Elekta AB Stock

Good morning, everyone, and welcome to Elekta's Q1 for the fiscal year of '26-'27. With me here in the studio in Stockholm, I have our CEO, Jakob Just-Bomholt, and our CFO, Klara Eiritz. As usual, we will start off with Jakob bringing in the highlights from the quarter and some strategic updates. And then Klara will bring you more details around the financials. And after the presentation, we will, as usual, have time for Q&A.

But before we start, I want to remind you that some of the information discussed in this call contains forward-looking statements. This can include projections regarding revenue, operating results, cash flow, as well as products and product development. These statements involve risks and uncertainties that may cause actual results to differ materially from those set up in these statements. With that said, I would like to hand over to you, Jakob. So please, Jakob.

Yes. Thank you very much, Peter, and welcome to all of you. Let me start by giving and sharing some key reflections on Q1. We have been very clear, I believe, Elekta is not trading at full potential. We want to action that. And to that end, we have established a 3-phase turnaround plan. And this year is really about improving the underlying profitability of the company. Q1 is a step in the right direction, and we expect to see continued progress and execution.

Let me just share with you a few highlights. We have now completed the change in operating model. The savings we indicated a few quarters ago has materialized above expectation, more than SEK 500 million. But most importantly, we did it to really enable faster execution. And, Klara, you will unfold our now 5 regional P&Ls, part of that pushing P&L responsibility further down in the organization. We see significantly improved EBIT margin. Yes, part of that uplift related to tariffs. But keep in mind, we also on reported EBIT have a headwind of 109 basis points linked to a more prudent way of accounting for R&D expenses.

So the underlying improvement is significant. And that translates into cash flow that improves year-on-year despite the inventory buildup that we're also going to address. If we turn to sales, yes, sales decline of 2% is below our guidance for the year. We reiterate that guidance. That also implies that we expect positive sales growth in Q2, and I'm sure we'll come back to that in the Q&A.

Just to flag here initially, China did start out weak in the quarter, I have to say, pretty much in line with our own internal forecast. And it really relates to poor order intake a year ago linked to poor market circumstances. Our market share, give and take is unchanged. That also means that we will guide for solid growth in Q2 as we are now having an order backlog that supports revenue growth going forward, but I'm sure we'll also come back to that.

So we are on plan. Focus is on improving profitability. But of course, we also have focused on delivering on the top line guide at fixed currency of 2% to 4%. So let me share some financial results, and then you'll give more color, Klara, on it. Book-to-bill of 1.11, order growth of 3%. We did see Elekta Evo, particularly in the U.S., develop as we planned and hope for. I just gave color on the negative net sales growth. Keep in mind, Q1 is by far the smallest quarter of the year. And as I said, we expect positive growth in Q2. We see Americas and Europe growing, APJ, China, TIMEA declining. I'll come back to that.

Then gross margin significantly up, and it's been some time ago since we had above 40% in Q1 at 42.6%, but obviously, 150 basis points one-off related to tariff refund and we'll get a bit more we expect in Q2, but underlying improvement. That translates into an EBIT margin of 11.2%. EBIT cash margin is actually 11.4% and an even bigger improvement year-on-year when you look at the tailwind we have from a more aggressive accounting practice a year ago. So I think we are quite pleased with that EBIT margin improvement and then the fact that it translates into cash flow. So the trend we are on in reducing our net debt continues, and we expect that also in the period ahead. So that's on the financial outlook.

If I then just give you a commercial flavor. Overall, radiotherapy market, when we look at it at a global level, it continues to grow roughly 6%. That also implies back to our revenue guide of 2% to 4%. We are still not growing with the market, that's highly unsatisfactory. We are going to do something about it. But as I said, at this stage, focus is on improving profitability. On order intake, a little bit lower than 6%, but still healthy. So we start to see a slight impact on some NPIs in the market and also various impact on orders around the world. But underlying market growth of 6%, which I consider very healthy.

If we look at Americas, very importantly, we are getting back to growth, and we expect that to continue for a period to come. We did get Elekta Evo approved, as you all know, in January, and that starts to translate into orders. So I'm not going to share specific order numbers for the U.S., but it's good. I mean, we are happy with progress so far, and we have our online adaptive for pelvis pending FDA. There will be further tailwind for the U.S. organization. Many more things to be achieved, but the momentum is what we hope for. On U.S. reimbursement, still early days, but it actually looks favorable, both for freestanding and hospital systems with a 3% to 5% reimbursement uplift. So let's see where that lands, but so far, so good.

If we move on APJ, there was, we actually expect it to come in stronger. The fundamentals of that region is strong. It's an underserved market. It's very varied from Australia to Vietnam, to Indonesia, to Japan. But we have just seen specific macro and impacting health care spend. So the market is down quite a bit. We don't expect that to be sustainable, and we are holding on to share, but we have now seen that for a period of time.

If we then focus on China, I was there last week, reviewing commercial, reviewing outlook, obviously, also centralized procurement. And as I said, we have seen weak order intake a year to 2 years ago. That has obviously depleted the order backlog, and that impacted Q1 in particular with the low number of installations. We have guided that we have now had 3 consecutive orders or quarters of good order intake. And that also is the reason why we say that we expect solid revenue growth coming into Q2.

A few words on centralized procurement. I think it's important for you to understand. Clearly, it's a change. It will lead to more price transparency in the market, but we have had centralized procurement in the past. Last year, our fiscal year, roughly 25% of the market was through centralized bidding. And Elekta had a win rate of more than 50%. So we are used to it. And I would say we're also ready for it. Obviously, it is a bit of choppy waters. Is that going to delay certain order intake our second half of the year? Maybe, but not necessarily. On the other hand, we see a push from Chinese government to advance CapEx to stimulate the economy and serve the health care system. So there are pros and cons. And all in all, when we look at our market share, we are in the mid-30s, so slightly down from last year, but we maintain our competitiveness.

On Europe, increasing revenue by 5% growth in most countries. So that's good. We are piloting some very important NPI, integrated console really a new workflow on our Harmony platform, and it goes well. Just keep in mind, when we come to second quarter, last year was a high-growth quarter, so the comp is tough.

And then on TIMEA, we saw a decrease of 4%. We expected growth here, I have to say. And it's delays, it's not cancellations, very important. We expect quite a good growth for TIMEA for the full year. That will start also come Q2 is our expectation, but we had some specific installations in neighboring countries of Iran that actually not due to Elekta, but other suppliers they stalled the final installation and hence, we couldn't recognize the revenue. But the outlook actually looks surprisingly solid for TIMEA, both in terms of orders and revenue. So that's overall on the commercial side.

And if we then go to where we are in our turnaround, the way we think about it is that we have now concluded Phase 1. We really had to change a lot things at Elekta. So we said it's a reset. But then once you reset, you also need to stabilize, and we are happy with where we are. Here 1st of August, we appointed a new COO of the company, Rodolfo Velasco, to really drive operational excellence within the company, and we can see that there's quite a lot of potential ahead of us. So I'm very happy to see we have a complete executive committee to drive the performance. And then this year, we, this quarter, we provide additional transparency. It's also how we want to operate the company, so we align internal with external and then improve quality of earnings with a more prudent accounting. So I'm happy about that.

Then focus is really on improving profitability this year. We have been optimizing our portfolio. We are more focused in how we invest. We still invest more than 10% or roughly 10% of revenue in R&D, have a laser focus on releasing new products to the market, strengthening commercial execution also through delegating responsibility and accountability to regions. We have good pricing guidelines now in place that will support us in the period ahead. And then we are laser-focused on COGS reduction program, and you also see some of it translating into improved gross margin.

So for us, it's about expanding margins. It's about productivity initiatives. And then importantly, at this phase is making the required steps towards us translating innovation in market share gains going forward, so we can soon get into Phase 3, and that is growing at or above the market because that is the future of Elekta bringing innovation to the market. So that's a high-level perspective of where we are. We feel good about it, but we know we have a lot of work ahead of us. And with that, Klara, I'll leave the word to you.

Thank you, Jakob. All right. So let's look into the numbers for Q1 in a bit more detail. Net sales decreased by 2% in constant exchange rates. Solutions sales decreased by 9%, and we saw growth in both Europe and Americas, however, offset by lower sales in APJ, China and TIMEA. Service sales grew by 5% with growth in all regions. The adjusted gross margin amounted to 42.6%, a considerable improvement from last year's 37%. The improvement is related to growth in software and service, price increases, but also lower cost levels, largely related to the change of operating model implemented over the last 2 quarters.

We had refunds of U.S. tariffs imposed under the U.S. International Emergency Economic Powers Act, which had a positive impact of SEK 53 million in the quarter, corresponding to about 150 basis points. As we anticipated when reporting our Q4 numbers, we had a negative FX impacting the gross margin negatively by 20 basis points. The adjusted EBIT margin amounted to 11.2%, and the year-on-year improvement was primarily driven by earlier mentioned improvements in gross margin, of course, but also lower selling and administration costs driven by the change in operating model. Year-over-year, we had a negative impact of about 190 basis points from lower capitalization of R&D and increased amortization of R&D. And that's why we see a larger improvement in EBITC than we see in EBIT.

I should also mention that we have no items affecting comparability in the quarter, but we did have SEK 16 million in Q1 as IAC in Q1 last year. So we have an adjusted EBIT for Q1 last year, but not for this year. Net income amounted to SEK 106 million (sic) [ SEK 261 million ] And adjusted earnings per share amounted to SEK 0.31 (sic) [ SEK 0.69 ]

And if we move to the next slide here, as of now, our external reporting structure is aligned with how we manage and organize our business internally. Internally, we are organized in 5 separate regions with full P&L responsibility. We have Americas, China, Europe, TIMEA consisting of Turkey, India, Middle East and Africa and APJ Asia Pacific and Japan. And starting now in Q1 '26, '27, this is also the structure that we will present externally. And you all were introduced to this new structure also at the Capital Markets Day. The regions have a P&L with fully loaded costs. So when you add the region's EBIT and group common costs together, you get Elekta's P&L and Elekta's EBIT. Group common costs consists of central costs associated with our central staff functions, and these costs will not be loaded into our regional P&Ls, but instead kept centrally.

Previously, in the old external report structure, we only showed 3 regions with net sales and contribution margin. Now we will report on net sales, gross income and EBIT for each of the 5 regions. So let's look at the performance of our 5 regions. To start with, the gross margin has improved in all 5 regions except, and all regions except TIMEA are now above 40%.

If we then take the regions one by one, we can see the following. We start with Americas. The EBIT margin for Americas improved year-over-year, driven by, of course, the launch of Elekta Evo and related price increases. In addition, as I mentioned, the refund of U.S. tariffs imposed under the U.S. International Emergency Economic Powers Act had a positive impact of SEK 53 million, corresponding to 490 basis points for the Americas region. For the next quarter, we expect around USD 3 million in a second and final tariff refund. Also remember that we continue to pay tariffs in the U.S. So that continues. But the refund is for Q1 and Q2.

APJ. So despite lower sales, driven by constraints in health care budgets and capital investments that Jakob also mentioned, the EBIT margin was almost in line with last year due to cost initiatives in both gross margin and OpEx, but we also see positive movements in terms of price and mix, service sales, to be precise, in APJ.

Region China's EBIT margin declined as a consequence of the lower volumes. But even their gross margin improved due to lower gross margin expenses, but we can see that we don't have full coverage of the OpEx in the Chinese region here. So we see a drop in EBIT. So we need slightly higher volumes in China for EBIT to come up.

And then Europe. The EBIT margin in Europe improved compared to last year, supported by a favorable development for Neuro and Brachy solutions.

And finally, the EBIT margin in TIMEA was negative in the first quarter. However, it was an improvement compared to last year. And normally, we see a seasonal pattern of gradual improvements towards the end of the year for TIMEA, and they have a better starting point this year than last year. So we expect that to improve over the course of the year.

All right. Let's talk about currency impact. We see a negative currency impact on net sales, mainly due to the strengthening of the Swedish krona against the main revenue currencies, the U.S. dollar and the euro. This impact is then partly offset by the group's significant cost base in U.S. dollars, British pound and Europe, limiting the effect on bottom line profitability. Changes in FX had a negative impact on both gross margin and EBIT margin by 20 and 30 basis points, respectively.

And then a few words on cash flow. Free cash flow before dividends and M&A improved by SEK 154 million, reaching a negative SEK 266 million in the first quarter. The year-on-year improvement was primarily driven by an improved EBIT of SEK 176 million, reflecting an underlying improvement in the business. We had a negative impact from more unfavorable changes in working capital of SEK 318 million, driven by a seasonal buildup of inventory. We, of course, had that last year also, but it was higher this year. And also as planned, we had lower R&D-related investments in the second quarter compared to last year and lower costs for interest and tax compared to last year, driven by a tax refund paid in Q1 this year and positive FX impacts.

Okay. Let's look at the historic development on a rolling 12-month basis, starting off in Q1 last year. If we start with the graph on the left-hand side, we can see that the EBITC margin is up considerably compared to the same period last year from 9.1% to 12.6%. We can also see a gradual improvement in gross margin with a 12-month rolling gross margin very close to 40%. Finally, on the right-hand side, we see solid development in free cash flow before dividend and M&A. I also want to mention that Elekta on August 24 signed a EUR 100 million credit facility with the European Investment Bank. And this facility is dedicated for R&D project funding and has a 6-year maturity.

All right. So before I hand back to Jakob, I want to conclude by reconfirming our previously communicated outlook for the fiscal year of '26-'27. This slide is the exact same one that we presented on our Capital Markets Day on June 17. And for '26-'27, we continue to expect net sales growth of 2% to 4% in constant currency and an adjusted EBIT margin of 12.5% to 13.5%. And by that, I hand back to you, Jakob.

Thank you very much. Yes. So let me conclude this call, look forward to Q&A. We see Q1 with continued progress in strengthening our financial performance. Big improvement in terms of gross margin, EBIT margin and then stronger cash generation. On the top line, yes, sales decline in China as a result of weak markets in recent years, but important for you to take away that based on the order intake we have seen in recent quarters, we expect future growth and certainly in Q2.

U.S. sales growth happening, order intake as expected and hopeful with the Elekta Evo, of course, as the main contributor. And that also means based on those events, our sales guide of 2% to 4% stands. And then focus is within Elekta to continue to improve the profitability. We are still below where we should be. And at the same time, we continue to invest in levers to accelerate our midterm innovation-driven revenue growth. So with that, Peter, thanks back to you.

Thanks, Jakob, and thanks, Klara. So before handing over to Q&A, just a short glimpse on the financial calendar. We will have our next report Q2, November 25. But before that, actually, we have our AGM coming up next week, Thursday.

But operator, so we are now ready for the Q&A, so you can open the session, please.

[Operator Instructions]

The first question is from Ludwig Germunder, Handelsbanken.

I have 2, please. Firstly, on orders in the U.S., you were talking a little bit about it, but I just wanted to follow up from the CMD in June, you told us that you by that time have taken double-digit Evo orders in the U.S., I believe, of which 25% were flips from competitors. Would you be willing to give some more color on how U.S. orders are progressing? And perhaps if you could update us on the things you told us at the CMD? And my second question would be on top line growth. You leave the outlook unchanged, and we understand that Q1 is a small quarter. You told us that Q2, you expect to be back on a positive growth territory. But would you be willing to give some more color on how you expect the trajectory of the organic growth to be throughout the year, please?

Yes, Jakob?

Thanks, Ludwig. Nothing changed from CMD on U.S. We did see double-digit growth, very solid double-digit growth in the U.S. I don't want to give the specific numbers here. So we are following the plan, and that also is the reason why we say that it will start to turn into revenue. So the growth, revenue growth outlook in U.S. for this year is solid, right? And all in all, we are progressing as we hope for.

So on top line growth, we stand by the guidance. And what we can say at this stage is we expect positive growth in Q2 also to an extent that we, as it looks now, will be positive for first half of the year. That's as far as we will go at this stage. But of course, we wouldn't say it if we didn't have funnel on orders to support us being within the guide of 2% to 4%.

We will move to the next question, Philip [indiscernible] from Nordea.

So first, and I'll do them one by one. I also have 2. Could you elaborate a bit on what you're seeing on the Chinese market? So what's driving the order growth? And what visibility do you have for order interest for the coming quarters and also perhaps order conversion?

Yes. So Chinese market, we guided a year ago, we would see a recovery in the market, and that has happened actually. So there was, as you may recall, an anticorruption campaign a couple of years ago, that subdued market demand. Everyone was nervous at going in and entering bidding situation. Situation is now normalizing, which means that the market is coming back to more or less its long-term equilibrium.

And there's still a very significant market potential because there are roughly 3,000 linacs installed. That should be at least 5,000. So the fundamental of the market growth is happening. Then we have seen that market recovery translating into orders secured for Elekta, and we have seen order intake growth the last 3 quarters. And they are now turning into installations. And once they turn into installation, we'll recognize them as revenue.

And that's why we say we have expectation of solid revenue growth in Q2. And we still think we, yes, the outlook actually looks okay for us in China, I have to say. And then in terms of market share, we estimate that it was actually the Chinese Medical Device Association put us at 35%, and I think that's give and take, right. So we are able to defend our market share to a large extent at least.

You had a second question, Philip, right?

Yes. So trying to understand how sustainable the gross margin improvement is. Could you rank the importance of pricing, software and service mix and also the structural cost savings?

Klara?

Yes. So I mean, the Service Solution mix is considerably favorable this quarter. But the pricing aspect is also an important lever, both for Services and Solutions.

But the mix is definitely very positive this quarter. And then we have, I mean, related to the new operating model, we have, we are operating at a lower cost level than we have in the past. So it is a mix of those 3 things.

Okay. And if I may, just a follow-up. And how sustainable is that going forward?

Well, as you know, the mix goes up and down, right? That will be different from quarter-to-quarter. The price increases are, we view as sustainable, of course, but that also depends on the mix a little bit. And then we have an underlying lower cost level that we see, that we expect to maintain.

We'll move to Sten Gustafsson at ABG.

Coming back to China, I was wondering if you could comment on what you think will happen to pricing and what you saw last year on, I think you mentioned, and thanks for that color, 25% of the business you did in China last year was through centralized procurements. And did that have any impact on price? And with this new increased level of centralized procurements out in the regions or provinces in China, do you think prices will come down significantly? Or what's your take on that?

Yes. Thanks for a great question. The truth is we don't know for sure. Well, what we know is that there will be increased price transparency. I think that works both ways. So essentially, the price we give in one province will be available to all 32. Price transparency will also discipline the market access because once you give a price here, it commits you elsewhere. So that's a positive. You can say price transparency also means you can't get away with very high prices in one province and not in the other. But if we judge by history, then we actually don't have evidence to say that centralized bidding resulted in lower pricing than you can say the more curated negotiated deals.

Okay. I guess we'll just have to wait and see what happens there. And then a question on your orders in, if I remember correctly, in Q4, there were 2 specific orders that didn't qualify to be booked given your new stricter order acceptance criteria. Were there any orders in Q1 that you didn't book given your new methodology?

Yes. But it's almost a topic that we have stopped debating within Elekta because we just say follow the guidelines. And whatever escalations that came our way, we declined because for us, it's extremely important not just to deliver good order numbers in a given quarter, but to, over time, build an order backlog that is of sound quality. So absolutely, there were deals here and there where there will be a degree of uncertainty and then we err on the side of being prudent.

We'll move to Veronika Dubajova at Citi.

I hope you can hear me okay. I kind of want to delve a little bit more into the order and revenue growth dynamic, if that's okay. Obviously, you guys are maintaining the guide. But if I look at the 12-month rolling order growth, it is still at minus 3%. Can you maybe help us understand how you can go from that minus 3% order growth to that 2% to 4% revenue? And I guess, what are the regions that are most important as we think about that growth acceleration through the remainder of the year? And maybe if you can kind of quantify some of your expectations around that, that would be super helpful.

And then apologies, I'm going to go back to the gross margin. Again, just trying to piece, separate out the pieces. And I guess you did have a pretty significant inventory buildup, which obviously should have been a tailwind to the gross margin as well. So trying to understand whether that was a contributor, and I guess if you guys can give us any guidance for the gross margin for the year or at least help us kind of anchor it relative to last year, whether you would expect that gross margin in aggregate to be flat up or down, that might be a good starting point as we think about modeling out the remainder of the year.

