q4 last year, the reductions that we implemented in the sales force following the acquisition started to have full effect on the cost side. Tariffs from the U.S. implemented in Q2 last year, meaning that we had no costs for this in the comparable quarter, Q1 last year. And for this quarter, then tariffs amounted to approximately SEK 2.4 million.

Admin costs, 8% of sales, same as Q1 last year, if we exclude acquisition costs for IU in the comparable quarter. In absolute numbers, admin costs were down if we compare to previous quarters. We have started to work on the relisting process. And -- but these costs, we will, of course, inform of how much costs we have for each quarter due to this process. And we expect the relisting to take place next year. R&D costs, 24% of sales. We activated slightly less, SEK 9 million instead of SEK 10 million in the quarter. The costs on this line also vary depending on how much development revenue there is for the quarter since salaries for the portion of the development team that have worked on projects that generate development are transferred to cost of goods sold. And in absolute numbers, for R&D costs, we were down a bit compared to last quarter, Q4.

However, then we also had some restructuring costs on this line, SEK 3 million related to the termination of development personnel in Seattle. On the other hand, we had more development revenues then, meaning more costs were moved to the cost of goods line. But all in all, if we look at all these different items, our R&D costs were down a bit compared to Q4, even though we continue to invest in this area. The other operating income and operating cost line that mainly consists of costs for the company's option programs as well as the revaluation of operating assets and liabilities in foreign currencies. And for this quarter, we had a negative impact on results of just above SEK 5 million attributable to this revaluation compared to a positive of just under SEK 2 million last year.

So following this then, our operating profit, our EBIT for the quarter was SEK 23 million, corresponding to an operating margin of 10%. If we then adjust our P&L for FX effects, EBIT amounted to SEK 36 million or 14%. And the way we did this is then that we used the average exchange rate for Q1 last year, recalculated the P&L. However, balance sheet items and their impact on this line, the other operating income and expense line, that has not been restated.

Organization-wise, the number of employees at the end of the period was 317. That's 19 less than going out of Q1 last year, and the majority of this change is attributable to the restructuring of the sales force following the acquisition of IU and also the closing of the Seattle office in Q4 last year. For adjusted EBIT, which is then EBIT exclusive of amortizations on surplus values related to acquisitions. The result here for the quarter was SEK 28 million. And if we then adjust for FX effects, the same way as we did for EBIT, our adjusted EBIT was SEK 42 million or 16%. Finance net and taxes, not much to say here for the quarter. We have no loan financing, meaning that the net financial items mainly consist of interest income on bank deposits and also, we have revaluation of internal loan liabilities to subsidiaries and an IFRS 16 effect.

Net profit for the quarter, SEK 19 million, and the tax expense was SEK 3 million. For this year, there are tax loss carryforwards in the U.S. attributable to Munich and also in the U.K. attributable to Surgical Science U.K. And then cash flow, we saw a very strong quarter on the cash flow side, SEK 65 million from operating activities compared with minus SEK 5 million last year. We had a big positive from working capital, SEK 36 million, where inventory remained largely unchanged, while accounts receivable decreased.

Current receivables, including accrued income, and that mainly relates to accrued license revenues that we invoice and that are paid in the following quarter. That has also decreased, meaning a positive effect on the cash flow. Investing activities, Tom talked about our new production facility in Tel Aviv. And for this quarter, we invested approximately SEK 6 million. And as also mentioned, they are expected to be commissioned now in the second quarter. Financing activities, not much to mention here for the quarter, and that meant that cash flow was a positive SEK 51 million for the quarter, and we ended the quarter with SEK 668 million in our cash and bank.

And with that, we open up for...

I would like to conclude by first thanking Anna and then a short wrap-up. Quarter 1 was a solid quarter for Surgical Science. The underlying business is growing. Margins are in line with last year, and cash flow was the best quarter 1 we've had in some time. The currency environment has been a real headwind and the intuitive impact on the license revenue is playing out as expected. But if you look through those 2 factors, what you see is the company executing well. We have momentum in EMEA.

We have a very strong quarter in the U.K. We have exciting new product launches generally and specifically in ultrasound. We have a growing robotics ecosystem beyond Intuitive and a pricing strategy that is working. We are not yet at our financial targets. We have been clear that 2027 is the year we expect to hit them, but we're moving in the right direction and building the foundation that gets us there. The opportunity in front of Surgical Science is significant. Simulation will become a central part of how health care trains its professional, and we intend to lead that shift.

With that, we open the floor for questions.

[Operator Instructions]

The next question comes from Christian Lee from Pareto Securities.

The first is regarding the license revenue. If you could give us some color on the composition of the license revenue in the quarter, if there were any larger packages delivered in Q1? And given that your robotics customers aside from Intuitive are contributing to sales to a greater extent, do you view the SEK 67 million you had in Q1 as a floor for the license revenue? Or should we expect continued volatility going forward?

I mean Christian, good question. So regarding the license revenues, it is clearly a positive trend where, as I said, simulation will play a central part of the digital offerings of the robotics platforms in the future. And since there is many players now entering and entering the competition more robotics systems are out there, the market is growing and the market potential is growing for simulation. That's clear. And I think it's very positive that we see that revenue streams from several different customers were seen during the quarter. Then regarding Intuitive and the kind of the expectations going forward, we don't speak about specific customers.

But what we can say is that simulation continues to be an important piece of the digital offering of Intuitive. And in a sense there, you could say that 2025 with 100% attach rate on the DFI was a slight jump start of the future. But when we speak with all our robotics customers, the team and I, we see that the discussions are only about how they can expand simulation content for their platforms and how they can tie simulation even more closely into their training pathways for the surgeons. So there is a real gap here between installed capacity of robotic systems and the number of trained surgeons.

So that's why I say that not only will we be an important piece for the robotics platform, but also, we think that this will be a growing business for us. Exactly how this will play out quarter-by-quarter is difficult to say, but I think you have to find appeal in the long-term opportunity here.

Excellent. My second question is regarding the structural changes in the Chinese market and your steps to address these challenges. Are you considering moving any manufacturing or perhaps assembly operations to China?

It's a very good question, and it's definitely a structural shift. And what we are doing is that we are trying to be a term coined by Atlas [indiscernible] local, meaning that we want to be global and local at the same time. So what this means is that we want to have more local presence, generally speaking, in China, not just related to production or operations. We want to be perceived as one global important player with a very strong local foundation so that we can be seen as an attractive player from a Chinese perspective and not as a foreign company. So we're taking actions then to increase our presence generally in China, and that has had as an effect, several important decisions here through last quarter and also this quarter.

The next question comes from Simon Larsen from Danske Bank.

I would like to start on the Education segment. I think it was a rather solid quarter for that part of the business. And it seems looking back a couple of quarters now that you've established some kind of revenue level around SEK 130 million per quarter. So how should we think about the Edu segment in particular going forward? Is this some kind of floor level you believe or any meaningful maybe one-offs here in Q1 that shouldn't be extrapolated thinking maybe about the ultrasound business, which was very strong, obviously. But any help on the dynamics on the Edu segment here going forward would be helpful.

Yes. So we haven't, as you know, particularly explained or set specific target for the [ Ether ] segment in the new financial target, but rather we had financial targets on the full company on the group level, right? But the E segment is definitely an underpenetrated segment, and there is lots of opportunity for growth there. And within the different subsegments of the Eder segment, you have different growth potential, both in percentage and in absolute terms. The way we're going to grow this segment is primarily by 2 important levers.

One is the sales and marketing lever, driving awareness in this segment of medical simulation and the value of our products. That's mainly a sales and marketing efforts. And there we have tremendous amount of activities going into driving different type of marketing initiatives to drive awareness as well as thinking hard and executing on how to cover the market in a much better way. We have a very broad product portfolio today, and there's a big opportunity here to cover the market in a more efficient way. And the second growth lever is in new product introductions. And as I mentioned in my comments here, we have a strong product pipeline working within R&D and product development. And we also have made some important product announcements here last quarter and the quarters before that as well. And usually, what happens then is that, that becomes kind of an add-on effect, meaning that it doesn't take away from the existing business, it rather adds on to the business.

So when you introduce a new product, then you get a jump in the sales. So it's definitely a growth strategy, and we're working on these 2 to 3 levers, sales marketing and product development to increase the penetration and grow the sales.

Yes. Cool. Got you. And I suppose maybe a tough question to answer, but on the industry OEM side, as Christian also mentioned, the strong print here in Q1, and you're sticking to your SEK 60 million to SEK 90 million impact versus last year for the full year of '26. But could you give us any sort of direction as to how the impact will be sort of distributed over the quarters? I would expect us to maybe see increased pressure from Intuitive in the coming quarters? Or am I mistaken? Any help in that regard, appreciated.

I think there's a lot of moving parts here. I mean it's not just -- our license revenues are not just constituted of Intuitive. As I've said, we have several different revenue streams within license revenues. We want to stick kind of to the overarching argument that simulation will become a very central piece for the robotics manufacturing. And as I said, we see increase in the number of requests for proposals and the number of development projects that we have with these customers. And usually, they stay -- they become customers and they stay customers with us for a long time. Then there's another piece of this as well is that the robotics manufacturers, they themselves work on the business modeling and the packaging of the digital offerings here. And the way that you offer robotic platforms tomorrow will not be necessarily the same as today. And that will also have an impact on the packaging of the digital offerings, and it will also have an impact on the volume of licenses that we sell.

So there are so many moving parts here. So we don't want to -- we want to refrain from making any sort of more specific predictions, but rather stick to the SEK 60 million to SEK 90 million that we have said that is the impact on the full year and then feel very confident about the long-term opportunity here in the license business.

The next question comes from Ulrik Trattner from DNB Carnegie.

And kind of building on the previous questions and regarding the SEK 60 million to SEK 90 million in guidance you provided. Is there any way where you can give us some more information on the effects in Q1? And I know you won't sort of to the guidance, but it should really help the market to navigate sort of seeing growth -- underlying growth in this segment. If you can help us provide some more granularity on the potential headwind or the expection of headwinds throughout the quarters of '26?

Once again, I think it's very dangerous and somewhat unprofessional to try and give guidance on a quarter-by-quarter basis when there's so many moving parts. I think that the macro trends are very positive and strong. I spoke about the increase of competition with different robotic manufacturers now coming in. We see strong competition by -- within the U.S. market now with Medtronic and Johnson & Johnson entering the tray. And that, of course, drives the need for training and drives need for simulation, right? And then as I also mentioned here just in the previous question, there is also moving parts in how you package and how you price these licenses and what prices you have for these licenses.

So all this together and still relatively few number of customers, not that we have like hundreds or thousands of license streams makes it that it can be a little bit lumpy, but the longer-term opportunity is very strong, and we also feel very confident in our ability to deliver value and extract good solid prices from these customers. sorry, regarding more specifically products, for example, the attach rate and how many licenses per system for specific customers, we need to also see how this plays out in a little bit of a more longer term. It's too early to judge for just one quarter.

Sure. But if we were to look isolated here for Q1, what was sort of the quantified negative effect year-over-year?

Do you mean for Intuitive, we have never kind of comment on the amount that we have for our different customers. So again, we need to stick to the -- we do stick to the SEK 60 million to SEK 90 million is still our best estimate for the year, looking then at 2026 in comparison to 2025.

So in essence, we will never be able to essentially track whether it's SEK 60 million, SEK 90 million, SEK 150 million in 2026?

Sorry, we will never...

Be able to -- as on the sell side, trying to put down estimates, we will never then be able to or then estimate or get any sense of whether it's SEK 60 million, SEK 90 million or SEK 150 million or SEK 250 million in negative effects year-over-year or SEK 20 million.

We had SEK 300 million in license revenues for last year. And of course, I mean, you know what a dominant player in Intuitive is on the market. We cannot comment on the exact numbers. But of course, this is something that we will follow if we have the possibility to give more information down the line when we've seen more quarters, we will, of course, continue to comment on this range.

Then sort of follow-up question and robotic surgery sales down 17%, 18% in local currency in reported numbers year-over-year, like 80% plus being towards Americas, I guess, some significant FX headwind. I would essentially call it sort of 10% sort of headwind here. And then if you add back sort of the negative effects, are we talking about underlying growth here in constant exchange rates? Or is it still in sort of the negative territory?

For the license revenues, if we look at them...

Robotic surgery since you're providing the revenue by product segment and robotic surgery is then sort of isolated. So just in general for the entire robotic surgery segment.

Yes. Yes, we do have a sale of products there, of course, as well, for example, the robotics, which is within the EU. But just for licenses, it is still the majority. And as Tom mentioned, that's down like 8%, and we saw that actually being higher than several of the other quarters last year. But Q1 was, I mean, 14% down for the U.S. dollar. Q1 really had a very, very large -- saw a very large currency effect moving into Q2, slowly, it will be less if the dollar stays at this level. But yes...

Great. And my second and final question, and I'm not sure if you want to answer this. U.K., you talked about success in the first quarter and some strong underlying demand and momentum out of that market. Intelligent Ultrasound, I guess, is part of this transformation and success in the U.K. And given that we saw negative EBIT contribution from Intelligence Ultrasound throughout 2025, and there is a significant uptick here in sort of EBIT for Q1, at least versus my expectations. Are we to assume that Intelligent Ultrasound as sort of a separate entity is in black numbers now on EBIT?

Yes, definitely. So they are contributing to our EBIT for this quarter and due to, of course, increased sales, but also through the cost reduction program that we have done as a part of the integration process. Apart from that, I also want to mention that we see an improved funding climate from the NHS that have made it possible to close many deals that have been sort of frozen in the NHS purchasing department. And also the fact that we now have a direct sales team in the U.K., which is selling the entirety, not just Intelligent ultrasound or ultrasound simulation product, but the entirety of the Surgical Science portfolio has had a very important positive impact on the sales and will, of course, have an even more important impact on the sales going forward, both for educational and also for our industry customers in the U.K., which represents a big opportunity for us.

There are no more questions at this time. So I hand the conference back to the speakers for any written questions or closing comments.

Yes. Great. I was just about to say we have some written questions. I think there was one about China. We answered that one, I hope. There's one around the uplift and the timetable for that taking place in 2027, which is around a year for this process is sort of a normal timetable, depending, of course, on how much consultants, et cetera, you use as well. But as for the share buyback, which is connected to this question, we cannot today do a share buyback on First North Growth Market.

However, it will be allowed starting in December this year, and that is why we -- tomorrow when we have the AGM, there is a proposal then to the AGM to give us that mandate so that we have it when the uplift takes place or if we're allowed on the First North growth market. Then there is one more question also around the relationship with Intuitive when you say, Tom, it's stronger than ever. Can you please elaborate...

The way that these relationships work, not just with Intuitive, but with both robotics companies as well as med tech companies that we engaged in deep collaborative projects around a specific value, a specific feature or a specific product from them. And then our development teams engage in a development project that leads to either a software simulation piece or some type of hardware for a med tech company. And these type of discussions with Intuitive are ongoing and development work is still continuing in an unchanged manner. And that's what I mean by this comment. And of course, that's a lead indicator for future business, of course, both with this customer and with all the other customers that we have.

Then I don't think we have any more written questions.

So no more questions. So thank you for your attention, and see you all in a quarter.

Thank you. Thank you for today.

Bye-bye.

Welcome to Surgical Science Q4 Report 2025 Presentation. [Operator Instructions]

Now, I will hand over to the speakers, CEO, Tom Englund; and CFO, Anna Ahlberg. Please go ahead.

Welcome to this earnings call for Surgical Science for the fourth quarter of 2025. My name is Tom Englund, CEO. And with me today, I have our CFO, Anna Ahlberg. We will first present a summary of quarter 4 and our results, and then we will have the Q&A session.

We are pleased that like quarter 3, quarter 4 was a clear step in the right direction for Surgical Science. We had sales of SEK 269 million and grew by 15% adjusted for currency effects. And our license revenues almost exclusively from robotics companies were the highest ever reported at SEK 92 million, which was an increase of 21%. The adjusted EBIT amounted to SEK 46 million or 17%.

On December 8, last year, we presented our new financial targets of annual sales growth of 10% to 15% with profitability of more than 15%. And it's gratifying to see that we're now delivering fourth quarter results in line with these targets.

So if we move over to Educational Products. Performance in Educational Products was mixed with growth of 4%. North and South America showed strong growth of 43% with a good distribution between the different countries. And we are seeing a clear recovery now in this region compared with previous quarters with a higher customer activity and bigger sales pipelines. And we're also cautiously optimistic about the future. Asia, on the other hand, saw sales decline by 21%, driven by a continued challenging market situation in China with generally lower activity and demand.

One of our strategic goals is to increase the profitability in all segments outside of robotics. For our high-volume products, we are now beginning to see the impact of this strategic initiative. During quarter 4, our average sales prices increased by around 9% compared with quarter 4 2024 at fixed exchange rates without us experiencing any significant effect on volumes. The impact is most felt in direct sales and indirect channels usually show a delay, but we expect further positive price effects to be seen during this year.

Also during the quarter, our new PartnerPath distributor program was introduced on a broad scale, and this program aims to improve cooperation, sales and efficiency between us and our partners, which, among other things, will contribute to increased profitability.

Highlighting the Ultrasound segment, the Ultrasound segment experienced a very high level of activity, both within hospitals but also in industrial customers. Although ultrasound sales increased by 48% compared to quarter 4 '24, the segment did not meet our growth expectations as pro forma sales, including the acquisition of Intelligent Ultrasound declined. The main reason for this decline we consider to be structural challenges within our own direct sales force, something that we've already addressed during the past quarter.

For ultrasound, and you can see the picture of an ultrasound simulation product to the right, 3 new simulation modules were launched during quarter 4 and in January. One of these is targeted towards the diagnosis of endometriosis, which is a major health problem affecting 1 in 10 women. The module supports one of our focus areas, women's health, an area that is neglected in health care and where we have identified that our unique products and solution can create significant value and contribute to earlier diagnosis. This is one clear example of how Surgical Science fulfills our purpose of unlocking the full potential of every medical professional to improve health care outcomes and save lives.

During quarter 1, you can expect the first products, which are based on the joint technology platform from Surgical Science and Intelligent Ultrasound to be launched. We are not yet done with the integration and still have a lot of work to do to realize the full synergies from the acquisition of Intelligent Ultrasound.

Now moving over to Industry. The Robotics segment had a strong quarter. License revenue grew by 21% to SEK 92 million, which was an all-time high for the company. We saw strong license revenues from our largest customer, Intuitive as well as several other players in the U.S. and China. These other players are now beginning to install robots in significant numbers, which is in turn driving our license revenues.

The collaboration with our largest customer, Intuitive, continued during the quarter. And in January '26, Intuitive announced that its system had been used on more than 20 million patients to date. This, together with the 18% growth in procedures during the quarter is clear evidence of the strong demand and broad adoption of robotic surgery. Both Intuitive and Surgical Science agree on the critical role that simulation plays in training robotic surgeons. Digital offerings are becoming increasingly important for robotics companies and Surgical Science is playing a central role in the development of these offerings.

During the quarter, our customer, Johnson & Johnson, applied for a so-called De Novo classification in order to start marketing its Ottava robot for gastrointestinal procedures. Another customer, Medtronic, received FDA approval for the use of its Hugo robot in urological procedures in the U.S. And 2 days ago, Medtronic announced the first commercial surgery with Hugo robotic surgery system at the Cleveland Clinic in the U.S. There are now several hundred robot models that are either actively being sold or about to hit the market.

Surgical Science is developing simulation solutions for most of the 20 largest robotics companies, and we feel very confident in the value and uniqueness of our offering in robotic surgery. We have a big and growing pipeline of robotics projects, and we see opportunities for deeper integration into our customers' digital offerings and our ability to create value for many years to come, in line with the recently presented strategy.

The introduction of our latest simulator, RobotiX Express has been successful and sales and deliveries have started to pick up speed. 14 simulation exercises have been launched on the simulator so far, and the portfolio will be expanded on an ongoing basis.

At the International Meeting on Simulation in Healthcare, IMSH in San Antonio in January, we showcased our products that are making use of AI technologies for the first time ever. In these products, AI is helping to analyze the instrument handling of laparoscopic surgeons and then recommend steps or skills for the surgeons to practice and improve. At the same time, within our core offering of real-time simulation of surgical procedures, we today see major limitations in the power and scalability of AI to handle and calculate models that could generate the complex real-time surgical simulation that our customers require.

Therefore, Surgical Science's simulation technologies will continue to be the ultimate solution for high-quality real-time surgical simulation for the foreseeable future and Surgical Science's product experience will be improved significantly with the use of AI.

Moving over to Medical Device Simulation. During quarter 4, continued progress was also made in strengthening the company's position within the medical device industry with a focus on endovascular applications. At the end of the year, the pipeline of ongoing development projects was 15% larger than at the same point in 2024.

Our development revenue is project-based and may fluctuate between quarters and not fully reflect the underlying level of activity. At the end of '25, the proportion of repeat customers for development projects exceeded 70%, demonstrating that Surgical Science is making progress toward becoming an even more integrated and long-term partner to these customers. During the quarter, several important solutions were delivered to our customers, including the areas of peripheral artery disease and pulmonary thrombectomy.

At the same time, sales of simulators to medical device companies for product-specific training fell to SEK 21 million compared with a very strong comparative quarter of SEK 43 million.

So over to the strategy and the work going forward. Surgical Science's new strategy was presented at the Capital Markets Day in December last year. The aim is to continue growing the company profitably and establish a market-leading position within our 5 different market segments, all of which currently have low to very low penetration. We are now pursuing active internal efforts to deliver on the strategy and are seeing progress across all initiatives. And we feel very confident that this is the right strategy that will lead to increased shareholder value.

Surgical Science is currently a world leader in medical simulation with a very strong brand. Our position is unique with market-leading products, strong and effective direct and indirect sales channels and an extensive medical expertise that our customers rely on for their training and development. Our global reach and support, which ensure reliability and presence are critical factors for our customers.

