Surgical Science (SUS) Q2 2024 earnings summary

Executive summary

• Net sales for Q2 2024 were SEK 212.5 million, down 2% year-over-year, with Educational Products down 13% and Industry/OEM up 15%; momentum improved late in the quarter, especially in Asia and Eastern Europe.

• H1 2024 net sales were SEK 400.7 million, down 10% year-over-year; Educational Products down 30%, Industry/OEM up 21%.

• License revenue declined 11% in Q2, mainly due to timing and slower uptake from new robotic surgery customers.

• CEO transition ongoing, with Tom Englund to take over in October 2024; organizational headcount increased to 265.

Financial highlights

• Q2 2024 operating profit was SEK 33.4 million (margin 16%), down from SEK 47.5 million in Q2 2023; adjusted EBIT margin was 19%.

• Net result for Q2 2024 was SEK 28.6 million; cash and cash equivalents at June 30, 2024 were SEK 667.1 million.

• Cash flow from operating activities in H1 2024 was SEK 58.5 million, down from SEK 145.6 million in H1 2023.

• Gross margin for Q2 was 68%, stable year-over-year; license revenues represented 32% of total.

• Sales costs were 20% of sales, admin 10%, R&D 23% (with SEK 19.4 million capitalized in H1 2024).

Outlook and guidance

• Educational Products growth for 2024 is uncertain and depends on timing and closure of large tenders, but pipeline visibility is strong.

• Industry/OEM expected to continue growth, especially in robotic surgery, with confidence in license revenue recovery.

• License revenue from da Vinci 5 is expected to materialize in 2025 as simulation is integrated in the broader rollout.

• Company targets SEK 1.5 billion in sales and 40% adjusted EBIT margin by 2026.