And then the final third one, I'm sorry, I know I said 2, but I squeeze in a third one. Why no change to the margin guidance if we are anticipating more tariffs and tariff refunds?

All right. I'll take the first and then you take the last 2. And of course, Veronika, when it's you 3 questions is absolutely okay. Keep in mind, we have a book-to-bill of 1.05. That's really how I think you should reflect on when you look at future revenue. Because when you look at the comparison on order intake rolling 12 months versus the previous, and we are applying stricter criteria, invariably, there's going to be a consequence of that change. So the revenue guide stands. If I would just give you a little bit of color of how we think and the visibility we have at the moment is likely TIMEA is going to be the fastest-growing region. I would also expect the region Americas would potentially come in second. And then we, as it looks right now, have a good chance to see all regions growing. And then on gross margin...

I think something to remember about the gross margin also is that we have a very positive geographic mix this quarter, right, with a lot of revenue in Americas and Europe. So that's something to consider. The inventory piece is not a huge part of what we see on the gross margin. But at the same time, I mean, we have, sorry, yes, your question about tariffs was more for the guidance, right? And there.

Yes. But if you just separately the gross margin, yes. So the inventory buildup was not a big contributor to the gross margin this quarter.

No.

And maybe I can build on, Klara, on top of, so we are actually starting to see a nice inflow, that's more on current orders on the price uptick. So I think it's good. I think I shared with you, we have implemented new pricing frameworks, and we are starting to see that gradually flow into the gross margin. And then on our operating model, we have been quite positively surprised about our service and order fulfillment costs coming down. And it really links to now regions taking full ownership of their P&L and that's very supportive.

And then, yes, on the full year guidance.

Yes. I mean, we stick to the guidance that we have. I mean, when we did the guidance, the tariff refund situation was quite uncertain, but we stick to our guidance. I mean, we have things go in the opposite direction also. I mean, we have the tungsten prices. We have FX, of course. So we stick to this guidance, and it is a range. So we expect to be within that range.

We'll move to Mattias Vadsten at SEB.

Can you hear me?

Yes.

First one, you said in the presentation that U.S., you're quite clear is performing in line with expectations. I'm just trying to understand, so Americas, plus 2% here, of course, only 1 quarter, but plus 1% in Q4, that's 2 quarters. So is it then either that orders to sales in the U.S. take more time than you thought? Or are there other markets outside of U.S. performing below expectations? Because I presume this is not the growth rate that you're aiming for in Americas.

Yes, it's linked to 2 things, hi Mattias. One is order intake that is developing as we hope for and then our revenue outlook because we are starting to see that orders that came from the FDA approval in January will start materializing into revenue from next quarter onwards.

Okay. And so the markets outside of the U.S. and Americas are nothing to dwell on?

No, that's exactly right. I mean, the way I would suggest you think about it is that there is a timing issue. Of course, every installation is different, but we really expect revenue growth to increase in Q2 versus Q1.

Okay. Then you made some helpful comments on reimbursement in regards to the U.S. So maybe could you comment if, let's say, in the last 12 months period, if the reimbursement situation has been a headwind. I mean, we've seen some headlines regarding reimbursement to [ R3 ] clinics lately? And then if you would want to elaborate on the increase that you talked about going forward.

Yes. It's still very early days, so it's not final codes. But the first proposal indicates a little bit more for freestanding, up to 5% reimbursement increase and for hospital systems to the tune of 2.5%, 3%. But keep in mind, it's early, and we'll know more over the next 1 to 2 months. Last year, it was obviously a headwind. I think we also flagged that in the call that there are challenges on the reimbursement environment. If that is now partially reversed, of course, it's going to be a tailwind in the market. But let's see how it plays out. And then very importantly, it continues to support adaptive treatment. So more, there is an incentive to drive more complex treatments, and that's good for Elekta.

We move to Kavya Deshpande at UBS.

My first one was on the revenue decline in China. If I understood correctly, I think you said this is a reflection of a weaker order backdrop in past. I was wondering if you could give us more color on what the order to installation period in China is today? Because last year, I think you called out a China book-to-bill ratio of around 1.3x in both Q1 and Q2, and we know orders grew in H2. So should we be looking at this revenue decline as a reflection of even older order weakness before that? Or were there any installation delays impacting as well?

And then my second question is on COGS inflation and just what you're seeing around tungsten and memory chip pricing and what kind of headwinds you've got baked into your guidance for that, for those elements this year?

We start with you, Jakob.

Yes. All right. Okay. So the revenue decline in China, I would rather see it as a quarterly choppiness, if you will, given that we will expect the number of installations to come back to a normalized level next quarter. And then it was a reflection of weaker order intake. If you go back on our numbers, we actually see the market and thereby also our order intake declined substantially. Our revenue declined significantly less that implied that we had a negative book-to-bill ratio for a period of time. And that just happened in Q1 to catch up with us.

But as I said, we expect solid growth for Q2, and we actually expect growth going forward in China. And then I think the uncertainty is more plus/minus is what happens in our second half on orders. But based on our commercial outlook, we still believe that the market will continue to recover in line with the expectations we have shared with you.

COGS inflation, maybe, Klara?

Yes. I mean, we see COGS inflation around 3%. And, but as you know, we see this as a very key focus area for us going forward with our Must-Win Battle 4, our COGS reduction program that will be driven in the capable hands of Rodolfo now going forward. So we have more to do in that area. We haven't seen really the effects come through from that yet. So we have more to do there. When it comes to tungsten, I'm not going to give the exact levels that we assumed when we did the guidance. But I mean, tungsten prices have come down, but they're still higher than last year, and they could still go up and down for the remainder of the year, right? We don't speculate, I think, into that. But they have come down that we can all see, but still higher than last year.

Let's move further in the queue. Kristofer Liljeberg-Svensson at DNB Carnegie.

Three questions. The first one, I just wondered, the stricter criteria you have around the order bookings, was that still having a negative impact on the order growth here in Q1? If I remember correctly, you implemented the new stricter rules later in last quarter or last fiscal year.

Yes. So from a nominal point of view, no, because we could say, yes, we have certain orders based on the old criteria that would have taken in Q4 that slipped into Q1, but vice versa based on the current criteria slipped onwards. In terms of year-on-year impact, probably we haven't quantified it. But I just want to leave you with, we are very committed to having a very tight order intake criteria. And we have also anchored that in certain incentives for top management. So everyone are keenly aware of that order we take in should have a very, very high likelihood of turning into profitable revenue going forward.

Your second question.

Yes. So coming back to the gross margin. So the favorable mix you have here in Q1, does that mean that you won't have the same typical seasonal pattern as before with Q1 being the weakest for gross margin?

Well, I mean, we'll see about the product mix and the geographical mix going forward. But remember, the tariff reimbursement, I mean, that certainly helped Q1 when it comes to gross margins.

But if you adjust for tariffs, you still have 41%, 41.1% gross margin. It's very high for being a first quarter.

Yes.

And typically, Q1 is the weakest gross margin quarter for Elekta.

Depends on the product mix and the geographical mix going forward.

You can say, Kristofer, this particular quarter that we're back to the revenue guide, do not plan to repeat. We had growth in Region Europe and Region Americas, which are the highest gross margin. And then we also had a slightly higher service to solution ratio than what we normally have in a given quarter. On the other hand, you're absolutely right that we expect strong sequential growth and that in itself is supportive of gross margin. So I think it's a mixed bag, but we don't want to guide on gross margin. We stand by the EBIT margin guidance that we gave here, 12.5% to 13.5%. And when we gave that guidance, as you said, Klara, we didn't include tariff refunds. So as we see it, that comes on top.

Okay. And the final one was on the gross margin. But TIMEA, why is the gross margin so much lower there?

Price pressure. I mean, it's Africa. We also see in India, highly, highly price sensitive. So historically, we have seen low gross margin. I would also say linked to very aggressive dealmaking, and we are, it's probably the region that is feeling the biggest impact of more price discipline and operational rigor. But if I would guide you, it will very likely be the lowest gross margin region, whereas U.S. and Europe more mature will be higher.

But do you think it would still be a 10 percentage point difference or?

I don't want to guide on that here.

We'll move to Julien Dormois at Jefferies.

2 questions. The first one relates to the savings program, which obviously has worked super well. You made comments previously that it would significantly exceed the target of SEK 500 million.

So just curious whether you would be willing to update that number and tell us what is the current run rate for this? And the second question, and sorry for coming back to China, but I think you have said in this call that your market share is now probably around the mid-30s. If I'm right, you previously mentioned something more into the tune of 40%. So just curious how the little bit of local competition is behaving there in the context of the local players being more and more vocal and also obviously in the context of centralized procurement. So how do you think you can defend your share in the coming years?

Yes. On the savings part or the lower cost levels as a result of the new operating model, I'm not going to give a precise number, but we are well above the SEK 500 million that we have communicated before. And we believe that we are at full run rate speed as of this quarter. We're pretty close to plan when it comes to OpEx. So, but a little bit ahead of expectations maybe in gross margin expenses. So that's maybe as far as I'll go. Then you have to look in our P&L and compare year-over-year and see what you can find.

And maybe I can build on, Klara, that from an employee perspective.

That's right.

Right. Half a year ago, we were 4,500 and now we are 4,000. So...

We're even below 4,000.

Yes, below, right? And it's not a goal in itself, but of course, you can do the math in regards to cost savings. So we exceeded that target. And keep in mind, we did it to really clarify accountability, become more business area, less corporate, and that translates into many other things. And then on China, no, no, you're absolutely right. I mean, we said historically, we have been around 40%. We also in the strategy update, guided towards we would be in the mid-30s, and that's where we are.

Is it intense rivalry in China? Yes. Are we still market leader? Absolutely, we are. Have we built a localized product portfolio? Yes, can we do more? I think so. So, and then coming back to centralized procurement, I'll just make the reference, which is factual that of what used to be centralized bidding last year, we had a win rate of more than 50%. Is that a predictor of the future? You have to make that judgment. But I think we feel pretty assured about the path. Then there are certain things on products, but that's our job. We'll continue to evolve to maintain the competitiveness.

And then we move to Danske Bank, Erik Cassel.

I wanted to ask first on the order recognition potential effect. I mean, I remember Klara saying in Q4 that the reported order intake would have been very different if you had the old recognition and Q4 is a big order quarter. And I guess, as you said, Jakob, then that you had some spillover from Q4 orders into Q1, but you said that could also affect Q1 into Q2. But since Q4 is such a much larger quarter, is it possible in some way to quantify the sort of effect that could have had on order intake now in Q1, assuming the Q4 phasing, basically saying what the Q4 phasing was, if that's possible?

I fully understand your point of view, but it would be flaky to do so. I mean, we applied the right order criteria with fairness in Q4, and we did the same in Q1. So we basically have a number of order intake criteria. Is there prepayment, is there site readiness? Is it going to be delivered within 3 years and so forth. And we did that in Q4, and we did that in Q1. No, so I wouldn't want you to think that we had a big flow into Q1 and a small outflow from Q1 to Q2. It's not how we think about it. It's just clean orders coming into Q1.

Okay. And then I have a question to Klara. I appreciate that you gave some color on the inventory build effect on gross margins. But I also wanted to ask since I guess we're seeing broadly higher costs now as well. Did the sort of standard quarter end update of standard costs that you do increase the sort of carrying value of inventory now at the end of Q1? And did that have some sort of positive effect on gross margins as well?

No.

Short answer, no.

Okay. Okay. Good. And then I just wanted to ask to sort of assess the, say, underlying gross margin improvements that we're seeing. If we assume that we now, for the rest of the year, see a more normalized service to solutions mix and geographical mix, do you still think that the gross margin improvement is going to be noticeable, so to say?

I mean, like Jakob said, we don't guide on gross margin. But like we've also said, I mean, we have, the new operating model has had effects not only in OpEx, but also in the gross margin. And there's a sustainability aspect to that, right? So that we don't expect to go away.

We'll move to the next question, Johan Unnerus at SB1 Markets.

2, then a follow-up there on China. You said you had a local offer. Is it possible to give a flavor of in the central procurement channel process, is the solution mix different versus private? I'm thinking in terms of proportion of premium versus mid versus lower end solutions.

So I would say we have adapted our product portfolio, not least on the software to fit to Chinese demand. The biggest difference between China and rest of the world is some service attachment rate, which is lower in China. It's an upside for us when we get it fixed, but it's also a little bit difficult in the short term. It's roughly around 30% service attachment rate. It's much higher, close to 100% in the more mature markets. But other than that, it's a global portfolio, but really catered in, with local software. Then we see that Adaptive is taking off in China.

So I think it's more precise than the 70% that's outside central procurement is not distinctly different from the linacs you're selling, offering or winning in central procurement deals?

No, that's correct.

Yes. The other question is then you're moving into the third stage when you higher zooming out, so to speak, in your strategy and you're pointing out distinctly higher growth already in Q2. Are you prepared to say that you're moving into the third stage already this year? Or is this something for the next, your next year?

Of course, we continuously take stock. But I would say this year, it's about improving profitability. So we do not become a one-hit wonder. And we can just see that there are so many things. Fortunately, we can operationalize and become better at executing. So we are in Phase 2 this year. And then I refer to our guide. So that is 2% to 4% revenue growth this year and then our midterm guidance. And we have no reason to believe that those guidances will not be fulfilled.

We'll move into the last question of today's call that is from Richard Felton at Goldman Sachs.

2, please. The first one, I just wanted to follow up on the APJ region, which was soft during the quarter. I know you called out constraints in health care budgets and capital investment. Are there any markets specifically in that region where those pressures are more acute? And then how should we think about that trending through the rest of the year? Is there any easing of those constraints? Or do you still see sort of subdued trends for the APJ markets for the rest of fiscal '27? And then the second one is a follow-up on inventory. Could you say what was driving the step-up in inventory in Q1? Was that sort of raw material inflation pressure or a buildup of finished goods?

So you start with APJ and then Klara, can take that.

Yes. So let me do a double-click on 3 countries. Indonesia, we have a big government tender, and that subdued the market a bit. And let's see what is going to be the outcome. Then we saw anticorruption clamp down in Vietnam. So that, as you saw also in China, makes the market a bit cautious. And then the recovery in Japan, I have to say, came a bit slower than we expected. Q1 checking in, we still believe that the market will recover from roughly 40 units to 60 units this year. But as I said, we started Q1 slower.

The way I would encourage you to think about it, I still think we will be soft Q2, and then we will continue to see some acceleration. But I have to say personally, I think Elekta, we have every reason to be fairly bullish on the long-term outlook for APJ because it's a hugely underserved market and radiotherapy is highly cost efficient. So in terms of share, we have held on to a very respectable market share. It's just a market that has been down temporarily, but we don't believe it's a permanent reduction in demand.

Thanks, Jakob. And then I guess, the profile of the inventory, finished goods...

Yes, it's both, I would say. It's volume driven, but there's also a bit of raw material cost in there as well or component cost.

With that last question, we are then concluding this call for the first quarter of the fiscal year '26, '27. And thank you all for participating and asking these questions. Goodbye.

So welcome, everyone, to Elekta's Capital Markets Day 2026. Welcome you here in Stockholm at [ Madison Square ] and also welcome all of you online. My name is Peter Nyquist, and I'm Head of Investor Relations since about 2 years now. So the big picture, we're going to have 3 hours of presentations. We will end with a 45-minute Q&A. And hopefully, around 3:00, we will have a break for coffee and refreshments. So that's the setup. I will go into more details later on.

But let me start with some reflections. Talking to both sell side and buy side over the last month and weeks, there are 3 areas that we hopefully will cover today that comes in mind. One is around products, one is really around growth in regions and competition. And the third one is about financial performance. So if I sort of comment each of them, if you talk about products, question we'll get a lot is Elekta competitive enough in radiotherapy to stay in the forefront, both when it comes to software as well as hardware. Hopefully, today, our CEO, our Chief Technology Officer as well as our regional managers will be able to answer that question, the uniqueness with the offering we have today, but even more important, we will spend quite a lot of time on the innovation we have coming up in the coming months and years.

The other thing that is discussed, and you probably know that as well, is growth and competition in regions. And basically, highlighting 3 regions, clearly important for Elekta, it's U.S. and that is about the success of Evo. What has happened to the reimbursement system in the U.S. How is that going to support you going forward?

The other one is around China, really, as Elekta is the market leader, how will Elekta stay market leader in China going forward? And how will Elekta be able to leverage from the recovery in the marketplace? And finally, Europe, a few years of successful launch of Evo, how will that stay? How will continue to embark on that in the coming years? We have our regional manager today presenting topics and answer those questions how we will be tactful to keep our leading position in China. And also grow in the U.S. and continue to grow in China.

The last part is around earnings and financial performance. And lately here, especially after Q4, a lot of questions received is the only way for Elekta to improve its earnings by cutting costs. And hopefully then, our new CFO Klara Eiritz, will be able to present to you. It's not only by cutting costs that we will be able to deliver on our 14% to 16% EBIT margin target that we have '28, '29 presented today, that we will be able -- it will also be product mix, launches, price improvements that will carry Elekta up to those margins.

So let's look at the agenda. We will start then with Jakob, talking about the strategy for about 20 minutes and targets. And then Christopher will spend quite a lot of time on products. So we will have a long session about that. That's extremely important. We will have a break for 15 minutes. And then we will go into the next section, which start with markets. We will have Arnaud who is heading up Europe, who'll talk about Europe, and then we have Ardie also here talking about U.S. in particular, but heading up regional Americas.

And Anming, we will have on a video prerecorded for this event. Then Klara will close the loop by talking about the numbers and the financial targets that we have. And then a short conclusion -- concluding remarks from Jakob, and then we have 45 minutes for Q&A.

But before we start, I would like to remind you that some of the presentations here contain forward-looking statements. That could include revenue, operating results, products and product developments. These statements involves risks and uncertainties that may cause actual results differ material from those set up in today's presentations.

With that said, I would like to introduce our first speaker, our CEO, Jakob Just-Bomholt. Jakob joined Elekta in August last year. Before joining Elekta, he was the CEO for 3Shape, a Danish medtech company. And before that, he had numerous leadership roles within Maersk. So please take up, the stage is yours.

[Presentation]

So warm welcome today's CMD day in a very warm room, also to the online participants. Over the last 12 months, we have been very clear, I believe, in saying that Elekta, we are not trading at our full potential. That clearly calls for actions. You want to get back to full potential. And what we will outline to you today is really what is the ongoing execution momentum. It's a realistic assessment of our competitive position in Elekta in the market. But then most importantly, what is the plan to correct our shortcomings and propel the company going forward. So we have been very much looking forward to today, and we are ready. We know what to do.

If we look at Elekta, and I think it's important to understand the Elekta case, we have been in precision radiotherapy for more than 50 years. What we do is really hard. It started with the Leksell Gamma Knife that is still the gold standard for treating the brain and is a best-selling product within brain treatment around the world. But today, of course, we are much more than that. We have presence globally. We have an installed base that continues to grow year by year, now more than 7,500 units internal, external beams. And very importantly for us, we see more than 2 million patients, and that number grows every month. We are being treated on our equipment, of course, not as treating, but we enable clinicians to treat. So that really ties into also our overall purpose of setting the standard of care to really bring hope to patients and you have all been touched by cancer.

So what we do is also important from an industrial perspective because look at the graph here, the cancer burden is increasing. You all know that. The biggest risk factor of cancer is age. And we are aging and the population is growing, which means that there is an underlying growing demand for cancer treatments. And then at the same time, there is a shortage of skilled professionals. We actually see that trend accelerating. And that puts a positive pressure on us as a vendor to innovate, innovate for precision and innovate for productivity, and Christopher, you'll come back to it.

Then to the right, you see that precision radiotherapy is really relevant for just about 50% of patient cases. We estimate that 40% of all cancer patients are treated with radiotherapy. But look at the budget, it's 10%. So that really gives you an idea that from both a clinical outcome, but also from a cost ratio is a highly efficient way of treating patients. And that's why we say that even though in certain markets, you'll talk about reimbursement challenge we have in the U.S., favorable for us actually, we have certain challenges in certain markets, but fundamentally, there is a tailwind because it's an attractive way from health care systems to treat patients.