2025 has been a challenging year in many ways, particularly in relation to the news surrounding our largest customer, Intuitive and the development of our share price. At the same time, Surgical Science has made great strides forward in many respects and is now, in many ways, a significantly stronger company than it was a year ago. Demand for our product is growing steadily, driven by a greater need for training, increased digitalization and a more complex health care. I'm optimistic about the future where our solutions will become a central part of health care training and our ability to generate profitable growth over time.

And with that, I would like to hand over to Anna to present the financials in more detail.

Thank you, Tom, and welcome, everyone. We start with sales. For the quarter then we had sales of SEK 269 million, up 7%. SEK 14 million came from Intelligent Ultrasound. And I should just mention, Intelligent Ultrasound is today renamed to Surgical Science UK, but we will still use IU when we talk about this acquired business throughout the presentation. And all IU sales are attributable to the Edu Products business area and the ultrasound product group.

In local currencies, sales were up 15%. And we have, after Q1 of last year, since then seen a significant negative effect from currencies on our overall sales. And also on our result, that I will come back to that later. We are just below 80% of revenues in U.S. dollars. We are mitigating this as best we can, except for raising prices that Tom also talked about. We also now quote more countries in euros instead of in U.S. dollars, for example. However, this will not mean a very large change in the ratio between different currencies since a lot of our revenues originate from the U.S.

Looking at the business areas, the split was 48% for Edu and 52% for Indu for the quarter, where then Edu was up 4%, but down 8% if we exclude IU. And as Tom mentioned, the Asia region declined 21% compared with the same quarter last year, and that was attributable to China having a weaker quarter, while countries such as Japan and the Philippines showed good sales.

Sales in Europe was weaker than last quarter, meaning Q3, but still remained strong and increased by 4%. France and Poland did particularly well in this quarter. And then the comparative figure also includes a major order to Romania. But mentioning Poland, Poland, this market has been really strong for us during these last quarters. It was at an all-time high for last year as a total, and it is also our largest market in Europe.

The North and South America region increased by 43% compared with the corresponding quarter last year. And this is attributable to the U.S., which is really nice to see since we have had some tougher quarters there. And this is even when excluding sales from Intelligent Ultrasound that is also -- that part of the business is our largest market. But even if we excluded it, the increase is attributable to the U.S.

Indu, up 10%. We had, as mentioned, all-time high license revenues of SEK 92 million. Development revenues were also very strong, while simulator sales within the business area was weaker. I will come back to this when we look at the revenue streams on the next slide. But for the full year, then this means that sales were SEK 992 million. This is an increase of 12% or 19% in local currencies. And in that number, IU is included with SEK 75 million. Their sales for the full year was SEK 80 million. They are in our books and consolidated as of February 18, 2025. And that meant that in SEK, sales were down approximately 30%. This is largely attributable to the U.K. and lower sales to NHS. We've talked about that before, and it's something that we are, of course, not at all satisfied with.

The U.K. market was also a market where we saw that sales should be coming from the full product range, also the other Surgical Science products as it then moved to being a direct market. However, and as Tom talked about, we do see a lot of positive signs for our ultrasound product group, where we are now merging our technologies, and we have really exciting products in the pipeline.

Edu for the full year 2025 was up 13% and Indu 11%, where license revenues were up 11% for the year. And looking then at the revenue streams, license revenues for the quarter were 34% of our total revenues compared to 30% last year. We saw really good sales, both from Intuitive, and that was then both from dV5 as well as from the older generations, as well as a larger batch revenue order from one of our other robotic companies, customers.

So as I think you're all aware of them, we did during the fourth quarter on November 25, received a cancellation from Intuitive on the memorandum of understanding that was signed in January. And this memorandum of understanding implied that all dV5s would be equipped with simulation from us. The cancellation meant that we now, as of January 1 this year, go back to the previous existing agreement between the companies and advanced simulation from us will only be offered to a minority of the customers.

For the older generations such as Xi, for example, the agreement has not been changed. It was always an optional feature. And our estimate for this was and still is that it will impact license revenues negatively by SEK 60 million to SEK 90 million for this year. However, as we have also emphasized and Tom talked about it, we still have significant revenues from Intuitive, and we continue to work very closely together on a road map for future simulation.

Moving on then to the next revenue stream, simulator sales that was as a whole down 12% compared to Q4 2024. This is due to the industry business area. This is more lumpy than for sales within Edu since it's usually tied to larger projects where development is also involved. And it sometimes also has to be seen together with development revenues. And as an example, the project that we have in Southeast Asian country, that is still in the development revenue phase. This will then during this year and towards the end of this project, move from being pure development revenues to pure simulator sales. So it is usually a mix of the 2 and the simulator sales also usually comes towards the end of the different projects.

Development revenues then up a lot also for this quarter and the project that I just mentioned, here, we had revenues of USD 0.7 million, and we estimate the same for this quarter, Q1. So this is, of course, a factor for the increase, but not at all entirely. We had very good development revenues also for other customers.

Our gross margin for the quarter was 66% versus 68% in Q4 2024. The fact that license revenue made up a higher share of total sales than in the corresponding period had a positive effect. However, currency effects have a large negative impact on the margin, approximately 2.3 percentage points. And unfortunately, the lower USD exchange rate has less impact on the cost of goods sold than on other cost items because our input goods are primarily purchased in other currencies than in dollars and also production and the associated wage costs, they are also not in U.S. dollars.

Then another factor impacting the gross margin negatively that we have seen throughout the year and commented on is that we do have lower gross margin on the IU products. But then also on the positive side, we see that our price increases are starting to have an effect. And that is, as mentioned, something we will continue to pursue.

Regarding OpEx, sales costs, they were 17% of sales for the quarter, 20% in the corresponding quarter. And here, we see that the reductions in the sales force following the acquisition of IU have now reached their full effect. And then for the quarter, we also had some lower costs of a more nonrecurring nature due to lower agency fees. This is attributable to sales in certain countries. So it depends on if we sell more or less to these countries. So that means that the cost level was maybe a bit on the low side because of this. But as I said, we have definitely lowered our level for the sales costs. And we have, during the year, also worked a lot with operational efficiency, and we have done reorganizations in line with this.

Administration costs, 9% of sales, the same as Q4 last year and R&D costs, 22% of sales. We activated slightly less, SEK 9 million instead of SEK 10 million. And then we had, in this quarter, restructuring costs on this line of approximately SEK 3 million. And this is related to the termination of development personnel in Seattle. During Q4, we restructured our U.S. operations, and this resulted in us closing our Seattle office.

We consolidated our operations to our office in Cleveland, and that is then our hub for all commercial activities and services and customer interaction. In Seattle, we had primarily development personnel. And so in connection with this restructuring, these employments were terminated. We still have a few other roles working remotely, and we have the lease for the Seattle office until October 2027.

So as I mentioned, the quarter then saw the full impact of the cost reductions we've done after the acquisition of Intelligent Ultrasound. We have done more than we said we would do. We said between GBP 1.5 million and GBP 2 million. On an annual basis, we have done GBP 2.5 million and that then meant approximately SEK 8 million in the fourth quarter. Still then because of the lower sales that we discussed and lower than expected, primarily in the U.S. -- in the U.K., sorry, the operating result for IU was a loss for the quarter of approximately SEK 5 million.

Other operating income and operating costs, that is then mainly costs for the company's option programs as well as the revaluation of operating assets and liabilities in foreign currencies. We had a negative impact on this line and on profits in the amount of approximately SEK 7 million during the quarter. And during Q4, we did an internal dividend from Israel. We are taking, as I mentioned also before, certain actions to reduce the effect of the weakening U.S. dollar. So we're both reducing intercompany items, and we also have as little cash as possible in USDs. So that's something we're working actively with.

Following this then, our operating profit for the fourth quarter was SEK 40 million, corresponding to a margin of 15%. And for the full year, the FX effects that I mentioned before on the line other, that was a negative SEK 38 million then for the year. And if we exclude these and we also recalculate our revenues and costs with last year's exchange rates and also then exclude acquisition and restructuring costs for the year, and that was in an amount of SEK 30 million, then we reached an EBIT of SEK 177 million for the year or 17%.

Organization-wise, we were 313 people at the end of the period, and that is 15 less than going out of Q3. The majority of the change then attributable to the closing of the Seattle office. With the IU acquisition, we added 48 people. And today, we have 11 less here.

Adjusted EBIT for the quarter, the result was SEK 46 million. And as mentioned, we had some restructuring costs due to the closure of the Seattle office. Excluding those, we had an adjusted EBIT margin of 18%, same as last year. For the full year, then the adjusted EBIT margin was 12% compared to 19% in 2024.

Finance net and taxes. no loan financing meant that net financial items that mainly consist of interest income on bank deposits and then also revaluation of some loan liabilities to subsidiaries, effect of IFRS is also impacting the finance net.

Then regarding taxes for the year, the expense here is consists of estimated tax on profit for the year and the change in deferred tax assets. This year's tax expense includes U.S. taxes attributable to the previous year and also taxes that are not linked to taxable income. And combined with the effect of the loss in Intelligent Ultrasound, this means that the effective tax rate increased. And then also for the year, our profit includes the acquisition costs of approximately SEK 23 million. And those are not tax deductible. That is then also impacting the rate.

And then cash flow. Cash flow from operating activities was SEK 73 million for the quarter compared to SEK 57 million for Q4 in 2024. Changes in working capital was really small, a small negative of SEK 3 million. Inventories were pretty much unchanged and accounts receivable decreased. Accrued income increased, and this is primarily due to higher license revenues, and they are then paid in the coming quarter, meaning now in Q1, and they have already been paid. So that basically means that the last day of the quarter is when this amount is at its highest.

Investing activities, we invested approximately SEK 3 million in the quarter in our ongoing construction of new production facilities in Tel Aviv. We -- they are expected to be commissioned in the second quarter of this year.

And then for financing activities, the larger amount underlying for lease liabilities is actually an adjustment in the quarter, so nothing to mention here for the year. And cash flow then was a positive of SEK 32 million for the quarter before FX adjustments. And we ended the year with SEK 616 million in our bank accounts.

And with that, I hand back to you, Tom.

Thank you, Anna. So to summarize, we believe that quarter 4 was a solid quarterly result and that Surgical Science is moving in the right direction. We see a continued rapid development of the company in a dynamic market where we can see positive signals both in our external work with our customers and in our internal efforts to create a stronger, more efficient and more profitable company. Our new strategy, which we also now execute on will make us a company with several more revenue streams and a company which addresses a significantly larger market than today.

And with that, I would like to open the floor for questions.

[Operator Instructions] The next question comes from Simon Larsson from Danske Bank.

My first question is related to the strong growth for licenses here in the quarter. Is it possible to quantify the number of robotic customers that bought licenses here in Q4 and how that has developed versus, for example, let's say, a year ago? I'm just trying to understand the underlying strength given the expected negative Intuitive effect we will see from Q1. So any color on the strength or sort of the breadth of the license growth here would be helpful.

Simon, Tom here. So we have said that we have 20 robotics companies as customers right now. And last quarter, it was around 5 of them who bought licenses from us.

Sorry, it was 20 active customers during Q4 or that's the total scope?

That's the total number of customers that we have, robotics companies that we have, significant robotics companies that we have and about 5 of them had revenue streams this last quarter.

And as you know, Simon, that can vary between the quarters since most customers with the batch sales, it can vary between the quarters. That's what we commented on also throughout last year.

Yes. Understood. Understood. And then I guess my second and final question for this time at least. I noticed on the balance sheet, accrued income item has increased quite a lot if we look at both year-over-year and quarter-over-quarter. Is there any sort of special customer -- specific customer group that's sort of driving this increase in accrued income? Or yes, any help to understand the dynamic behind that figure would be also helpful.

Yes. That is what I just mentioned before on the cash flow that is due to -- primarily due to increased license revenues and it is being paid in the quarter after and for Q4, it has been paid. So that's the number I referred to as being sort of always at its highest at the last day of the quarter. So there's no like increased risk or that we accrue more in a different way than we've done before or anything like that. So it's really positive in a way. And again, they have been paid and are always paid in the quarter after.

Okay. So it should come down sequentially already in Q1 then unless it's a very big quarter again for licenses.

It varies a lot with the license revenues. Yes.

The next question comes from Ulrik Trattner from DNB Carnegie.

A few questions on my side, and I will limit it to 2, of course. But can you talk about the sales growth momentum in licenses for Intuitive if we were to exclude the dV5, given that this is the last quarter where it will be included as sort of basic skill simulation. Essentially, are you seeing growth outside of the dV5? And for '26, if we were to exclude the effects that you already quantified, would you expect that Intuitive would grow in 2026?

In terms of in terms of attach rates, we see for the other products, not the dV5 that we have sort of the same attach rates that we've had before with the license sales. And so that means that the customers are actively using simulation within those products as well.

And then regarding this news that Intuitive will only supply Surgical Science simulation to a subset of the dV5s, that we believe then will have a negative effect of SEK 60 million to SEK 90 million during the entire 2026 compared to 2025. And we have very sort of low visibility on the attach rate for our simulation solutions in the dV5 offerings here for the coming year, both when it comes to the full year and also the quarterly distribution and the quarterly attach rates.

Sure. But I was kind of aiming for here if we were to completely exclude the dV5 and just look at sort of the legacy platforms from Intuitive, the SP, the Xi, et cetera, et cetera. And I know it's a little transparency in terms of attach rate. But would you assume that there would still be any type of growth for those products?

We will not go into more detail regarding the exact growth within the different product lines for our customer. And it also becomes very complex because, of course, Intuitive also has an exchange program where they exchange dV4s or [ dVXs ] to dV5 and so in certain geographies and in certain geographies, they do not. And that entire kind of dynamics is very difficult for us to get into. So we report this kind of overall general revenue impact that we think that it will have for 2026. And once again, we have limited visibility into exactly how this will play out.

Yes, I understand. And second question before getting back into the queue, and that would be on the cash flow side. And you reiterated that there will be some growth and some profit expected, not that sort of your targeted level. Is there anything that suggests that the cash flow for 2026 should not follow, i.e., are there sort of investments needed on your end? Or do you need to beef up working capital? Or are we to expect roughly sort of cash flow growing in the same extent as profits?

There are no structural changes when it comes to cash flow as it has looked before and going forward. No, we have no -- I mean, the investments we do is primarily in staff and in development personnel. I mentioned that we are investing now in a new production facility in Israel, but it's not -- I mean, it's not major amounts.

The next question comes from Christian Lee from Pareto Securities.

Would it be possible to quantify the larger package order received from one of your robotics customers in Q4? And excluding this package, would license revenues still have shown year-on-year growth in Q4?

Christian, we would not actually want to give that detail away when -- about these package orders, they become lumpy. I think that the main point here is that the robotics market is developing rapidly. And there's more and more players that are coming to market or are about -- or are already in the market. And many of these players are also customers to us. And that drives the demand for simulation and training on these robotic platforms in general. And that is kind of an accelerating trend that it's a long-term trend, and it's also kind of a revolution within health care right now.

So overall, that will drive the need for simulation from Surgical Science. And then it will be lumpy, both because of the packages, as you say, certain quarters will have revenues when customers buy a large amount of packages or license packages from us. And it will also be driven by how quickly these robotics players will get their market acceptance and our customers. So you should think of this as an inherently attractive market to be in, in the long term with some fluctuations quarter-to-quarter.

Okay. Understood. And my second question then is regarding the cancellation of the memorandum of understanding with Intuitive. Could you please elaborate on why the impact of this is having the magnitude of this -- magnitude if it relates solely to dV5? And could you also please elaborate on the key variables that determine whether the impact lands closer to SEK 60 million or SEK 90 million?

So the dV5 is obviously the flagship product of Intuitive, and they will continue to sell the other products, the dVX and Xi as well alongside the dV5. And the sales focus right now is, of course, on the dV5 very much for the markets where dV5 has been launched. And for the markets where dV5 has not been launched, Intuitive continues to sell dVX and Xi. So the drop here in revenue, the SEK 60 million to SEK 90 million has, of course, to do with the delta of being available in all the different dV5 units that are shipped versus just a subset of it.

When it comes to the factors that determine kind of where you land on the SEK 60 million or the SEK 90 million, it is very much related to the attach rate, which has been the same mechanics as with the previous models when we have sold simulation exercises in the X and Xi, we have spoken a lot about the attach rate. And it's then difficult for us to understand exactly how the attach rate will be on the dV5 given that there are so many factors at play here.

So in terms of the rate at which dV5 grows in the market and so on, I mean, you can look at the Intuitive reports, it's around 18% procedural growth, and they have -- they also state the numbers of dV5 that they ship and so on. But I think that, that's pretty stable. It also has to do with how quickly their organization can actually install and get these systems active. So the main factor from our perspective is the attach rate.

The next question comes from Ulrik Trattner from DNB Carnegie.

And then another focus area, medical simulation outside of robotics. You enjoyed a very strong growth in 2024. We have seen quite a big decline in 2025, and now you talk about 15% increase in projects end of the year versus sort of end of the year last year. So what is to be expected from sort of these numbers and then what to be expected in 2026? And given the fact that there is a big fluctuations between the years in terms of both revenue and projects, one would assume that these are short-cycle projects, and that would assume that it's short-cycle revenue as well. So you should have a little bit higher visibility, right?

Again. So regarding the growth here in the number of projects, the reason why we state this clearly in the report here about 15% is that it's a lead indicator for the simulator sales later on, right? So the development revenues, if we are successful with the development project, it will lead to simulator sales. And that simulator sales can either happen immediately where the customer buys a bulk orders of simulators can be spread out over several quarters or even several years. So the largest medical device order that we ever got, which we announced a few quarters back here, that will be a simulator sale that will go on for 3 to 4 years.

So it's a lot dependent on kind of the size of the customer, the importance that our -- that the simulation that we sell into the importance of the product for that customer and how quickly they in turn can both educate and sell -- educate their organization and then sell their product in the market. So I think that the way you should look at it is that the more projects that we have, especially with big customers like Medtronic and Johnson & Johnson and Gore and so on, the higher the potential simulator sales should be over time.

And it's, of course, very difficult then when you're a small P&L or a small revenue because then it gets lumpy, right, which is what we see here now. But then it's, of course, important to track the lead indicators, which is the number of returning customers and the growth in the number of development projects that you have. And I think that we can fairly say that now we have a quite healthy mix of the number of projects we have. We have a quite healthy mix towards larger players and larger potential projects and smaller players and quicker turnaround projects, both within development revenue and simulators.

Okay. That's great. Is it possible for you to quantify how many of your sort of medical device customers that are currently utilizing your simulation in sort of a commercial product rather in development?

Yes, it's -- if you look back all years, I mean, it's going to be -- for all products, it's going to be somewhere around 30 or more, I would assume.

And these, in general, should generate recurring revenue, right?

That's the idea. They are not all doing that today, but that's one part of the strategy and also one part of the profitability increase that we want to see in other parts than the license business and robotics. So that's something that we're working towards. You're absolutely right.

Sorry for being a stickler ballpark, out of the 30 or so that are on the market, how many of those are essentially today recurring products?

A minority, a low percentage.

And then just...

Again, why would that be?

Because usually they buy a solution today that consists of both hardware and software, the entire product packaging, right? They want to develop a medical device and they want to make a simulation for that. So they bring a part of the hardware and we build a simulator around and also develop the software, and that's sort of sold in a package. In the future, where we want to go is we want to create the hardware as a platform on which you can sell multiple software modules on. And we can also then have a more continuous value delivery where we can charge on these on a recurring revenue basis.

Right now, we have taken the first step where we sell more software onto the same platform, but it's still not on a recurring basis. It's on a perpetual basis. So that's then the next step in the strategy.

So just I understand it correctly, the [indiscernible] that has been launched on to the market, they have essentially fulfilled their demand out there?

Sorry...

In terms of installation -- in terms of devices, given that there are no sort of recurring revenue on these type of products of the [indiscernible] that has been launched, that implies that, I guess, they're used for training purposes, but that would assume that these products or sort of the number of devices placed have sort of fully supplied the market's demand and there is sort of...

Sorry, you can't really look at it like that. If you take Medtronic, which is one of our absolutely biggest customers and where we provide a simulator for one of their key critical products, they are going to have an increasing demand of simulation as the revenue for their product increases, right?

So there's going to be more sales and education staff that needs to be trained. It's also going to be more countries that are onboarded onto this product that also need to be educated. And that's -- it's almost like it's a product SKU for a specific company, but the company is so big, so it becomes like a marketing itself, right?

So you can think of it as a recurring business also to continue to sell the hardware and the solution for several years to come. It's not like they place one bulk order and then it's over with. That's the 4 years that I spoke about before. So...

And then my second question would be on Intelligent Ultrasound. And just also going back to if I understood one of your comments correctly there, Anna, because I do note that the losses that IU brings is significantly lower here in the fourth quarter, whereas sales volumes are down sequentially as well from Q3. And did you talk about lower agency fees related to IU affect this result...

Sorry if that was unclear. No, it's not related to IU. That was more a general comment that the sales costs can go up and down depending on what countries we sell to or what structure we have and how they are paid, if it's more a rebate or if it's sort of commission and that can affect the sales cost line, and that's what happened in this quarter. So no, it was not...

Yes. Understood. And then the natural follow-up question would be, it looks like at least the losses are declining and it's becoming more manageable. Do you have any more levers to pull? Or is this more a game of hoping for volumes to increase in NHS funding coming back?

In U.K. specifically, I mean?

I mean in IU specifically.

We have many more levers to pull. They are 3 of them, it's sales and sales efficiency and the way we sell and market the product. It's product related, how we develop and package the products. That's why I spoke about in the CEO message that in this quarter and in the coming quarters, we will start releasing the ultrasound simulation products that carry the combined technical base of both Intelligent Ultrasound and Surgical Science, and that can actually also drive profitability. And then, of course, we can work on production improvements and COGS improvements to drive profitability. So there are several different angles you can improve, and we are working on all of them.

