Sectra's six-month interim report 2024/2025: Order bookings at a record high

Rhea-AI Summary

Sectra reported record-breaking order bookings in Q2 2024/2025, surpassing SEK 4 billion. The company's contracted order bookings rose 739.6% to SEK 4,223.1 million, including a major SEK 3 billion contract for Sectra One Cloud in Québec, Canada. However, Q2 net sales decreased 4.3% to SEK 753.5 million, and operating profit declined 38% to SEK 109.6 million.

The company's transformation to service sales and cloud deliveries is progressing, with cloud recurring revenue increasing 29.9% to SEK 121.3 million. The Secure Communications segment showed strong growth, and a post-quarter settlement regarding patented technology will positively impact Q3 results. Despite short-term revenue impacts from the business model transition, management remains optimistic about long-term growth in healthcare and data security markets.

Positive

• Record-breaking order bookings of SEK 4,223.1 million, up 739.6%
• Cloud recurring revenue increased 29.9% to SEK 121.3 million
• Total recurring revenue grew 12.8% to SEK 484.7 million
• Secure Communications segment showing fastest growth
• Significant patent settlement to boost Q3 results

Negative

• Net sales decreased 4.3% to SEK 753.5 million
• Operating profit declined 38% to SEK 109.6 million
• Operating margin dropped to 14.5% from 22.4%
• Profit for the period decreased to SEK 87.8 million from SEK 150.6 million

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LINKÖPING, Sweden, Dec. 12, 2024 /PRNewswire/ -- International medical imaging IT and cybersecurity company Sectra's (STO: SECT B) order bookings for the second quarter surpassed SEK 4 billion, exceeding the previous highest level for a single quarter. In other respects, the outcome was dampened by currency effects as well as the ongoing transformation of the business model. However, the transition to service sales and cloud deliveries is nonetheless progressing rapidly and will eventually benefit Sectra and its customers.

Second quarter: August–October in figures

• Contracted order bookings rose 739.6% to SEK 4,223.1 million (503.0), of which SEK 4,017.0 million (460.1) pertained to guaranteed order bookings. Of the guaranteed order bookings, 3% were recognized during the quarter and a further 1–11% are deemed to pertain to revenue within 12 months after the end of the quarter.
• Net sales decreased 4.3% to SEK 753.5 million (787.7). Based on unadjusted exchange rates, the decrease was 2.1%. Recurring revenue accounted for SEK 484.7 million (429.6) of net sales, up 12.8%. Based on unadjusted exchange rates, the increase was 15.2%. Cloud recurring revenue (CRR) increased 29.9% to SEK 121.3 million (93.4). 
• Operating profit declined 38.0% to SEK 109.6 million (176.7), corresponding to an operating margin of 14.5% (22.4). Based on unadjusted exchange rates, operating profit decreased 35.2%. 
• Profit for the period amounted to SEK 87.8 million (150.6). 
• Cash flow from operations amounted to SEK 176.1 million (57.7). 
• Sectra transferred SEK 211.9 million (211.9) to shareholders through the 2024 share redemption program.

Six-month period: May–October 2024 in figures

• Contracted order bookings rose 39.3% to SEK 4,838.1 million (3,472.9), of which SEK 4,560.1 million (804.5) pertained to guaranteed order bookings.
• Net sales increased 7.7% to SEK 1,477.3 million (1,371.5). Based on unadjusted exchange rates, the increase was 9.3%. Recurring revenue accounted for SEK 967.0 million (826.7) of net sales, up 17.0%. Based on unadjusted exchange rates, the increase was 18.5%. Cloud recurring revenue (CRR) increased 35.8% to SEK 244.1 million (179.8). 
• Operating profit declined 14.9% to SEK 209.4 million (246.0), corresponding to an operating margin of 14.2% (17.9). Based on unadjusted exchange rates, operating profit decreased 12.4%. 
• Profit for the period amounted to SEK 168.2 million (212.1). 
• Cash flow from operations amounted to SEK 119.4 million (-40.6). 