So that's where we are on an industry. If we then translate that into numbers for radiotherapy, this is our view of the industry. The way that I think about it is a niche market, but a very large niche market. within medtech, roughly internal, external beams, including software, including service, USD 7 billion. And when you look at the market, say a bit more than 50% is associated with the upfront purchase of equipment and corresponding software and a little bit less on software upgrades, cloud-based Software-as-a-Service and then, of course, the technical service to sustain the equipment over a 10-, 15-year lifetime. So it is, if you will, a razor-and-blade model that should lend itself to predictive revenue.

Then over the years, we have seen inflection points from a technology perspective within radiotherapy. We have seen the image-guided radiotherapy, so we can actually see what we shoot at, and now we move into an era of adaptive radiotherapy. And I just want to pause a little bit to explain what is that really about? So with better imaging, you can really see better the tumor. And with that better precision then you have increased confidence in escalating the dose. But if it takes a lot of time, it's not going to help you. So we see combined also that we can do a replan with the patient on the table faster and faster.

And when you add those 2 things together, better precision and faster replanning, you really get into hypofractionation at scale, not just for the top end clinics, but for many -- and with scaling hypofractionation clinics, hospital systems can treat more patients because you can go from potentially 30 fractions to 5. We then show an example of 2 fractions treating prostate that's good for the return on the investment for customers, and it's obviously good for U.S. as patients. So there is a lot of innovation to be harvested, and that's why we will continue to sustain a strong investment profile in R&D and fundamentally good news for a company like Elekta.

But then how are we positioned as a company. We are positioned very well. As I said, the starting point of Elekta is really that we were born for precision radiotherapy. So our ambition is to have the world where everyone has access to best possible cancer care. We will do our part by making the equipment available around the world. Then obviously, our ambition is to lead within precision radiotherapy -- we are very clear eyed on where we play.

I'll show you our portfolio logic, but it's within linacs, it's within brachy, it's within neuro. We have the market leadership positions to sustain it. And then you can ask yourself, okay, why Elekta, why are you going to win versus our competition? As I said, from day 1, we were just built for precision radiotherapy. And what we do is hard. When I talk to the engineers, I get deeply, deeply impressed by many years of experience. Then we also pure-play radiotherapy. I worked in a conglomerate Maersk. It comes with many benefits, but I tell you, it's also many drags. And that's why we have reorganized to be fast, noncorporate, passionate about the products we innovate.

Then very importantly, particularly in an era of adaptive, we have that Integrated system of hardware and software and Christopher, you'll outline why is that integration increasingly important with adaptive combined with services. Then we have chosen positions of innovation leadership, clearly on our brachy and neuro product categories, but also within adaptive within motion management within the imaging. So we do select plays where we believe we lead ahead of competition. And then we have global scale. By the way, also super important when you service your equipment to have that network density. And I'll get back to strategic priorities and our midterm targets, okay?

If you then look at the company, and I think it's important when we outline our product innovation strategy, it's actually a very well-defined product portfolio. So it's CT-Linacs. Within that, we have essentially now tailored it to 6 subproduct categories, but CT-Linacs and we have MR-Linac, our MR-guided linac accelerator, then we have our Brachy business, and then we have our one neuro business, and it's all combined with the Elekta ONE software suite, where we are increasingly working on unifying and integrating all products under the same software architecture.

If you then look at our competitive position, it actually has a very attractive profile. So within neuro, we are clear #1, clear, clear. Within Brachy, equally clear #1 in both those 2 product categories, more than half of the global market. Then MR-Linac, you can argue it's easy to be #1 when you're the only one with the product, but it's still #1, and it's actually quite a good way of entering hospital systems and then make our CT-Linacs available because we are the only shop in town, if you will. And then we have a clear #2, but challenger position within CT-Linacs and correspondingly within our both planning software and oncology informatics system. You'll recognize, to your right, the industry size of roughly that $7 billion. And that translates into as an installed base, not annual, installed base 18,000 units of external beams. So that's how we look at the industry.

If we then look at where are we today, as I started out by saying we're not at full potential. I can argue, is it an improvement plan or turnaround? I believe it's a turnaround. And we have been going through a reset and stabilize phase, as we call it. And what has that really been about? Well, it's been about simplifying, decentralizing the organizational structure to give you example, half a year ago, we were roughly 4,600 colleagues. We're now 4,000. That was not a goal in itself. The goal was really to accelerate the speed by which we innovate and service our customers. We said then that with that simplification of the organizational structure, we need fewer people, and we will continue to optimize our processes, but that will correspond to a saving of more than SEK 500 million. You'll give, Klara, an update on where are we in Q4 versus what we consider our baseline in Q2.

We have strengthened leadership team. If we look at the Executive Committee, there's been quite a lot of change within executive management. But when you say you're not performing at full potential, change needs to start at the top, and I feel very good about the people we have brought on board and we'll bring now a COO to drive operational excellence within Elekta starting 1st of August. And then we have talked a lot about the culture, more performance, a better say-do ratio and then certainly also hardwire that in incentives. So bonuses are now at risk.

I like to see leaders also with skin in the game. And it really should underpin that we need alignment with our shareholders to drive the company forward. But we are now in a second phase, improved profitability. And what is important for you to understand is we really built the foundation for innovation-driven growth, but it has to be done from a strong foundation. So we have taken choices. What are we innovating for? What is our innovation highway and what are we not going to do? It's generally been with a commercial lens, what is important for our customers, what deliver return on investment, what delivers productivity and what delivers good clinical outcome.

Then we are going to release products. And Christopher, you'll share. I'm excited to see your presentation here. And then absolutely on commercial execution, and you'll have 2 of our regional heads, Europe, U.S. here presenting on stage and from China. And then we worked a lot on our pricing framework. So we ensure that the orders we get it are profitable today and tomorrow, and then we continue to work on our COGS to expand the gross margin.

But we are really keen on moving from improved profitability into innovation-driven growth because that's, at the end of the day, what is going to deliver the full potential of Elekta that is to grow at or above the market. So we will continue to invest in R&D. As I said, roughly the way you should think about it 10%. We will continue to have a mindset of continuous release of products, not big banks, but continue. And we believe it's great for customers to buy with Elekta and then during the lifetime on the equipment, be able to upgrade. We have very strong ambitions. And I would also say proof points that we can grow above market in the U.S., we have to because we are now 20% of revenue from U.S. should be significantly higher.

And then the operational excellence will absolutely be a muscle we can stimulate a bit more. And then as we grow, we will still be a little bit tight on OpEx to see some of it invested in growth, but also some of it supporting our midterm EBIT guidance.

Then we have 4 must-win battles that really guides the organization that reflects also the phases we are on. The first, simplify, empower, speed. I just want to remind you, it's been a big reset. I think it's been great. Dust is still settling in. Everyone got -- many got new reporting lines. But essentially, what we wanted to do is 2 things, maybe 3. One, reduced number of organizational layers from 9 to 6. I know it works because when you have fewer layers, you take faster decisions. Then we wanted to decentralize and empower both regions, but also our functions. I want people to take decisions. Don't want them to come and ask me [indiscernible] because what really needs to be a core strength for a company like Elekta, we are not that big, is to take fast decisions and take decisions very close to our customers.

And then it meant that a lot of managers were leading the organization. So we have more doers and fewer checkers checking the checkers, if you will. But we feel very good about where we are, and you'll show some financial outcome. But the most important thing here was to increase velocity, make us run faster.

Then we talk focused innovation. You'll get more color, Christopher, but it's really in a company like Elekta, we have to be clear on what is important for our customers and then we innovate and then we continue to invest to support that direction. We have a strong market-leading position in China, roughly 40% market share. Of course, we want to defend that and then grow with the market. And then as I said, we are underrepresented in U.S. So we see U.S. as a growth market for Elekta.

And then lastly, on continuous COGS reduction, I would say we have potential to work closely with our vendors, do continuous upgrade to make sure we are on the latest tech stack and continue to see a bit [ IKEA ] model always to get your cost a little bit lower next year than this year, right? So that's the path we are on.

That then translate when we put it all together and we look at our order backlog, we look at the activities into a guidance for this fiscal year of revenue growth in fixed currency at 2% to 4%. We feel good about that. And then an EBIT margin of 12.5% to 13.5%, we equally feel good about that range. Keep in mind, this assuming that capitalization is going to match amortization. I'll just make that point because it's a deviation from how we have done in the past.

So -- and if we look at our midterm target, we expect the company to grow mid-single digit. That is probably over the period, slightly below market. But mathematically, we will hit the market growth rate year 3. And I would say, personally, I struggle not beating our main competitors and grow with or above the market. But that is the plan we are ready to share with you today. And then on EBIT margin, 14% to 16% with the same assumption on capitalization and amortization and then translated into a free cash flow of roughly 10%. And if you do the math going forward on revenue, it should lend to a free cash flow before dividend of SEK 2 billion. So a significant increase. And we were happy last year we saw net debt come down, and we'll probably continue to see that trend going forward.

Then as I said, mathematically speaking, with the mid-single-digit growth rate and the guidance of 2% to 4%, we will see an accelerated growth through the 3-year period. So what underpins that growth? Absolutely, first and foremost, product releases, right? We have medtech, it all starts and ends with products, but then absolutely also with commercial execution. So we'll see our expansion in U.S., but let's not forget the other markets, and that's why they're here today. Then we can double-click further on software and service expansion. But given the margin profile, it's very important we continue the trajectory on software sale and service sale.

And then lastly, it's important when you look at radiotherapy overall, while mature in Western Europe and the U.S., there's a huge unmet need elsewhere, and that translates into greenfield expansion in a number of markets. And of course, we want to capture that, and that also underpins the 6% growth that I started the presentation with.

And then just to double-click on Service and Software, as I said, it has an attractive margin profile. Service contracts are typically attached either at point of sale upon expiry of the warranty. And in many markets, I wouldn't say customers are captive, but there is a strong preference, of course, for service from vendors. In other more creative emerging markets, we are looking at how can we embed service stronger into our software offering.

And then on the actual software, we are rolling out performance planning. On our planning software, we'll continue to accelerate our Software-as-a Service. That's really our cloud-based OIS software. And then very importantly, we use software to really integrate workflows, which is a very significant demand from our customers, fewer clicks, faster productivity.

So what I would like to leave you with from my short introduction is I personally think the radiotherapy has all the ingredients to be and is an attractive industry segment. We have a strong position. We are market-leading in number, #2 in others, and that's it. And we have a focused product portfolio. We are not at full potential, hugely unsatisfactory to say. I hope I'm not going to use the same words in a couple of years.

And we will execute our turnaround in 3 phases. We give and take, believe we are in the middle of that phase. We will continue to see sales growth. Sales growth will be accelerated through the 3-year period, and that then translate into midterm EBIT targets of 14% to 16% and a corresponding significant uplift in our free cash flow.

Yes. Thanks for your attention.

Thank you, Jakob. Thank you. So the next speaker, been mentioned quite a lot by Jakob, so big expectations, and I'm sure you will deliver, is our Chief Product and Technology Officer, Christopher Busch. He's been with Elekta since 2023. Before that, he had senior R&D roles in Philips. And he will lay out the, among other things, the innovation pipeline that will support our future growth. So please, Christopher.

Thanks, Peter. So hello, everybody. I want to show you in the next roughly 25 minutes the logic behind why we will be very competitive and also increasingly successful in the market in the next few years. And I stood here roughly 1 year ago and what we presented then was a little bit fuzzy. I think today, we will be very concrete, both with our guidance, but also with our upcoming releases.

So how is the logic of my talk going to be built up. It was mentioned already focused innovation. So we have focused on from different angles on what we do, how we do things and how we choose certain things to do, but also not to do. I'll start briefly with a look at our portfolio, how it was in the past and where we are as a present as a baseline and then go into some underlying industry trends that are driving where the market is going to go and then focus very concretely on our innovation agenda and what we are going to release and how we are going to do it.

Looking at the history, as was mentioned before, we started in 1960s with the Leksell Gamma Knife with the idea of having surgery in the brain without open incisions. So surgery without a knife. And it was possible in the brain, and we have been still very successful at this to this state to work on this. And please keep that kind of thought in mind because I will return to it because we are now at a point where we can bring the same promise to the overall body of a patient.

In the 2000s, we added imaging to the therapy treatment while the patient was in the room. So this is image-guided therapy. This is the synergy was a great success and revolutionize how people were looking at radiation therapy.

Then also it's somewhat later in the 2000s, we said now we can, with this confidence of better seeing what we are doing, and able to modulate the beam to shape it much more precisely about how the tumor was looking. And this is what we call volumetric modulated arc therapy, VMAT.

Now fast forward to the 2010, Elekta made a big bold decision to really go for the ultimate in image guidance, and that was or is the MR-Linac, where we combine an MR with a radiation therapy device, both for ultimate visibility of soft tissues, both cancer, but also organs at risk, but also enabling 3D -- real-time 3D motion management. And now we are at the point where we are bringing adaptive across our entire Linac portfolio, and we can do this now because there have been advances in software, in AI, in compute power, in imaging, and they all have come together, they're all coming together to make this possible to be scalable, not just for the academic centers, but for the broad application in the clinics.

Now this is a slide you have seen before. My point here is that increasingly, this is not a portfolio of individual products that are isolated and are developed in isolation. But increasingly, they are -- have a similar backbone, whether that's a workflow-driven backbone, whether it's a user experience backbone or whether it's just a software backbone. My focus will be today on the CT-Linacs, MR-Linac and our Elekta ONE software suite, but also these specifically on the software side of things, these topics are being applied into the brachy and into the neuro region.

And the most important product that we currently have and we focus on, and that is also going to be the core of what I will show you is the CT-Linac enabled through software-driven innovation. It's not a device story, it's a software device combination story.

So what are industry trends? And I will focus on 4. In the past, there was a choice clinics had to make. Are we going for high productivity, short treatment, standardized? Or are we going for personalization, complex treatments. And you had to go either way. Now with the advances of the technology, and we come back to that, this becomes not antagonistic anymore. You can have both. The margin of marry that you have to do if you want a productivity is less. It's not anymore as high as you had when you did in the past.

Come back. Number two, to do this, to achieve number one, you also need to make sure that there is no less safety efficiency and accessibility. And that requires a deep scale of integration of different technologies. You cannot look at them in isolation. You cannot look at the treatment planning software independent from the Linac, independent from the imaging, independent from the data storage.

As was mentioned by Jakob, this enables dose escalation, and that's a very important stepping stone to hypofractionation, and I'll talk also a little bit about ultra-hypofractionation because ultra-hypofractionation is nothing else than radiosurgery, bringing us back to the idea of the Gamma Knife.

And then lastly, I will talk a little bit about why clinicians and also now reimbursement tiers are going to favor the uptake of these complex treatments. But if they want to be taken up at scale, they need to be accessible and easy to use. They cannot come at the cost of a large number of extra staffing or at very complex treatments that nobody or very few people can actually partake.

So when you look at personalization productivity, if you look at the ultimate radiation therapy device for personalization, that used to be the MR-Linac. It has all the imaging. It has all the control of our dose. It has the real-time motion management. You can really see what you're doing while you're doing in 3D in motion. But this came at a price of reduced -- increased complexity and therefore, reduced productivity. You need a highly trained personnel, you need longer treatment session and therefore, the commercial value for this device was less pronounced.

On the right side, you see the Elekta CT-Linacs and the CT-Linacs have been optimized for a long time now to make many treatments in a short amount of time. So treatment sessions of 10, 11, 12 minutes and making sure that you get a high number of patients through. So they are building increasingly on simplicity. And now with technology, as I mentioned, AI, GPU power of the compute and enhanced imaging makes it possible that these things become enabling each other. And I'll show you examples of that.

So the goal where we are going, and that's industry-wide, is increasingly autonomous and often adaptive treatments that are still efficient. And we talk about this. You have to say you want to do this, but it cannot come at the price of either safety, efficiency or accessibility. So workflows that used to be done in weeks from first imaging of the patient in the simulator, doing or doing contouring segmentation and then later making a treatment plan and then depositing the dose in 30 fractions or so over a course of weeks to the patient now becomes compressed to minutes. And that's fantastic.

But of course, if you compress a lot of work steps into a few minutes, the risk of something going wrong, the risk of overseeing something is becoming increasingly larger. So you have to think about how can we make sure that all these work steps, and you see here on the right, the diagram about what needs to come together, how can we make sure that this is developed, tested, verified in a safe way. And that's also what we see when we look at regulatory bodies, specifically in the U.S., who tell us as vendors, it's great that you want to offer this to customers, but please show us, demonstrate to us that this is fail-safe, that the risk of something going wrong is very small.

And so we believe this requires deep co-development of these connected workspaces and also a shared integrated system architecture. And that makes when we talk about how we do innovation in Elekta that people are working on treatment planning software, people working on the Linacs, people working on the control systems, people working on the OIS, they need to work increasingly together. change of how we do things.

Now the third industry trend and it has been going on for years that what used to be 40 fractions became 30 fractions and 20 fractions. So fewer fractions with higher doses the trend towards hypofractionation. And where we are leading as Elekta is that now you see clinical studies. You see here the Hermes study, and you see here an ESTRO release from earlier this year, where we go to this ultra-hypofractionation, which we believe will enable breakthroughs and how productive linacs and specifically Unity can be.

What you see here is that people have now evidence that you can reduce the number of fractions for certain cohort of prostate cancer patients down to 2. And you can deposit that kind of amount of dose in 30 minutes and less. So what this means is that you can start treating prostate cancer in 2 fractions or 30 minutes in a total of 1 hour. And I'm not going to talk about sim-less size, simulation less treatment planning, but this is a breakthrough, both from a productivity perspective, but think about it from the perspective of a patient, think about it from the perspective -- commercial perspective of a hospital. And this is prostate and it will go to other organs as well.

So we believe this will lead in or is leading in an era of stereotactic body radiation therapy that is building on the original thought of the Leksell Gamma Knife, but bringing the same kind of principles now to the rest of the body because technology makes it possible. And Elekta is leading because to do -- to go this extreme, you really need the technology of an MR-guided system to be really confident and sure.

The last one I want to talk about before I move over to our own portfolio is we see significant shift in reimbursement. On the left, you see the U.S. where even as recent as the beginning of 2026, the U.S. reimbursement coding has been simplified to have tiers of simple, medium and highly complex treatments. And Ardie will talk a little bit more about it, but the reimbursement for simple treatments has gone significantly down while the complex treatments still have a very interesting billing structure.

What that means now is that we have a problem for small clinics with few highly trained professionals because to be staying in business, they need to move to highly complex treatments. But at the same time, they have the staffing they have, both the number of people, but also the education level. And that's the dilemma that we are helping them to resolve. And the clinicians who are forced or also want to go into this direction when asked about what's the most important thing that you need, it's motion management. Motion management, we have, of course, on the Unity and the MR-Linac, but we are now bringing it very shortly also to the CT-Linac.

So let me switch gears. That was the background why we are doing what we are doing. But now focusing on what we are actually doing. So first, what are we spending? And here, you see an overall gross R&D spend as a percentage of revenue developing over the last few years. And you see that we are committing ourselves as Jakob was already also showing to a 10% R&D spend over sales. We believe this is above medtech average and is also at the right level to ensure that we have enough innovation funnel to drive a market-leading position. And I'm in my role, of course, Chief and Product Technology Officer, always trying to say, let's make sure that we invest enough, but this, I believe, is enough.

And why do we believe this? And you see focus on 6 or 5 different topics over the last few years. So we didn't start just a few months ago. This has been going on for some time. First of all, we have focused the share of our most important investments on core products. So saying what are the top 3, 4 products that we absolutely want to be leading in that we need to be cutting edge, that means that we shifted resources towards these vital few.

We also looked at what are the real top requirements from our customers. Not what we hear is nice and it's great, but what is really driving our customers' overall performance. And that can be clinical, but also very often, it's nonclinical. It's about how easy can I service a Linac? How easy is it to upgrade my software? How fast is it for me to have a service that is proactive instead of reactive, all these kind of things.

What we have also been doing, we have taken some tough decision saying we have to have more focus also in the number of our development sites. So smaller sites, we decided to maybe not continue there, but co-locate people, bring them together also in view of having to have to work closer together across different products and therefore, not only get people closer together, training them, upskilling them, making them sure that they have the right competencies, forward-looking with data science, AI next to the core of mechanical and electrical engineering. And overall, we have also done steps for process simplification. Looking at this company of the size of Elekta, we might have had a few processes that were a little bit over the top, also make it easier to innovate faster.