Perfect. And just sort of to be fully clear here, obviously, you don't want to guide, and I guess IU will not be disclosed as sort of separate EBIT contribution for 2026. But it would be fair to assume that given everything that you've done in terms of cost savings and the 3 points that you alluded to here that losses for IU would be lower compared to 2025, right?

Yes, because they have gone down sort of sequentially as we have done these restructurings and benefiting from the cost savings there. So yes, since they have the full effect in Q4, that's correct.

Thank you. We have a question from the feed here from [ Austin Groves Family Office ]. Are you currently tracking with other major robotics players such as Medtronic or J&J to have similar penetration install rates as you do with Intuitive? In your discussions with non-Intuitive customers so far, are you competing with other customers for that business? What would you say is the main limiting factor holding that business back? And when, how will it be resolved? So are you currently tracking with other major robotics players such as Medtronic and J&J with penetration install rates?

It's depending on the customers' requirements and the customers' wishes about how this customer wants to package the simulation, either as a mandatory piece, digital part of the full robotic experience or as an accessory that we sell on. So it depends a little bit from customer to customer. Some customers will have 100% attach rate of our simulation into their digital ecosystem and some customers will have a lower attach rate. It also depends a little bit on the different product models that these robotic companies have.

We are -- we feel that we have a very high market share within robotic simulation for these robotic companies and that there is not that much other competition out there. And actually, frankly, it's not the competition holding us back. The main limiting factor holding us back is our capacity to create compelling simulations for our customers and tying this closely into the digital ecosystems of our customers. And the other limiting factor is how the robotic companies want to train the surgeons on the robotic consoles, meaning the integration of simulation into the training curriculum and training ecosystem of those robotic manufacturers and making sure that, that is smooth and easy from a surgeon's point of view. Those 2 things are holding us back.

And then a third structural thing that is holding us back that we have addressed with this RobotiX Express is still that the training usually takes place in the operating room on the console itself. And that's a constraining factor, meaning because that console is also used for clinical procedures. And that we're solving them with our RobotiX Express, which is a generic robotic training that you can use outside of the operating room. So I hope that answers your question, Austin.

And then we have one more written question in the feed. If there are any one-off effects from switching from subscription to license model with the dV5. It is fully and will continue to be a full subscription model?

So that is not the difference than the difference is, as Tom discussed before, the attach rate for the dV5. So that is the change, so to speak. And for the older generation, there is no change because that was also before offered as an option.

So we have no further questions in the feed, and we have a few minutes left. Do we have any other questions, Anna?

I don't think so. No.

Okay. But then thank you all for listening to this quarterly report, and I see you again soon. Take care. Bye-bye.

Thank you. Bye-bye.

Welcome to Surgical Science Q4 Report 2025 Presentation. [Operator Instructions]

Now, I will hand over to the speakers, CEO, Tom Englund; and CFO, Anna Ahlberg. Please go ahead.

Welcome to this earnings call for Surgical Science for the fourth quarter of 2025. My name is Tom Englund, CEO. And with me today, I have our CFO, Anna Ahlberg. We will first present a summary of quarter 4 and our results, and then we will have the Q&A session.

We are pleased that like quarter 3, quarter 4 was a clear step in the right direction for Surgical Science. We had sales of SEK 269 million and grew by 15% adjusted for currency effects. And our license revenues almost exclusively from robotics companies were the highest ever reported at SEK 92 million, which was an increase of 21%. The adjusted EBIT amounted to SEK 46 million or 17%.

On December 8, last year, we presented our new financial targets of annual sales growth of 10% to 15% with profitability of more than 15%. And it's gratifying to see that we're now delivering fourth quarter results in line with these targets.

So if we move over to Educational Products. Performance in Educational Products was mixed with growth of 4%. North and South America showed strong growth of 43% with a good distribution between the different countries. And we are seeing a clear recovery now in this region compared with previous quarters with a higher customer activity and bigger sales pipelines. And we're also cautiously optimistic about the future. Asia, on the other hand, saw sales decline by 21%, driven by a continued challenging market situation in China with generally lower activity and demand.

One of our strategic goals is to increase the profitability in all segments outside of robotics. For our high-volume products, we are now beginning to see the impact of this strategic initiative. During quarter 4, our average sales prices increased by around 9% compared with quarter 4 2024 at fixed exchange rates without us experiencing any significant effect on volumes. The impact is most felt in direct sales and indirect channels usually show a delay, but we expect further positive price effects to be seen during this year.

Also during the quarter, our new PartnerPath distributor program was introduced on a broad scale, and this program aims to improve cooperation, sales and efficiency between us and our partners, which, among other things, will contribute to increased profitability.

Highlighting the Ultrasound segment, the Ultrasound segment experienced a very high level of activity, both within hospitals but also in industrial customers. Although ultrasound sales increased by 48% compared to quarter 4 '24, the segment did not meet our growth expectations as pro forma sales, including the acquisition of Intelligent Ultrasound declined. The main reason for this decline we consider to be structural challenges within our own direct sales force, something that we've already addressed during the past quarter.

For ultrasound, and you can see the picture of an ultrasound simulation product to the right, 3 new simulation modules were launched during quarter 4 and in January. One of these is targeted towards the diagnosis of endometriosis, which is a major health problem affecting 1 in 10 women. The module supports one of our focus areas, women's health, an area that is neglected in health care and where we have identified that our unique products and solution can create significant value and contribute to earlier diagnosis. This is one clear example of how Surgical Science fulfills our purpose of unlocking the full potential of every medical professional to improve health care outcomes and save lives.

During quarter 1, you can expect the first products, which are based on the joint technology platform from Surgical Science and Intelligent Ultrasound to be launched. We are not yet done with the integration and still have a lot of work to do to realize the full synergies from the acquisition of Intelligent Ultrasound.

Now moving over to Industry. The Robotics segment had a strong quarter. License revenue grew by 21% to SEK 92 million, which was an all-time high for the company. We saw strong license revenues from our largest customer, Intuitive as well as several other players in the U.S. and China. These other players are now beginning to install robots in significant numbers, which is in turn driving our license revenues.

The collaboration with our largest customer, Intuitive, continued during the quarter. And in January '26, Intuitive announced that its system had been used on more than 20 million patients to date. This, together with the 18% growth in procedures during the quarter is clear evidence of the strong demand and broad adoption of robotic surgery. Both Intuitive and Surgical Science agree on the critical role that simulation plays in training robotic surgeons. Digital offerings are becoming increasingly important for robotics companies and Surgical Science is playing a central role in the development of these offerings.

During the quarter, our customer, Johnson & Johnson, applied for a so-called De Novo classification in order to start marketing its Ottava robot for gastrointestinal procedures. Another customer, Medtronic, received FDA approval for the use of its Hugo robot in urological procedures in the U.S. And 2 days ago, Medtronic announced the first commercial surgery with Hugo robotic surgery system at the Cleveland Clinic in the U.S. There are now several hundred robot models that are either actively being sold or about to hit the market.

Surgical Science is developing simulation solutions for most of the 20 largest robotics companies, and we feel very confident in the value and uniqueness of our offering in robotic surgery. We have a big and growing pipeline of robotics projects, and we see opportunities for deeper integration into our customers' digital offerings and our ability to create value for many years to come, in line with the recently presented strategy.

The introduction of our latest simulator, RobotiX Express has been successful and sales and deliveries have started to pick up speed. 14 simulation exercises have been launched on the simulator so far, and the portfolio will be expanded on an ongoing basis.

At the International Meeting on Simulation in Healthcare, IMSH in San Antonio in January, we showcased our products that are making use of AI technologies for the first time ever. In these products, AI is helping to analyze the instrument handling of laparoscopic surgeons and then recommend steps or skills for the surgeons to practice and improve. At the same time, within our core offering of real-time simulation of surgical procedures, we today see major limitations in the power and scalability of AI to handle and calculate models that could generate the complex real-time surgical simulation that our customers require.

Therefore, Surgical Science's simulation technologies will continue to be the ultimate solution for high-quality real-time surgical simulation for the foreseeable future and Surgical Science's product experience will be improved significantly with the use of AI.

Moving over to Medical Device Simulation. During quarter 4, continued progress was also made in strengthening the company's position within the medical device industry with a focus on endovascular applications. At the end of the year, the pipeline of ongoing development projects was 15% larger than at the same point in 2024.

Our development revenue is project-based and may fluctuate between quarters and not fully reflect the underlying level of activity. At the end of '25, the proportion of repeat customers for development projects exceeded 70%, demonstrating that Surgical Science is making progress toward becoming an even more integrated and long-term partner to these customers. During the quarter, several important solutions were delivered to our customers, including the areas of peripheral artery disease and pulmonary thrombectomy.

At the same time, sales of simulators to medical device companies for product-specific training fell to SEK 21 million compared with a very strong comparative quarter of SEK 43 million.

So over to the strategy and the work going forward. Surgical Science's new strategy was presented at the Capital Markets Day in December last year. The aim is to continue growing the company profitably and establish a market-leading position within our 5 different market segments, all of which currently have low to very low penetration. We are now pursuing active internal efforts to deliver on the strategy and are seeing progress across all initiatives. And we feel very confident that this is the right strategy that will lead to increased shareholder value.

Surgical Science is currently a world leader in medical simulation with a very strong brand. Our position is unique with market-leading products, strong and effective direct and indirect sales channels and an extensive medical expertise that our customers rely on for their training and development. Our global reach and support, which ensure reliability and presence are critical factors for our customers.

2025 has been a challenging year in many ways, particularly in relation to the news surrounding our largest customer, Intuitive and the development of our share price. At the same time, Surgical Science has made great strides forward in many respects and is now, in many ways, a significantly stronger company than it was a year ago. Demand for our product is growing steadily, driven by a greater need for training, increased digitalization and a more complex health care. I'm optimistic about the future where our solutions will become a central part of health care training and our ability to generate profitable growth over time.

And with that, I would like to hand over to Anna to present the financials in more detail.

Thank you, Tom, and welcome, everyone. We start with sales. For the quarter then we had sales of SEK 269 million, up 7%. SEK 14 million came from Intelligent Ultrasound. And I should just mention, Intelligent Ultrasound is today renamed to Surgical Science UK, but we will still use IU when we talk about this acquired business throughout the presentation. And all IU sales are attributable to the Edu Products business area and the ultrasound product group.

In local currencies, sales were up 15%. And we have, after Q1 of last year, since then seen a significant negative effect from currencies on our overall sales. And also on our result, that I will come back to that later. We are just below 80% of revenues in U.S. dollars. We are mitigating this as best we can, except for raising prices that Tom also talked about. We also now quote more countries in euros instead of in U.S. dollars, for example. However, this will not mean a very large change in the ratio between different currencies since a lot of our revenues originate from the U.S.

Looking at the business areas, the split was 48% for Edu and 52% for Indu for the quarter, where then Edu was up 4%, but down 8% if we exclude IU. And as Tom mentioned, the Asia region declined 21% compared with the same quarter last year, and that was attributable to China having a weaker quarter, while countries such as Japan and the Philippines showed good sales.

Sales in Europe was weaker than last quarter, meaning Q3, but still remained strong and increased by 4%. France and Poland did particularly well in this quarter. And then the comparative figure also includes a major order to Romania. But mentioning Poland, Poland, this market has been really strong for us during these last quarters. It was at an all-time high for last year as a total, and it is also our largest market in Europe.

The North and South America region increased by 43% compared with the corresponding quarter last year. And this is attributable to the U.S., which is really nice to see since we have had some tougher quarters there. And this is even when excluding sales from Intelligent Ultrasound that is also -- that part of the business is our largest market. But even if we excluded it, the increase is attributable to the U.S.

Indu, up 10%. We had, as mentioned, all-time high license revenues of SEK 92 million. Development revenues were also very strong, while simulator sales within the business area was weaker. I will come back to this when we look at the revenue streams on the next slide. But for the full year, then this means that sales were SEK 992 million. This is an increase of 12% or 19% in local currencies. And in that number, IU is included with SEK 75 million. Their sales for the full year was SEK 80 million. They are in our books and consolidated as of February 18, 2025. And that meant that in SEK, sales were down approximately 30%. This is largely attributable to the U.K. and lower sales to NHS. We've talked about that before, and it's something that we are, of course, not at all satisfied with.

The U.K. market was also a market where we saw that sales should be coming from the full product range, also the other Surgical Science products as it then moved to being a direct market. However, and as Tom talked about, we do see a lot of positive signs for our ultrasound product group, where we are now merging our technologies, and we have really exciting products in the pipeline.

Edu for the full year 2025 was up 13% and Indu 11%, where license revenues were up 11% for the year. And looking then at the revenue streams, license revenues for the quarter were 34% of our total revenues compared to 30% last year. We saw really good sales, both from Intuitive, and that was then both from dV5 as well as from the older generations, as well as a larger batch revenue order from one of our other robotic companies, customers.

So as I think you're all aware of them, we did during the fourth quarter on November 25, received a cancellation from Intuitive on the memorandum of understanding that was signed in January. And this memorandum of understanding implied that all dV5s would be equipped with simulation from us. The cancellation meant that we now, as of January 1 this year, go back to the previous existing agreement between the companies and advanced simulation from us will only be offered to a minority of the customers.

For the older generations such as Xi, for example, the agreement has not been changed. It was always an optional feature. And our estimate for this was and still is that it will impact license revenues negatively by SEK 60 million to SEK 90 million for this year. However, as we have also emphasized and Tom talked about it, we still have significant revenues from Intuitive, and we continue to work very closely together on a road map for future simulation.

Moving on then to the next revenue stream, simulator sales that was as a whole down 12% compared to Q4 2024. This is due to the industry business area. This is more lumpy than for sales within Edu since it's usually tied to larger projects where development is also involved. And it sometimes also has to be seen together with development revenues. And as an example, the project that we have in Southeast Asian country, that is still in the development revenue phase. This will then during this year and towards the end of this project, move from being pure development revenues to pure simulator sales. So it is usually a mix of the 2 and the simulator sales also usually comes towards the end of the different projects.

Development revenues then up a lot also for this quarter and the project that I just mentioned, here, we had revenues of USD 0.7 million, and we estimate the same for this quarter, Q1. So this is, of course, a factor for the increase, but not at all entirely. We had very good development revenues also for other customers.

Our gross margin for the quarter was 66% versus 68% in Q4 2024. The fact that license revenue made up a higher share of total sales than in the corresponding period had a positive effect. However, currency effects have a large negative impact on the margin, approximately 2.3 percentage points. And unfortunately, the lower USD exchange rate has less impact on the cost of goods sold than on other cost items because our input goods are primarily purchased in other currencies than in dollars and also production and the associated wage costs, they are also not in U.S. dollars.

Then another factor impacting the gross margin negatively that we have seen throughout the year and commented on is that we do have lower gross margin on the IU products. But then also on the positive side, we see that our price increases are starting to have an effect. And that is, as mentioned, something we will continue to pursue.

Regarding OpEx, sales costs, they were 17% of sales for the quarter, 20% in the corresponding quarter. And here, we see that the reductions in the sales force following the acquisition of IU have now reached their full effect. And then for the quarter, we also had some lower costs of a more nonrecurring nature due to lower agency fees. This is attributable to sales in certain countries. So it depends on if we sell more or less to these countries. So that means that the cost level was maybe a bit on the low side because of this. But as I said, we have definitely lowered our level for the sales costs. And we have, during the year, also worked a lot with operational efficiency, and we have done reorganizations in line with this.

Administration costs, 9% of sales, the same as Q4 last year and R&D costs, 22% of sales. We activated slightly less, SEK 9 million instead of SEK 10 million. And then we had, in this quarter, restructuring costs on this line of approximately SEK 3 million. And this is related to the termination of development personnel in Seattle. During Q4, we restructured our U.S. operations, and this resulted in us closing our Seattle office.

We consolidated our operations to our office in Cleveland, and that is then our hub for all commercial activities and services and customer interaction. In Seattle, we had primarily development personnel. And so in connection with this restructuring, these employments were terminated. We still have a few other roles working remotely, and we have the lease for the Seattle office until October 2027.

So as I mentioned, the quarter then saw the full impact of the cost reductions we've done after the acquisition of Intelligent Ultrasound. We have done more than we said we would do. We said between GBP 1.5 million and GBP 2 million. On an annual basis, we have done GBP 2.5 million and that then meant approximately SEK 8 million in the fourth quarter. Still then because of the lower sales that we discussed and lower than expected, primarily in the U.S. -- in the U.K., sorry, the operating result for IU was a loss for the quarter of approximately SEK 5 million.

Other operating income and operating costs, that is then mainly costs for the company's option programs as well as the revaluation of operating assets and liabilities in foreign currencies. We had a negative impact on this line and on profits in the amount of approximately SEK 7 million during the quarter. And during Q4, we did an internal dividend from Israel. We are taking, as I mentioned also before, certain actions to reduce the effect of the weakening U.S. dollar. So we're both reducing intercompany items, and we also have as little cash as possible in USDs. So that's something we're working actively with.

Following this then, our operating profit for the fourth quarter was SEK 40 million, corresponding to a margin of 15%. And for the full year, the FX effects that I mentioned before on the line other, that was a negative SEK 38 million then for the year. And if we exclude these and we also recalculate our revenues and costs with last year's exchange rates and also then exclude acquisition and restructuring costs for the year, and that was in an amount of SEK 30 million, then we reached an EBIT of SEK 177 million for the year or 17%.

Organization-wise, we were 313 people at the end of the period, and that is 15 less than going out of Q3. The majority of the change then attributable to the closing of the Seattle office. With the IU acquisition, we added 48 people. And today, we have 11 less here.

Adjusted EBIT for the quarter, the result was SEK 46 million. And as mentioned, we had some restructuring costs due to the closure of the Seattle office. Excluding those, we had an adjusted EBIT margin of 18%, same as last year. For the full year, then the adjusted EBIT margin was 12% compared to 19% in 2024.

Finance net and taxes. no loan financing meant that net financial items that mainly consist of interest income on bank deposits and then also revaluation of some loan liabilities to subsidiaries, effect of IFRS is also impacting the finance net.

Then regarding taxes for the year, the expense here is consists of estimated tax on profit for the year and the change in deferred tax assets. This year's tax expense includes U.S. taxes attributable to the previous year and also taxes that are not linked to taxable income. And combined with the effect of the loss in Intelligent Ultrasound, this means that the effective tax rate increased. And then also for the year, our profit includes the acquisition costs of approximately SEK 23 million. And those are not tax deductible. That is then also impacting the rate.

And then cash flow. Cash flow from operating activities was SEK 73 million for the quarter compared to SEK 57 million for Q4 in 2024. Changes in working capital was really small, a small negative of SEK 3 million. Inventories were pretty much unchanged and accounts receivable decreased. Accrued income increased, and this is primarily due to higher license revenues, and they are then paid in the coming quarter, meaning now in Q1, and they have already been paid. So that basically means that the last day of the quarter is when this amount is at its highest.

Investing activities, we invested approximately SEK 3 million in the quarter in our ongoing construction of new production facilities in Tel Aviv. We -- they are expected to be commissioned in the second quarter of this year.

And then for financing activities, the larger amount underlying for lease liabilities is actually an adjustment in the quarter, so nothing to mention here for the year. And cash flow then was a positive of SEK 32 million for the quarter before FX adjustments. And we ended the year with SEK 616 million in our bank accounts.

And with that, I hand back to you, Tom.

Thank you, Anna. So to summarize, we believe that quarter 4 was a solid quarterly result and that Surgical Science is moving in the right direction. We see a continued rapid development of the company in a dynamic market where we can see positive signals both in our external work with our customers and in our internal efforts to create a stronger, more efficient and more profitable company. Our new strategy, which we also now execute on will make us a company with several more revenue streams and a company which addresses a significantly larger market than today.

And with that, I would like to open the floor for questions.

[Operator Instructions] The next question comes from Simon Larsson from Danske Bank.

My first question is related to the strong growth for licenses here in the quarter. Is it possible to quantify the number of robotic customers that bought licenses here in Q4 and how that has developed versus, for example, let's say, a year ago? I'm just trying to understand the underlying strength given the expected negative Intuitive effect we will see from Q1. So any color on the strength or sort of the breadth of the license growth here would be helpful.

Simon, Tom here. So we have said that we have 20 robotics companies as customers right now. And last quarter, it was around 5 of them who bought licenses from us.

Sorry, it was 20 active customers during Q4 or that's the total scope?

That's the total number of customers that we have, robotics companies that we have, significant robotics companies that we have and about 5 of them had revenue streams this last quarter.

And as you know, Simon, that can vary between the quarters since most customers with the batch sales, it can vary between the quarters. That's what we commented on also throughout last year.

Yes. Understood. Understood. And then I guess my second and final question for this time at least. I noticed on the balance sheet, accrued income item has increased quite a lot if we look at both year-over-year and quarter-over-quarter. Is there any sort of special customer -- specific customer group that's sort of driving this increase in accrued income? Or yes, any help to understand the dynamic behind that figure would be also helpful.

Yes. That is what I just mentioned before on the cash flow that is due to -- primarily due to increased license revenues and it is being paid in the quarter after and for Q4, it has been paid. So that's the number I referred to as being sort of always at its highest at the last day of the quarter. So there's no like increased risk or that we accrue more in a different way than we've done before or anything like that. So it's really positive in a way. And again, they have been paid and are always paid in the quarter after.

Okay. So it should come down sequentially already in Q1 then unless it's a very big quarter again for licenses.

It varies a lot with the license revenues. Yes.

The next question comes from Ulrik Trattner from DNB Carnegie.

A few questions on my side, and I will limit it to 2, of course. But can you talk about the sales growth momentum in licenses for Intuitive if we were to exclude the dV5, given that this is the last quarter where it will be included as sort of basic skill simulation. Essentially, are you seeing growth outside of the dV5? And for '26, if we were to exclude the effects that you already quantified, would you expect that Intuitive would grow in 2026?