Comments from Torbjörn Kronander, President and CEO of Sectra AB
"The first half of the year can be summarized as follows: record-breaking order bookings, a continued positive trend for secure communications and significant progress in the transition to selling medical diagnostic imaging as a service. More extensive contracts with customers lead to large variations in order bookings, sales and earnings between quarters. The new business model, which generates higher revenue in the long term but lower revenue in the short term, had a clear impact on the quarter and will continue to have such an effect until the major customer contracts with recurring revenue that are currently in the start-up phase properly get under way. 

"During the most recent quarter, we booked our largest order ever, worth over SEK 3 billion. It concerns a multiyear contract for Sectra One Cloud for public healthcare in Québec, Canada. The order is a clear example of how extensive certain procurements have become within healthcare, with future IT systems expected to cover larger regions for longer periods. This pattern of larger contracts becomes even clearer when you also consider the trend toward consolidating all medical imaging IT into a single solution.

"Our security customers are investing heavily in strengthening information security and making society more resistant to cyberthreats. This means that Secure Communications is currently our fastest-growing operating area. After the end of the quarter, we also reached a settlement with a US company regarding our patented technology for secure communications. This is a non-recurring business transaction that will have a significant positive effect in the third quarter (see page 5 for more information).

"Healthcare and data security are both areas that are expected to grow for a long time to come, and that are relatively unaffected by the economic climate. With loyal customers combined with a strong brand in growing areas, we have every reason to remain optimistic about the future."

Read the attached interim report for further CEO comments and information.

Presentation of the interim report 
Torbjörn Kronander, President and CEO of Sectra AB, and Jessica Holmquist, CFO of Sectra AB, will present the financial report and answer questions. The presentation will be held in English.

Time: December 12, 2024 at 10:00 a.m. CET
Follow live or listen to the recording afterward: https://investor.sectra.com/Q2report2425

This information constitutes information that Sectra AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out below, at 8:15 a.m. (CET) on December 12, 2024.

For further information, please contact:
Dr. Torbjörn Kronander, President and CEO, Sectra AB, +46 (0) 705 23 52 27

This information was brought to you by Cision http://news.cision.com

https://news.cision.com/sectra/r/sectra-s-six-month-interim-report-2024-2025--order-bookings-at-a-record-high,c4080189

The following files are available for download:

https://mb.cision.com/Main/1263/4080189/3166714.pdf	Sectra’s six month report 2024/2025
https://news.cision.com/sectra/i/sectra-s-secure-mobile-vpn,c3361802	Sectra's secure mobile VPN
https://news.cision.com/sectra/i/torbjorn-kronander--president-and-ceo-of-sectra-ab,c3361801	Torbjörn Kronander, President and CEO of Sectra AB
https://news.cision.com/sectra/i/sectra-s-cloud-service,c3361803	Sectra's cloud service

 

View original content:https://www.prnewswire.com/news-releases/sectras-six-month-interim-report-20242025-order-bookings-at-a-record-high-302329895.html

SOURCE Sectra

FAQ

What was Sectra's largest order in Q2 2024/2025?

Sectra secured its largest order ever, a SEK 3 billion contract for Sectra One Cloud with public healthcare in Québec, Canada.

How much did Sectra's cloud recurring revenue grow in Q2 2024/2025?

Cloud recurring revenue (CRR) increased by 29.9% to SEK 121.3 million compared to the previous year.

What caused the decline in Sectra's Q2 2024/2025 operating profit?

The decline was primarily due to currency effects and the ongoing transformation of the business model to service sales and cloud deliveries.

How much did Sectra return to shareholders in 2024?

Sectra transferred SEK 211.9 million to shareholders through the 2024 share redemption program.

What is the expected impact of the US patent settlement on Sectra's financials?

The patent settlement is expected to have a significant positive effect on Sectra's financial results in the third quarter of 2024/2025.