We shifted innovation also to cost innovation, taking out costs in our bill of materials, but also the cost to serve. And we have been, for the last few years, also shifting resources and capabilities towards software development because without the software, the device will not be up to date anymore.

So I want to go into 4 different areas now very concretely. So this is now a switch to the Elekta portfolio as it is and will be very soon. Starting with CT-Linacs. I said, this is the highest priority for us right now. I will also share some exciting developments in the Unity in the MR-Linac space. I already alluded to that we can do now much more efficient treatments with the Unity. A key enabler for that is treatment planning, both in online adaptive, making it fast, but also as a stand-alone departmental software solution. And of course, oncology information system is a data backbone for the oncology departments, and we are upgrading our offer there as well.

So the CT-Linac. What you see on the left, driven by increasingly adaptive treatments, now motion management, come back to that and important for us to be able to offer this as an upgrade option to our installed base that people can do this in a gradual way without having to throw out the old linac when it's not necessary because of old age and continue to work with what they have and build on that. So what we have already today is our online adaptive, Evo. And we already have the AI supported what we call Iris, which is the brand name for our next generation of imaging algorithms for pelvis.

So what's coming in, in the next 12 months? And these are all for me, part of one big launch phase or wave, maybe you should call it wave. First of all, on the top row, you see 2 imaging-related ones. First one, next-generation AI, Iris, second one, real-time motion management, which is really something new. And below, you see C and D, which are workflow related. Integrated console, a software package that will make or is making workflows in the therapy room much smoother, less clicks, fewer clicks. And we are also releasing a new integrated table with 6D versatility that will go hand in hand and therefore, this line with the integrated console.

And let me double-click very quickly on each of those 4. Iris. We have released Iris for Pelvis some time ago, and we are deploying it. That's why I call it scaling to our installed base and upgrading or selling new Evos with this functionality. What is now new is head & neck and brain, also very important body side for radiation therapy, which benefit now from the increased image quality of Iris.

But next to that, and therefore, not so easy to show in the nice pictures that we are also increasing the imaging frame rates, roughly doubling them, a little bit less than double. That's important for image acquisition speed. And we're enhancing the quality of these cone-beam CT to a level that you can directly use and import these images in the treatment planning. And that's a little bit more technical, something called Hounsfield units where you need to have electron density that are accurate enough to be able to be used for the dose absorption calculations.

It's really exciting. And this is, of course, only the beginning of what will come because we are looking at motion management, artifact metal artifact reduction, gas bubble artifact reduction and so forth. This is a very interesting road map, also an upgradable road map for the coming, I would say, 5 years at least.

This one, I am personally really excited about. With Unity, we brought 3D real-time motion management to the RT space. And what is now happening that we are enabling in a different approach because it's not MR, it's CT, the same concept to be applied also on CT-Linacs. So what is it? It's real-time 3D tracking of internal organ motion. So not looking at the patient from the outside and seeing that the patient is breathing and then trying to say, okay, what's happening inside the patient, but directly tracking of what's happening inside the patient using existing x-ray kilovolt cone-beam CT imaging infrastructure.

So no need for new hardware. You can use what you already have. And that makes it different from some competitors who are adding extra x-ray beams to the patient's room, but that means modification, very expensive and also, of course, something that, yes, it's very expensive for people to do. This is a software-driven innovation. This is going to be available to our existing installed base.

We have chosen prostate cancer as the first release application. Motion management is very specific. motion of a prostate is different from the breathing motion of a thorax. It's different from the motion of a pancreas. So we have to be body site specific, prostate or first release, others will follow. This is a key enabler for the reimbursement options that I was referring to earlier and that Ardie will also talk about a little bit later.

This is going to enable with existing equipment on the device side, our customers in an easy -- rather easy way, and you see this diagram on the right, this is the user experience, and this looks very similar to what we have introduced to comprehensive -- in comprehensive motion management to our Unity as well. So you see also convergence of user experience. And this is a foundation for a new innovation path on real-time motion management in CT-Linac that we are the first to introduce.

Okay. Let's switch over to the integrated console, so more to the workflow inside the therapy delivery. Integrated console is a software application. You see here a screenshot of one of these integrated console interfaces. And what it does, it is guiding the workflow, helping the technologists, where are we, why I'm in the workflow, what's my next step? It has integrated imaging tools that -- where you don't have to change between different screens, which is image acquisition, the registration of the image and then later the review of the images.

Obviously, this has a large viewing area, as you can see. And it also enables continuous system monitoring, the quality assurance of the system. Is my linac up and running and performing in the right way. And it has interactive communication tools. This has been CE approved already for our Harmony linac. And it's a pleasure to say that we have been starting to treat or actually our customers, first pilot site has started to treat customers with -- started to treat patients with this solution as we speak. So this is not future. We are piloting it on the Harmony. We are going to learn from what is going to come from it, feedback, how can we tweak it, make it better.

And then we will have a broad release on the Evo next calendar year, and that will go in conjunction with the integrated 6D table because these innovations best go hand in hand. And what I'm not talking about here, but what is actually also very relevant that on the back end, we have a new and modern interoperability API, application programming interface that will make access to our linacs from third parties, whether that's surface-guided radiation therapy companies or others, more harmonized, easier, much in a modern and controlled way. So there's also an interoperability play that we're doing here.

6D table, let me be brief looking at time. As I mentioned, it is increasingly integrated with software, the integrated console, the integrated table hand-in-hand, higher, better ergonomics for patients. We have better modern user interfaces in the handheld controller for the technologists who do this every day many times. So for them, small improvements are really important. And this also has a value proposition of a quicker and more accurate patient positioning that's really relevant if you want to apply stereotactic radiation surgery or stereotactic body radiation therapy. These are the highly reimbursed kind of procedures that people are flowing towards.

CT-Linac. Now let me go into a little bit more detail on the Unity. Unity has been around for roughly 6 years. And we are now introducing a new package called Unity Pro, which is going to be a step change in MR-Linac productivity and customer return on investment. What we already have today many enhanced MR imaging packages that are helping to make better pictures faster. We have introduced comprehensive motion management, making it easier to gate and to make sure that motion in the body is being monitored and then also managed.

What's now coming up is, on one hand, what we call visual guidance, which is a breathing feedback loop for patients to give them help how deep do I have to breathe in, do I have to hold my breath, makes it easier, increases the productivity of treatments because patients are more compliant.

And on the right, AI-enhanced automation tools, MR-based auto segmentation, GPU-enabled dose planning and some enhanced tooling. But what this enhances is that on the left side, you see that the typical treatment time on a linac with Unity was roughly 45 minutes, sometimes 50 minutes. But basically, the hospital had to plan for 1 hour per patient. With this, we can predictably go for bladder and prostate cancer patients, not all, but for these 2 treatment slots of 30 minutes. That makes 2 patients an hour. And for hospitals who are looking at productivity and the number of patients they can treat per day per year, this is doubling the business case, and Ardie will talk about this a little bit more.

But what is also happening next to the productivity that roughly 6 years after we introduced Unity, we are now also seeing clinical evidence of efficacy superiority coming in highly profiled trials to the market. On the left, you see a study called UNITED, which was recently published in the Lancet Oncology, so the highest profile oncology journal that there is that basically says with MR-guided adaptive radiation therapy, you can reduce the size of the volume you radiate in the brain for aggressive glioblastoma patients by 40%.

And coming back to Mr. Leksell's idea, the brain is very sensitive. So you want to radiate only very precisely the tumor 40% less means significant reduction of side effects and side effects in the brain mean severe mental and intellectual deterioration. And at the same time, survival rates stay the same.

On the right is another one, very different application, where also now it becomes evidenced, not hypothesis, but evidence-based that if you have prostate cancer and you want to avoid erectile dysfunction side effects that with this technology, very precise radiation, you can reduce the amount of erectile dysfunctions by roughly a factor of 2. Again, not a 5% or so, it's a factor of 2 reduction. So significant advances.

And we have other examples where we look at pancreatic cancer, Memorial Sloan has recently published an article where they said in their first studies, they show that the 2-year survival rate for pancreatic cancer very difficult to treat, has gone up. The 2-year survival rate has doubled. Again, a factor of 2, not a 5% or 10% increase. So this evidence will make this attractiveness for this kind of treatment significantly higher. At the same time, the productivity, so the complexity that you have to -- the cost of complexity is becoming manageable with 30-minute treatment slots. So there, we believe that we're really entering with Unity Pro, a second generation, a second phase of our MR-Linac product.

I will be very brief in this one. Treatment planning is an example where Elekta was not cutting edge a few years ago. But with Elekta ONE Planning, we are there right now in a very competitive situation with any competitor that there is of today. You see evidence here with talk about 10x improvement in GPU speed, but we're also putting a lot of effort to making it easy for our customers to upgrade. And here, you see a reduction of the upgrade time from 4 hours to 30 minutes. This is important because these 4 hours or 30 minutes is the time that our customers lose in productivity in the clinic.

We have upcoming releases for remote collaboration. In online adaptive, the doctor has to approve plans more frequently than in the past and the doctor does not -- cannot come to the treatment room all the time. Therefore, we make it easier from remote to not only do the plan review, but do an approval that is also then used for billing. So it's documented. And we introduced performance planning, which is our entry point for people who say, we don't have the full -- we don't need the full range of what Elekta ONE Planning can do, but we want to do the hard core increase in the planning speed that is shown here with 10x.

So we are very bullish about this and also because this is not a stand-alone software offering, which it can be. But when you talk about online adaptive, this is the software that's driving the brain of the online adaptivity while the patient is in the treatment room.

The last slide I want to show is our Elekta Oncology information system. We have a large installed base. It has been around for a long time, and we have gotten a lot of feedback and getting a lot of feedback from customers saying, you need to make sure that this stays up to date and it feels a little bit dated. So we are putting a lot of effort right now into performance enhancement where we say we reduce software latency, we make the scalability to very large centers that have 20 years of data from patients. And we also, of course, invest in continuous future enhancement like compatibility and integration with online adaptive.

Workflow, we are integrating now very focused our different offerings in Elekta ONE to make it faster, more automated, fewer clicks. We are working on better interoperability with third parties, for example, EMR providers, and I mentioned already the improved planning to treatment.

And under the hood, which is not visible to our customers yet, we are working very diligently to make sure that we have an updated technology stack that fit for future. Also here, lower installation efforts, but also providing the foundation for scalable Software-as-a-Service delivery moving forward. And I think Arnaud and Ardie will talk a little bit how important that is for also our money monetization with Software-as-a-Service models. We have now semiannual releases, so twice releases. We have 6 -- we have had 6 releases over the 3 years, and it's a continuous improvement effort. So here, there is still work in progress, but there is a significant improvement of what we can offer to our customers.

So the 3 points I want you to take away. We have a commitment to spend 10% of R&D -- of our revenues in R&D. and this is appropriate to make sure that we have a market-leading portfolio. We also look at our focused innovation agenda and also look at more what is most important to our customers. And as we speak today, the most important, the #1 repriority of our customers is increased productivity without losing access to complex treatments. And this, we are committed to have a predictable and fast release cadence with upgradability, and we have shown you a few of these highly impactful releases that are coming in the next 6 to 12 months. So this is not -- that's not '24, '48 kind of outlook. These are committed road maps that we will deliver on very soon.

And with that, I hand back to Peter.

Thank you, Christopher. So we are coming to the first break. A few things. Online, you can post your questions. I think it's on the right top corner for the Q&A that we're going to end the CMD with, so you can start doing that already now. So the time is now approximately 3:00. So I expect everyone to be back in their seats at quarter past 3, and that goes as well for you online. Then we'll start the next session, which is about the market areas and then ending with financial. So welcome back in 15 minutes.

[Break]

Great, and welcome back both here in Stockholm as well as online. Some remarks break. I'll start seeing that we are posting questions online. That's perfect. It would be great if you do it in English, that will help you in the Q&A to start with, but that's great. So we're moving now from product into market areas. And we're going to start with Europe and then Americas and then China.

So the first one out is Arnaud Delhaye, who is heading up Europe since 2025. Before that, he have had different senior positions within Medtronic and Johnson & Johnson. And Arnaud will talk a lot about the success we have had with Evo, but also how that actually can convey into further growth for the coming years. So please, Arnaud.

Good afternoon. I'm really happy to be here and be the first regional leader to speak about Europe, the region we are in. So Europe is a very dynamic market in radiotherapy. And for Elekta, it's a strategic region. And I'm going to share with you why both it's a strategic market and it's very important for Elekta.

Starting with the market size. Europe represents roughly 25% to 30% of the overall global value of the market. And interestingly, it's 1/4 of the installed base, which is not necessarily always the case in the large medtech organizations. This is due to a few factors. The first one is radiotherapy is seen as a cost-effective and well-reimbursed treatment modality by the market. It's well supported by public health care systems, even if there are, of course, some challenge like any public health care systems, but it's pretty stable, it's growing and it's dynamic.

The second aspect of the market is its appetite for new technology. As you -- as we all know, we launched Evo first in Europe. I'm going to share with you how we are doing. So the market is -- the barriers to enter the market are there, but they are not as tough as they can be in other part of the world. So it's a good platform to launch a new technology.

The third element of our market in Europe is its geographical mix between Western Europe, which is a mid-single-digit market growth, mostly driven by a replacement cycle and the Eastern part of the European region, where we see double-digit growth potential, mostly linked to capacity expansion, infrastructure investment in the market. So in summary, if we dezoom a little bit on the market, the market is stable, is growing and is a technology-driven market.

Now turning to our performance in Europe. Over the last 5 years, we have seen consistent growth of Elekta in the market. And now Europe as a region weights for 32% of the overall performance. There are 3 -- it's a good growth, but it's not the ambition we've got. We believe that we can grow faster and more profitably in the region.

We have -- we are going to focus on 3 main commercial priorities in Europe. The first one is the upgrade. We want to capture the upgrade cycle. I will detail with you what's the opportunity in front of us in the next slide. That's the #1 priority. There is a replacement cycle in front of us for CT-Linacs that represents a major opportunity. And Evo is absolutely well positioned to capture this opportunity. The second one is to accelerate our growth in recurring revenue, notably service and software and software as a subscription model as SaaS. And the third one, we have to step up our ability to execute better. We are doing well, but we can do better, and we have to do better. So those 2 factors will -- those 3 priorities, sorry, will help us to keep growing in revenue, in market share and in profit.

So let's look at the biggest of our opportunity, which is the 1,000 linacs that are open for replacement. So as I shared, the market today is a market with around 3,900 linacs installed, well known. We know where they are. And as an average, the customer keeps the system 12.5 years before they think about replacing their system, their CT-linac. There are 1,000 linacs that have reached 12 years of age, between 12 and 17 years. 1000 in the market. So this represents a unique opportunity for us to position Evo as a replacement of choice for them as well with the adaptive option. So that's the biggest opportunity we've got.

The good news about it is that we know where they are. We know how they are going to make this acquisition via tenders or via direct procurement. And it's a sizable market that we can approach pretty simply for a commercial organization. That's the #1 opportunity we've got. And we believe that Evo has the best potential to capture this opportunity.

Now in parallel, we have seen a very interesting growth in our recurring business during the last 3 years. And today, we have increased by 5 points our recurring business. So the Service business and the Software business. The Service business, it's mostly linked to renewal of our installed base, new contract, simplification of our offering, price increase on our service contract. And the second one is the Software penetration that was linked to the Evo launch. So plus the new acceleration we've got in SaaS.

So it's one step. It's a very interesting base business for us because it's highly predictive in terms of revenue, 48%. We can do better. Jakob shared that it's 45% at group level. Here, it's 48%. So it's highly visible in revenue. It's high quality of margin and it's highly predictable. So no big surprise. It's a recurring business coming every year. So we believe that we can really create much more value coming from this source of business.

But all those 2 priorities, the replacement cycle and the increase in revenue generation from recurring business are strong priorities, critical priorities, but nothing will happen with a step-up in commercial execution. So we have reorganized the company. We have reorganized the regional region Europe commercial sales force. We have delayered the number of managers. We have reinvested in new salespeople, stronger talent, stronger salespeople who are here to hunt and capture market share.

So we are raising the bar in the sales organization, much more discipline as well in terms of pricing. We have simplified our portfolio. Today, the portfolio is much more leasable for the customer and for our teams with much more price discipline on average selling price. So we are raising our price in average selling price. We have as well a big mandate to increase our price when we renew the service contract every year. So we try to have this discipline of systematically renewing and avoiding multiyears of service every year. It captures a growth in terms of revenue and directly profit.

We have changed our order fulfillment organization. So when we sell a system, it takes time, of course, before we install the system and the system becomes clinically available. So we have analyzed all the steps that we can improve in terms of cost to serve, in terms of customer satisfaction. So we are trying to reduce the time to install, increase the customer satisfaction in this journey of installation.

And lastly, we have a big opportunity in terms of lifetime recurring revenue and revenue of an account. So every -- we are going to change the way we see our own account instead of going just to replace and invoice service contract. We take the account as a whole with an account team made of service team, order fulfillment team, application specialists and salespeople who are here to maximize the profitability of every account by upselling, upgrading, securing retention and maximizing the value per account for the company. So it's a question of volume, but it's more a question of profitability per account for us.

So with all those priorities, so this replacement cycle, the recurring revenue from Service and SaaS and with this uptake in commercial excellence, commercial execution, we are going to -- we have an ambition to on the base of the 8%, we had a very strong year last year, 8%. So this is the effect of Evo launch in Europe, 70% of our placement and the uptake in software. We have delivered this strong performance, and we believe that we can deliver a strong single-digit growth over the next 3 years. Europe will remain a core contributor of the company. And with this reinforced discipline, the performance can offer us potentially upside. Thank you.

Thank you, Arnaud. Thank you. So moving from a region, which has delivered well on the launch of Evo, moving to a region where you have a great potential based on the launch of Evo. We will have our Head of Americas, Ardie Ermers. He started in the company in 2022 as Head of Europe, and then he moved to U.S. and heading up that organization. And before that, Ardie had a few senior positions in Philips and spent quite a lot of time during that period in U.S. So he has that background. Again, so he will talk about the turnaround, how we regain our position in the U.S. through product launches.

Thank you, Peter. Good afternoon. So after winning in Europe, now we have to win in the U.S., one of the biggest markets for radiotherapy. And I'm going to explain how we're going to do that. First of all, let's talk about the market. A lot of this is known. But as you saw in the graph, 25% of the installed base, but 35% of the value. This means high profitable business. So it's really important for Elekta to perform in this marketplace. This is where you get maximum value for the solutions that you offer.

If you characterize the market, it's a replacement market. You don't see a lot of greenfield new hospitals being built. It really is about holding on to your installed base and making sure you have competitive flips. The other characteristic of this market, and you've seen this over the years, it's really been driven by paper fraction, which is really counterintuitive of what we are developing in this space. More fractions means more payment. That's not good for the patients.

You can imagine if you're a patient, then you have to go to the hospital 30 times to get treated. When you know that there are better solutions out there where you can get treated in 5 fractions or like Christopher said, maybe even 2. So this is our goal to make sure that, that becomes accessible in the marketplace.

Also in the U.S., you see a steady decline of the number of fractions, and you wonder what's behind this. And you see some of the more academic-based institutions going to SBRT treatments. In some cases, 30% to 35% is SBRT. Now these are complex treatments, and they are very sophisticated. So you have a lot of people that need to be in the room in order to perform these procedures. That's a barrier to get access to adaptive therapy in the rest of the market. So the goal for Elekta is to make this very simple so that you don't have to be at NYU or Sloan Kettering or MD Anderson to perform these kind of treatments.

And then last but not least, you've heard about the reimbursement challenge. ESTRO even published on it and said, we have to focus on improving the reimbursement for radiotherapy. The conventional treatment IMRT method is under pressure, which actually creates a great opportunity for us at Elekta. And let me explain to you why. Over the last 10 years, we've seen constant cutting and cutting on the reimbursement per fraction on IMRT. This year was really chaotic because they launched the new billing codes. They really reduced the complexity of the billing codes, but they also said there's another cut on IMRT.

Now what they did not cut is SBRT. And like I just explained to you, the movement of the market is towards SBRT treatments, treatment in 5 fractions or even less. And if you do this in the right way and you actually get the SBRT code and the adaptive plan built, there is an upside of $10,000 per patient. Think about that. If you go this route of adaptive radiotherapy, you will see a $10,000 improvement per patient. So this is a great opportunity for us because as a company, we have invested and committed to adaptive radiotherapy.