In terms of in terms of attach rates, we see for the other products, not the dV5 that we have sort of the same attach rates that we've had before with the license sales. And so that means that the customers are actively using simulation within those products as well.

And then regarding this news that Intuitive will only supply Surgical Science simulation to a subset of the dV5s, that we believe then will have a negative effect of SEK 60 million to SEK 90 million during the entire 2026 compared to 2025. And we have very sort of low visibility on the attach rate for our simulation solutions in the dV5 offerings here for the coming year, both when it comes to the full year and also the quarterly distribution and the quarterly attach rates.

Sure. But I was kind of aiming for here if we were to completely exclude the dV5 and just look at sort of the legacy platforms from Intuitive, the SP, the Xi, et cetera, et cetera. And I know it's a little transparency in terms of attach rate. But would you assume that there would still be any type of growth for those products?

We will not go into more detail regarding the exact growth within the different product lines for our customer. And it also becomes very complex because, of course, Intuitive also has an exchange program where they exchange dV4s or [ dVXs ] to dV5 and so in certain geographies and in certain geographies, they do not. And that entire kind of dynamics is very difficult for us to get into. So we report this kind of overall general revenue impact that we think that it will have for 2026. And once again, we have limited visibility into exactly how this will play out.

Yes, I understand. And second question before getting back into the queue, and that would be on the cash flow side. And you reiterated that there will be some growth and some profit expected, not that sort of your targeted level. Is there anything that suggests that the cash flow for 2026 should not follow, i.e., are there sort of investments needed on your end? Or do you need to beef up working capital? Or are we to expect roughly sort of cash flow growing in the same extent as profits?

There are no structural changes when it comes to cash flow as it has looked before and going forward. No, we have no -- I mean, the investments we do is primarily in staff and in development personnel. I mentioned that we are investing now in a new production facility in Israel, but it's not -- I mean, it's not major amounts.

The next question comes from Christian Lee from Pareto Securities.

Would it be possible to quantify the larger package order received from one of your robotics customers in Q4? And excluding this package, would license revenues still have shown year-on-year growth in Q4?

Christian, we would not actually want to give that detail away when -- about these package orders, they become lumpy. I think that the main point here is that the robotics market is developing rapidly. And there's more and more players that are coming to market or are about -- or are already in the market. And many of these players are also customers to us. And that drives the demand for simulation and training on these robotic platforms in general. And that is kind of an accelerating trend that it's a long-term trend, and it's also kind of a revolution within health care right now.

So overall, that will drive the need for simulation from Surgical Science. And then it will be lumpy, both because of the packages, as you say, certain quarters will have revenues when customers buy a large amount of packages or license packages from us. And it will also be driven by how quickly these robotics players will get their market acceptance and our customers. So you should think of this as an inherently attractive market to be in, in the long term with some fluctuations quarter-to-quarter.

Okay. Understood. And my second question then is regarding the cancellation of the memorandum of understanding with Intuitive. Could you please elaborate on why the impact of this is having the magnitude of this -- magnitude if it relates solely to dV5? And could you also please elaborate on the key variables that determine whether the impact lands closer to SEK 60 million or SEK 90 million?

So the dV5 is obviously the flagship product of Intuitive, and they will continue to sell the other products, the dVX and Xi as well alongside the dV5. And the sales focus right now is, of course, on the dV5 very much for the markets where dV5 has been launched. And for the markets where dV5 has not been launched, Intuitive continues to sell dVX and Xi. So the drop here in revenue, the SEK 60 million to SEK 90 million has, of course, to do with the delta of being available in all the different dV5 units that are shipped versus just a subset of it.

When it comes to the factors that determine kind of where you land on the SEK 60 million or the SEK 90 million, it is very much related to the attach rate, which has been the same mechanics as with the previous models when we have sold simulation exercises in the X and Xi, we have spoken a lot about the attach rate. And it's then difficult for us to understand exactly how the attach rate will be on the dV5 given that there are so many factors at play here.

So in terms of the rate at which dV5 grows in the market and so on, I mean, you can look at the Intuitive reports, it's around 18% procedural growth, and they have -- they also state the numbers of dV5 that they ship and so on. But I think that, that's pretty stable. It also has to do with how quickly their organization can actually install and get these systems active. So the main factor from our perspective is the attach rate.

The next question comes from Ulrik Trattner from DNB Carnegie.

And then another focus area, medical simulation outside of robotics. You enjoyed a very strong growth in 2024. We have seen quite a big decline in 2025, and now you talk about 15% increase in projects end of the year versus sort of end of the year last year. So what is to be expected from sort of these numbers and then what to be expected in 2026? And given the fact that there is a big fluctuations between the years in terms of both revenue and projects, one would assume that these are short-cycle projects, and that would assume that it's short-cycle revenue as well. So you should have a little bit higher visibility, right?

Again. So regarding the growth here in the number of projects, the reason why we state this clearly in the report here about 15% is that it's a lead indicator for the simulator sales later on, right? So the development revenues, if we are successful with the development project, it will lead to simulator sales. And that simulator sales can either happen immediately where the customer buys a bulk orders of simulators can be spread out over several quarters or even several years. So the largest medical device order that we ever got, which we announced a few quarters back here, that will be a simulator sale that will go on for 3 to 4 years.

So it's a lot dependent on kind of the size of the customer, the importance that our -- that the simulation that we sell into the importance of the product for that customer and how quickly they in turn can both educate and sell -- educate their organization and then sell their product in the market. So I think that the way you should look at it is that the more projects that we have, especially with big customers like Medtronic and Johnson & Johnson and Gore and so on, the higher the potential simulator sales should be over time.

And it's, of course, very difficult then when you're a small P&L or a small revenue because then it gets lumpy, right, which is what we see here now. But then it's, of course, important to track the lead indicators, which is the number of returning customers and the growth in the number of development projects that you have. And I think that we can fairly say that now we have a quite healthy mix of the number of projects we have. We have a quite healthy mix towards larger players and larger potential projects and smaller players and quicker turnaround projects, both within development revenue and simulators.

Okay. That's great. Is it possible for you to quantify how many of your sort of medical device customers that are currently utilizing your simulation in sort of a commercial product rather in development?

Yes, it's -- if you look back all years, I mean, it's going to be -- for all products, it's going to be somewhere around 30 or more, I would assume.

And these, in general, should generate recurring revenue, right?

That's the idea. They are not all doing that today, but that's one part of the strategy and also one part of the profitability increase that we want to see in other parts than the license business and robotics. So that's something that we're working towards. You're absolutely right.

Sorry for being a stickler ballpark, out of the 30 or so that are on the market, how many of those are essentially today recurring products?

A minority, a low percentage.

And then just...

Again, why would that be?

Because usually they buy a solution today that consists of both hardware and software, the entire product packaging, right? They want to develop a medical device and they want to make a simulation for that. So they bring a part of the hardware and we build a simulator around and also develop the software, and that's sort of sold in a package. In the future, where we want to go is we want to create the hardware as a platform on which you can sell multiple software modules on. And we can also then have a more continuous value delivery where we can charge on these on a recurring revenue basis.

Right now, we have taken the first step where we sell more software onto the same platform, but it's still not on a recurring basis. It's on a perpetual basis. So that's then the next step in the strategy.

So just I understand it correctly, the [indiscernible] that has been launched on to the market, they have essentially fulfilled their demand out there?

Sorry...

In terms of installation -- in terms of devices, given that there are no sort of recurring revenue on these type of products of the [indiscernible] that has been launched, that implies that, I guess, they're used for training purposes, but that would assume that these products or sort of the number of devices placed have sort of fully supplied the market's demand and there is sort of...

Sorry, you can't really look at it like that. If you take Medtronic, which is one of our absolutely biggest customers and where we provide a simulator for one of their key critical products, they are going to have an increasing demand of simulation as the revenue for their product increases, right?

So there's going to be more sales and education staff that needs to be trained. It's also going to be more countries that are onboarded onto this product that also need to be educated. And that's -- it's almost like it's a product SKU for a specific company, but the company is so big, so it becomes like a marketing itself, right?

So you can think of it as a recurring business also to continue to sell the hardware and the solution for several years to come. It's not like they place one bulk order and then it's over with. That's the 4 years that I spoke about before. So...

And then my second question would be on Intelligent Ultrasound. And just also going back to if I understood one of your comments correctly there, Anna, because I do note that the losses that IU brings is significantly lower here in the fourth quarter, whereas sales volumes are down sequentially as well from Q3. And did you talk about lower agency fees related to IU affect this result...

Sorry if that was unclear. No, it's not related to IU. That was more a general comment that the sales costs can go up and down depending on what countries we sell to or what structure we have and how they are paid, if it's more a rebate or if it's sort of commission and that can affect the sales cost line, and that's what happened in this quarter. So no, it was not...

Yes. Understood. And then the natural follow-up question would be, it looks like at least the losses are declining and it's becoming more manageable. Do you have any more levers to pull? Or is this more a game of hoping for volumes to increase in NHS funding coming back?

In U.K. specifically, I mean?

I mean in IU specifically.

We have many more levers to pull. They are 3 of them, it's sales and sales efficiency and the way we sell and market the product. It's product related, how we develop and package the products. That's why I spoke about in the CEO message that in this quarter and in the coming quarters, we will start releasing the ultrasound simulation products that carry the combined technical base of both Intelligent Ultrasound and Surgical Science, and that can actually also drive profitability. And then, of course, we can work on production improvements and COGS improvements to drive profitability. So there are several different angles you can improve, and we are working on all of them.

Perfect. And just sort of to be fully clear here, obviously, you don't want to guide, and I guess IU will not be disclosed as sort of separate EBIT contribution for 2026. But it would be fair to assume that given everything that you've done in terms of cost savings and the 3 points that you alluded to here that losses for IU would be lower compared to 2025, right?

Yes, because they have gone down sort of sequentially as we have done these restructurings and benefiting from the cost savings there. So yes, since they have the full effect in Q4, that's correct.

Thank you. We have a question from the feed here from [ Austin Groves Family Office ]. Are you currently tracking with other major robotics players such as Medtronic or J&J to have similar penetration install rates as you do with Intuitive? In your discussions with non-Intuitive customers so far, are you competing with other customers for that business? What would you say is the main limiting factor holding that business back? And when, how will it be resolved? So are you currently tracking with other major robotics players such as Medtronic and J&J with penetration install rates?

It's depending on the customers' requirements and the customers' wishes about how this customer wants to package the simulation, either as a mandatory piece, digital part of the full robotic experience or as an accessory that we sell on. So it depends a little bit from customer to customer. Some customers will have 100% attach rate of our simulation into their digital ecosystem and some customers will have a lower attach rate. It also depends a little bit on the different product models that these robotic companies have.

We are -- we feel that we have a very high market share within robotic simulation for these robotic companies and that there is not that much other competition out there. And actually, frankly, it's not the competition holding us back. The main limiting factor holding us back is our capacity to create compelling simulations for our customers and tying this closely into the digital ecosystems of our customers. And the other limiting factor is how the robotic companies want to train the surgeons on the robotic consoles, meaning the integration of simulation into the training curriculum and training ecosystem of those robotic manufacturers and making sure that, that is smooth and easy from a surgeon's point of view. Those 2 things are holding us back.

And then a third structural thing that is holding us back that we have addressed with this RobotiX Express is still that the training usually takes place in the operating room on the console itself. And that's a constraining factor, meaning because that console is also used for clinical procedures. And that we're solving them with our RobotiX Express, which is a generic robotic training that you can use outside of the operating room. So I hope that answers your question, Austin.

And then we have one more written question in the feed. If there are any one-off effects from switching from subscription to license model with the dV5. It is fully and will continue to be a full subscription model?

So that is not the difference than the difference is, as Tom discussed before, the attach rate for the dV5. So that is the change, so to speak. And for the older generation, there is no change because that was also before offered as an option.

So we have no further questions in the feed, and we have a few minutes left. Do we have any other questions, Anna?

I don't think so. No.

Okay. But then thank you all for listening to this quarterly report, and I see you again soon. Take care. Bye-bye.

Thank you. Bye-bye.

Hello, everyone, and a warm welcome to Surgical Science's Capital Markets Day 2025. My name is Anna Ahlberg, and I am CFO for Surgical Science. We have a hybrid event here today, meaning that we have both participants on site as well as people listening in digitally, a warm welcome to you as well.

The event will also be filmed and put on our website after we have finished here today. It is almost 3 years ago that we had our first Capital Markets Day in Surgical Science February 22, 2023. And we look forward a lot to be able to present the company and our plans in more depth to you here today.

As we have communicated, we have for some time, worked on a new strategy for the company, and in order to capture all the possibilities that we see on the market. The strategy is also being reflected in new financial targets for the company, which we announced in the press release earlier this morning.

Our agenda today looks as follows. First, we have a shorter chapter that we call Surgical Science today, who we are, our purpose and mission and position today. And after that, we will go into our new strategy -- our new strategic plan.

Here, we will talk about the market, size, growth and our place on it. We will also talk about our 5 key market segments. We will do a deep dive into each one of them, look at priorities per segment and also talk about profitability per segment and see what we can do in order to improve that.

We will also touch upon acquisitions in this section. The strategy is reflected in our ambitions as well as on our new financial goals, which we as mentioned, sent out as a press release this morning and that we'll get back to you during this session.

We plan to have a break at 3:15 for 15 minutes. And after this, we have a chapter that we call expanding the market, where we will go more into our sales strategy.

After expanding the market, we will have some concluding remarks and then a question-and-answer session. So we ask you to please wait with any questions until then.

And during the question-and-answer session, we will, of course, take questions both from the audience present here today as well as from you who are listening in. We who are here from the management team today are our CEO, Tom Englund; our Chief Revenue Officer, responsible for sales and services, Niclas Mottus Olsson and myself. And we also have our Chairman and previous CEO, Gisli Hennermark, in the audience, as well as our Board member and previous Chairman, Roland Bengtsson.

Once again, a warm welcome. We hope you will find the day interesting and rewarding. And with that, I would like to hand over to our CEO, Tom Englund.

Thank you, Anna. Hi, everyone. My name is Tom Englund. I'm very happy to host this first Capital Markets Day for me. Both since it was a while since we had our last Capital Markets Day about 3 years ago, but also because we have just concluded the work with our new strategy and also presented our financial goals and it's an opportune moment for us, of course, to tell this story and speak more about what we plan ahead.

Before I start with our first session, Surgical Science today, I want to comment on the news that we sent out on November 25 regarding intuitive canceling the memorandum of understanding regarding simulation from Surgical Science on their dV5 robots. The news meant that simulation software from Surgical Science would only be optional and ship to a select customer set of the dV5 customers, the most important customers that they have -- the Intuitive have for dV5. And this recent development is, of course, disappointing, both because we have announced a memorandum of understanding earlier, but of course, also that sows doubts about our customer relationship with Intuitive.

At the same time, simulation for robotic surgery, as you will see here in a second, is more strategic than ever, and we work closer than ever with Intuitive than before on the road map ahead. And we intend to cover this entire strategic development in the robotics section of the presentation here further on and what plans we have going forward for the segment. But before we get there, I want to start with a bit of background into Surgical Science today and our business today.

That's Surgical Science. We have a very important purpose or why that unites us and engages us tremendously. This purpose is new for us with the revised strategy and has been altered from our previous mission statement with the main change that we have expanded the market to encompass all health care professionals. Our purpose is to unlock the full potential of every medical professional to improve health care outcomes and save patients' lives.

We believe that our business and target customers encompass all health care professionals globally. This is a customer group that ranges in the millions of professionals where we only have scratched the surface and served a couple of thousands of them today. And the impact of our products and services are better health care outcomes for patients ultimately saving patients' lives. This is an important purpose that the entire Surgical Science team stands behind, rallies behind and is engaged by.

And our vision, we believe in a world where medical professionals should train but also get certified in a simulated environment. We believe that this industry should focus and function in the same way as the aviation industry, where pilots receive their certification in a simulator and where they also need to be recertified every year according to certain procedures and assessment criteria.

Today, we are quite far away from this vision, but we feel an accelerated development towards it and our activities in the strategy, as you will see, aim to taking us further towards this future. The value proposition for simulation is very strong and is growing due to the trends in the health care market. With simulation, health care professionals can train in a safe and repeatable way to achieve the necessary skills before engaging in clinical procedures.

Simulation exercises can be changed in difficulty and different patient parameters can be adjusted to allow for a variety of scenarios for the surgeon. These exercises can also be based on the proficiency of the surgeons and create a so-called proficiency-based learning journey.

Simulation also allows for standardized and quantifiable results, removing subjective assessments that historically were used and the need for proctors or human supervisors. With the introduction of more and more digital tools and advanced instrumentation, simulation also becomes a powerful technology to train in the safe operation and enablement of these tools inside or outside of the body. And finally, simulation is a scalable and sustainable technology as opposed to the often used wet lab infrastructure where animals or even cadavers today are used.

There's a clear movement away from these types of training environments and they are more and more being questioned. Simulation is the sustainable alternative. Several studies have also shown the superiority of simulation when it comes to shortening training times versus traditional techniques as well as improving the procedural quality of surgeon.

At our website, you can look at 400 different validation studies, providing evidence of the validity and reliability of our simulation technology, which has helped pave the way for revolutionizing surgical education and training. The evidence is overwhelming. Simulation is a very powerful technology to teach psychomotor skills, to increase quality of surgical procedures and to make surgeons and health care professionals more efficient.

There is a range of different training tools for medical education today, spanning from the more simple and traditional tools such as basic learning and training tools to more advanced ones such as high fidelity simulation. High fidelity simulation, which is the area that surgical science focuses on strikes the right balance between introductory and advanced motoric training with a high level of realism and flexibility in the scenarios provided. Since it is a simulation, you can get repetitive training to build muscle memory to ensure that you attain the proper proficiency and procedural skills before operating clinically in the patient.

Often, these tools and technologies are also used in combination, where students can start out with the basic learning tools before moving on to, for example, simulation. As you can see to the right, cadaveric and animal training is still in use today, but as I said, is more and more being replaced by more sustainable methods such as high fidelity simulation, apart from the obvious ethical concerns with this type of training, the cost for to training is also very high and requires dedicated facilities such as this wet lab infrastructure.

Surgical Science today is the world -- clear world leader in high fidelity surgical simulation with a very talented team of around 320 people. Our installed base of around 10,000 simulators is bigger than any other company in our market. But at the same time, as you will see, it only represents a small fraction of the potential in the market. We have a broad and strong distributor network, which will increasingly become an asset for us as the company grows and as we pan out into more business segments.

One news since our last quarterly report is that we have consolidated our U.S. operations into our Cleveland office where we will create a so-called customer center. The aim is to provide an even better support for our U.S. customers from Cleveland. And therefore, as a consequence, we have decided to close our Seattle operations. However, our customer-facing capacity in the West Coast of the U.S. remains unchanged and will improve over time.

During the last years, Surgical Science has grown both organically and through acquisitions. The acquisitions of SenseGraphics, Mimic and Simbionix have all been very successful and with them, the company has been able to add revenue, products and customer relations in a very synergistic fashion.

The most recent acquisition that we did, Intelligent Ultrasound in January of this year, it was made on very favorable terms for Surgical Science. However, it has weighed on the result for the company during this year and is an important reason to the lower profitability this year. However, we are very satisfied with the acquired assets of Intelligent Ultrasound, primarily within the product portfolio which opens up new markets for us within ultrasound simulation.

We have worked internally a lot with capturing our unique competitive advantages, how we create customer value and the reasons to why our customers today choose to work with us. These insights are described in what we call the Surgical Science Advantage. Customers today choose Surgical Science for a high innovation pace and world-leading products. These products provide unmatched value for our customers and our customers stay with us in part due to the continuous high innovation pace and value delivery of our team.

We have an ambition to provide amazing customer experiences with a high degree of authenticity and clinical accuracy, and we want to make our customers' advocates for us in medical simulation. The fact that we have a broad product portfolio and large and global support structure means that we can become a turnkey partner for our customers as well for simulation infrastructure and operations. With services such as simulator fleet management solutions, we can ensure uptime and correct deployment of simulators across -- simulator assets across the world for our customers.

And the combination of these strengths will become even more important in a market where we will address a broader customer category and not only to the early adopters. The 4 strengths in combination is also what is necessary to enable our customers to move from operating single unit simulators to the deployment of larger fleets of simulators internally and for the market then to increase further in size.

One of our biggest prides internally is that we have some of the world's most prominent research institutions and hospitals as well as med device companies and robotic surgery companies as our customers. Our company was founded more than 25 years ago, and many of these companies have been with us for many, many years. This means that we have a higher ratio of returning customers, which is really, really great. And many of these customers, especially in the med device space, are also very big, meaning that there is a future opportunity for continued growth for each customers.

Having a customer roster like this also acts as a powerful reference as we progressively go deeper and deeper into the market. We would like to conclude this chapter with a video highlighting one of our customers Andrew Eyre, Medical Director at the STRATUS Center for Medical Simulation in Massachusetts, United States as he explains value of simulation and the Surgical Science Advantage.

The STRATUS Center for Medical Simulation is the simulation center for Brigham Women's Hospital in Boston, Massachusetts, we focus on a whole wide variety of skills and courses. We do a lot of nontechnical skills. We work a lot with high fidelity manikins, but we also do a lot of procedural training, especially with our Surgical colleagues.

The landscape of medical education has really changed over recent decades. It used to be acceptable to kind of learn on the patients.

But in order to do it safely, there are better ways to train and learn than we had many decades ago, simulation has become a critical part of that training algorithm. It lets people practice and train and learn from mistakes in ways that don't hurt patients, but also don't cause damage to themselves as providers.

We used to kind of expect and accept that some errors and some mistakes would happen. That's really not acceptable anymore. And simulation has made it possible for us to bring people up to a level of competence. And so using simulation people can learn exactly what the techniques are, learn exactly how to approach a procedure. And so it's really made the patient safety movement jump light years ahead.

