Sectra Delivers Outstanding Results, Continues Customer Satisfaction

Sectra's Exceptional Nine-Month Interim Report

LINKÖPING, Sweden - International medical imaging IT and cybersecurity company Sectra (STO: SECT B) has achieved a notable feat by ranking number one globally for customer satisfaction in radiology. This achievement extends to digital pathology, marking the twelfth consecutive year that Sectra leads the industry. The company’s dedication to its clientele is the cornerstone of its enduring success across various sectors.

The recent performance metrics paint a promising picture. Despite a transition towards service sales, the Group has observed a positive trend in operating profit. Furthermore, a recent settlement regarding patented secure communication technology positively impacted financial outcomes.

Financial Highlights for the Third Quarter

This quarter, which spans from November to January, showed mixed results:

• Contracted order bookings decreased by 47.8%, totaling SEK 967.6 million, with guaranteed bookings representing SEK 710.8 million. Notably, 19% of these bookings were recognized as revenue within the quarter.
• Net sales rose by 22.2% to SEK 848.4 million, boosted by a recurring revenue of SEK 525.8 million, indicating a growth of 21.0%.
• Operating profit reached SEK 314.7 million, benefiting from a patent settlement, with underlying operations showing an impressive growth of 175.1% to SEK 204.7 million.
• Profit for the period increased significantly to SEK 264.0 million, showcasing a robust improvement in financial health.
• Cash flow from operations demonstrated strength, amounting to SEK 580.7 million.

Performance Over the Nine-Month Period

Examining the overall performance from May to January, the results highlight:

• Contracted order bookings grew by 9.0% to SEK 5,805.7 million, predominantly from guaranteed order bookings.
• Net sales improved by 12.6% to SEK 2,325.7 million, with recurring revenue accounting for SEK 1,492.8 million.
• Operating profit amounted to SEK 524.1 million, reflecting both strategic decisions and positive market conditions.
• Net profit for this period was SEK 432.2 million, further underlining Sectra’s market resilience.
• Cash flow from operations was notably robust at SEK 700.0 million.

Insights from the President and CEO

Torbjörn Kronander, President and CEO of Sectra AB, shared his thoughts on the results: "Customer satisfaction extends beyond just the products and services we offer; it embodies our entire corporate culture. Effective IT support is crucial for our customers' significant contributions to patients and society, and this understanding fuels our attention to customer needs. Our leading position in customer satisfaction, even amid our major transition to cloud-based services, underscores the strength of our culture. This commitment to our clients contributes to sustainable long-term performance and growth."

Kronander also cautioned about the impact of large projects on margins in the near term as the company adapts its business model to include more cloud-based services. He expressed confidence that this transition will yield substantial benefits in the long run, not only for Sectra but also for clients relying on their services.

Growth in North America

Adding to the positive outlook, Sectra has made significant strides in North America, particularly in the U.S. and Canada. The company reports that nearly all new sales in these regions are now cloud-based SaaS services. This strategic shift, while initially dampening growth, is expected to produce favorable effects in the coming years.

Future Presentation and Further Information

As part of ongoing transparency and engagement with stakeholders, Torbjörn Kronander and CFO Jessica Holmquist will present detailed insights from the interim report. The session will be conducted in English, and participants can tune in to understand the future trajectory of Sectra as it navigates through industry changes and client needs.

The leadership team encourages all interested parties to access the interim report for additional insights and analyses of the financial outcomes and business dynamics.

Frequently Asked Questions

1. What are the main highlights of Sectra's latest financial report?

Sectra has reported significant growth in net sales, profit increases, and maintains a leadership position in customer satisfaction, especially in radiology and digital pathology.

2. How has customer satisfaction influenced Sectra's growth?

Customer satisfaction is central to Sectra's operational ethos, informing their corporate culture and driving long-term success amidst market transitions.

3. What financial challenges is Sectra currently facing?

The transition to cloud services presents short-term challenges, particularly impacting operating margins and sales; however, positive long-term prospects are anticipated.

4. In which markets has Sectra seen the most growth?

Sectra has identified North America as a key region for growth, where they have effectively transitioned to cloud-based service offerings.

5. How can stakeholders stay informed about Sectra's progress?

Stakeholders can follow Sectra's presentations, review interim reports, and engage with the company for updates on financial performance and strategic direction.

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