And to quote one of our key collaborators at Kettering Health, which is not an academic medical center, they basically said 2026 cuts brought to pain. And he said, Elekta brings the aspirin because we are helping to keep these customers viable and able to grow. So if you are in a community-based hospital or even a freestanding clinic, you will need to go to a solution that can do adaptive therapy. And this will trigger replacement of these linacs. So if you combine SBRT billing with adaptive workflows, you have a chance to survive. And guess what? This is the strength of Elekta.

But let me bring you back to last year, virtually out of Seattle, it was 3:00 a.m. for me, and I talked about hope and promise. We are not happy where we are in the U.S. As you can see, the percentage of our share in the company is way too low. We need to win in the U.S. And Jakob reminds me on a regular basis that, that needs to happen.

Now in brachy and neuro, we've actually held our own very well. We are leading in this space. We saw good growth in brachy and neuro. Remind you that it is a high profitable business, but our Achilles' heel has been the linac side. And as you saw today from Christopher, the commitment to address this portion of our business is rightfully there. And therefore, I'm going to talk about 3 commercial strategies to win in the U.S.

The first one is to commercialize Evo and Unity into this space of adaptive therapy. We've done it in Europe with proven results. We are doing it in the U.S., and I'll show you how we do that. The second piece is get the installed base growing again so that you can attach service because service agreements are very profitable for Elekta. But if you can increase your installed base, you also need to have a good attachment rate. I'm happy to report our attachment rate in the U.S. is over 95%. So if we grow our installed base, we attach good service agreements to those, and we will see obviously that profitable revenue coming in.

And last but not least, and this is the secret to the success of adaptive is to start combining this again with a world-class treatment planning solution. And that really is the proxy to go to Adaptive because if you're going to condense these workflows down to minutes, you need to make sure that the solutions that you have implemented in your department are world-class and you can trust. And that's our Elekta ONE Planning solution.

So let me unpack the first priority. We listen to our customers, and this is what they said. I would love to go to adaptive therapy. We see our friends at the academics do this, but I don't have the staff for it, and it takes way too long. The averages that we see is 35 to 40 minutes. I cannot afford to put my patient on the table for 35 to 40 minutes. This needs to go quick. So what has Elekta done? We've reduced this total workflow to 15 minutes, which fits in the standard treatment slot. So you don't have to make a sacrifice. You don't have to start planning for 3 treatment slots in order to do an adaptive case.

The second thing is it needs to be simple, autonomous. It needs to be intuitive. I cannot have 10 people in my treatment room. This needs to be done, and we've seen examples now in Europe with one physician and one physicist.

And last but not least, we call it adapt for a reason because in some cases, the tumor does not respond, so you don't need to adapt. So we have not created a black box. We have created a completely open architecture, adaptive workflow where you can decide if you want to adapt or not on the fly. That's really crucial because you don't know which patient is going to benefit when they're on the table. We call that Evo with Iris, and that's why we believe that we're going to start taking market share in this space.

The second portion is you've seen this over the years, MR-Linac has a great future. It is the stalwart of radiotherapy. You can actually see the tumor as the dose is being delivered. But also the feedback was, yes, but mainly academics use it. And the reason for that was because the treatments were complex and they were long. So what we heard from them is the investment profile of the Unity is not attractive for us. And while academics have found money to invest, we as integrated health networks, we feel the business case is not strong.

Now enter Unity Pro. We have now enabled 2 patients per hour, which means that the average amount of patients that are treated on the Unity go from 300 per year to 600 per year. That means that the return on investment of the Unity goes down to 13 months, almost equal to a linac. That opens up the door, and we start to see evidence that institutions like Providence and institutions like Orlando Health are starting to put unities in their flagship hospitals. Now that opens up a big market potential for us.

On top of that, marketing in this market is really -- marketing is really important in the U.S. market. If you can go to prostate cancer patients and say, come to my institution and I treat you in 2 times 30 minutes, that opens a lot of pool. Instead of them flying to New York or going to Houston, they will come to your local hospital and get treated for prostate cancer, which is the highest volume cancer in the U.S. and globally, actually.

And then last but not least, unlocking new treatment methods. In the past, you would not do liver or pancreas cancer on linac because you can't see. What we saw in our superiority studies is now you can actually treat pancreas and liver, which open up a complete new revenue stream for the hospitals. So the combination of investing in adaptive therapy on CT and MR unlocks a new market potential, and we're starting to see the evidence that this is working.

So by focusing on our installed base, last year, I talked about the aging of our installed base in the U.S. This is now a great opportunity for them to replace their older linacs and start upgrading to Evo. And we've seen the evidence that, that is happening.

Second question you asked us, is this really competitive? And we go up against our competitors, and we show them how we do adaptive versus what they show us, and we win hands down. What has that done for us? Last year, -- last year, we had a 30% solutions order growth in the U.S. based on this strategy. Double-digit Evo orders and twice as many Iris upgrades because Iris unlocks the imaging potential.

And then most importantly, again, starting to look at Varian flips, taking Varian linacs out and putting Evos in. So really nice that we are showing these results. As you know, first, you have to get the order, then you need to get the install. So we'll start seeing that pull-through in our revenue in this coming fiscal.

Second part of our strategy was to make sure that the installed base starts growing and start pulling through our service. These are obviously the key drivers for profitable growth. And we believe with a higher installed base, we also will see a better service revenue. On top of that, we've been able to drive better price increases. We obviously saw the inflationary pressures. but we've been able to get a higher price for our service agreements, also because this is very sophisticated technology. And our customers are starting to move away from in-house services and putting it back in the hands of Elekta.

And last but not least, Software as a Service. We've been able to really increase the value of our Software-as-a-Service contract. We move away from standard maintenance and service, and we moved into a SaaS agreement. And that really helped us boost the profitability of our SaaS -- our software business on the service side. And lastly, we talked about what is so secret or what is so special about your adaptive workflows.

The key of all this is the world-class TPS solution. We saw a 50% uptake of TPS in the marketplace. Why is that? Because now we have world-class workflows that are really, really fast and of high quality. We're the only one that has Monte Carlo-based dose planning, but now we can do it fast. And on top of that, it's very easy to install. So what's the commercial effect of attaching software to hardware? Obviously, you boost your margins.

And last but not least, once people are comfortable with TPS, they open the door to go to adaptive treatments. So the barrier to go to these complex treatments has been lowered tremendously with our software solutions.

So like I said, we are not happy with the position we are in, in the U.S. We've been eating our order book, and we needed to innovate on the CT-linac front. And as a result, we saw a 6% decline last year. But based on the fact that we saw a very strong order intake here that will translate to sales revenue, we expect a mid- to high single-digit revenue growth CAGR over the next 3 years.

So with that, I hand it back to you, Peter. Thank you so much.

So let's move to the last region, which is China. We have prerecorded a video from Anming, who's been heading up Region China since 2017, before being with Elekta for almost a decade. Before that, he had senior positions within Siemens. So he will bring us back to the market share, the leading market share that we have in Elekta in China and how we'll keep that, but also leverage from the recovery of the market. So you will see that on the video.

Hello, everyone. After the Americas and Europe, I will briefly talk about China. China is a large and relatively transparent market. We have a good visibility on volumes, competition and policy. At the same time, demand in China is driving quite differently than other radiotherapy markets.

I'll make 3 points, how the market is evolving, how we are positioned in this market and what this means for our priorities. Starting with the market. China represents around 10% of the global RT market in value. The market is now recovering. Before this, the anticorruption campaign reduced over volumes over the past 2 years and revenue followed with a delay. 2025 was a turning point. Based on updated data, we saw over 250 linacs sold. In 2026, we expect around 10% growth, reaching over 270 units.

There is still a clear unmet demand. Today, China has about 3,000 installed linacs. Based on the current instance, the need is closer to 5,000. What is changing now? How this demand is being unlocked. Model-based procurement is being rolled out more systematically with at least one round expected per product this year. It increased pricing pressure. but it allows more hospitals to adopt radiotherapy and create life cycle value over time. In parallel, reimbursement is also improving.

Pricing for key advanced applications like SBRT and VMAT has been increased. MR and CT adaptive radiotherapy are also included. This improves the financial return for hospitals. Growth is returning. At the same time, the market is becoming more competitive and life cycle value becomes more important. In China, we welcome local competition as it supports market development.

Elekta remains the clear #1 with around 40% market share by revenue. This reflects our strong market position, supported by our focus on the higher-value segments. So we entered this next phase from a position of strength despite recent market volatility. China remains a key market for Elekta. As the market recovers and the competition intensifies, our goal is clear. We will not only defend our leadership, we will strengthen it. We will do this through 3 key priorities: accelerating localization, strengthening our ecosystem partnerships to capture life cycle value and deliver a China tailored portfolio offer.

Let me walk you through this. First, localize R&D and manufacturing. What sets Elekta apart is that we are the most comprehensive radiotherapy player in China. from brand to body, from radiotherapy to brake therapy and from core treatment to digital management of radiation oncology departments. We offer hospitals everything they need to deliver high-quality cancer care in a sustainable way. We support this, we continue to deepen localization across our portfolio and across our supply chain. This includes frontline local manufacturing and a strong software R&D in China.

Second, life cycle value through partnerships. We have the largest installed base in China. Value goes beyond the initial system sale. It comes from upgrade, software and service with strength partnerships across the ecosystem. The work closely with leading medical centers to accelerate clinical adoption through collaboration, training and education. We also partner with local players, including pharm and to improve access, local service delivery and solution capabilities. As the market recovers, the value will increasingly come from life cycle management beyond the initial unit sales.

Third, China tailored portfolio offering. China has diverse and evolving clinical needs and increasing focus on both access and the quality of care. To address this, we developed China-focused products that include local clinical workflows and requirements. With our local manufacturing, R&D and ecosystem partnerships, we can respond quickly to these needs.

Elekta Harmony Pro is a key example. Developed and manufactured in China is a one-stop intelligent adaptive radiotherapy solution, combining online imaging guidance and steotactic treatment. In adaptive radiotherapy, we are clearly a leader in China, recognized by key customers, key op leaders and the government. In fact, Harmony Pro is the only project selected at a national level for this technology, led by Elekta together with leading customers, including Peking University, People's Hospital. In the first half of the fiscal year, 2026, we are still impacted by the anticorruption campaign. We saw improvement in the second half of the year and ended the year at minus 6%. As the market recovers, we return to mid-single-digit growth, supported by these priorities.

To conclude, China's radio therapy market is recovering with strong long-term potential. Elekta is the #1 player in China in that market with our focused strategy, primary positioning, de localization, strong partnerships and a tailored offering with leadership in adaptive RT, we are well positioned to deliver sustainable and profitable growth in China. Thank you.

Thank you, Anming. So we're moving to the last presenter, and that will be our CFO, Klara Eiritz. She joined Elekta in March. Before that, she have held numerous senior position, as example, CFO of Volvo Construction, CFO of Ericsson Europe and Latin American region as well as numerous positions within Sandvik. So her part will really be to close the loop, give numbers behind everything that has been told today. So with that, Klara, the scene is yours.

It's best for last, right? Yes. Great. Okay. So let's spend some time on the financials. And I'm Klara Eiritz, and I am the CFO of Elekta. And as Peter said, I started 3.5 months ago. I have a background from large technology-driven global Swedish companies. Peter mentioned them, I think, Sandvik, Ericsson and Volvo. But I'm really happy to be here at Elekta and be a part of this exciting and important journey that we are on.

Of course, I have experience of financial management from the companies that I worked on. But maybe in particular, I have experience from working with performance management in a decentralized company with a decentralized operating model. So that's an experience that I look forward to bringing into the journey that we are embarking on at Elekta. When I joined Elekta 3.5 months ago, my first focus was the balance sheet. spent a lot of time on the balance sheet review that, as you know, resulted in impairments and write-downs in Q4 last year. But we were making changes to our strategy. We wanted to make sure that our balance sheet reflected those changes. And also from a CFO perspective, wanting to make sure that we have the appropriate provisions for receivables and things like that. So that was my first my first priority.

We also wanted to get that done, put it to the side to be able to direct our efforts towards the future and the important task that we have at hand here. Then, of course, I've also spent a lot of time preparing for today and especially maybe working on the financial targets, of course, together with Jakob, the management team, but also the Board to make sure that we have relevant and ambitious financial targets for Elekta going forward.

Okay. So for the next 20 minutes, I will spend time on 3 different topics. I will talk around quality of earnings and what we are doing to improve the quality and the integrity of our earnings at Elekta. I will then spend some time on the financial targets. Jakob talked about them earlier, but I will go into a little bit more detail. And then I will say a few words on our approach to capital allocation.

All right. So let's start with quality of earnings. Quality of earnings has been an important part of the ongoing turnaround and the reset and stabilize phase that Elekta has been in during the past year. And therefore, I think the operational improvements listed to the left here are not -- or they are highly familiar to you. So nothing really new here. But by addressing these, we believe we improve the integrity of the company and the integrity of our earnings.

The first topic is order book quality. We believe in a high-quality order backlog that can act as a strong predictor of revenues to come. Second item is the balance sheet. We believe in a strong and relevant balance sheet that can support our strategic growth ambitions and our capital allocation ambitions. Thirdly, we believe in keeping R&D capitalization on a balanced level. And last but not least, I will say a few words on the positive P&L effects that we are seeing from the new operating model that also Jakob talked about earlier.

We also aim to increase transparency around our earnings and financials by establishing or setting clear midterm financial targets and improving transparency and communication around our cash flow. So I will go through the items on the left-hand side here one by one, and then I'll come back to the transparency part when I talk about the financial targets.

So order backlog. By applying a firmer interpretation of the criteria for order recognition, we aim to improve the predictability of our sales by improving the quality of our order backlog. We want the orders we take into our backlog to have a high probability of turning into actual sales, and we want that to happen within a not-so-distant future. In other words, we want to have a strong link between orders and revenue.

And for the order backlog and our book-to-bill ratio to be solid indicators of growth to come. That has not been the case at Elekta in the past. And as you are aware, the order backlog had to be written off quite substantially in the past 2 years. Right now, we have about SEK 34 billion in our order backlog, which equals around 2x our sales in '25, '26. And if you remember when we released our Q4 report, we also had a rolling 12-month book-to-bill ratio of 1.04, which is fairly aligned with our sales growth expectations for '26, '27, as Jakob mentioned in his presentation and that I will come back to shortly as well.

Okay. Next item on the list, balance sheet. With the R&D impairments and other adjustments to the balance sheet in a total about SEK 2.5 billion, we now believe that we have a balance sheet that is well aligned with our current business assumptions and our strategy going forward. We have a balance sheet that will help us build our commercial success and deliver high-quality earnings going forward. This topic is also, of course, closely related to capitalization of R&D.

Elekta comes from a history of very high levels of capitalization versus amortization. And you can see that in the left part of this graph, if you look at the historic years. This has supported EBIT, but it can also be risky. And part of these high capitalization levels was in the end what had to be written down in Q4 last year. Going forward, we will more or less keep capitalization on the current levels. And for '26, '27, we expect capitalization and amortization to be roughly in line.

Going forward, it could even be that amortization will slightly surpass capitalization as we have important product launches in the pipeline, and those have to leave the balance sheet and be starting to be amortized. As Christopher also mentioned, gross R&D expenditure will be around 10% of revenue going forward, and we believe that this is an appropriate level for us to deliver on our innovation agenda going forward. Keep in mind that the new operating model has given us a more efficient and focused R&D muscle that will allow us to drive innovation with greater velocity. And I think this is important to keep in mind also when you compare the 12% with the 10% going forward. All right.

Last item on the list. The new operating model or the new decentralized operating model that was presented by Jakob also in the beginning. We have moved resources and accountability from group functions to the regions and thereby strengthening the P&L accountability of the people who know our business and our customers the best. By delayering and simplifying the organization, we remove cost, but the main benefits of this model are around accountability, decision-making and empowerment, and these effects can already be seen in the P&L.

On this next slide, we can clearly see the lower costs associated with the new delayered operating model. As previously communicated, it will lead to SEK 500 million plus in annual net run rate savings, of which most is in OpEx. The cost reductions have come through perhaps a little bit faster than what was originally expected, and we see positive effects on cost and spend in general as cost-related priorities are now made with a full regional P&L in mind.

And it's interesting because I've seen this play out at some of my previous places where I've worked, and I've seen the power of this way of doing things when you have an end-to-end P&L responsibility rather than a fragmented P&L, that is a powerful thing in an organization. So it's interesting to see that play out also here at Elekta.

I also want to emphasize that the reduced cost levels come mostly from decentralizing and reducing what used to be group function costs. It's not about decreasing our customer-facing resources. On the contrary, these resources have actually increased during the reorganization. So the decrease in selling costs, for example, that you see here is not due to reduced sales force, but rather a reduction in the central not customer-facing organization.

Okay. So let's leave the quality of earnings for now and move on to the financial targets. And before I dig into the midterm financial targets, I want to say a few words on the outlook for this fiscal year '26, '27. Jakob went through this as well. So there's nothing really new here, but I want to go into a little bit more detail. Adjusted for currency, we expect sales to grow 2% to 4%, driven by growth in all markets or all regions and services.

We also expect adjusted EBIT to grow and land somewhere between 12.5% and 13.5%. This is driven by pricing effects, Evo commercialization in the U.S., of course, we talk a lot about that, but essentially all over in our markets, this is ongoing in different stages. And then, of course, lower cost levels due to the new operating model that I just talked about. So this is in line with what we said when we released our Q4 report, but a little bit more details and a little bit more precise perhaps.

All right. The midterm financial targets for '28, '29. As Jakob previously said, we expect to reach mid-single-digit growth in terms of compounded average growth rate or CAGR in '28, '29. This is measured, as you know, as CAGR over a 3-year period starting in '25, '26 and ending in '28, '29. As Jakob also mentioned, we expect sales development or sorry, the expected sales development indicates a gradually higher growth rate towards the end of the 3-year period, and that's driven by product launches, software and services expansion and growth in the U.S.

As for the EBIT margin, we aim for 14% to 16% in '28/'29, driven by improved gross margin and leverage on the lower OpEx levels. When looking at EBIT, keep in mind that EBIT in '25, '26 was supported by R&D capitalization being higher than amortization. So the EBITC was actually 11.2%, and this is really the level we start on when we set our targets for the future.

For cash flow, we target cash flow before dividends as a percentage of sales of 10% in '28, '29. And this would create space for us to continue to deliver solid shareholder return, but also invest in Elekta's operations.

So let's spend some time on growth. On this slide are the growth ambitions for Europe, U.S. and China as presented by Arnaud, Ardie and Anming. And it's these ambitions that add up to the group target of mid-single-digit growth, along with, of course, an assumption of mid-single-digit growth for the rest of our markets and countries. So that's included, of course, in our group target. But today, we're just talking about these key markets.

We expect continued solid growth in Europe as we continue to grow the adaptive-based business and scale services and software. The U.S. is expected to contribute with the highest growth rate as Evo and Iris gain traction and services scale on the back of a growing installed base. And for China, we see growth opportunities by adding -- adapting a more localized product offering and leveraging our installed base.

Then on to the EBIT bridge. So with these growth ambitions, how do we get to the 14% to 16% EBIT? Well, first, we believe that gross margin will improve and gradually return towards the pre-pandemic levels as we grow and expand within adaptive.

And next slide is on gross margins. I'm not going to talk more about gross margin here, but I'm going to say a few words on R&D and SG&A. As mentioned earlier by Christopher and also by me, I think, we expect the R&D organization to run at a gross expenditure of roughly 10% of revenue. The assumption here is that capitalization and amortization will be roughly in line. However, as I said before, it could be that towards the end of this period, we see amortization going up a little bit due to the product launches that we have in our plan and also the timing of those launches.

As for SG&A, we see continued leverage effect on the new lower cost base, and our ambition is to offset further inflationary effects by increased productivity.

If we then double-click on gross margin. We expect productivity measures and margin leverage from higher volumes to roughly offset cost inflation. This includes margin leverage from the lower cost base associated with our new operating model or Must-Win Battle 1, as we call it. We also expect reductions in product costs from Must-win Battle 4.