Our center is one of the older centers in the United States. We've been doing simulation for about 20 years, then we really pride ourselves on finding the right tool and the right technologies for what we're trying to do. And while there are a lot of the companies out there are Surgical Science has proven itself to be really at the forefront, the technologies are user-friendly. They have a wide variety of products that really fit the types of skills and content that we're trying to teach, but also the service has been phenomenal.

When we have issues that come up if we have questions or concerns or if we're looking to change our simulators, that team has really been there and shown that their support has been there for a very long time and has built a real relationship with our center and staff.

This concludes our chapters -- first chapter Surgical Science today. And we will now move into our next chapter, strategic direction and value creation. In the strategic direction chapter, we will explain our financial goals, our view on the high level market and also our targeted segment at strategic high-level goals. And then in the value creation section, we will go deeper in each of the targeted segments, which in some ways can be seen as businesses within the business and explain our goals and priorities for each of these segments.

As you have seen from this morning's press release, we have issued new financial targets for Surgical Science. Revenue growth shall amount to 10% to 15% annually with an adjusted EBIT of at least 15%. And we estimate that these targets will be met in 2027. As a consequence of the previously communicated news about the company's customer intuitive, profitability and some sales growth is expected for 2026, although not in line with the targets.

Furthermore, we intend to grow deeper in our already existing market segments, which are minimally invasive surgery simulation, medical device simulation and surgical robotics simulation. And then on top, we have an ambition to scale ultrasound simulation into a business, which is significantly bigger than today, and we also have an ambition to grow our smallest segment emergency medical simulation from inception stage into a real business.

The goal of this new strategy is to create an even more stable foundation for the company with 5 distinct business segments and exposure to a significantly larger total market than before. We will leave these goals for now and add significantly more detail and plans and then come back to the financial goals in the end of the presentation.

Speaking about the market. Surgical Science operates in the health care education market. This is a huge market, which represents everything from various programs within university education, different educational platform, companies, platform technologies, educational technologies, learning management systems, health care training by pharma companies, et cetera, et cetera, et cetera.

Medical simulation, the red sliver there is a subset of the Education and Technologies & Content segment, which is the base color. Our internal estimates supported by various market reports shows medical simulation to be a very, very small part of this very large market, approximately 2%. This is an illustrative picture to show that medical simulation still is a very small part of the total health care ed market. The health care education market is set to grow at a fast pace in the coming years driven by a few mega trends such as aging populations, increasing complexity of care and workforce pressure. And medical simulation then is a very suitable technology and tool to address the consequences of these trends.

If we then dive deeper into the global medical simulation market, where Surgical Science operates, we estimate this market to be around SEK 25 billion in size. This market comprises of manikin-based simulation or patient simulators, screen and web-based simulations, where you learn through a computer app or interface, physical or task trainers or so-called anatomical models and finally, immersive and device integrated simulation, which is what we do.

We assess that the market addressable to Surgical Science and our products and services is around SEK 9 billion. Here, there is an opportunity for us both to take market share in already existing segments, so the red part in the left bar, where we sell products today, but we can also grow into other product categories, which are the other colors than the red in the graph.

As you know, Surgical Science has 2 overarching business areas, educational products, catering to training in hospitals, simulator centers and universities and industry OEM, where we cater primarily to medical device and surgical robotics companies. We assess that educational products constitutes the larger part of the addressable market today. Industry OEM constitute 1/5 to 1/3 of the market, but with a much faster growth than the educational market.

And then also as an asterisk here, I would like to say that it can be quite deceiving with market assumptions in a fairly small market with low penetration. In a sense, the market is created by the main players and market sizes and growth rates will be very dependent on the market success of the individual companies and their initiatives.

We will now move away from our market estimates and instead focus on the strategic direction of the company. We have taken a decision to actively target 5 distinct market segments in our new strategy. As you know, we have historically reported on the split educational products and industry OEM in our financial reporting. We believe that this traditional split, though, is too broad and somewhat too general view of our target segments, and we have, therefore, broken down the market further into 5 prioritized segments.

Minimally invasive surgery simulation is our biggest segment today, representing around 30% to 35% of our sales. The Ultrasound Simulation segment has become large due to the acquisition of Intelligent Ultrasound and now represents 15%, 20% of our sales. The customer base is somewhat similar to that in minimally invasive surgery simulation, but we are also addressing much larger customer subsegments here with different product categories.

Emergency Medical simulation is our smallest segment, very much in incubation mode. In this segment, we address customers in the emergency first responder and defense areas, and the large order that we announced earlier this year for government agency in the Southeast Asian country belonged in this segment.

Surgical Robotics simulation is our second largest segment. Here, we act as a supplier and OEM partner to the robotics companies, and our solutions provide safe and efficient onboarding and proficiency development of the surgeons on the robotic platforms of our customers.

And finally, we have an exciting field of medical device simulations where our customers are medical device companies who use simulation, both to provide safe and efficient onboarding for their customers, which is similar to the robotics companies, but these med device companies also use our solutions and simulators as a tool for their sales and marketing teams to demonstrate the features and benefits of their products in a safe and efficient manner.

Looking at our business models. These vary depending on segment. For MIS, Ultrasound and EMS simulation, so 1, 2 and 3, we develop and sell simulator hardware together with software modules. For Surgical Robotics, we engage with our customers in development projects and then are paid licenses for every robot that ships with our simulation. And for medical device simulation, we also engage first with our customer in development projects to build bespoke simulators for these companies. And then we sell them custom-developed simulators throughout these often very big organizations.

Service and support is always an integral integrated part of any offering. Our outspoken ambition, and this is very important, is to make each segment profitable on their own and for these segments to contribute to the overall profitability of the group. Today, as you can see, robotics simulation has the highest relative profitability due to the license business model. There is limited relative profitability improvement potential from where we stand in this segment today. But all the other segments contribute to a far lower degree of the -- to the overall profitability.

One big opportunity and major objective with this strategy is to increase the profitability in all the other parts of the business, aside from Surgical Robotics. There is a very big upside here and tangible improvement potential in these areas of the business.

In order to reach our financial goals and eventually double the size of the company as we have as an internal ambition, we have defined 6 strategic objectives that will service our long-term goals for the coming years.

Our first goal clearly states our ambition for continued growth by delivering world-leading products within our target segments. The second goal is to ensure that our customers become happy, satisfied users with our technology and simulation so that they can achieve their goals by proper onboarding, infrastructure, around the simulators and the necessary knowledge.

Thirdly, we have as an outspoken ambition to make simulation a standard practice within health care education, both as a training but very importantly, also as a certification tool. This will have a big impact on how deeply we can penetrate the market.

One goal is centered around the ability to bring up new businesses from inception. Here, we are working actively to reach product market fit now for the Emergency Medical Simulation segment. We foresee continued growth for our company. We want to ensure that we grow in a scalable and a financially efficient way so that we can both grow but also maintain a good profitability in line with our financial goals as we are doing so.

And finally, we would not be able to achieve anything without our exceptional team, our exceptional people in Surgical Science. This objective is both efficient -- it's both about how we are most efficient in our internal collaboration and processes as well as how we develop our organization as the company grows.

As I pointed out in the previous slide, one of our strategic objectives developed -- is to develop world-leading products with an ambition to create an amazing customer experience. And as an example of an amazing customer experience, we would like now to introduce to you the RobotiX Express, our latest addition to our product offering, which you can see here physically on the stage to the left of me.

RobotiX Express is a portable simulator that makes robotic surgery training more accessible, enabling health care professionals and trainees to build skills efficiently, affordably without taking time away from the operating room. The simulator is compact and lightweight, as you can see, has a small footprint, enabling training wherever your surgeons are without the need for a dedicated facility. Previously, robotic surgery training could only take place on the robotics console, which competed then for the time the console was used for clinical work.

[Presentation]

We have now described our addressable market, our financial and strategic goals on the highest level, and we've also presented our 5 prioritized market segments. Now in the value creation chapter, we will do a deep dive in each of these segments of the respective opportunities that we see in our plans for each segment in more detail.

As a backdrop for the presentation of our value creation plan, first, some data points. Surgical Science shows a 14% growth in SEK year-to-date quarter 3 versus previous years -- year. We've had a revenue CAGR of around 11% since 2021. Revenue growth in industry has been significantly stronger than that of educational products. Our industry customers, which predominantly are med device and surgical robotics companies have shown more resilience in their spending due to the -- during the economic downturn.

On the other hand, hospitals and SIM centers, our customers in educational products have seen a lot of their budgets for CapEx cut, which has affected our sales performance in this segment. Our profitability, which has been around 20% to 25% in the previous years has gone down during this year to around 10%. The main reasons for this negative development are a shift in revenue, stream mix away from license revenues towards more hardware. The acquisition of Intelligent Ultrasound, which was at the time of acquisition and unprofitable company, and still weighs on our results. And finally, unfavorable currency effects.

As I've already pointed out, we have historically divided our business into two business areas: educational products and industry OEM. And educational products comprise of around SEK 500 million or half of the company's revenues. But as I've already mentioned, we have then divided this segment further down into 3 subsegments: minimally invasive surgery, ultrasound simulation and emergency medical simulation. And we will now present them a bit in more detail each of them.

Our first segment, Minimally Invasive Surgery Simulation is our biggest segment and comprises around 35% of our total revenues today. It covers solutions for surgeons and physicians to train in many different kinds of procedures related to minimally invasive surgery. We have four main product categories in this segment, laparoscopy, endoscopy, endovascular and robotics. Endovascular and robotics are the fastest-growing segments -- product segments, whereas endoscopy remains flat and laparoscopy is decreasing in sales.

Minimally invasive surgery techniques have for many years now grown in importance and are many times favored from traditional open surgery. We also see an acceleration towards MIS away from open surgery, clearly. This development has in turn driven the need for simulation in order to teach MIS surgery in an efficient way. However, there is still a large skills gap and massive training need for surgeons and health care professionals in this field. This training need is growing as the shift towards MIS is increasing of an estimated 1.2 million to 1.5 million specialty surgeons globally today, only a minority still has received formal MIS training.

The value of the technology is also evident since more and more hospitals and residency programs increasingly require that their students go through simulation classes before performing MIS procedures clinically, which further drives simulation adoption within the segment.

Now moving over to Ultrasound Simulation. Our Ultrasound Simulation business has increased in importance with the acquisition of U.K.-based Intelligent Ultrasound and now constitutes around 20% of the company's revenues. Ultrasound and Ultrasound Simulation is an image-based technology, which is a different tech stack than what we use for, for example, minimally invasive surgery simulation.

The customer base includes both hospitals and SIM centers, but also much broader than that with, for example, nursing schools, sonography programs, at health schools, emergency departments and so on. And in the beginning of the year, we concluded the acquisition of Intelligent Ultrasound, and we have not been satisfied with the financial performance and sales growth of the ultrasound simulation product category in the past year, and as such, the acquisition has weighed heavily on the group profitability.

However, with the acquisition of Intelligent Ultrasound, we have become the clear world leader in ultrasound simulation in terms of sales and with a significantly broader product offering than before. And we can now use this combined product offering to sell to existing customers as well as addressing completely new segments and customer groups that we couldn't address before.

Point-of-care ultrasound or POCUS is an application where ultrasound is used at the bedside by physicians as an early diagnostic tool, and this area is growing rapidly. Hospitals and training programs are increasingly mandating POCUS competencies for residents and nurses. And we also see that training needs extend beyond traditional user groups, such as doctors to also now nurses, first responders, medical students. They all represent fast-growing cohorts for us.

Surgeons are also now increasingly expected to use ultrasound for new applications such as guidance procedures in, for example, nerve blocks, ablations, different types of biopsies and not just as a diagnostics tool anymore.

Finally, we see a strong and increased focus on women's health generally and there is a rising demand for early pregnancy assessment, in fertility, diagnostics and maternal fetal monitoring. All these factors are driving the demand for ultrasound training and ultrasound simulation tools. We have a high ambition here internally for this segment, and we believe that we can see considerable growth in the years to come. However, we are at the same time, realistic that there is further work to be done when it comes to both creating awareness for new target groups as well as some further development of our product offering to capture some of the new use cases and customer groups.

We will now look at the video, where a few of our key opinion leaders speak about the value and strong rise of point-of-care ultrasound and the importance of proper POCUS simulation.

[Presentation]

The next segment and the smallest one still in incubation mode is Emergency Medical Simulation. Here, we focus on development and sales of simulation training solutions to give defense medical professionals and first responders, the necessary skills and knowledge to manage medical emergency situations. We kickstarted this segment and the ambition in this area with a large order to this defense ministry in the Southeast Asian country, and our ambition is to continue to grow with sales towards customers, both in the defense sector, but also take the product and creating a version for civilian use as well. This version will be sold to first responders, emergency staff and other blue light personnel, which represents a different customer category than that, for example, MIS.

Our products here consist of mixed reality and virtual reality solutions where you manipulate manikins and tools physically with your hands while being in a virtual environment of your choice, for example, at the site of a car accident or in an emergency room of a hospital. These solutions provide a high level of immersiveness and realism, and they are very flexible in that they provide easily adaptable scenarios with quantifiable and immediate performance metrics and results. The opportunity within these segments, we consider to be very, very big for Surgical Science.

Within defense, the spending is rising rapidly, and EU member states have increased defense budgets by 17% reaching a record EUR 279 billion, and these are expected to grow by an additional EUR 80 billion per year by 2027, according to Goldman Sachs. And we are already active in this space. And as I said before, with a major deployment for Southeast Asian defense customer, and we also have additional defense and national readiness projects currently in the pipeline.

On the civilian side, only in the U.S., there are over 250,000 employed emergency medical technicians and paramedics and estimates suggest total over 1 million license or certified EMS personnel, underscoring the potential for training, recertification and upskilling. This creates a recurrent sustainable demand for high-quality training solutions, including initial refresher, advanced skills with scenario-based simulations.

One reason as to why we see particularly strong interest for our mixed and virtual reality solutions is that defense and emergency organizations increasingly require training formats to reduce the reliance on proctors and supervisors formats that offer repeatability and also that provides immersive scenario-driven environments, which are ideal conditions for VR-based digital simulation platforms.

We will now have a look at the video, where one of our products within emergency medical simulation emerge XVR, this product is designed to teach specific emergency procedures in a VR environment, which provides a high cognitive load for the trainee and a very realistic training scenario.

[Presentation]

Now I'll turn our attention over to our Industry segment. This segment comprises the other half of Surgical Science's revenues and it's been growing around 20% CAGR during the past years. Industry is made up out of two subsegments, robotic simulations and medical device simulation. And we will now describe the segments and the opportunity for us in more detail, starting with robotics simulation.

The Robotic Simulation segment constitutes our second largest segment with around 30% of total sales, with revenues from development projects and licenses. Depending a little bit on how you define it, the market ranges from anywhere from 100 to even 400 different companies. However, if you only regard soft tissue robotics and look at the major players, there are about 20 to 30 of these companies. Robotic surgery is at an inflection point with even stronger projected procedural growth than currently seen driven by the value advantage over open surgery and also the value advantage over general minimally invasive surgery and also by increased competition.

It's very clear that robots will be a key part of the infrastructure in the operating room and hospitals of the future. When all these robots come to market, there is a massive training need for surgeons to accelerate the product adoption and also, of course, for the new robotic companies to market their respective products. Proof of this need is that only around 100,000 out of the 1.2 million specialty surgeons or 1 in 10 has been trained on robotic surgery, whether it be on a da Vinci system or any other manufacturer.

Furthermore, the digital innovation of the robotics companies will pick up speed as the pace of hardware innovation decreases. And this is a natural progression that has happened in many different markets outside of robotics. Robotics companies see that digital innovation represents an opportunity for differentiation and continuous value delivery, enabling also the possibility for large recurring revenue streams.

Simulation has an important role to play in the learning journey for robotic surgeons, generic learning pathway, as you can see here on the slide, typically consists of several steps with more basic system introduction and early training, followed by advanced training and procedural support. Simulation is crucial for the surgeon in the early stages when learning the ropes of a new robotic systems and to build the necessary muscle memory.

Simulation is also then used later in the learning journey as the surgeon should learn specific procedural steps where quality and efficiency of these steps are paramount. Historically, these later parts of the training journey have also been carried out with cadavers or animals. And these methods -- once again, for sustainability reasons are now being replaced by simulation and anatomical models. Many robotic companies, if not all, run initiatives to reduce the dependence on cadavers or animals in their training.

Historically, the simulation has been used by robotic surgeons in the early phases on the previous slide of training with a focus on teaching the introductory motoric skills of the surgeon. This is what we, on the previous slide referred to as system introduction and qualification. However, the trend is now shifting towards more advanced simulation and also towards supporting surgeons much later in their training journey.

The surgical robot can be seen as a sensing unit, which collects large amounts of data from its instruments and from the seeing camera. Much in the same way as an autonomous vehicle collects a lot of data from its environment around it. This data can then be used to produce insights for the surgeons on his or her clinical efficiency and improvement area -- improvement areas. All major robotic manufacturers today have this type of capabilities within their digital offering. Intuitive calls it case insights, Medtronic calls it touch surgery.

These insights can then be used to recommend different areas for improvements and simulations that the surgeon should focus on. And the surgeon can then train on these areas in a simulated environment over and over again until the performance is improved and the surgeon can go back into the operating room again.

Simulations will also in the future be adapted to the proficiency of the surgeon with more difficulties or changing environments, specific patient characteristics, emergency situations that might occur, meaning that even very experienced surgeons will find training value from the simulation. This means that simulation will become part of a continuous learning journey throughout the career of the surgeons. And this is what we mean when we -- for example, in the press release that we sent out, say that in simulation will become an integrated part of the digital ecosystem of the robotic surgery companies.

We would now like to listen to our Chief R&D Officer, Ariel Ben Moshe as he explains the future developments in robotic simulation and the use of AI in our development efforts.

Advanced AI technologies is something that we are actively pursuing and developing in Surgical Science R&D to make personalized recommendations for surgical training reality. We are using huge data sets and training advanced models that will offer a personalized recommendation for the follow-up training after each simulation session. Imagine that those technologies could also be connected to performance from real surgeries in reals ORs and allow closure of the training loop between the real OR and the simulation.

Advanced AI technologies is something that we are constantly using in the R&D for Surgical Science. It helps us code better, be more efficient, design a huge variety of anatomies for our simulated cases and allow us to bring advanced user experiences like interactive voice recognition supporting multiple languages to our products.

I want to add that the use of AI in our development work will benefit not only robotic simulation, of course, but all the different product areas that we have. This picture represents a list of the most important robotic surgery customers globally, and all of them are customers to Surgical Science.

In terms of market share of the installed base, Intuitive still dominates the market with more than 10,000 systems installed. It has taken considerably longer for the challenges in the market to come out with the robots than was previously estimated. And this also has had an effect on the license revenues that we predicted for Surgical Science when we, in 2022 established our financial goals, we then thought that it would be significantly higher than they are today.

However, now many robotic companies are actively selling their products on the market. Among Surgical Science's customers here, it's only J&J, Johnson & Johnson with their Ottava platform that are not yet selling their robots in any part of the world. And focus now for these companies is, of course, to get the robots approved for more procedures and also to globalize their sales efforts.

The latest news that we have here is that Medtronic, one of the largest med device companies in the planet with a huge project to bring out the Hugo robot, last week got their FDA clearance for general sales in the U.S. for urologic surgical procedures. And this is a major step for the company, and it will drive Medtronic's robot volumes a lot.

It is important to note that Intuitive will keep a very high market share here of the installed base for the year to come both due to their already, of course, large installed base, but also due to their market success with existing products, most notably the latest released da Vinci 5.

And this concludes the robotics simulation chapter. Now I would like to move over to the Med Device Simulation Chapter segment. Our customers in this segment represent some of the largest med device customers in the world, and these companies use simulation, both as a means to train their customers in the safe operation and installation of their medical devices, but also as a sales and marketing tool at events and customer meetings to showcase the features and values of their products.

Simulation is mostly the only way that the med device companies have to demonstrate their equipment without placing it physically into the patient. And as such, simulation has become a very important training tool as well as a revenue-generating tool for these companies. There are several trends pointing towards the increased use here of our technology. Medical devices are becoming more complex, requiring simulation-based onboarding for safe adoption. These steeper learning curves for the more complex devices drive demand for faster and more efficient training.

Med device companies are also launching many more new and sophisticated products than before. And finally, there is this trend towards sustainability, moving away from animals and cadavers, similar in the robotic space.

Most of our companies here today are within the endovascular or cardiovascular field. And therefore, you can see our endovascular products such as ANGIO Flex Pro and ANGIO Mentor Suite are in the highest demand for this segment.

Our customers in the Med Device segment represents some of the most important med device companies globally, and we have long-standing relationships with many of them. Many of them have been our customers for years and use simulation as an integral tool in their marketing and educational efforts, and they devote significant internal resources to operating their simulation infrastructure.

The power of the customer base is also visible in our sales results towards this segment. Sales within medical device simulation has grown steadily during the past years, and you can see how the development revenues, which is the light blue bar, is a driver for increasing simulator sales, the dark blue bar in the years thereafter. One example of this is the large order, potentially the largest single deal in the company's history that we announced with our quarter 3 report just earlier year for one of the world's biggest med device companies.

This development project is currently underway, and it will be completely -- completed in 2026. After that, we will equip the customer with the simulators that we have developed for the customer. And we believe that, that revenue stream will go on for at least 4 years thereafter. The number of development projects that we do for our customers is also a very clear lead indicator for ensuing simulator sales, of course, which is a testament to our long-term relationship -- sorry.

As you can see, these projects have grown steadily in the past years, and we have a high degree of repeat customers, which is a testament to our long-term relationship and the customer success that we create and finally, to the importance that simulation has for these companies. We see a very, very strong potential to keep growing this segment, given that the trends in the market are so favorable for simulation and for Surgical Science.

