This article first appeared on GuruFocus .
-
Net Sales:SEK963 million, up 26% year over year.
-
Order Intake:SEK699 million in contracted order bookings, down 47% year over year; rolling 12-month book-to-bill ratio at 1.9.
-
Recurring Revenue:Up 32% year over year.
-
Cloud Recurring Revenue:Up 75% to SEK315 million; rolling 12-month cloud recurring revenue exceeded SEK1 billion for the first time.
-
Non-Recurring Revenue:Up 11% year over year, mainly from license revenue, migration, and professional services.
-
Recurring Revenue Churn:0.5%.
-
Operating Profit:SEK191 million, up 61% year over year.
-
Operating Margin:19.8%, up from 15.5%.
-
Profit Per Share:Up 55%.
-
Imaging IT Sales:Up 30% year over year; recurring revenue share close to 78% in the quarter.
-
Imaging IT Operating Profit:Up 77% year over year; margin reached 23%.
-
Secure Communications Sales:SEK89 million, down 4% year over year due to delivery delays.
-
Secure Communications Operating Profit:Slightly above breakeven.
-
Cash Flow from Operations:SEK3 million, compared with SEK118 million in the corresponding quarter last year.
-
Cash Balance:SEK1.8 billion at end of reporting period.
-
Equity Assets Ratio:52%, above the 30% target.
-
Dividend:Board and CEO proposed a total dividend of SEK443 million for approval at the annual general meeting.
-
Geographic Sales:US reported the largest increase; all markets contributed to growth except the UK, which saw a temporary decline.
-
Warning! GuruFocus has detected 4 Warning Signs with STU:9II.
-
Is STU:61L0 fairly valued? Test your thesis with our free DCF calculator.
Release Date: September 04, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
Net sales increased 26% year-over-year, with operating profit up 61% and profit per share up 55%.
-
Cloud recurring revenue grew 75% to SEK315 million, with rolling 12-month cloud recurring revenue exceeding SEK1 billion for the first time.
-
Recurring revenue overall increased 32% year-over-year, and customer churn remained very low at 0.5%.
-
Imaging IT sales grew 30% and operating profit surged 77%, with margin reaching 23%, driven by increased usage and new deployments.
-
Strong financial position with equity/assets ratio of 52% (target 30%) and cash balance of SEK1.8 billion, supporting a proposed dividend of SEK443 million.
Negative Points
-
Order intake decreased 47% year-over-year to SEK699 million, with no large orders signed in the quarter.
-
Secure Communications sales declined 4% year-over-year due to production problems that halted the factory for part of Q1, though now resolved.
-
Gross margin declined year-over-year due to higher cloud costs, increased external migration costs, and a higher share of hardware sales.
-
Cash flow from operations dropped to SEK3 million from SEK118 million in the prior-year quarter, impacted by negative working capital changes.
-
Currency movements had a small negative impact on sales, and the UK market saw a temporary sales decline.
Q & A Highlights
Q: On the new diagnostic reporting module, what is the primary advantage for existing North American customers to buy Sectra's reporting solution rather than a competitor's standalone product? A: CEO Torbjorn Kronander explained that Sectra's reporting is done from inside the imaging window, which drives major efficiency gains for radiologists facing high workloads. It eliminates the need to leave the application to dictate or write a report, and enables more intelligent reports with links to images for referring clinicians.
Q: Cloud recurring revenue grew 75% to SEK315 million in the quarter. What type of customers are driving this increase? A: CEO Torbjorn Kronander said the main increase comes from the large contracts in the UK, US, and Canada. These are contracts Sectra has invested in for a long time, and as larger portions of these customers go live and begin using the service, usage-driven revenue grows.
Q: Given the intense implementation period for large contracts, should we expect consulting, hardware, and migration revenues to remain at a high level for the coming two years? A: CEO Torbjorn Kronander declined to give a forecast, stating it changes quarter by quarter and will fluctuate up and down. He noted that in Scotland, Sectra is also responsible for client hardware (PCs), which is unusual for its contracts.
Q: With the EBIT margin at 19% this quarter and Imaging IT margin improving 6 percentage points, does the overall group profitability target look conservative? Would costs need to accelerate to deploy all new customers? A: CEO Torbjorn Kronander said he does not think costs will have to increase a lot, but there will still be significant costs to get the big contracts live. He declined to comment on the targets, noting they are a board decision.
Q: How do you view overall demand from new hospitals to sign enterprise imaging contracts, and do you see any trend shift in US demand? A: CEO Torbjorn Kronander said there is no big change in US demand. In Europe, however, concerns over public clouds delivered by American companies have slowed things down, as customers realize the transition is not as easy as they believed.
Q: How soon do you expect production and sales in secure communications to ramp up after the Q1 production problems? A: CEO Torbjorn Kronander said production has already ramped up. The problems that halted the factory and impacted Q1 are fixed, and he expects a return to normal levels soon.
Q: What explains the somewhat weaker gross margin in Q1 the production ramp-up in secure communications or larger hardware shipments in imaging IT? A: CFO Jessica Holmquist said there are several factors, mainly on the imaging IT side: increasing cloud costs, more external migration costs, and a slightly higher share of hardware versus Q1 last year. Secure communications was not the primary driver.
Q: Now that a larger US customer has upgraded from on-prem to cloud, is interest from other US on-prem customers to upgrade increasing? A: CEO Torbjorn Kronander said yes, interest is increasing, though it will be a long process given the large installed on-prem base. Unlike the reluctance seen in Europe, US and Canadian customers want to move to cloud because it saves costs and space and lets them redirect personnel spending to medical staff rather than IT.
Q: You have historically recruited significantly each year, but the pace has slowed. Should we expect a shift toward spending more on AI tools for higher productivity per head rather than hiring? A: CEO Torbjorn Kronander confirmed this is correct. AI will gradually take over a lot of routine work, leading to somewhat less headcount growth and more growth in IT and AI costs. He noted the change will be gradual, not overnight.
Q: Are you starting to win any US customers for the reporting solution? A: CEO Torbjorn Kronander said Sectra has advanced discussions with several customers but has nothing published yet on any wins.
Q: On the large cloud contracts, when do you expect progress beyond the initial smaller region for the large US health system, and when will Scotland be fully implemented? A: CEO Torbjorn Kronander said progress with the US health system is continuous, with sites going live all the time. For Scotland, a very large project with many health boards, it will take one to two more years before fully live. In Quebec, Sectra started with two hospitals and is now delivering to many more, getting up into the tens.
Q: Are AI tool costs starting to become a meaningful cost item, and where do they appear in the P&L? A: CFO Jessica Holmquist said AI is a growing cost that appears under other external expenses. However, it is not yet at a stage where it has a meaningful impact on the P&L.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