When it comes to price, we plan for price improvements across the product portfolio with the main effects or the main contribution coming from improved solution pricing in mature markets and price increases across the service contract portfolio.

And as you've heard from the regions as well as from Christopher, we plan for improvements in both market mix and product mix, driven largely by our growth -- by our adaptive business. Higher share of Evo and Iris in mature markets will improve the market mix, but also the product mix within solutions. Launch of new products in solutions and services -- or sorry, Solutions and Software that Christopher talked about, including recurring software sales will support the product mix, but also help drive volume. And we also expect margin support by increasing our service attach rates and scaling our service sales as our installed base grows.

Okay. So let's leave the P&L and talk a little bit about cash flow. To secure continuously solid shareholder return and to create room for needed investments, we target a free cash flow before dividends of 10% of sales in '28/'29. For '28/'29, this implies a slight buildup in net working capital driven by higher sales, CapEx in line with depreciation and historic levels, R&D capitalization of 3% to 4%, and we assume that the finance net tax and leases to remain on current levels. This level of cash flow would open up opportunities for us and allow us to move forward with a certain room for action.

And that brings me to the last part of my presentation, which is capital allocation. So a cash flow at 10% of sales in 2029 would give us roughly SEK 2 billion available for investments in growth and distribution to our shareholders, while maintaining our dividend payout of no less than 50% of net income, we would have room to invest further in our innovation-driven growth agenda, Christopher's R&D muscle or even decide to pursue opportunities -- other opportunities to fuel our growth ambitions.

And if we double-click on the shareholder distribution, dividend payout is, of course, a primary alternative for distributing capital to our shareholders. But the dividend policy is, as I said, to distribute 50% of net income at a minimum. But on top of what we -- on top of that, we have the mandate from the Annual General Meeting, and that mandate is likely to remain also after this year's meeting to buy back share when the circumstances are right.

And that brings me to my very last slide, super summary of what I've just gone through. We are taking steps to improve our earnings quality and the integrity of our earnings through clarifying and strengthening the connection between the P&L, the balance sheet and the cash flow, but also between orders and revenue.

As for the financial target, we're aiming for 14% to 16%, and we expect commercialization of our adaptive offering, recurring software sales and service growth to be the main levers to get us there. And lastly, we believe that a strong cash flow and solid balance sheet is key so that we as Elekta can continue to pay good shareholder returns, but also invest in our future.

So thank you. That was it for me today. So I hand it back to you, Peter. Thank you.

Great. Thank you, Klara. So with that, we are coming to the almost end of the presentations. But before we will have the Q&A, Jakob just want to summarize all the presentations on the next slide. So please, Jakob.

Thanks. That may be a good idea. All right. I think we have taken you through the tour of Elekta, how we see it. And I just want to leave you with some overall perspectives. First, we are keenly aware of the situation we are in. As we say, we are not at full potential. I would say it's all frustrating, but it's also exciting because it shows that there's potential for us when we get to full potential. We absolutely feel we have a plan. It's a robust plan. It's vetted in activities that then translate into financial targets.

And if I would just give you a little bit on advice, do not underestimate our will to execute on the plan. I just tell you, we will see it through. I personally feel we have an obligation as Elekta, given our place in the industry and the world to make this company successful. The company deserves it, the colleagues deserves it. And just a proof point what we saw on the OpEx side, I mean, it's not small things we have done, okay? 15% fewer colleagues, wheel is still on the wagon. We are still rolling -- the OpEx savings are meaningful, but we did it not to save cost. We really did it because we want to see a new Elekta, Elekta 2.0, faster execution, a better say-do ratio, more innovation to the market, and we just have to do it. That's just my personal take.

We have a plan in place. We're excited. We have a leadership summit with 100 Elekta leaders joining us here in Stockholm next week. We did it after mid-summer to engage them, and they will be engaged. They see the value of the plan. When we ask them, should we change at Elekta, basically, 99 out of 100 said, yes, you have to change, and we need to move the company forward. So I think we have a strong base to accelerate our cushion going forward.

Then we have a new operating model in place. Of course, when you do a lot of changes, it's hard not to do a little bit of naval gazing and become internally focused. We are done with that. For me, it's now commercial execution. So some of the guys here on the stage, and we have one online. We will talk a lot about customers. We'll talk a lot about gaining market share on pricing discipline.

Then, of course, as a medtech company, it's all about innovation. And I think, Christopher, what you outlined, maybe hard to really see all the finer prints. But at the end of the day, this is a step-up change in the innovation pace, and we're actually harvesting on some of the focus areas you have had over the last couple of years, and we should continue to deliver on that.

And then not least, when you go out in Europe, there's a lot of tender business, you also have to be price competitive. And you can only be price competitive at a good margin if you lean yourself. And that's why cost discipline within Elekta is going to be a lifestyle. It's not a diet. And I think our customers to serve that. So you will see significant product releases ahead of us. I would be very surprised if we don't see exactly the trend line we outlined on sales growth.

Our order backlog is still solid. We clearly take note of some of the concerns to us on the order intake in Q4. I think we explained part of it, part in Middle East, part on being stringent on order intake criteria. I also said that overall, we have a book-to-bill of 1.04, and that's how you should think about revenue generation, and we now outline that here in our yearly guidance.

And then when we look at the EBIT margin and cash generation, it's going to be a new company when we deliver on it. On the EBITC, a few years ago, we were at 7%, 8%. We now guide at 14% to 16%. Last fiscal was the first year in 5 years, we saw a net debt reduction despite SEK 900 million dividend. And obviously, when you start to generate a free cash flow in excess of around SEK 2 billion, it gives us a lot of flexibility that Klara outlined in terms of dividends and other ways of distributing or deleveraging the company. So that's the key takeaway I'd like to share with you, and thanks for your attention. And then we look forward to Q&A.

Yes. So we need a few seconds to make the stage ready for the Q&A. So bear with us.

Thank you. So what we do now, I will alternate questions here in Stockholm with questions I have received from you online. So again, if you have a question in English, post a question and we will answer them here on the floor. So I'll actually start with Veronika here in the middle.

Veronika Dubajova from Citi. Two questions for me. I mean I have a lot more, but I'm going to start with 2, that's all right. The first one is just on the midterm growth ambition. I'm just trying to reconcile, obviously, your ambition to see meaningful acceleration in the growth from a revenue perspective, but the fact that Evo certainly Europe has been out in the market for a little bit. In theory, '26, '27 should be the years of impact in the U.S. We know there is a new platform coming from Varian. There is growing focus from United on the market, not just in China, but also outside of China.

So I'm trying to understand kind of what gives you the confidence in your ability to really drive that growth acceleration given where we are from a product cycle perspective for you and your competitors, long-winded way of summarizing it.

My second question is just on the gross margin and the positive price contribution. As an observer of Elekta, what's been clear for a long time is pricing discipline has been something that the organization hasn't always had in the past. So I was hoping you could talk about what changes you've made to how your sales force is incentivized, how your regional leadership is incentivized to make sure that we can actually see the realization of positive price on a go-forward basis?

Great. I think with the growth story, we'll start with you, Jakob, and maybe Arnaud and Ardie can fill in on the growth.

Yes. Maybe we do it on why -- Ardie, why don't you start U.S., Europe, then I tie it globally, if that's okay. If you start, Ardie?

Yes. I think your first question, Veronika, on competition and why do we feel strongly about winning is because the evidence we show is that the adaptive way of implementation is superior to what we see from our competitors. We do it faster, easier, and we have a very flexible workflow. So I feel strongly that the direction they're taking is actually strengthening the strategy that we took. And so it's always great that your competitors are following your strategy. So that's why I feel strongly that we can compete and win.

And then on price discipline, we see a significant uptick also for these adaptive solutions because we tie it back to the business case for administration. So pricing discipline on the orders, but also pricing discipline on service has boosted our revenue profile.

Arnaud, would you like to...

Yes. So on the Evo and online adaptive, I think just 1 month ago, not far from here, there was this, and we see -- we saw the high interest, I think adaptive was central to the Congress. I think we got the first mover advantage. We are still not done with the launch. So we are accelerating. We see a lot of demand, a lot of interest. Most of the markets in Europe have already purchased, and we have installed for a large part of them Evo and for a large portion of them with the online adaptive. There are many centers who are going to when clinical today. So I think it's just -- I wouldn't say just the beginning, it's an acceleration for us.

On the price discipline, as I tried to explain, I think we have simplified our portfolio -- our offering with packages. So it creates a lot of discipline and control when we price. So it's not just about taking an order, it's taking an order that meets our financial objectives. So much more rigor and discipline here.

Yes. So maybe I, perfect, add a bit color. So in the U.S., we now have the product to compete. And with our leadership in adaptive, it clearly resonates. And then there is strong systemic demand for vendor competition in the market. In Europe, I think you outlined the replacement cycle coming in with 1,000 systems, and we are there to compete. And then keep in mind that the ecosystem, you should really consider it as a platform. And what Christopher outlined is it will be very meaningful enhancement with the 4 priorities you outlined, motion management, Iris. And then we have really worked on it for a handful of years, integrated console, integrated workflow and integrated table. And there's a significant need.

So we feel -- no, we know that the product will be much more competitive, and we're actually selling with those features. If we then unfold it back to your UNITED imaging, of course, it's a new competitor coming in. We have a war room on them. I don't want to do specific, but we know exactly where they have installations in Europe, okay, and why they want it. I'll just remind the audience also, we compete well in China, the home market, and we sell 50% -- last fiscal, we sold 50% more than they did. So I think that at least gives me confidence that we can compete. But of course, they will accelerate.

And then within the emerging market, we are now fine-tuning our Harmony platform to have a high productivity, low-cost system. Then onwards to price discipline, I'll do it super sharp. But basically, the storyline is this. We have now introduced a quarterly framework where we establish target steering and then very importantly, floor ASPs and margins per product. So it's really 6 CT-Linacs, MR-Linacs, 3 software packages on the TPS and OS. And we will discuss every quarter. We will analyze win-loss ratio. And then if we deviate from those floor, there has to be an escalation part. It's quite a new way of doing it. I wouldn't say it's top steering. But of course, we -- it has to be that when we win deals, they are profitable, we are aligned and then we move forward from there. Yes.

Great. And just like Veronika, present yourself and the company you are representing. So Hassan, please, I'll move to you here.

It's Hassan Al-Wakeel from Barclays. A couple from me as well. And firstly, another on the top line midterm targets. I'd love to get your sense on the revenue guidance in the context specifically of U.S., the U.S. reimbursement crisis that you mentioned, Jakob, on the full year analyst call. Speaking to experts, revenues for facilities are down up to 30% and even with higher acuity mix and motion management, it could be down as much as high single digit. So how do you think this will impact market growth for linacs? Could it push out replacement cycles? And why isn't this a headwind to your orders, particularly as you have a competitor launch at ESTRO later this year?

And then secondly, also on UNITED, but specifically on China, you are the biggest and most comprehensive player in radiotherapy in China. But do you think this is changing with strengthening competition out of your radiotherapy, but also multinational imaging peers, you are the most positive on China. So how do you think about the risk to that mid-single-digit expectation from -- for the China midterm targets if locals do indeed catch up higher up that acuity curve?

Let's start with Ardie on the reimbursement question in North America, and then Jakob can take the China question later on. So please, Ardie.

Yes. Thank you for the question. I think indeed, what I described today was that there is pressure on the traditional way of getting reimbursement done for the U.S. market. But like I said, this is an opportunity because the centers that actually make money have shifted more and more of their volumes to SBRT. So the centers that actually prove that they can financially thrive have moved to more complex treatments, which is great for us because what this does is that the systems that are out there that are aging, they need to be replaced. And that means we have access to a marketplace where the market position of Elekta has always been inferior compared to our competitor.

So I think for us, it will drive demand. It pulls us also into deals because the customer wants to see what's available in the marketplace. And linked to the fact that we see a launch coming, it actually is great for us because it confirms the direction of Elekta. So we see this as a positive upside.

As far as what does that mean for the revenue profile, I always believe that if you start seeing winning in the marketplace and you can start seeing your order book growing, then eventually, you pull this through on the revenue side. That's why we feel strongly about our guidance.

Maybe, Christopher, if you want to chip in, as you presented also a view about the reimbursement.

Well, I see what you mentioned that it becomes an economic necessity for many centers in the U.S. to shift to more modern approaches, more complex approach of radiation therapy. So if they have a very old aging linac, they need to shift or they need to give up. When they shift, they will look at where can we shift that is the easiest for us with our existing staffing, with our existing number, but also capabilities to do it. And I think here, I think we are a clear leader. If you look at the treatment times, argumented 15 minutes for adaptive treatment times, this is far ahead of what some of our competitors report.

When we talk about our portfolio, we don't have to have a dedicated machine for adaptive. You can have a machine that you can use both for adaptive and for non-adaptive treatments. You make the choice at the day when the patient is there and saying, I can go for a non-adaptive or I want to go for an adaptive. And the third one is that we have it across our portfolio. We have it on Unity, obviously, the high end. We have it on Versa HD and Evo, and we are bringing adaptive also to Harmony.

So we have it in our full portfolio. It's really adaptive for everybody, plus what I was mentioning about bringing CT motion management of organs to the linac, again, opening up a new revenue path that is manageable within our existing software framework, which is, I think, unique. And we don't know what the future will bring from other competitors. But where we are right now, I feel very confident that, that will carry on the growth in the next years.

And then Hassan, maybe on China, it's true we are a little bit an outlier. Good thing is it's also an outlier in historical performance, right? So why are we fairly positive, not overly positive, but fairly positive. The market is recovering. So last year, it was 250 units. We expect 10% growth, and it should really have an equilibrium around 300 units, still a greenfield market, 3,000 linacs, it should grow to likely 5,000, which is, let's say, 3 linacs per million capita. And that's very realistic.

And then we look at our current data points, and we are roughly 40%, and that's notch below, but just a notch below where we were 3 years ago, right? So -- and then we actually look at China as an opportunity for us besides growing with the market. Of course, there are things we're also concerned about. And that is we see our development speed is really good innovation speed. We see the world-class planning software we now have is partially developed out of China. We will probably deploy more resources there. We absolutely have COGS reduction opportunities out of China.

So there are quite a few things. And then I talk a lot also to leading authorities. They look at Elekta as a very important player in the Chinese market. It's part -- we are integrated part of cancer care. We are actually seen as a Chinese company and a good citizen. So that's why we guide on mid-single digit going forward.

Before going to right side, I'll take you one there as the last one on the left side here, and then I'll move to right side.

Johan Unnerus, SB1 Markets. Yes, one for Ardie and one for Arnaud, Ardie first. The order positive shift in larger order intake, could you elaborate a bit more on the characteristics of the -- your clients that are active? Is it Unity centers? Or is it larger centers? Or is it a bit of a mix or...

Yes. I think the nice thing about our commercial approach is that we've segmented the market, really focused on the different segments in the U.S. We've identified where we are strong. We've identified where we have opportunity, but it's a very nice balanced mix between IDNs, between academic and between freestanding and community. The only thing I'll say where we see a change is with Unity, where we are now seeing a shift from academic to IDNs. Like I said, the flagship hospital wants to basically keep these highly valuable patients in their health system instead of referring them out to the academics. So that's where we see a little bit of a shift. But for the rest, it's a balanced order intake for the market.

You want to chip in there? Christopher, it seems like you.

Well, no, I think the power is that we have a harmonized approach for online adaptive, but also for motion management across our portfolio. So for IDNs who try to harmonize their installed base inside their own integrated delivery network, it is a perfect way to make sure that the training is harmonized, that they have reference point about what are expectations about productivity of certain sites and they can roll out the same kind of processes, again, across the whole portfolio of sites ranging from smaller sites to these flagship sites. And I think that's what these centers are looking for, and that is what we are enabling in a good way.

And then you had a question for you, Arnaud, right?

Yes, indeed. In Europe, when Evo has got a bit longer in the -- further ahead in the launch, you mentioned 1,000 potential linacs that are up for renewal. I mean some linacs can be up to 20 years old when they replaced, others can -- well, there could be a case for replacement before 10 years. But what's your -- how do you define these 1,000 roughly?

And secondly, when looking at your clients that are taking on Evo in Europe because I mean some linacs -- some people are looking more into the pure stereotactics and other are treating a fair amount of conventional and lower premium -- low premium part of the market, where is the Evo position in Europe?

So the 1,000 units for replacement are all 12 years and more. So of course, there are some who reached 20 years in specific markets like Germany, for example. So we -- Evo until now, basically 50% of the Evo we sold, we sold them with Ektae online. So we feel that it means that those customers want to do online adaptive clearly. And approximately, we have the same amount, the same proportion with advanced treatment and more conventional treatment. But the possibility to upgrade Evo is really what interests the market. So this -- and specifically with the development we'll have in a few months, the new release, I think will enrich the value proposition of Evo with the upgrade and the upsell of those -- of the 6D table, the integrated console, the high-risk development that they are waiting for. And I think that's going to give us another boost for Evo.

Great. Let's move to the right, Ludwig, you had a question.

Ludwig Germunder from Handelsbanken here. So I have 2 questions, please. The first one would be on the gross margin. You mentioned that you aim to take that back to pre-pandemic levels, which is something that you've been speaking about for some time now. And I would just be curious in hearing a bit more about what makes you confident in this step? And maybe also if you can mention anything about the time line you aim to do this in?

And then a second question on the price increases that we also have been speaking about. So how are you thinking about price increases? First, should we view the price increases to a similar level in all the markets? And secondly, how do you reason around the price increases and balancing that with gaining market shares as we're speaking about increased competition?

Could you start with the price and gaining market shares? And then maybe you can comment on the gross margin.

No short answer is on price, you shouldn't think it's across the board. Each market has different competitiveness. It's actually less price sensitive in the U.S. Certain markets, it's more price competitive. We see India being fairly competitive. So there are variations. But the way you should think about it is we expect a price uplift of 2% to 3%. That's how we look at it on the short term. Then on overall price discipline, that is -- that goes back to the comment I said earlier on floor margins and floor ASP, and it's really down very granular per sales cluster.

Klara, shed some light on the gross margins.

Yes. I mean, as I said, this will be a gradual -- sorry, who asked the question?

It's Ludwig Germunder.

It will be a gradual move towards this increase. But I think we feel confident with the new product launches with this position that we have in Adaptive, that is new, I think, compared to in the past, I haven't been here for that long. But we are -- we feel very confident about that. And also as we grow the installed base, our ability to also scale services on the back of that installed base to also defend the gross margin. And also, I mean, we expect the cost -- or the new operating model and the cost decreases that will remain, right? So that we will scale on that going forward. That's the idea.

So we don't expect to scale back, if you will, that cost piece. So that's an important part. And then also what we haven't maybe spoken so much about today, but our Must-Win Battles 4, which is our reduction of product cost, which Christopher's team is working on, on redesigning our products, making them more cost efficient, but also what the supply chain team are working on in terms of reducing the cost. That's a really important area for us as well and something that we have included in our plans.

Maybe to add to that second point because in the past, when you look at how our linacs have been developed, they have been developed mainly from out Europe, specifically the Crawley environment, where there was less emphasis on very rigorous design for cost.

Now we have shifted a lot of our also linac development to Beijing in China, where they both have the local supply chain, but they also have, by nature, a very strong focus on getting cost down from the beginning. And that, of course, then again, feeds back into also our U.K. development teams.

So moving forward, all new developments will have a very strong KPI related to cost reduction. And cost reduction is not bill of material alone, can be, but it's also about how fast can you do an installation, how much can you do remote or how big is the reliability gain that you get if components last longer. These things in the past were not the prime -- there was the clinical features. I mentioned in my presentation, the clinical features were the driving force for our development program.

Now we have these nonclinical features at the same level of consideration.

We move to Mattias here in the front, and then I'll move to the back end again.

Mattias Vadsten from SEB. So you talked about the new launches of product features, Iris high definition imaging, motion management, 6D table, et cetera. My question is, how do you incrementally charge the customer for this? Or is it rather lever to drive sort of Evo adoption in itself? And also, I think it comes down to the first question we had in the room here with the back-end loaded growth profile. So with these new features, are you seeing that when those are released, you are fully competitive, so to speak? And today, you're not just there yet? Or how should we read into it?