The product launch pace in this field is very high. And only in the cardiovascular segment that this graph depicts, there are around 12 new device launches or devices that get FDA approval in the U.S. every year, so once every month. These devices come in many different varieties and are increasingly complex in their operation and installation, and they put much higher demand on the surgeons to receive proper training. At the same time, as you can see on the bars, there is a high rapid growth in the number of patients who actually receive these devices as well, depicting the sales of, in this case, cardiovascular devices.

Several large med device companies show really good growth numbers in this area. And this, in turn, means that the number of surgeons who have to be trained in installing them is also increasing. I want to end this deep dive with a movie of how one of our customers, California-based med device company PROCEPT is using simulation in their sales and marketing efforts.

You can see pictures from PROCEPT's sales convention, where the sales and account managers receive training with the surgical science simulators on how to do product demonstrations of the company's water ablative prostate surgery tool. And then PROCEPT's sales team, they use these simulators in their day-to-day interaction with customers. So each sales representative has one of our simulators, both to do like product demonstrations, but also to demonstrate important features that ultimately generate revenue for the company.

So this concludes our deep dive into our 5 different market segments. We have described the segments and our market opportunity in more detail. And now what we have done is that within our strategy, we have then defined a set of strategic priorities for each segment, which we are now executing on.

For MIS and Ultrasound, the priorities are to increase our profitability, to drive penetration, to drive market penetration and get deeper into the existing market segments. We also have the plan to launch amazing new products designed to provide more value for our customers and to capture a wider set of customers personas.

For emergency medical simulation, we intend for the segment to prove itself as a running business and to bring the product offering from the defense side to the civilian market. And for robotics and med device, we work to continue with our successful key account strategy to continue to provide our distinguished customers with superior value and for robotics simulation specifically, to close this loop to go on this learning journey and to make simulation an integrated part of the digital ecosystem in the continuous learning loop.

The financial goals that we today communicated are based on organic growth with no acquisitions factored in. However, we are continuously considering acquisition opportunities which can contribute with either customer base, product diversification, synergistic products, market access or strategic intent -- sorry, strategic talent. This is the same perspective and plan that we've had on inorganic growth also before with the older strategy, and it remains unchanged then with the new strategy.

I would like to end this chapter, strategic direction and value creation by speaking a bit about our profitability improvement efforts, since this is an important part of our strategy and the financial goals. And since we feel today that it's only the Robotics segment that has an acceptable profitability level. We are currently conducting a set of different activities to improve our gross margins.

We are doing various changes to our product portfolio to drive volume and to improve the product mix. We're also more actively working with price increases and price management with various activities to increase our average sales price or ASP. And then in parallel, we conduct another set of activities to reduce our cost of goods sold or the production cost of our products.

As we noted in our last quarterly report or in our latest quarterly report, we have started seeing positive effects already from this work, although the results are somewhat hidden due to the negative currency effects that we have at the same time. But we believe that this positive impact will increase even more in the quarters to come.

We are also working very actively to improve our organizational efficiency and ability to do more work and create more output with the same or fewer people. One of the initiatives that will have the biggest impact is to unite our software and hardware development around a set of platforms. On the hardware side, these platforms will enable us to make configuration of base designs, which will be important both to reduce our production costs, but also to be able to significantly increase our volumes.

On the software side, a consolidation of our software platforms will enable faster development times with more reuse of existing software assets. This, in turn, will also drive our ability to handle more simultaneous customer projects and faster response time for our customers. In parallel to this platform initiatives, we're also working across the organization with various projects to improve our organization and overall efficiency. These range from general digitization efforts aimed at making the entire team more efficient, so we can increase our agility and scale sales and number of customers while maintaining or only slightly increase our staffing.

And then finally, we have another set of activities, specifically aimed at improving our sales efficiency. And Niclas Olsson here, our Chief Revenue Officer, will explain more about this after the break.

To conclude, profitability improvements in the parts of the business outside of robotics is a key part of the strategy. And we have in this last part of the chapter given more detail on how these profitability improvements will be achieved.

And that concludes the strategic direction and value creation chapter. We are about 5 minutes ahead of schedule, but we will keep the agenda as it is and allow for a 20-minute break instead of a 15-minute break and meet back here then at 3:30 according to the agenda. So see you soon.

[Break]

Welcome back. We will now move on to the next item on the agenda, expanding the market, which will be presented by our Chief Revenue Officer, Niclas Olsson. We operate in an underpenetrated market with generally low awareness of medical simulation, meaning great potential for us as a company. A key to how much fast we can grow in the coming years is related to how we can develop and build strong and efficient sales channels. Therefore, we have a lot of focus on this in the strategy, and I welcome Niclas to present this in more detail.

Thank you very much. I'm a little bit of the kind of wildcard here because I am a typical sales guy. So I will try to curb my enthusiasm and show you the facts. I've been instructed not to move across this line or that line to stand still, so I will do my best here.

We are in a very interesting situation now where we have built, I would say, by far, the most superior sales and sales channel network in the industry. We have I would say, 5 regions from the Americas, we are separating America, separating U.S.A. from the America, given the kind of impact we have from the business in the U.S. solely. We have EMEA. We have U.K. as a direct market. We have APAC and China isolated on the same reason due to the impact and the success in China.

We are servicing the Americas and the U.S. market from our Cleveland office. And as Tom mentioned, we are building now a customer interaction center in Cleveland to be able to work closer to our customers. We are servicing EMEA from Gothenburg, and we have a sales office now in Cardiff as well in U.K. From Tel Aviv, we are servicing APAC and from Shenzhen, the China market. We're also expanding our services out of the Shenzhen office. And in the future, we will see how much more we can cover of the APAC market. We have a fantastic sales and service organization. We are recruiting actively from competitors. We are, by far, the most attractive employer in our industry. We have a lot of the people joining us from the customer side, especially then when it comes to industry business.

Today, we have approximately, I would say, plus 90 distributors scattered around the world. And in most markets, significant markets, we have, I would say, 2 to 3 partners to be able to balance and to be able to utilize our strategy in a better and more aggressive way.

What is really going to change for us when it comes to sales and service is technology. I hope that you had a chance to play with the RobotiX Express here. It is a game changer. And why is it a game changer? Well, first and foremost, because it's a customer-driven project originally. We had a discussion with Karolinska here in Stockholm. And they said that it's so difficult to get console time for our surgeons. We have to stay long hours to train on the system. Couldn't you build something that the surgeons can bring home, and they can practice when they put the kids to bed and where they've had their dinner. So that's how these projects started. And this has turned out to be how do you say in English, [indiscernible], product with very great huge interest from this product.

And when we are now combining ultraportable product with AI features. AI features such as learning management tools. We are building in insights. It means that the surgeon can learn what am I doing wrong? And when we are selling this product, we try to compare it with the golf simulator. If you have a simulator that only tells you that you're hitting a stroke, it goes as far. But you never get feedback. What can I do better? How can I become better? And what is really interesting with our products and our technology. If we look into it from a historical perspective, we have taken beginners to proficiency. But then what?

The market that we have addressed is approximately 160,000 beginners a year. That is what is being produced surgeons being produced a year. But by implementing learning tools and individual measurements and guidance and proctoring, as we say, in the health care space, we are expanding the market to, I would say, approximately 1.6 million professionals.

And what evidence do we have of that? Well, one of the first customers of this simulator is a U.S. surgeon that called us up and ordered one unseen. And the listing price for the simulator is approximately $65,000 in the U.S. And this is what people are willing to pay for a product that they can use as a personalized tool. As we say, how do we make the best ones, even better. And that's why we talk about our strategy is expanding the market significantly.

Looking then into sales and service, how will we accelerate the growth? How will we drive growth from where we are today? Well, as mentioned before, we have sales and channel development, our distributor network. We are running a lot of efficiency programs in sales, implementing new IT tools, AI supported tools when it comes to quote, when it comes to managing the business.

Even as important part here is to drive simulation as part of medical training. How do we make it, as Tom said before, an integrated part of the health care system. You can fly a plane without -- you can't fly a plane without recertification. But you can do surgery 20, 30 years after you went to med school without any recertification. We see a huge interest today from medical institutions, university, colleges, et cetera, provide us tools so we can certify our surgeons and our staff in general.

No other organization has the same product with reach as we have. So when we are launching a new product today, we can use our sales channels to quickly get them out on the market. And a little bit of a sunshine story here is the first Latin American customer of the RobotiX Express was a Peruan Hospital. And that was a big surprise to all of us that we could reach Peru in a few weeks after launching a new product.

So talking about penetration, we have done a quite interesting study on -- we are the biggest by far company in simulation, but how much have we penetrated the market. And I think these figures are pretty stunning that in the U.S. where we are doing really well, we estimate the number of prospects to approximately 6,000 customers in the U.S. And for anyone that into the details, we know that there's far more hospitals in the U.S. And if you add then ambulatory, surgical clinics, colleges, universities, the figure is far higher. But the way we calculate it is that these are the ones that are relevant to us and our business. And still, we only have I would say, a 10% penetration of the market of various reasons.

If we then go to a region like APAC, we have approximately 16,000 relevant prospects in APAC. India has approximately 50,000 hospitals. So we are being very conservative here. And when we are now launching products with lower price points for building scale, we know that where we have to focus a lot going forward are in the underpenetrated markets. So with the global perspective, we have so far, 5% of what we think should be the market for us, even with a conservative approach.

There is now many initiatives in the world when it comes to medical training. One of the reason is that the age curve, a lot of surgeons today are getting to the tail end of their career. And how do you educate people on new technology without technology, that is a bottleneck today. So for example, in Mexico, it's just been announced that there will -- they will be building approximately 1,000 SIM centers across Mexico. We don't think that we will sell 1,000 simulators, but it will, for sure. And we have already seen an uptick in Latin America now this year.

Coming then into the area of how do we manage, how do we work with all these distributors and all these channel partners. We are launching a concept that we call the PartnerPath. PartnerPath means that we have to provide different services. If you are a small channel partner to us in Colombia, you can't expect the same service level as you should do in China if you are a major channel partner in China.

So the PartnerPath concept means that we are setting up different service models depending on the potential, depending on the performance. If you fly first class with us or business class or economy depends on potential performance and how much you co-invest in this. To support the PartnerPath, we are now launching something that we are very excited about. It's the Partner Portal. We are digitalizing our health efforts here.

So partners can log on. They can use our tools, our way of coming up with the right configuration for products. They can do their quoting, they can place their orders, et cetera, on the partner portal. And this will give us a completely new way of scaling the business. Instead of educating everyone in various meetings, we do campaigns, digital campaigns.

And looking into then EDU, I would say that it has different challenges versus industry, education customers buy less frequent than industrial customers. Our channel partners need to have access to the right information to successfully close the deal. So with this tool, we can scale, we can work with electronic orders, we can provide faster support. We -- on our side, we have real-time visibility, what is really going on in the market, and we can direct resources, et cetera based on the activity on the market. And we can also make sure that what's being sold is compliant with our way of doing business.

And we are, of course, onboarding new distributors regularly when we are growing into new markets. Industry is potentially even more interesting. The challenge working with the industry is that we are making a big project with one of the top 3 companies in the United States. They spend sometimes millions of dollars of developing a technology with us. But how do they get awareness out to their daughter companies around the world that this technology is now available. And what is really interesting is that this program is endorsed by the biggest companies, help us to make it visible what we can buy from Surgical Science.

And every time I visit a new market or a market, I have the same feedback from the big med device companies that why don't -- why are we not informed what is available for us because the med device companies, they use our technology predominantly to train and educate their customers but also to sell their products, and in some cases, to do R&D work.

So if I work in an R&D Department of a large med tech, how can I be aware of what's being done in another side of my company. So we are working very closely with the big companies to set up what we call this kind of private rooms where we put all the available assets for them in one secured area where they can provide us data and we can provide them products.

When it comes to really driving credibility and adoption, working with medical affairs is very important to us to work with the leading institutions. We have ongoing projects with Cedars-Sinai Hospital in Los Angeles, with Cleveland Clinics in Cleveland, with Rick's Hospitality in Copenhagen. This is how we build the trust for that our technology represents the reality. And with this credibility, we can turn our products into commercial successful platforms. It's -- there are many, I wouldn't say, alternatives, but today with different digital tools, et cetera, we have all seen what's going on now with AI-generated content. It's still extremely important to have scientific-based product, and that's why we are working very close with the medical affairs.

There is a number of associations around the world, and we are working with, I would say, most of them. And the associations are the ones that set the standard for a specific discipline. And even here, working with an association, it strengthens our credibility, and their opinion leaders can, of course, then hopefully talk in our favor. One of the latest agreements we have is with ESGE, the European Society for Gynaecologic Endoscopy. They have training programs for robotic surgeons, and they are present in 156 countries.

So to be accreditated from this association, you have to do a skills test and you have to do it on a robotics mentor from Surgical Science. And you have to do it on our software. Why is this important? Because when we look at the number of new robotic entrants, there will be, in the future, more players on the market, which platform to use to certify a surgeon. And we see a trend now that more and more you turn into agnostic solutions like Surgical Science.

So here is where we see a great opportunity going forward that we have our own platforms that opens up for surgeons to practice in their homes, practice at the hospital without taking productive time out of the consoles in the hospitals.

So to sum it up, to wrap it up, I would say that we are in a very favorable place for scaling up our business with the new technology. We strongly believe that this AI-enabled technology where we go from being proficient to be the best you can be. It's a game changer for us and our industry that instead of treating everybody in this room as one mass, we will look into every individual and we can design specific programs for you, for you to become the best surgeon you can be. And we already today see evidence that this is generating a lot of interest from the market. And very excited about our potential.

So that was pretty much everything from me. Thank you.

Thank you, Niclas. So that we start to reach the end of our long presentation, and we have come to the concluding remarks. And as a short recap then, this strategy that we have presented today defines our 5 key market segments, Minimally Invasive Surgery Simulation, Ultrasound Simulation, Emergency Medical Simulation, Robotic Simulation and Medical Device Simulation. These 5 market segments represent a significantly bigger addressable market than previously in the previous plans.

The strategy also involves significant profitability improvements in all segments apart from robotic simulation. And we have, for each of our market segments defined a set of strategic priorities that aim at both creating customer market success, of course, but also contribute to our financial goals. Then we have started to work on projects to drive growth and improve our profitability, and these initiatives will have continued positive impact in the quarters and years to come.

And finally, Niclas has in his chapter, explained how we intend to expand the market through a set of specific activities aimed at increasing simulation penetration and driving simulation adoption.

We have today also updated our financial targets. The revenue growth of 10% to 15% will in the coming years come from both growth in existing as well as new segments. And the strategy implies that the company will target a significantly larger market and more revenue streams than previously. We aim for at least 15% adjusted EBIT. And as we start delivering according to this -- to these goals and to also the strategic plan, our ambition is to continuously increase our financial goals.

And we have today also announced that the company will start working on a transfer of listing from First North growth market to the Nasdaq main market in Stockholm, and we'll initiate this work during the beginning of next year. The main reason to why we are doing this is that we believe that we belong on the main market. We have been listed now at First North since 2017, and we feel that we live up to the governance standards of the main market and that we are ready as a company.

We also believe that the main market listing will open the Surgical Science share to many more investors. Certain investors have rules for -- that prevent them from investing companies outside of the main market, and this means that Surgical Science now will open up for them. And finally, being on the main market improves our capital management flexibility with more tools, such as, for example, repurchasing of our own shares.

And this, ladies and gentlemen, concludes our presentation for today. Thank you for listening. Thank you for listening to our story, how we will continue to build Surgical Science and create value for our customers and shareholders. Our team, I can tell you are extremely excited, very engaged and looking forward to the journey ahead.

And with that, we would like to open up for Q&A.

So we now move on to our question-and-answer session.

[Operator Instructions]

Ulrik?

I'm Ulrik Trattner from DNB Carnegie. I guess I'll address the million dollar question. The moats of your procedure specific simulation in sort of -- in the news flow of Intuitive choosing to in-source or sort of in-house develop basic scale simulation. How confident are you? And especially given the presentation that you have recently like here told us that is becoming a more integrated part, software becoming a more integrated part. What hinders Intuitive to develop preceding specific simulation in-house?

Thank you. Great question. So if you remember the slide that I showed with the different steps in the learning journey of the surgeon on the robotic simulation chapter, you have the early steps, which is more of the basic simulation leading up then to the later steps. So the further steps where you have the more advanced procedural type of simulation the ones that we provide with Surgical Science now towards Intuitive.

And we think that the basic simulation tools, they can be done in engines such as Unity or Unreal very similar to the type of computer graphics that computer game development that you have with the other companies. Whereas the more advanced procedural type of simulation requires real-time physics engines and considerably more advanced and complicated tech stack. And we think that there's -- given this other trend that we see on this continuous learning journey where the surgeon will practice more and more later in the more advanced type of scenarios, there is a very strong case to be made that procedure simulation will become a very important part of that entire digital offering.

And then, of course, your question is, okay, so if can -- if you can do it, can somebody else do it? And here, I would say that there is a couple of different answers. First is has taken the company many years to get to the position that we are today. And we have quite a talented team. So I think we have a strong head start. It's considerably more difficult to build this type of procedural simulation than the more basic skills.

And then thirdly, it might not necessarily be in the interest of the respective robotics companies to do this type of simulation by themselves because it goes back to what Niclas said about the generic trainers and the trainers -- the training driven by the societies rather than the robotics companies and creating credible certified standards that you can certify surgeons against. And that should be done then with neutral or neutral bodies rather than the manufacturers themselves.

So our plan here is, of course, to lean in and continue to have a very high innovation pace to make sure that we can be part of this continuous learning journey and be a very proactive supplier towards the robotic companies at the same time as we are working together with the medical associations to develop these standards and certification processes as well as innovating and developing our own tools such as the RobotiX Express that we have shown.

And just a follow-up, what is the reasonable penetration rate of procedure-specific simulation. Prior to the announcement, I think Intuitive went out and told that they had roughly 30% penetration of their installed base, but that also included basic training?

And that is difficult to tell because it depends not only on kind of the value of these different technologies, but also how Intuitive plans to sell it to which customer cohorts and so on the plan to sell it. So that's why we would not comment on a specific procedure or a specific attach rate, but rather, we have given a quite large range instead in the financial impact that this news has for our company.

And if I can just squeeze in one, also a follow-up. Did you get any sense or any heads up that Intuitive was developing a basic scale simulation for the dV5 given that you were part of the development of the dV5?

We work very closely with Intuitive. We have done so for years, and we have an intimate relationship with their development teams. We have never disclosed or had any discussions about this type of changes like from a commercial standpoint. But of course, we know what they're working on sort of, but now it was as a surprise for us, the change in the MoU and of course, not a big disappointment for us that hurts us in the short term. But as I think -- I hope that you also feel now that in the long term, it can actually have a lower impact given that we see that procedure simulation has such an important part to play in the digital ecosystem of these players.

So I can continue? Thanks, everyone else in the room. RobotiX Express. Obviously, I understand what you're planning to do here, taking it sort of into a generic segments, trying to open up sort of the mines and the scales of resident surgeons and the ones not getting the ability to sit down in a debenture for instance. But the software itself looks very similar to that of what Intuitive is offering built into their dV5 system now with the basic skills. So what customer segment are you planning to address here?

The customer segment that we're planning to address with the RobotiX Express is kind of the broad beginner base as Niclas had in his triangle there, the pyramid, as well as a certain set of the professionals. And what you need to do is you need to be able to offer the entire kind of offering -- simulation offering as to cover that entire learning pathway. And then, of course, in the beginning, when you're learning the ropes of robotic system and you get to understand how to move -- handle the clutch, for example, or how to handle the instruments. I guess there is a limited kind of differentiation that you can do in terms of the exercises. And it's about actually making the simulation fit the specific robotic modules.

So what we have not shown here, for example, is that this generic trainer can also be equipped with different types of grippers and different types of clutches to fit the different robotic models. So in that sense, it's going to be more of like a specific -- it can be more specific robotic experience for one specific manufacturer. So in that sense, it's flexible.

And then as you go -- as you go more into the procedural simulation, there is a wide variety of different types of procedure and different types of critical steps that you can simulate. And there, I think it will differ from manufactured to -- sorry, from robotic company to robotic company. And also, we will continuously develop that part. So there is a lot of room and opportunity for continuous value delivery when you get into the more advanced procedural content.

I played around it, and I get understanding that it doesn't include haptic feedback. And I guess, if you're a new surgeon trying to sort of apply robotic surgery, that haptic feedback is by far the most sort of important skill set in order to get started with robotic surgery. So how much of a problem is it that is lax haptic feedback?

So of course, we have done a lot of customer interviews before conceptualizing the product and one of the discussions is around the need for haptic feedback. And there's only a few or if like yes, very few robotic platforms that have haptic feedback today. Most of them have not. And you can also learn the introductions well without haptic feedback and it also has to do with striking this balance between accessibility, portability and, let's say, more realism or more proximity to the actual robotic simulator.

So in that case then, you would -- if you want to practice haptic feedback, then you can do that on a procedure simulation from Surgical Science on, for example, a console instead. So those are the type of balances. We always have to strike in product development as we develop our products.

Great. Simon Larsson from Danske Bank. I was just curious because you said that you wanted to improve the product mix, right, going forward. So what does this really entail? Is it more software content or more standardized hardware and bringing gross margins higher or -- what is...

It's a range of different -- a good question. It's a range of different activities, and we've sort of touched on them in different parts of the presentation. One of is this platform thinking both on the hardware and software side, right, that makes us have fewer product variants and a few base models that we base a lot of different products on. And then the same goes with the software, be having a few platforms that you can then build from with reusable software assets that will also help margins.