Well, it obviously is a mix. I think when we talk about adaptive, I believe we are the leader of the pack. At this point in time, we are ahead. When we talk about some other things like workflow integration, we are catching up and we're honest about it, but we are catching up. So that's where, for example, the integrated console and the integrated table are so important because they bring us on par with what competition has to offer already. But having said that, because we are upgradable, people who have already an Elekta linac for them, it's an easy step to get to that new level. And they know that we have a commitment to go further than that.

Talking about a willingness to pay, the willingness to pay often depends, do they get paid for what they pay for. So when they get like in the U.S., Ardie was elaborating, increased reimbursement for these more complex processes and procedures without having to hire new staff, adding a certain capital investment to get to an online adaptive workflow is actually a business case that makes a lot of sense for these centers because otherwise, they are faced with old equipment that is not going to deliver any value to them.

So I consider willingness to pay a derivative -- willingness to pay Elekta is a derivative of them getting paid for what they are delivering and that are the value proposition that we are focusing on when we prioritize.

Clinical and nonclinical.

But we can charge in the market...

Of course.

So when we sell with integrated table, integrated console, we actually do that now in Europe with the upgrade clause, we can charge higher than on the old spec.

Very clear. Then also, you talked about the new modern interoperability API and so on in your section. So maybe if you could be a bit more precise on what that means? And also, is this driven by the customer side so that they pressure on you on that side? Or is this sort of something opportunity that Elekta sees.

It's both. It's what Elekta sees, what our third parties see that we work together with and what our customer sees. And in the past, the interoperability between different vendors was often done on a more ad-hoc base where you directly put their software, their APIs into our -- deep into our own system. What we are now defining is a much more controlled modern interface that is for all vendors, the same, but it's flexible enough to also accommodate the different vendors.

So for the third parties, you name them that talk about surface-guided radiation therapy. They have a very clear set of specifications they can develop on, they can test on and therefore, easier for them to put it also into our workflows. And for the customer, the benefit is clearly that they will see a smoother workflow than in the past because we had to redevelop with every vendor and test with every vendor a new one, and that led to delays for certain vendors, but also for one vendor, the integration or the interoperability was better for another one less so. So this becomes also a very valid value proposition for our customers.

Anyone we move there to the table with Christopher here.

[ Erik from Boyle Capital ]. Just a question regarding Evo and the installation time for that. I mean, it's potentially an upside if one can do upgrades directly with old Synergies or the Harmonies or the Agilities. So can you touch -- give some light on the potential upside on the margin side, but also on the installation time, I mean, the book-to-bill, the difference if you do just do an upgrade of MLC in comparison to installing the full Evo. So that's one question.

Secondly, on the software side, I mean, great to see the growth in U.S. has there been any flip around on, I mean, RayStation or even Eclipse with the new software that is apparently very positive. Lastly, I mean, looking at the growth for Brachy, I mean, you're the clear leader in this. Could you touch a little bit on the growth and the potential of the Brachy side because that's obviously a high-margin product and a great product.

Maybe you can start with the Brachy growth.

I absolutely can. Yes. So Brachy where you deliver the dose inside the patient's body is a more traditional way of treating, but actually high, high quality. And we have estimated a plus 70% global market share, good margin profile in the business. We also look towards, say, mid-single-digit growth, but it's part of our overall guide.

So we think we have a strong position. And then very importantly, you start to reinforce that position into our linac system under the Elekta ONE software. And that is a strong demand for our customers from workflow. You give a Brachy boost and then you go over to the linac treatment. And that's part of the commercial synergies that we can drive stronger going forward. And the same on Europe, by the way.

Yes. And maybe to enhance that Brachy story. As you probably know, we have still MicroSelectron out there, and they're getting ready for replacement. And so we see a nice uptick now for them to finally go to the Flexitron platform. So that also drives our growth in the Brachy business.

And maybe I know and Ardie, you can comment on the flips we have on software. You mentioned RaySearch, for example, and how that is in your markets.

You want to start ?

Yes. No, I think what is clear is that you've seen, obviously, the department level planning systems is basically what people use for bread and butter. That's where people have invested, for instance, in RayStation or Eclipse. What we have done now with this version of Elekta ONE Planning, we're unlocking a new way of treatment.

So it basically is in parallel to what they use. But once you start using this in the adaptive environment, you stop using it in the conventional environment. So this journey of transition is now happening. And you see a couple of key customers that have said, "Hey, if this is part of the integrated ecosystem, then why do we still have a separate machine standing here." So I think what you will see is that this integration of that ecosystem, linking the linac to the TPS and the OIS, that's a secret in order to get to adaptive treatments. And with that, the focus on a stand-alone departmental-wide treatment planning system will start to disappear.

Arnaud, any comments on the U.K.

I think totally it's exactly what Ardie has described. I think we have not seen huge issue until now. So it's not a blocker for us.

And Erik, you had a third question, right?

Upgrades versus...

Book-to-bill on the installation difference, the time if you do a full installation of Evo, but in comparison to just swapping the MLC, if I understood you can do and the margin difference because it must be huge from a COGS point of view. If you can touch a little bit on that, it would be interesting to hear.

Maybe you can start.

No, no, but it's -- there are certain upgrade opportunities. You saw some of them from Ardie from existing installed base. Of course, typically, when we have customers with equipment older than 8, 10 years, it makes less sense to upgrade because it costs money. On the existing linac, but rather wait and then replace it. But the way you should think about the Evo platform, that is really the accelerator of upgrading our aging installed base in the U.S. and then tap into what you outlined, the 1,000 units market opportunity in Europe.

I mean you need to come with new technology, and that's, I think, what we have outlined, we have.

Maybe to enhance that a little bit further, the book-to-bill on the linac is normally about 12 months. But now you see that in order to really get access to these new reimbursements, actually the book-to-bill -- book to revenue is shortening. So we really have a high need for these customers to get their bunker ready, take the old machine out and put the other machine in. Obviously, that's more capital intensive. And also the margins on the upgrades are much better, right?

Iris combined with the [ EOP ] suite is very good margin for Elekta. So that's where I would say that's a 3- to 4-month cycle. So I think this is really driving a lot of profitable growth for us.

Great. Move to Kristofer.

Kristofer Liljeberg from DNB Carnegie. Two questions. First, I would like to get back to what do you think will hold back what you see as the full potential growth? And the reason I'm asking is -- you see China recovering since U.S. solution orders were strong last year. Now you're talking about customers want pretty quick installations. So what's holding back growth near term?

And the second question on working capital and the reason for why that should be a bit higher here now than what we have seen in recent years as a percentage of sales?

So maybe, Jakob, you can start with the full potential on growth and then Ardie and Arnaud can chip in and then working capital for you then, Klara.

Yes. So first, we take note of the growth trajectory the last 2 years. There has been organic growth of 1% per year, right? We now guide at 2% to 4%. We say it's below market growth. But for us, it's super important. We have better say-do ratio, if you will. So on the growth side, of course, we need to see the proof points being lived out in the U.S., I would say, start of the year, promising, but we are 1.5 months into our new fiscal year.

And then clearly, we see also in certain markets, new competitors coming in, and we want to take stock of that and see how it plays out. But -- so that's why we stand by the guidance we give. Then on the midterm, it's clearly linked to 3 things. The most important is on products. And we do believe that with what we outlined here, we are ahead in certain areas. We are matching on others, great on the software side.

On the OIS side, we have some work to do, but we know what we need to do. So that's on the product side. Then commercial execution, it's linked to our Reset the Model. We have great commercial leaders out there. We have changed incentives. We have changed quite a lot of people. We have a new performance culture. And then what I really, really think is important is we have to stay lean on the cost side so we can deliver that good price value ratio to customers and compete with -- to compete with someone that brings the best technology at a good price is a pretty tough competitor to compete with.

You want to add in something Arnaud or Ardie.

Yes, I think for Europe, we have seen really a very strong uptake with Evo. We have this cycle of replacement that is really a very nice opportunity. I think the 2 things that could offer upside to the guidance that we are thinking about in Europe are -- I think it's all this science of execution. I think this is where we -- most of the companies, as we all know, can accelerate or decelerate.

So I think there is really a big opportunity to have much more rigor, much more discipline in the organization, but it's already an ongoing activity, but we'll see. We'll see how much we can capture on top of this. And of course, innovation and how competition will come to the market. So I think that's where we are.

Ardie?

Yes. For me, Kristofer, full potential means that we are competing, and we are showing that we are starting to compete in the most important segment again of linacs. We saw obviously Brachy neuro was fine. MR-Linac is great, but now we need to untap a different market segment. But it's really fun now to get into the mix again of competing on the linac side. And that for me means full potential that our customers are pulling us in because they want to compare, and we have not seen that in the past. So that's for me, really, again, competing in the marketplace.

Klara, on the working capital question.

Yes. I mean -- so the cash flow slide that I showed is for '28, '29, right? And we expect a little bit of an -- or we expect an uptick year-over-year in revenues in that year, and that means that we probably will tie up a little bit more in working capital that year compared to the year before. Of course, we'll do what we can to not do that, but that's the assumption that we have in the model.

Erik, in the end of the -- yes, over there.

Erik Cassel from Danske Bank. I wanted to talk about emerging markets. There hasn't really been any talk of it on the CMD, and I recall from the last one that back then, that was like the core topic of unit growth in coming years. So basically now, I guess we're seeing United they're in like 85 countries. We have Shinva announcing a lot of wins in LatAm. And I think I counted another 8 linac coming to market in the next 2 years, mostly targeting those kind of markets.

So I just wanted you to talk a bit about emerging markets where you're today pretty strong. What are you seeing for the coming years? Do you see that you can sort of keep market growth? Or do you expect to lose out in units? And what do you see on price now that they are coming with essentially 40% discount versus what you're offering? That's my first question.

Do you want to start here, Jakob?

Absolutely. And then we can cover LatAm in detail, Ardie. So when you mentioned some, you shouldn't necessarily take it as that we have actively deselected the other. We just chose these 3 large core markets. So our planning assumption is absolutely that we will see intensified competition in the global South. And we absolutely, Erik. I mean, we see that now in LatAm. We see that in Indonesia. We see it in India actually also. And we are tailor-making our product portfolio accordingly. What we have outlined, and we also have that in the guide, we -- for this fiscal, we assume broad-based growth. And actually, our EMEA region, you can say also after a weak last year, I would be very, very surprised if they don't show a pretty reasonable growth going forward.

So don't over interpret that would be my advice. And then on LatAm specifically.

Yes. Like you said, we have a very strong position in LatAm, and we see a continuation of that. If you see the uptake of Evo, for instance, now in Argentina, in Chile and Mexico, you see that these customers are looking for the same thing, which is they need to treat more patients more efficiently with less staff. And so the solutions that you can buy in the market from our competitors that are coming do not facilitate those kind of needs.

So for us, it's a really strong position to leverage our premium position, which then also protects our price points in that market space. So I feel really strongly about our market position in LatAm.

Let me say something about India before you come to the second question specifically because I see there is a significant opportunity, specifically in India, and you mentioned it as a key coming up market. India is price sensitive, obviously. They have a need. They are significantly underserved when it comes to cancer care. What they do have, they have highly qualified clinicians. Unfortunately, these clinicians are not where the patients are.

So what we are doing, and it's important that we said we are bringing adaptive and therefore, hypofractionation to our entire portfolio that we will position Harmony specifically as a productivity engine towards the Indian market, including hypofractionation and the feature I mentioned about remote collaboration is going to be essential in a hub-and-spoke model where there's a hub where the clinicians are that are going to do the treatment planning, making sure they are pushing this then to the kind of regional centers a very price competitive value proposition, but leapfrogging maybe a lot of markets when it comes to the adoption of hypofractionation because Indian people for Indian people to travel to a center is a huge expense. It's very difficult.

So us being able to bring adaptive and thus hypofractionation to our whole portfolio, I believe, is going to be a key differentiator also to some of the maybe more cost of goods competitors that might come from China. So I think the portfolio here is really important.

And the second question?

Yes. I also wanted to talk a bit on service as well, which you haven't touched much on. I mean my belief that it generates the lion's part of profits in Elekta, so may even say all of it. But what happens to Service now in the coming years? Because as you've said yourself, you've lost quite a bit of market share. I guess the service is running on an installed base that has market share, which is notably above what your new market share sales is. So in terms of coming years, what happens if that installed base starts to churn? Can it be offset somehow?

Maybe you want to start, Jakob.

Yes. So thanks, Erik. Installed base is actually growing. So you can still lose a bit of market share. But if the overall market growth exceeds that, then -- and that's what we said. I mean, I think at last Capital Market Day, we showed a lower installed base than we show this year. So overall, we see our service revenue growing. And it is actually very important.

Of course, you can sit there and say, what is the split profitability, service, software or hardware because if you don't have the equipment sale, you don't have the service contract, at least not in our case. But the profitability margin is attractive. And we're actually looking at strengthening the moat around our equipment to make it more attractive for customers to use Elekta as a service provider when they choose us as the equipment provider. But it's a very good point.

Yes. I mean we are also enabling service with our teams in a much more efficient way. So in this case, you had third parties in the past that would come in and say, "Oh, I serviced an Elekta machine in the past, and I can do it for half the price." It really creates a complete different model when you start focusing more on remote service, remote access and building in solutions that only Elekta can provide.

So you see a shift. The old engineers that used to be able to fix our linacs, they're retiring. So those people that were in-house are now basically coming back to us and people sign up for service agreements. So our attachment rate is going up. And with that, I also see that we counter the threat that you just described.

Arnaud, any comments on the Service business in Europe?

Yes, clearly. So in Europe, we still have a lot of opportunities in Eastern Europe to increase the attach rate. So that's really a boost. As Jakob said, we are increasing our installed base. And on software, overall, I think the attach rate is another priority. So we can as well increase there. So I think -- and plus disciplined price increase. So we try not to sell multiyears of service anymore where it's very difficult to capture the full value of price -- annual price increase and we segment year-over-year.

So again, in terms of execution, price discipline, I think we are maximizing the price increase potential.

David, in the middle of the room here.

David Adlington, JPMorgan. Maybe you could just talk to the cadence of the improvement in revenue growth. And just to be absolutely clear, the mid-single digit is a compound number over the 3 years, not mid-single digit as an exit rate in '28, '29 because there's, I think a little bit of confusion around that. And then just on China, you're talking about double-digit unit growth for the market. I just wondered if we can get your expectations on pricing and also how your market share, you're expecting that to evolve over the next 2 to 3 years.

Yes, it's not the exit rate. It's a CAGR. China, barely, we expect the market to go from 250 units to 270, but it could also be 280. But clearly, the market is recovering on price. We see a little bit more procurement through VBP. So -- but the price stability when we look at ASP is still there, and we actually have increased prices a little bit on our end.

Great. We have time for one more question. Any gentleman here in the front?

[ Rutger Smith ], I represent the Family Office. This is an odd question, but with these aging machines that are replaced, are they refurbishable? And if so, I mean, they can -- if they are going to be scrapped, someone could pick them up for next to nothing. Is that happening? Is someone picking these up, selling them to less developed markets for a very cheap price?

Do you want to take that Christopher or should I?

I'll start with what you see. I mean I can start. First of all, yes, they are scrapped and mostly not refurbished because we have to see that they are also radioactive parts, or activated parts in there. So they are not just ready to go out again. Do we -- are there incidences of people getting those hands on? And maybe that is the case. I cannot comment on that. I don't have any data. But of course, the idea is that we are increasingly reuse components of existing of older parts of the linacs. We are looking, for example, at the opportunity to reuse tungsten as one of the key materials that are a significant part of linacs that are very high in demand as we speak. And of course, moving forward in the more circular economy, we will increase the number or the amount of percentage of parts we will reuse.

So to find a linac in a usable format after we decommission it, I don't think that is happening very often, but maybe for you to -- because you know how you do decommission our linacs.

No, I mean, I can tell you almost all the linacs get scrapped. There's a few examples of moving them between institutions that have one of them and they move it to a different part of their institution. But we do not support actively moving them to other countries because the quality of the machine cannot be warranted. So when you say, "hey, I've got a cheap machine, I refurbished it and then I can use it again." I may be seen 2 cases so far.

Good. That was actually the last question. Before I have Jakob to close, I would like to say for everybody here in Stockholm, we have a meal back at Forskaren, our head office. It's not going to be in an office. It's going to be on the bottom floor at Urban Deli. So right after you done here, people from Elekta will help you and show you the way there. So -- but before we close, Jakob, anything you want to say?

I want to say thank you very much for showing up, whether online or here in the room. I know it was a warm room. We didn't do it on purpose. And then I wish to the swedes here and there are quite a few, Glad Midsommar.

Thank you. Thank you.

Ladies and gentlemen, welcome to the Elekta Q4 Report Conference Call. I am Valentina, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions]

At this time, it's my pleasure to hand over to Peter Nyquist, Head of Investor Relations. You will now be joined into the conference room.

Hi, and good morning, everyone, and welcome to Elekta's conference call for the fourth quarter and the full year of 2025 and '26. My name is Peter Nyquist, and I'm Head of Investor Relations here at Elekta. With me here in the studio in Stockholm, I have our CEO, Jakob Just-Bomholt and I would also like to welcome our new CFO, Klara Eiritz, as she started now, I guess, 3 months ago as new CFO of Elekta. Very welcome. Great to have you here.

Today's agenda starts up with Jakob giving some key takeaways from the fourth quarter, including some strategic highlights. Then Klara will give us details on the financials and Elekta's outlook. After the presentation, we will have, as usual, a time for Q&A.

But before I start, I want to remind you that some of the information discussed on this call contains forward-looking statements. This can include projections regarding revenue, operating result, cash flow as well as products and product development. These statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in the statements.

With that said, I would like to hand it over to you, Jakob. Please.

Thank you, Peter. A warm welcome to all of you. Warm welcome to you, Klara. Throughout the year, we have really been very clear on that Elekta, we are not trading at our full potential. We are a wonderful company, but we are not at full potential. And to address that, we have said we need to drive significant transformation within the company. And the way we think about it is that we really have a transformation that will take place over 3 phases. The first one, Reset and Stabilize; the second, Improve Profitability; and the last one and most importantly, and long-term Innovation driven growth.

If we look at Phase 1, I would almost say we are done, and we are actually a little bit ahead of what I expected now 9 months ago. We have been working a lot to reset our operating model really with the view of ensuring that we have empowered accountable teams. We increase our velocity and how we operate, how we execute, how we innovate. Then we have been going through a simplification of our org setup.

Some of you may remember, we have now executed having 9 organizational layers to 6. We have decentralized. We are pushing P&L profitability to our regions. And as a consequence, we did really a zero-based review of the organization. And today, we have we have more than 500 fewer colleagues within Elekta than we were 6 months ago. Then we have been working quite intensely on strengthening leadership when you when you realize you're not at full potential, you have to look yourself in the mirror. And part of that is, at least in my -- our view, to strengthen the leadership bench.

If you look at the Executive Committee, 4 out of 6 have been appointed within the last 12 months. We have seen 8 out of 17 members in the executive management being new. And I feel good about where we are. We are working on culture. We have many strongholds, but we also have things we want to change. More customer centricity, more performance management, more accountability. And then we are hardwiring that into incentives from the very top to further down and really linking incentive payouts with the value we create for our shareholders.

And then lastly, we have been very clear on we want to improve the quality of earnings. The way we look at it as I say it really takes out it in 3 distinct pillars. First, to reduce the delta between what we capitalize of R&D cost and what we amortize. I'm happy to say this quarter, we actually deliver on that. So it's good, and we expect that also to happen going forward. Then with the plan of having you in, Klara, we said when you want to have quality of earnings, you'd also need a quality balance sheet, and we have been going through it in great detail.

We are today announcing an impairment related to certain discontinued business activities, but certainly also other things, and we'll share the details. It's noncash items, and we don't expect that to happen going forward.

And then lastly, you may recall in Q2, we did another impairment of our order backlog. And I was also very clear on that, that's it. And when you make such a statement, you have to be very clear on that. You take in quality orders going forward. So we have been, I would say, prudent in what we call in as orders. You shouldn't -- we leave the year with a book-to-bill of 1.04. I actually feel good about it. It's a better indication of future revenue growth. You shouldn't read into it that it's a weakening of our underlying business fundamentals, but rather it's an initiative stemming from us desiring to improve quality of earnings.