Then it can also be things like let's call it, product-related decisions. So saying, for example, that we are a company that should be in the high-volume production and not in the, let's call it, Swiss watch manufacturing where we only produce a few simulators a year of a specific product. And that means then reshaping the product portfolio to actually go for the higher volume products and for, of course, was the higher volume segments. So those are some of the initiatives that we're doing.

Perfect. And also, I guess then the new financial targets, 10% to 15% for the group. Is it fair to assume still then that we will have higher growth coming from the med device OEM side and a bit lower from the education? Or how do we end up at the 10% to 15% as we go forward?

I mean -- Anna, please, feel free, but the 10% to 15% is -- if you look at the momentum right now, the momentum is much stronger for industry than for educational products. And there is -- we have said that the educational products can also have a double-digit CAGR, but it has been lately hampered by the kind of budget situation and the budget shortages that we have in the hospitals.

So also, again, here, we have taken [indiscernible] principle, and I don't know, principle of caution and said that sort of the average is 10% to 15%. And we feel that it's important that we can start delivering on these targets, and then we can progressively increase them as we go. But you're right that we definitely foresee industry and med device and also robotics, once the new robots come up to have a significantly higher growth rate than the other.

Maybe a final one, if I can squeeze that in. I think you mentioned the big med device contract that you won in Q3 that it will sort of last for 4 years as it rolls out in terms of products. Is that a typical sort of time line or product life cycle for that type of product? Or...

Niclas, what do you say about that?

I mean, I would say that when it comes to med device simulation, first and foremost, we have the development phase and then we have the rollout phase. But then we also have that. We have that -- you can see you can hear me. We have 3 phases: develop, build, deliver and then we have maintenance and support. So it actually goes on. And this is a very sizeable project. So normally, we have designed and built maybe is a 2-year phase. This one is significantly longer. But we see a trend that more and more of these projects are coming due to the shift from using cadavers, I mean, human cadavers and animals. So there is a trend today in the industry to go away from that space into the digital space. Did I answer your question?

Yes. So maybe then to conclude a 4-year sort of life cycle or rollout. It's maybe a bit on the longer side than...

Given the size of the project, of course.

What will happen also is that some projects -- with some med device products, what happens is that they have some sort of midlife kicker. So after a few years, they come up with improvements, and then they come to us, and we make improvements in new development project. And then the hardware simulator can perhaps stay another couple of years, that extends the number of years from 4 perhaps to 5 or 6 and then it also gives us an opportunity to sell new software modules onto those simulated as well. And I think it's a fantastic situation that we're in, in this kind of med device companies because as the innovation pace is so high, as I showed, there is ample room for growth within each of them, right?

So it's more like our internal capacity sometimes to handle these projects that actually puts a limit for how many we can do.

I think maybe we had a question over here.

[indiscernible] Private Investor, a newcomer to company which is lucky, so I'm a happy investor. AI is the new animal in the room. What potentials or risks do you see? Is it -- would it be easy to use AI to do what you have done in a number of years here?

So as Ariel spoke about in its video, we use AI, both in our product development to actually build better products. And Niclas spoke a little bit about what type of features and functionality that you can get from AI, you can get more like insights from the actual output of the simulator so that the AI or the software can guide you better through your proficiency journey or your learning journey, right?

And then we also use AI, of course, as many other companies do, has an internal efficiency tool in all the work that we do, both in R&D but also in other parts. And then your question about okay perhaps AI then could it replace the procedure simulation that we're doing today with taking a data set or even taking clinical imagery and then making simulation out of that.

We still think that, that is quite far away, given that the foundation and models that needed to do so, they have to be very, very big. And there's a very big effort going into that. And you also then have to do a simulation that is not that like 60% or 70% good. It needs to be clinically accurate and valid, right? That's what we spoke about as one of the key parts of our Surgical Science advantage.

So in order to get to that level, we think that we're quite far away. But of course, as leader in this space, this is something that we are monitoring very, very closely and actually try to make advantage of and build on because we know this space better than many other companies or, yes, a lot of the ecosystem. So that's how we think around it. So we're actually trying to utilize this as much as we can and try to have a high innovation base.

Ulrik Trattner here again from DNB Carnegie. A question on educational products. My impression and based on the history of Surgical Science, the profitability of the educational segment is largely volume driven, it's volume dependent. And we had a discussion a year ago where you stated that you did see improvement in the procurement and tender activity of the industry. What's the state of the industry right now?

When it comes to your statement about that it's volume dependent, I'm not sure I agree actually with all due respect. I think that we have opportunities both to become more efficient in our production, but definitely also in our sourcing activities. And with the initiatives that we are doing on the platform side, there is lots of profitability improvements that we can do on our production cost in general for educational products. But then, of course, as you say, with increasing volumes, we can distribute the work over more units if we are efficient. So that will definitely help.

Then your second question, I think, it bodes more around the kind of the state of the business in general for educational products. And here, we, I think, see a mixed picture, I would say, certain markets are growing very strongly as we recorded 45% or 46% growth in EMEA last quarter, for example, and other markets such as our important U.S. market have more of a sluggish development. And here, what we are trying to do is, of course, to have specific plans for each and every one of these markets. But of course, we cannot expect the same kind of growth rates right now from where U.S. is today in the type of development that they have up to EMEA.

One of the things that have really worked well in -- even in economic difficulties, if I look at back at my experience is that if you launch new products, even if it's a sluggish budget situation or sluggish economy, there can be a very high new product pickup also in tough markets. So that's why we believe a lot in launching new products as a vehicle to drive sales, both in markets that are doing great and markets that are doing not so great.

And just what about forward integration? It looks like your acquisition of Intelligent Ultrasound was a bit of sort of portfolio acquisition, but also you're buying a market space in the U.K. Are there more markets that you'll open up to taking over from distributors? What's your take on it?

I think that on the industry side, we have a very clear key account direct strategy, and we will keep that because it's fewer customers, fewer accounts and they acquire quite a high professional and sort of relation with many different counterparts of Surgical Science interacting with the customer. We strongly believe in the distributor model for educational because it's a model that we can get a large coverage, as Niclas said, more than 90 distributors globally. And we can also use this model as we have 5 different market segments, so we can create separate subdivision -- subsegments of distributors depending on the different segments that we target because the customer groups are fairly different.

So it's definitely so that we want to keep on working with the distributor model. And we do think that with some of the efficiency methods or projects that we're running, we will actually become quite profitable in doing so as well.

[indiscernible]. So you mentioned you want to scale on software. Historically, you kept the physics engine separate after the acquisitions and kind of had the last meter integration in the software. Is that changing? Do you want to scale more? Can you just add some more detail on that?

So we have -- because of the acquisitions, as you point out, we've sort of come with different tech stacks on the software side and on the hardware side, of course, into the company. And then there has been some integration being done as you point out, but not kind of to the full extent possible. And I think one of the key parts of this plan now, as you could see on the OpEx slide with platform is to consolidate the number of physics engines even further.

And the main reason for that is to be able to handle more projects concurrently and use more of the software assets that we have and also that the entire team is trained on one specific engine so that all the different improvements and work goes into the same bucket, so to say, and benefits all of our customers. So it's definitely the ambition. This is a work that has been ongoing for the last, I would say, 9 to 12 months, and it's accelerated now with the new strategy to try to reduce the number of engines for sure. And that is also one of the reasons to why we'll be able to keep an even higher innovation pace here going forward.

And both that and kind of focus on 5 different areas. Is that like a reorg starting today or something you already initiated?

No, we are quite happy with the organization that we have right now. We haven't spoken about that specifically, but we have a functional organization with a head of each of the departments. So we have the finance department, the sales department, the R&D, the product marketing and so on. And for the company with the size that we are in around 300, 350 people as we are today, we feel that this is the adequate and most efficient organization.

And then of course, as you grow, especially on the Business segment side, these 5 segments that we have noted, you could, over time, see that these become more divisions or business areas within the company. But it's very, very critical that you do that at the right timing so that you don't introduce a lot of inefficiencies organizationally, but rather do it when the time is right. And we don't think that the time is right for now. So now we have a great organization. And I think that the main challenge for us now is to manage these cross-functional projects across these functions that we have. So that is something that we put a lot of emphasis on. And we think we are handling it pretty okay.

Viktor Westman from Redeye Capital. I was happy to see the decision to change the listing to the main market. And then I was equally disappointed when you told us that the reason was changing the listing just for the sake of it. I would have thought share buybacks would be no-brainer on today's valuation. So my question would be, what would it take for stock buybacks to be the top priority on the agenda?

Anna?

It was on the list. So it's definitely there and a tool, again, that we would like to have. And then of course, you need the AGM's approval, and it's a Board decision. But it's definitely a tool that we would like to have.

Should we take a question from the...

Yes. Let me see maybe a bit in line with your questions, Simon, but still in which market segment do you see the highest growth potential? And which segment do you expect to be the primary driver in achieving the overall growth target for the company?

I think that the smallest market segments are, of course, to us where we will have the highest growth rate just because of the simple mechanics of it, right? So emergency medical simulation and also ultrasound, we're starting from very low levels there.

But then I think that when it comes to the segments that will have the highest impact on kind of reaching our overall sales growth target will definitely be minimally invasive surgery simulation, medical device simulation, and robotic simulation because they are biggest ones and both robotics and med device we have this stronger growth rate. And I do think that if we are successful with the strategy of expanding the market, there is a very big upside also in minimally invasive surgery simulation, just because the fact that we still have a very low penetration in this segment, but I think the proof is in the pudding here, and it will take some time before we can see those kind of revenue growth accelerate to a different level than they are today. And then on top, we have some macroeconomic factors that are working -- that are working that we have to take into consideration.

Then we have a question. Should we expect a scenario in which hospitals decide to only go with one ROS provider, meaning robotic surgery provider, given the complexity of training of several different robot simulation.

I can start here, and perhaps you can chime in, Niclas. But what we see in the market is that there is a clear need for alternatives to the incumbent robotic surgery supplier, that hospital management and also surgeons welcome the newcomers that come in, not perhaps only because it provides more competition and a better price points. But we definitely think that the OR of the future will have several different robotics platforms two, perhaps, in some cases, even three different robotics suppliers. And the third one will be for specific applications that the two general robotics suppliers cannot handle. So we believe that, that is what's going to happen. I don't know, Niclas, do you want to comment further on that or...

Yes. I mean it's -- in the markets where there is public -- in the markets where it's public tendering, the hospitals can't choose. And we see that across Europe and in some other spaces as well. And when you look into the current alternative and the options that will come, it's going to be drive for having multiple platforms. And I just want to take the opportunity while standing up here to respond to the question about fidelity or haptic feedback, it's on the market actually a nonissue, because from the robotic platform suppliers, they don't want the training device to be so similar to the real thing, so to speak, so it causes a problem with muscle memory and that the trainees believe that they can fly the real plane, so to speak.

So we have a number of projects with the industry with this platform when we will configure it with, as Tom said, new grips, et cetera, but fidelity or haptic feedback has never been an issue.

Great.

Yes, Ulrik Trattner here again. We have a tonne of moving parts here, two operating segments, but a tonne of products. You talked about improved profitability for educational products coming from different angle sources. Wouldn't it make sense for you to get a bit more transparent and start sort of reporting a contribution margin per segment for us, enabling sort of to track the development going forward?

Yes, you're absolutely right that this is the first time we actually actively started speaking about the different profitability levels, relative profitability levels of our different segments. We haven't done that before, right, on one of the early slides that we had here in the presentation.

And we think that it's important right now to say these are the areas where we have profitability improvements. But then, of course, as these grow, I spoke about divisions and larger business units as this company grows, then of course, we will also start tracking this financially. But it doesn't make sense with a small P&L that we have today and the number of shared resources that we have across these segments to do it.

The most important thing that we should do for the segments right now is to make sure that we can have great and amazing products for each of the different segments. And we can make sure we have strong sales activities and marketing activities for each of the different segments. And then, of course, internally, yes, we will monitor this and make sure that we have this ambition, as I said -- we work towards this ambition to have each of the segments profitable and contributing to the profitability. And then at some point, I don't know, we will probably open up and divulge a bit more. But rest assured that this is an internal a very, very strong focus.

Definitely. We add more details as we go.

And to your point, I think also just -- we think that it's important to show the complexity or show the different parts of our business and go deeper and explain the different segments because it is actually 5 different businesses within the business, as you can understand instead of trying to hide it on a higher level because then it's possible for you to actually do understand the company, even if there's a lot of moving parts, you can do your own reasoning in a better way than not being transparent.

[indiscernible] going to the smallest business area then, Emergency Services. I guess just to get a feel for the ultimate risk scenario, right, is that you have this fantastic order which you complete and with success or not, but then there's nothing more because we don't know. We haven't seen it, but the upside is, of course, that every rescue worker in the world has to perform some kind of training like this. So what's -- what -- is it -- since you bring it up as a Business segment, is it even feasible that this would just fizzle out and become nothing? Or what's your feel?

It's a very good point. And you know as we said, that it's less than 5% of the company's turnover. So it represents a very, very small part, right? And as we were also very clear about, we started this when we got this order from the Southeast Asian company. And then we had this strategic goal as a strategic objective to bring up new businesses because we think that our technology is applicable and valuable in broader segments than just this one.

But to your point, it's a different discipline to bring up small businesses rather than to work on improving existing businesses, right? So you have to do it right. Both you have to set the expectations, right and we have been very clear that this is an incubation, and we need to take it to the next step.

And in terms of financial forecast, we have not kind of allotted a lot of revenue upside internally when, for example, devising these targets into that segment. And then it's about making sure that you have a dedicated team, making them work individually, making sure that you reach product market fit, making the customers super happy, but of course, at the same time, having a strategic perspective on this is the market, as you could see, it was very, very big, right? And it starts with one happy customer and one customer who is returning and comes back and perhaps even sells it to another department within the same country and so on. So that's how it starts.

So as I said, we have a huge pipeline or a big pipeline already with similar customers. So we feel pretty positive about this, but we are also very careful of not kind of making this into a too big thing. But we think it's important for you to understand that this is one of the areas that could have a very big potential here going forward, but also speaking transparently about the time it will take until this gets significant. Does that answer your question?

Yes. It warms my heart since I'm one of the few people who actually tried out the product before it was launched, and critically failed at doing so?

Yes. Yes. And if I just -- and in order for us to get into the bigger part of the pyramid and go deeper in the market, then you can't launch have mature products, then you have to really nail it in all the different aspects. It becomes more of like a consumer product, for example, this looks like an Xbox, it should behave like an Xbox when I open it. Same thing with this one. So we are definitely aware of the ambition level that we have to have internally to reach these markets.

Okay. Let's just take one more question from the people joining us online. How far along are your customers today adopting continuous learning workflows? Are you seeing tangible commercial demand for continuous learning modules today? Or is this primarily a forward-looking opportunity you are investing ahead of?

So our customers today are adopting continuous learning workflows in that sense that certain associations and societies are asking their surgeons to certify us on a specific procedure. In that case, you could say that they have to do this continuously. But it's still very few associations and societies that are doing it like that.

And in many cases, sort of our customers are hindered by the fact that what's available to them is what is available in the software modules that we provide to them. There's no kind of no infrastructure, no process around, that's why so important to work on the medical affairs to work even deeper with this association society to build this continuous learning workflows out and also to really improve on our LMS and our cloud solutions so we can provide that kind of learning journey ourselves, right? And that is something that is a big focus for us.

So you don't do this kind of one-type training, but rather revisit the simulator and revisit the LMS again and again and again.

And the utopia or the dream is, of course, when you merge these two together. And our learning journeys coincide with the mandated certification processes of the societies and associations. So you can actually learn and perhaps also get the accreditation and certification with the LMS of Surgical Science. So I think you're pointing to one of the most strategic topics that we have internally in the company, which we are pushing -- taking a lot of action on. Thank you.

Thank you. And with that, I think we will conclude our Capital Markets Day 2025. Thank you to the team behind the scenes, all of you who joined us here today and those of you who followed us online. We truly appreciate your commitment. Thank you, and goodbye.

Thank you.

Welcome to Surgical Science Q3 Report 2025 Presentation. [Operator Instructions] Now I will hand over to the speakers, CEO, Tom Englund; and CFO, Anna Ahlberg. Please go ahead.

Welcome to this earnings call for Surgical Science for Q3 2025. My name is Tom Englund, CEO. And with me today, I have our CFO, Anna Ahlberg.

Quarter 3 was a clear step in the right direction for Surgical Science. Total sales of SEK 264 million was an all-time high for the company, and this result was despite the negative impact on sales from currencies of 5 percentage points. The group grew by 14% compared to the same quarter last year and by 19% adjusted for currency effects. Adjusted EBIT amounted to SEK 33 million and was negatively impacted by restructuring costs of SEK 2 million. Adjusted for these costs, profitability was 13%. Since around 6 months back, we have initiated a set of activities to improve our profitability, primarily focused on our hardware and software simulator business, that is not the robotics or development business. And we're now happy to see that these activities are beginning to have an effect, and we expect further improvements in the quarters to come.

Speaking about educational products, this business unit stabilized during the quarter from the weak revenue of the previous quarter. We saw a growth of 8% compared to the same quarter in 2024 and 26% compared to the previous quarter. We saw good demand and customer activity in several regions during the quarter, with Europe showing the strongest growth at 46%. The entire ultrasound simulation segment, which became a strategic focus area in connection with the acquisition of Intelligent Ultrasound, also developed positively with high customer demand in all markets except for the U.K. In the U.K., we continue to see problems and sluggishness in the allocation of funds from the National Health Service, NHS, which is a key source of funding for our products, and this had a strong negative impact on sales in this market.

The Americas grew by 9%, which was lower than our expectations and as in previous quarters, due to extended sales cycles in a tougher budgetary climate for hospitals. Sales in the U.S. for comparable units, that is when we exclude Intelligent ultrasound, decreased. Our sales team in the U.S. report signs that the market is becoming more active, and this is also visible in the number of quotes we send out and how much leads we generate inbound and external events. Still, for quarter 3, sales in the U.S. was a disappointment.

During the quarter, we saw 2 prominent associations launch training programs that include certification based on simulators from surgical science. Together with the American Society for Gastrointestinal Endoscopy, ASGE, we launched a plan for training and certification in diagnostic Endoscopy or so-called EUS curriculum, which is based on our GI Mentor simulator.

For the first time ever, trainees can earn an ASGE certificate of completion directly through the simulator, marking a major step towards standardization of certification. And this is important since it elevates simulation from a training tool to a recognized certification platform. In addition, our robotics Mentor robotic surgery simulator now includes the GSA curriculum from the European Academy of Gynecology Surgery's recognized framework for training in robotic surgery. AGS and Surgical Science have together developed a robotic psychomotor skills curriculum and test where all exercises have been validated and benchmarked scientifically.

These 2 collaborations are important steps in our work to make simulation a widely used and recognized tool in both the training, but also the certification of physicians and health care personnel. The result for Surgical Science will be an increased overall demand for our products required for certification and also that our customers will find it easier to obtain budgetary approval for these products. Very exciting developments.

Switching over to industry OEM. Industry OEM performed well during the quarter with sales increasing by 20%. Development revenue increased by 131% compared with the same quarter in 2024. And the business area saw a strong inflow of new development projects, both in medical device simulation and robotics.

In the medical device simulation area, we secured what is potentially the largest single deal in the company's history in this segment during the quarter for one of the world's largest medical device companies. The contract spans over 4 years. The first phase will be a development project, including sales of a first batch of simulators for the customers' training and sales activities. And then further simulators will be ordered in the coming years. We initiated the project as well as recognized development revenue from the project during the quarter. Simulation is rapidly becoming a critical tool for these customers in their sales, marketing and customer trading activities.

In addition to this, we signed another large order with the same customer during the quarter, which proves our ability to sell multiple broad projects to the same customer and cements our preferred supplier status with the customer.

In the robotics product area, our RobotiX Express has been very well received in the market. RobotiX Express is a simulator for surgeons to become proficient in the robotic surgery. The demand for training robotic surgery is very, very strong and is expected to increase further in the coming years as hospitals increasingly switch to this type of minimally invasive surgery. Our ability to offer a solution to this training challenge faced both by hospitals as well as by the robotics companies will enable more surgeons to be trained more effectively in this field. Due to the length of the sales cycles, we expect significant revenue impact from RobotiX Express to start during quarter 1 of 2026.

License revenue for the third quarter amounted to SEK 66 million, which is a slight increase compared with the same period in the preceding year despite the stronger Swedish krona. Intuitive, Surgical Science's biggest customer reported 19% procedure growth for the da Vinci system in the third quarter and the installed base grew by 13%, primarily driven by the new da Vinci 5 platform. In the U.S., we continue to see a decline in simulation subscribers on older generation da Vinci systems due to them being replaced with a new platform. For the second quarter in a row, our revenue from new robotic manufacturers remained at a low level. However, at the beginning of the fourth quarter of 2025, we are once again seeing stronger sales to these other robotic manufacturers.

Overall, we note that several of our customers in robotic surgery are approaching commercial launches, which is expected to lead to an increase in license revenue in the coming quarters and years.

Now regarding profitability. Our gross margin amounted to 65%, which is down from the 69% last year. One of the reasons for the decline is the very strong simulator sales in relation to license revenue, which thus accounted for a lower share of total sales than in the corresponding period last year. Other reasons are currency effects and also the inclusion of Intelligent ultrasound into the financial with a different margin and loss-making at the time of acquisition and Surgical Science.

As I stated in the beginning, for several quarters now, we have been pursuing a number of initiatives to improve profitability within educational products. Our goal is to significantly improve profitability in this area, which will in turn impact group profitability very positively. We saw during the quarter that these initiatives started to have an effect despite the headwinds that we see from currency effects. And over the coming quarters and in 2026, I expect continued positive results, thanks to this plan.

So continuing to look at the numbers a bit more in detail for the quarter then we had sales of SEK 264 million. That was up 14% and SEK 19 million then came from Intelligent Ultrasound or IU. And all IU sales are attributable to the educational products business area. And when we look at product groups, it's within the ultrasound product group. In local currencies, as Tom mentioned, sales was up 19%. And starting from last quarter, we now see a negative effect from currencies on our overall sales with our approximately 80% of revenues in U.S. dollars. We are doing some things to try and mitigate this, except from raising prices. We also now quote more countries in euros instead of in U.S. dollars, for example.

Going out of Q2, we had an unusually high backlog or order stock for simulators, where the difference between ingoing and outgoing order stock was approximately SEK 30 million, and this was relatively evenly distributed between the 2 business areas. Most of these orders were shipped during the third quarter, and there is no significant difference between the opening and closing order book, excluding this item then after the third quarter.

Looking at the business areas, the split in revenues was 53% for educational products and 47% for industry OEM, where educational products was up 8%, however, down 6% if we exclude IU revenues. And as Tom said, U.K. sales here are weak and well below expectations. The Asia region declined by 5% compared with the same quarter last year. Sales in China, they were stronger than in both the first and second quarters, but in line with the comparison period, while sales declined in India, if we look at the comparison period. Sales in Europe then remained strong despite weak sales in the U.K. and increased by 46%, where we saw for the quarter, strong sales in countries such as the Czech Republic, Poland and Portugal. And then the North and South America region increased by 9% compared with the corresponding quarter last year. However, then sales decreased for comparable units, and this is mainly attributable to the U.S. In the quarter, Brazil was a country that delivered strong sales.

And yes, as we've said all through the year, then the U.S. market has been tough, a lot of leads and discussions, but the deals have taken longer to close. And for the quarter, we had costs for tariffs and customs duties, approximately SEK 2 million. These we have for this quarter been able to pass on to the customers. Industry OEM then up 20%. We saw all revenue streams increasing, and we also saw very high activity level. And as Tom mentioned, several good deals that potentially can be very large for us. For the first 9 months of the year then, this means that sales were SEK 724 million, an increase of 14% or 20% in local currencies. And IU is included with SEK 59 million, and that means that sales increased by 5% for comparable units. Educational Products up 17% or down 1% if we exclude IU. And again, Europe is the region that continues to show the strongest development and has done so throughout the year. Industry OEM, up 12% for the year-to-date, where license revenues are up 7%. And if we then move on to our revenue streams and continue with license revenues. They were then 25% of total revenues for the quarter compared to 28% last year.

As mentioned, many times before, and as Tom talked about, this is lumpy for new entrants. Many of our customers are still in early phase and they purchase their licenses in batches and then that can then cause a timing effect between when the license is purchased and when it's used. So, for the quarter, as also in Q2, this part of the license sales was unusually low. However, at the start of Q4, we have seen better sales to these players. And then when it comes to Intuitive, we had the same effect as in Q2 that we saw a decline when it comes to renewals of subscriptions facing low with the older generations. However, for this quarter, this was offset by higher revenues from DV5 if we compare to Q2.

Simulator sales as a whole was up 14% compared to Q3 2024, and this was the second strongest quarter ever for this revenue stream. Both areas increased, however, as we saw not if we exclude IU sales, but Indu was really strong. And also here, we've said before that this is more lumpy than for sales within Indu since it's usually tied to larger projects where development is also involved. And development revenues were up a lot also for this quarter, partly due to the project we have for a Ministry of Defense in the Southeast Asian country, but not at all entirely. Development revenues were good also for other customers. The Southeast Asian project then it's for 18 months and SEK 52 million, USD 0.9 million was recognized in Q3, and we estimate approximately the same amount for Q4 on this order. And we continue to see stable service revenues.

Moving on to costs and the EBIT margin for this quarter. As Tom mentioned, our gross margin was 65% versus 69% in Q3 last year. And we had several factors influencing the fact that the margin was lower. License revenues then being a lower share of total sales and also currency effects. They had a negative impact of approximately 1.5 percentage points where the lower U.S. dollar exchange rate has not had an impact on costs yet. Part of our COGS is, of course, also in U.S. dollars, but these inputs were purchased previously and then at a higher exchange rate. The proportion of direct sales also impacts the gross margin, and it was lower within educational products and then mainly -- that is mainly then the U.S. And we talked about Intelligent Ultrasound and that they have a lower gross margin on those products. On the positive side, we see that our price increases that we've done are starting to show effect.

Regarding OpEx, sales costs were 21% of sales. And for the quarter, that includes some restructuring costs, approximately SEK 1.5 million. That is then attributable to further reductions in the sales force in the U.S. as a consequence of the acquisition of IU. Admin costs were 8% of sales. And during the quarter, we completed the merge of former IU's U.S. subsidiary with one of Surgical Sciences U.S. subsidiaries, and that resulted in some slightly higher legal costs and tax consultancy fees. R&D costs, 21% of sales, where we activated SEK 7 million, a bit lower than the same period last year. And as you know, the costs on this line vary depending on how much development revenue there is for the quarter as salaries for the portion of development department staff who have worked on these projects that generate development revenue, they are transferred to cost of goods sold. And that means that more was transferred also in this quarter since development revenues were high.

Going back to IU. When we acquired IU, we said that we estimated rationalizations and cost savings to between GBP 1.5 million and GBP 2 million on an annual basis. And as of Q3 and on an annual basis, we have made cost savings of approximately GBP 2.5 million in relation to the cost structure that existed in the company at the time of the takeover. And that is then mainly in the form of reduced costs related to the company's previous stock market listing and staff reductions, mainly in respect of sales personnel. For the quarter, cost savings of approximately SEK 6 million are included. And as mentioned before, then restructuring costs of SEK 1.5 million related to further personnel reductions are also included. Still, because of lower sales than expected, primarily in the U.S. -- in the U.K., as discussed before for IU, the operating result for IU was a loss of SEK 11 million. So of course, when we look at the comparison numbers after that, we have made an acquisition in February of this year of IU within the ultrasound sector. That was a loss-making company, and we have made -- taken several measures then as discussed on the cost side, still making loss, but we believe a lot in the ultrasound sector, and we see a lot of positive signs from this sector. It was also an acquisition that we were able to make at 0.5x sales.

Other operating income and costs that mainly consists of costs for the company's option programs as well as the revaluation of operating assets and liabilities in foreign currencies. And for the quarter, we had a negative impact on results of SEK 7.2 million attributable to this revaluation. It was slightly negative also in the corresponding period in 2024. But as you might remember, it was -- there was a large negative due to this in Q2. So, following this, our operating profit for the third quarter, excluding the restructuring costs, was SEK 27 million or an operating margin of 11%. Organization-wise, we were 328 people going out of the quarter, 1% more than going out of Q2. With the IU acquisition, we added 48 people, and then we had a number of redundancies. We continue to employ above all software developers. However, we are also working intensely with efficiency improving projects and employ with caution and cost consciousness. And you can see the split between our sites down to the right.

Adjusted EBIT, EBIT exclusive of amortization and surplus values related to acquisitions. That was for the quarter 13% compared to 22% last year. And for the first 9 months, it was 10% compared to 20% last year. Finance net, as most of you know, we have no loan financing. So net financial items for the quarter was primarily interest income on bank deposits. It was also revaluation of internal loan liabilities to subsidiaries and impacted by IFRS 16. Then our tax expense for the quarter was SEK 10 million and net profit was SEK 20 million. That means that the effective tax rate was high. The largest reason for this is that there's a larger portion of loss-making entities within the group, including Intelligent Ultrasound this year, and that then increases the relative effect of tax costs. In addition to that, we had some items that were in relation to 2024 fiscal year in the U.S. and some minimum taxes that were also paid. And as mentioned then, net result for the quarter was SEK 20 million.

Looking at the cash flow, negative SEK 4 million from operating activities and from working capital negative of SEK 45 million. That is primarily because of higher accounts receivables, and that is primarily -- that is due to higher sales. We do not see any increased risk in our accounts receivable stock. Inventories decreased slightly. Cash flow from investing activities and financing activities is nothing to mention here for the quarter. And that meant that cash for the end of period September 30 ended at SEK 597 million.

Thank you, Anna. So, to summarize, we see continued rapid development of our company in a dynamic market where we can see positive signals, both in our external work with our customers and in our internal efforts to create a stronger, more efficient and profitable company. The strategic review that began before the summer is in its final stages. The strategy, which will lay the foundation for Surgical Sciences continued growth journey will be presented during our Capital Markets Day on December 8. If you're interested in attending in person or digitally, please sign up. Information on how you can do this can be found on our website in the Investors section.

Our new strategy seeks to continue growing the company, both in segments where Surgical Science has traditionally been strong, but also in new adjacent segments with low penetration of simulation. In these areas, we have identified that our technology and expertise can create significant customer value. And the results from these efforts will be a company with several more revenue streams and a company which addresses a significantly larger market than today. And we're looking forward to presenting our strategy in more detail within short. And with that, I would like to open the floor for questions.

[Operator Instructions] The next question comes from Simon Larsson from Danske Bank.

Filling in for Victor today. So, Tom, you mentioned several regulatory announcements were made during Q3 in the robotics space. Should we expect any impact from these approvals already here in Q4, thinking license sales specifically? I know you stated that sort of it will impact in the coming quarters and years, but specifically Q4? Or what's the timeline here?

Yes, we will see an impact from these other robotics customers also already in quarter 4 of this year, yes. This is also what we stated in the CEO letter in the quarterly report.

My second question then relates to cost. Given that you're tracking quite a bit below your adjusted EBIT margin target for next year and cost, of course, increased quite a bit also here in Q3. If you could give any more color on how you expect to sort of develop cost here from this point also in the context of you saying that you're implementing cost reduction initiatives. Should we expect cost maybe even to decline sequentially from this point? Or yes, how should we think about modeling cost ahead?

I mean, first of all, profitability is one of the key focus areas for us as a company right now. And we are -- as you said and as I said as well earlier, we are doing a lot of different activities to improve both the gross margin and ensure that we grow costs cautiously and look for efficiencies in our cost base. So, there is a lot of activities such as price increases that Anna mentioned, different types of policies in place to ensure that we can have as high revenue as possible in our educational products business unit as well as different COGS reduction activities that we're doing that will drive an improved gross margin on educational products.

And then when it comes to the acquisition that we did with Intelligent Ultrasound, as Anna mentioned, that has had a significant impact on the profitability. But as Anna also said, we believe a lot in the ultrasound simulation space, and we are a much, much stronger company now with an added product portfolio and added competence from Intelligent Ultrasound than we were before the acquisition. And we have added a loss-making company to the financials. So, of Surgical Science. And then we have taken out approximately GBP 2.5 million on an annualized basis. The idea is then to continue to grow the ultrasound business up with good gross margins and then that this will then generate profitability also both as a stand-alone and together with Surgical Science then, of course. So, it's a strong focus for us is the conclusion.

The next question comes from Ulrik Trattner from DNB Carnegie.

You provided some granularity on Intuitive sales in Q2 and its contribution for the quarter. And I was wondering if you could provide some more color on this in Q3 as well as we have seen that the DV5 is increasingly its portion of the instruments sold for Intuitive as well as higher replacement sales as they report it. So just trying to also get some type of sense on when the replacement is starting to become a positive rather than a hampering factor short-term.

First of all, I think that it's important when you look at the robotics market to have this long-term perspective. And to just first, I want to emphasize how inherently attractive this market is because we see such a strong uptake, generally speaking, for robotic surgery. And you can see it in the numbers on procedural growth, for example, communicated by Intuitive. And you can also see it in the strong news from other players that are launching or are planning to launch new robotic systems in the market. So, I think it's an inherently attractive market segment to be in. Having said so, it will take some time until you see kind of the full potential in this market as many of the new entrants have been delayed in their efforts to come out with products in the market, but it's coming slowly.

And then to your question about Intuitive and the DV5, it's great to see, first of all, that DV5 seems to be such a resounding success for Intuitive, right? And now also they have managed to get to a production level where they don't have -- where they can produce a lot of systems, which means that their volumes are ramping up, as you could see in the quarter 3 report of Intuitive. And that, of course, will drive the demand for training on these devices. And then as you rightly said, Ulrik, and what we also pointed out in the quarter 2 report, there is this kind of churn effect that we see now in the migration between old devices, DV4 or da Vinci X and Xi and the new da Vinci 5 platforms as some of the customers actually replace the systems when they are buying a new DV5. But it's not all customers who are replacing or trading in the systems. Some customers are also adding the DV5 to their fleet of robots and the DV4 will still stay. And of those customers, some of them will continue to use simulation on the old system and some will terminate it because they feel that the old system can be used clinically instead for as a training tool. So, you have many different kind of scenarios.

And then to your question, sorry for the lengthy background, to your question, how will this all play out in kind of the switch in the growth between DV5 and DV4 it's very difficult for us to actually judge that because of these different scenarios or different ways that this can play out. But we feel happy about the fact that DV5 is successful in the market, and we see this kind of strong growth in installed base in general. And you also might remember that DV4, the older generation systems will still also be sold in some markets alongside the DV5. So, there could also be a simulation subscription sales towards all those new units that are going in. So that's the dynamics that we have to deal with and that affect kind of the simulation sales and the subscription renewals as well for Surgical Science.

And just a follow-up on that with Medtronic now really sort of close on approaching FDA approval for urology indication and hernia indication as well as clinical progress on the gynecology indications. So, they look to have products on the market in the U.S. by early '26. Do you believe the lumpiness in your dynamic of reporting sales for licenses will gradually come down? Or will that increase? How should we view that?

Yes. I think it's a good question. And over time, it will gradually come down the lumpiness, of course, since more players are coming out with robots and those players are customers of ours buying licenses from ours. So yes. But I mean, you can't sort of look at that, I think, from within the next 1 or 2 quarters, but rather long-term, that's like within the next 1 to 2 years. So yes, then the lumpiness will come down.

And my second question would relate to Intelligent Ultrasound. And obviously, sort of sales has been below your expectation and thus sort of EBIT contribution has been well below. And like looking at Q3, I guess you didn't expect it to start the year to have a contribution of above sort of around SEK 11 million in the quarter. So just how should we look at this short-term, given the disruption in NHS, the disruption in the U.S. Is it going to be loss-making for the foreseeable future? And will you be able to meet your financial guidance low end on the margins if Intelligent Ultrasound continues to be loss-making?

Yes. As I said earlier, we believe a lot in Intelligent Ultrasound, and we believe a lot in the ultrasound simulation market. And we feel super happy about the contribution of Intelligent Ultrasound's product portfolio into the product portfolio of Surgical Science. And we can already now see in the number of quotes and the sales in many regions of the world that it's going in the right direction. Then NHS is a problem for our sales in the U.K., both for Intelligent Ultrasound, but also generally for Surgical Science. And the budgetary problems that we have in the U.K. have led to dismal sales for both Surgical Science and Intelligent Ultrasound. So that's kind of one of the most important contributing factors to why sales is low.

We actually see quite decent uptick in sales in other parts of the world of the ultrasound portfolio. So, we have a good product portfolio, and it will become even better going forward, which means that we can work towards becoming the world leader in ultrasound simulation. Then what we have done is, as I mentioned, we have taken out costs to make sure that we can minimize the losses as much as possible. But we definitely want to sell ourselves out of this situation. We think that we have a lot of assets, both in the team in Intelligent Ultrasound as well as in the products. So that's the plan. It's going slower, primarily driven by NHS, but we feel that we are acting as swiftly and as forcefully as we can with both costs and revenue. Do you want to add anything, Anna?

No.

I hope that answers your question.

Yes, just a clarification. Would you still be able to expect to reach your lower end margin guidance for '26 if Intelligent Ultrasound remains loss-making?

I don't want to comment on that right now. Sorry. Anna, do you want to.

No. I mean, as you said, Tom, we are working and we are also -- remember, when we do our acquisitions, we do full integration. So pretty quickly, it becomes sort of -- it's an overall question and of course, increasing sales, as you said, Tom, both for Intelligent Ultrasound products and also for the rest of the product line. And then we are taking many different measures to improve profitability. This is one of them, definitely, but there are others as well.

I think that you can think about it that we are creating a much stronger company through the acquisition of Intelligent Ultrasound. And long-term, this will be a very, very good addition to the Surgical Science family. And despite the disappointing short-term sales results, we have not changed our positive view on the long-term attractiveness of the ultrasound simulation market and the positive contribution of Intelligent Ultrasound into Surgical Science.

The next question comes from Christian Lee from Pareto Securities.

I have 2 questions, please. I'm curious about what you describe as potentially the largest single deal in the company's history within medical device simulation. Could you please elaborate on the potential deal size here?

No, we can't unfortunately. Hi, Christian. No, unfortunately, we can't elaborate due to commitments towards the customer, we can't elaborate on the deal size here. We have to let it be at potentially the largest deal. But what I can say, which is similar to what I've said previous quarters is that within the industry and within the medical device companies now, we see simulation rapidly becoming a critical tool for med device companies to present and showcase their products towards prospective customers as well as existing customers and users because it allows them to do these presentations or trainings in a safe and very efficient manner.

And that's why we see kind of this increasing customer activity generally and the inflow of development projects within industry in the quarter. And this was a trend that went on just now not in this quarter only, but also in the previous quarters, right? And I think this big order now is a testament to this that we are becoming more of like a preferred supplier with some of these med device companies when it comes to providing simulation in a broad array of product areas for them. These are big companies, and they have divisions, and these divisions have subdivisions, and we are now actively going deeper and deeper into these companies.

And as they are also big companies, this means that when they adopt a specific technology like simulation for their sales force and marketing efforts, for example, that means that the demand of a simulator can be quite high. And that's hence then the big deal size that this becomes. So, it's a development revenue and it's an initial purchase of some simulators. And then gradually, as this product rolls out globally, we see a very big potential for high volumes towards these customers and for this specific product that we're speaking about.

And my second question, simulator sales declined by almost 9% year-on-year if we adjust for the delayed deliveries pushed from the second quarter. Beyond the negative currency effects, was this mainly due to challenging comparables? And how should we think about the outlook given that you will face even tougher comparables in the fourth quarter?

Yes. I mean, yes, as you know, we don't give guidance. But we -- as Tom said also, we see a lot of activity. We see that some markets, takes longer time. We see it's been tough in the U.K. We talked about the U.S., which is -- and we see some very strong markets like the Europe -- like in Europe, several markets there. So, we continue -- and it's also a bit different, of course, between the different product lines there where we see -- we talked about ultrasound. We have other product lines that we see a lot of activity within. So yes, we don't -- we see a lot of activities and still a lot of positives for the IU product business area, even though some markets are a bit tougher.

I mean we feel that the toughness primarily comes from these shortages of budgets, budget unavailability and primarily in the U.S., as we have said, right? There is a lot of things that you can do anyway to try and maximize sales given the tougher market climate. You can work on different sales activities; you can work on different marketing activities and so on. And we are doing all of those. And rest assured that we are having an extremely high pace out there in the market. And we have a good feeling and there's a very high amount of quotes going out and customer dialogues that we see.

The other thing that you can do, of course, is to launch new products because new products usually can get budgets faster in a challenging market climate. So that's also why we're quite excited about the volume ramp-up now of RobotiX Express because RobotiX Express is such a product that can be added on top of the simulator sales that we already see. And that can then, of course, be a revenue contributor. And that product is targeted both towards educational products as well as for industry OEM. So, we have high hopes for this product line once we start selling it more actively here.

And I just mentioned very briefly, but price increases is, of course, something that we continue to work with, and we see that, that has a positive effect and that we can actually take out higher prices and also has to do with how we package our products and hardware in relation to software, et cetera. So, these are all things where we work very actively. When we talk about RobotiX -- sorry, Christian, did you have another question? I don't remember if you already had 2.

I had 2 already. So, I'll get back to the queue.

Okay. Thanks, because we also had a written question around RobotiX Express now that we're talking about it.

Yes. What is the average length of the sales cycle for the RobotiX Express product line? And what is the company doing to shorten it, so potential customers can better understand the benefits of integrating said products to improve the medical staff's curriculums?

Great question. So, the sales cycle length depends a little bit on the type of customer that we engage with. We have both educational product customers or hospitals and SIM centers that are buying the RobotiX Express, and then we have the med device companies. So, when we look at the hospitals and SIM centers, you could say that in general, the sales -- average sales cycle for a hospital and SIM center is anything between 6 months to 2 years, depending on region and depending on type of institution. And this is applicable both for our existing simulators as well as for robotics simulators. What we are doing with RobotiX Express, though, is that we're marketing it at a more attractive price point because we believe that this is a product that could be sold in volume because we see a very high demand for training for surgical robotics surgeons. And this means within a more attractive price point, that means also that sales cycle could come down and be shorter than what they are for other simulators.

And then when it comes to industry OEM customers, for example, robotic surgery companies that are buying the RobotiX Express platform and putting their software, simulation software onto it and then using it in their training efforts, there, of course, the sales cycle will be longer because they would need to perhaps do some hardware modifications as well as software development for the platform. So that could be perhaps around a year or something like that from the initial discussion until we engage with the customer. But of course, once we have come over that first hurdle, then it will be more like of a transactional sale since they have standardized on our platform, so to say.

Let's see. Did we have any more questions signed up. I don't think so. We have some written questions. I think we talked about the license -- there are some questions on the license revenue side. I think we talked about those. There is one also, when we will transition to a fully subscription-based revenue model, when that will be completed? And that is the case for 2025, that it is fully subscription-based for Intuitive. I'm not sure if the question is related to that or to all. But for Intuitive, yes, it is.

Regarding pricing, there's a question DV5 over DV4, we cannot -- never comment on prices for our customers. What we've said is that prices have been set for a period with the MOU with Intuitive, where the prices will go down over time.

Yes. And then we have a question regarding forward visibility we don't comment on.

We will again also invite you all to the Capital Markets Day on December 8. So, I hope to see you all there. But I think with that --

If there's no more questions.

With that, I think we --

Yes. But thank you all for your attendance and for the interest in our company. And yes, have a great day. Bye-bye.

Thank you. Bye-bye.