As I said, we are now done, give and take with our reset and stabilize, and we move into improved profitability. And clearly, this quarter from our point of view, was a step in the right direction. I look at EBITC, and there, we have a very, very substantial increase of 4.5% give and take versus same quarter last year. Actually, EBITC is the highest in 7 years on the margin. So it's good.

As part of improved profitability, we have focused innovation that also links to some of the impairments. We know what we need to innovate. We know what is important for our customers, and we'll unfold more of that at CMD in a couple of weeks. We are clearly working on strengthening the commercial execution. It also links to leadership culture and incentives.

We spend a lot of time on pricing excellence. We do see cost of goods sold increasing from tungsten to microchips to logistics, and it's important that we have a very stringent structure to pass on those cost increases to our customers, and we expect to do so. And then we have programs on OpEx and COGS. And specifically for OpEx, I'll come back to it. It's fair to say that the OpEx savings have exceeded our expectations significantly. And we have a very significant part of that in Q4. So we can be happy about that. And lastly, we have ongoing work on simplifying and standardizing our processes.

Then at the very end, I hope we can conclude improved profitability within this year, maybe part of next year, but the future of Elekta is really to drive growth through innovations. And we'll continue to invest. We just come out of ESTRO. It confirms that radiotherapy is highly relevant. It's clinically efficient, it's cost efficient. We can become more precise. We can adapt more.

So we'll continue to invest in our road maps, and we think customers are absolutely willing to pay for that. So we look forward to sharing more when we meet in a couple of weeks. But if I then turn into the full year.

As I said, book-to-bill of 1.04. We did see -- and we were a little bit negative surprised in the Middle East. We did see specific customers delaying decision. But most importantly, we have just implemented firmer order acceptance criteria throughout Elekta to ensure that the order backlog we have now is of very good quality and is indicative of future revenue growth.

In the U.S. specifically, we have seen on our CT-Linac portfolio double-digit growth. We expect that to accelerate linked to Evo also this fiscal year. So we are on plan. We are positive.

On organic growth, 1% linked to Europe, but actually also our EMEA region, our Middle East, Africa, India region. On gross margin, we did see an uptick despite the FX and tariff headwind, now at 38.4%. It's still too low. We need to be above. And on EBIT margin, 12.3%. We clearly see that a lot of the work in becoming more efficient is really starting to have impact. Keep in mind, this quarter, we did have a headwind from capitalizing less and amortizing more.

So if you look at the underlying EBITC, it was an improvement from 8.6% to 11.2%. And that translated directly into cash flow. So the cash flow almost SEK 1.4 billion despite paying out SEK 300 million in severance payments. And we saw, for the first time in 5 years, a reduction in net debt which we are very happy about. And that also allows us to sustain the dividend. So the Board approved yesterday dividend payments of SEK 2.4 per share, unchanged from prior years.

If we look then on the next slide, specific key takeaways. As I said on the book-to-bill, we did see lower Middle East, Africa. That's really where it stemmed from. Also a bit of India, but we were very clear on also saying no to a lot of orders last minute because we felt the criteria was not truly fulfilled, and we feel very good about that.

Net sales decreased 1%. It was really driven a bit of Asia Pacific. Actually, we had some delayed project installation understandably so in the Middle East or Africa. I believe I also mentioned that at our last call. And had we not had those specific delays related to a very turbulent world in the Middle East, we would have had a positive organic growth in line with previous quarters, give and take. Then we will come back on the impairment of capitalized R&D and discontinued products. So I'll leave that for you.

Gross margin, highest of the year, a little bit not lower than last year, but we actually exceeded our expectations. And keep in mind, we have an FX headwind and also a bit of bill of material headwind, but we managed to compensate through price increase. On the EBIT margin, we are at 18.9% and that really links to lower OpEx and lower service costs. So a lot of the things we have been working on is now materializing into EBIT margin. And this quarter, EBIT margin equals give and take, the EBITC margin. And then lastly, on cash flow, we saw a little bit lower cash flow in the quarter. But as I said, what really counts is the full year, and we are very happy to see that our net debt is coming down.

On the commercial side, if we look at Americas, 1% growth, Evo launch continues as planned. We are positive about it, but more importantly, so is our customers. On APAC, we did see a decrease of 3%. We have seen a little bit of lower growth in some specific Asian markets. And then conversely, we see that the recovery in China that we talked about did actually materialize. So on orders, we have -- and revenue, we had 6%, 7% growth in the quarter, and we have had second half growth. And the outlook is positive going forward.

Lastly, on EMEA, the momentum is still there. We have product launches. It's really Elekta Evo that is more than 2/3 of our solution sale. So that momentum continues. And then as I said, Middle East, Africa, we have just seen a pause, understandably so in the quarter. But the good thing is I met here at ESTRO a lot of both customers and resellers, and they are positive. Unfortunately, people still get cancer and radiotherapy is cost efficient. So I'm actually very impressed about the resilience, and we don't see this being a structural issue in the years ahead.

If we look at our strategy progression, and if I'll just give a very brief helicopter perspective. On the first one, I think we're doing well. I'm happy with what I see, and we are ahead of plan. Focused innovation will unveil that, but we are taking a number of decisions, and we know what we need to innovate. We have the plans in place and we'll share that on CMD. There will be a strong systemic demand for what we will offer in the years to come.

Expand in China, give and take, when we look at it, we are at 40% market share, 39% to 40%, a bit higher when it comes to value. So it's clearly a position we want to defend, and we are ready to compete. And in the U.S. we are really on the hunt for more market share, and the portfolio is shaping up. So we expect also high double-digit growth on orders this fiscal year. And then by the end of first half, it will start to materialize in revenue.

On continued cost reduction here, we are challenged a little bit because we have the input factors hitting us. So we really have two tracks. One is the price excellence I outlined, that is just going to be a muscle. I'll also personally stimulate within the company because we need to see CPI clause increases coming out through the system. And then we run a lot of COGS, cost reductions throughout the company, and we will announce a new COO starting in the company 1st of August.

So let me close here by saying on the operating model. The split between COGS and OpEx is maintained. We have no reason to believe otherwise. It's a significant impact in earnings Q4. It significantly exceeds what we guided at SEK 500 million. The restructuring charge is a notch below what we expected at SEK 421 million. And as you see, the last point, the workforce is reduced by more than 500 employees, and that translated into the savings. But as I said, the real core of the operating model is to innovate faster to execute faster to get closer to our customers.

So with that, I'm going to close.

All right. So hello, everybody. Klara Eiritz here, new CFO of Elekta, started the 1st of March. So I will speak a little bit about the financials then. And starting with the full year. Jakob has mentioned some of this at some repetition, but we'll do it this way.

Adjusted for currency effects, net increased by 1%, and the growth was driven by the EMEA region and recent product launches, especially in Europe then with Evo and Elekta ONE as well as also service growth and price increases also mainly for Europe. Adjusted gross margin was up a little bit year-over-year driven primarily by these price increases for Europe. However, partly -- or that offset then the negative currency effects and tariff costs year-over-year. Adjusted EBIT landed at 12.3% for the year, driven by said price increases and lower OpEx, of course, then due to the implementation of the new operating model, which allows us to run the company on a lower cost level. Adjusted EBITC margin improved as well, but the improvement was a bit less than for the EBIT margin due to lower capitalization and higher amortization.

Then let's look at the fourth quarter in isolation. Okay. I'll just continue talking and see if we can get the numbers up. So adjusted for currency, net sales declined 1%. Business momentum continued in Europe and sales also increased in Americas. However, this was fully offset by lower sales in APAC due to the Japanese market slowing down. So despite growth in China during the fourth quarter, APAC sales dropped by 3% in constant exchange rates.

And due to the ongoing conflict in Iran, sales in the Middle East were down a little bit also and this hampered the total growth numbers for EMEA compared to last year than despite the continued momentum that we see in Europe. And in constant exchange rate, solutions decreased sales by 2%, while services sales were unchanged compared to last year.

Maybe I'll stop there before we move on? Or should I continue, Peter? Can the listeners here see the -- yes, okay. All right. Then -- yes, the book-to-bill ratio was 0.96 in the fourth quarter for reasons mentioned by Jakob here in the beginning of the call. And also for the full year, the book-to-bill ratio was 1.04 then. And gross order intake in the fourth quarter decreased by 15% in constant exchange rates. And this decrease is -- sorry, gross order intake in the fourth quarter decreased by 15% for the reasons that Jakob mentioned, a decline in the Middle East, but also stricter policy for order intake recognition at Elekta.

So while these measures temporarily, of course, affected the book-to-bill ratio, they also reflect a more disciplined strategy focused on improving our order quality without impacting our growth ambitions, of course, going forward. So in the fourth quarter, adjusted gross income was SEK 1.9 billion, representing an adjusted gross margin of 39.9%, a slight decrease, mainly driven by changes in foreign exchange rates, while we saw improvements from price and product mix that contributed positively in the quarter.

And then tariff costs, the strengthening of the Swedish krona against major currencies had a negative impact corresponding to a total amount of around SEK 200 million. And maybe also worth mentioning is that last year was favorably impacted by unusually strong software sales. So that's something to keep in mind also when looking at the year-over-year comparison.

Adjusted EBIT came in at SEK 902 million, representing a margin of 18.9%. The higher adjusted EBIT margin derived mainly from a lower cost base than due to changes to the operating model as well as also lower R&D spend. And then what I mentioned in the beginning with, of course, price increases and all those things, they trickle down to the bottom line, of course. But we also see a somewhat higher amortization and lower capitalization that offset some of those positive effects then.

Reported EBIT amounted to minus SEK 461 million, representing a margin of minus 9.7%. And the reason for the negative reported EBIT was the IAC or the Item Affecting Comparability of SEK 1.4 billion that we booked now in the fourth quarter. Gross margin was impacted by Item Affecting Comparability corresponding to about SEK 19 million. So most of the IAC can be found in OpEx and other operating income and expense.

Right. Then we can go to the next one. Yes. But before we get into more details around the one-off items, a few words on currency then. FX had a negative impact on revenue of about minus 7%, mainly driven by the stronger SEK versus main revenue currencies, U.S. dollar and euro. The effect on COGS and OpEx, on the other hand, was favorable as the stronger SEK versus main cost currencies impacted the cost base favorably. And then we have some positive currency effects between gross margin and EBIT also driving from realized and unrealized currency effects on the balance sheet.

Then if we move to the next slide, and we talk a little bit about the one-off item of SEK 1.4 billion. This amount is a combination of impairment of previously capitalized R&D costs and goodwill as well as provisions for other balance sheet items, mainly trade receivables.

And if we start with the trade receivables part here, we have done some provisions for specific projects, but it's mainly an update of the general model for expected credit losses. We're essentially adapting more of a prudent approach to receivables that are long overdue. And in the balance sheet, we could see that these provisions have eroded over time, and we want to restore them back to more normal levels.

The R&D impairment in Q4 is related to products that are no longer part of the strategic road map and they will not be launched. And we also have examples where we have similar product -- similar development projects that are being combined into one, and this means that we must give up some of the parallel development costs that are currently activated on the balance sheet. These decisions and the consequential impairments give us a balance sheet that is better aligned with current business assumptions and our strategy going forward.

For competitive reasons, we will not disclose, of course, further details around which products, projects or initiatives that we're talking about here, but we can say that with these adjustments, we have a balance sheet that is well in line with our strategic ambitions and that will help us build our commercial success going forward. The impairment of goodwill is related to the Kaiku business in Finland and the strategic decision to start to wind down that business.

Can go to the next one. Cash flow after continuous investments amounted to -- let's see, this is the full year, sorry, yes. One -- or sorry, for Q4 amounted to SEK 1.1 billion, including severance payments of approximately SEK 160 million in the quarter. And the full year cash flow improved SEK 336 million to SEK 1.4 billion. And the improvement year-over-year mainly is due to more favorable movements in working capital and lower investment levels.

Then let's say a few words about the dividend proposal related to the fiscal year '25-'26. The board proposal to the AGM in August or September, I can't remember, is an unchanged dividend of SEK 2.4 per share. This would equal SEK 917 million split into installments as usual. So that is the proposal to the AGM.

And then maybe on to a few comments on the EBITC margin. You can see those numbers in the gray boxes at the bottom here under the graph. And for 5 consecutive quarters, we now see an improvement in the 12-month rolling EBITC margin, which is encouraging and something that we are focusing on when we assess the business.

Great. And then a few final words then on the outlook for '26-'27. We expect sales in constant currency to increase year-over-year. And with that, we also expect an improvement in the EBIT margin. And on our Capital Markets Day on June 17, we will present more details related to midterm financial targets going forward. So we will talk more then. Thank you. So I hand back to you, Jakob, to close out the part.

Yes. I'll be very brief. So we do see both full year and Q4, as you outlined, Klara, a strong improvement in profitability. We are happy about that. It translated into cash. Keep in mind, we said that we wanted EBIT to be closer correlated to cash generation. It's being delivered upon reduction in net debt, very important for us. We have done the balance sheet review. It will not impair our ability to grow and execute and deliver great products in the future. And I personally would say short term, above all, we'll focus on improved profitability and create the foundation for innovation-driven growth. But very soon, we will pivot towards pursue innovation-driven growth, and we will share that in greater details at the Capital Market Day.

Great. Thanks, Jakob. Thanks Klara, for the presentation. So we are now open for the Q&A session. So operator, we open that line now. So please?

I think we have the first question from Hassan Al-Wakeel, Barclays.

[Operator Instructions] The first question comes from Hassan Al-Wakeel from Barclays.

A couple, please. Firstly, can you talk about the order intake you're seeing in the U.S. and how customer conversations are progressing, particularly as it relates to changes in U.S. reimbursement with level 1 to 3 reimbursement implemented earlier this year and whether this is triggering lower revenues for centers and an elongation to replacement cycles? And then secondly, on China, you talked previously about confidence of double-digit growth in H2 and beyond. Q4 looks to be slightly softer than that. What was different versus your expectations? And how do you consider the risk of new entrants in China impacting your ability to grow double digit, particularly given this is a market that isn't expected to contribute to growth from many other MedTech companies?

Yes. Maybe I'll start China, then I get into the order intake in U.S. specifically. So in China, it's absolutely right. On revenue, we came at 6% orders, 7% in Q4. So that was slightly lower than double digit. It was one with the installation. So sometimes we operate at these margins. I do think we saw what we outlined back to growth second half. So that's important. The market recovering, that's important, strong market share, and we also expect to grow in this fiscal year.

Specifically on new entrants, absolutely, it's there. I mean, we don't want to name them. You know them. We see a host of smaller having struggling to really get a foothold and then we have one larger. But we compete, and I actually consider China being a good lab for strengthening the competitiveness of Elekta because when we compete in China, we can also compete elsewhere. I outlined when we look at units, we assess that last fiscal, we roughly had between 39% and 40% market share.

If I then turn on to U.S. first on reimbursement, there's actually a reimbursement crisis within radiotherapy. We see a lot of independent clinics struggling. It's less an issue for us, I would say, first, because we have not had our full share. So -- and -- but secondly, also because we worked a lot towards adapting the treatments. And there, the reimbursement environment is actually much more favorable. So you're well compensated when you do replans instead of one treatment with the same dose for 30 fractions.

So all in all, challenge in the U.S., but specifically for Elekta, we actually feel it serves us well. Does it then extend the buying cycle time? Yes, maybe it does a little bit but given where we are, we are less focused on what's happening in the market, but more focused on actually selling to existing and new customers and get back to our fair market share.

We'll move to next question, and that's from Mattias Vadsten at SEB.

Can you hear me?

Yes. Perfect.

I have two. So the first one, continuing on APAC, it was a bit surprising to me where it decreased in Q4. So I mean, you are heading in the right direction in Q3, I thought. So if you can maybe comment on Japan because you outlined that quite clearly. And I guess I don't know if Japan is around 15% of APAC. So it must be a quite steep decline there. So maybe, yes, explain Japan a little bit more in detail.

Yes. So the market in general is roughly 1,100 Linacs in Japan. And then if you assume a 5-year or 15-year lifetime, you can expect how many will be purchased every year. And we saw a dip relative to that equilibrium last year. The outlook, there's been change in the reimbursement code. So the outlook is actually favorable this year. So we expect to bounce back. And just give you a little bit of color. I was with the Head of Gastro Society in Japan. And there outlook is from government that in 15 years, we will see 24% more patients being treated by linac accelerators than today. So the long-term potential is good in Japan. But we saw both Japan, actually also Indonesia, where there's a big government tender being softer than what we expected. And yes, it also surprised us a little bit coming into '25-'26.

You had the second question, Mattias?

Yes. Thanks for that answer, very clear. Then it is this order criteria changes that you have. Some questions to that. So if you could give maybe some examples of orders that you no longer consider? What regions this is mainly relevant for? I guess in the end of the day, also anything you can say to give a sense of the margin improvement you see by these initiatives is helpful for us. And I would say in Q3 orders were quite good, if I remember correctly. So -- and I guess you have had this initiative done as well. And so yes, if you could comment on that a bit as well.

Yes. I mean, first, I'll just direct you to the nominal order intake. You look at it year-on-year. I look at it also a nominal. As such, it was not a bad order intake, but obviously with a significant decline to Q4 last year. So on order intake criteria, if I just speak at it broadly, we have, for years, seen that our order backlog grew much faster than revenue, and it became bigger and bigger to the point that we said we impair it. And we also said we don't want to see that happening again.

So for private sector orders in general, we need a prepayment. We need a very clear site delivery. So we have high -- it really boils into, we need to have high certainty that, that order materialized into revenue within a 3-year time period. Then we have, by the way, also on service orders in general tilted towards more yearly orders than multiyear orders. So I'll just come back to -- we did see some softness particularly in the Middle East, and I can give you some specific examples. But all in all, the way I encourage you to read it is that the order -- our book-to-bill of 1.04 is now indicative of future revenue growth. And that's at least how we look at it, and we wanted to create a stronger link between what we report at the order intake and what we expect as revenue going forward.

Then on a very specific example, I could tell you, we got some deals we said no to every exception from the rule. And some of them, we actually got prepayments, but that was from the distributors but we still didn't get pen to paper from the end user and then we said no. And we have said no to end year discounts, we have said no to airfreighting equipment into installed within the fiscal year. And that's part of the commitment we have been very clear on. We want good quality of earnings.

Can I just have a quick follow-up because I think it was a very helpful answer. This -- that you said around yearly orders on the service side compared to multiyear orders. Would you say that, let's say, I'm expecting you not to contradict but would you say it's a material impact on what the development that we see in...

It depends from -- yes, it depends a little bit from region to region. But I would say, in general, we think it's more favorable for Elekta to do single year service contracts with -- that we can then renew because we -- the cost, I wouldn't say it's captive, but we typically have a long-lasting relationship, and we have been very clear on it. We don't want to incentivize the behavior within the Elekta, whether it's an incentive to make a 5-, 10-year service agreement when it's better for the company to do yearly. And over time, we will reflect on should we show the full order intake or should we more show the solution order intake because it's actually more descriptive.

We move on to the next question. Erik Cassel at Danske Bank.

I also want to talk a bit on orders and maybe start on the stricter acceptance criteria. I mean, good color on it previously, but I just wanted to see if we can try to single out what sort of effect that had. For one, like if you can talk about the solutions part of it. What sort of orders did you say decline to book now and on what basis? And what was the impact? And then also then on service, what was the service impact overall? Any sort of color on that, I think, would be super helpful today.

Yes. I think actually, I gave a lot of color towards Mattias. So just in general, we just say no to all orders, recognizing them in our book-to-bill. They are part of our funnel if they don't live up to their criteria. And I believe I also said now half a year ago, that we hold our regional managers highly accountable to that orders coming in should materialize to revenue because we incentivize not them but salespeople on orders. So of course, if you pay commission, you expect revenue.

Yes. I appreciate that you gave a good qualitative color on it. I was just more asking on the numbers side. If you can say anything on numbers, what the actual impact was so we can sort of distinguish between what was more market driven, so to speak?

Yes. I think the best -- it doesn't directly answer, but I think the best guide we give you here is that we have worked fairly hard on getting an order intake that is more descriptive of future revenue growth. In the past, we saw our CAGR significantly higher for our order intake than materialized revenue, and that's not a sign of a healthy order backlog. And then the way we look at it, we look at it distinctly from service, from software, from solution, but we don't share these numbers here. Maybe we will consider it going forward, but we don't here.

Okay, fair. Then just a quick follow-up on the service yearly instead. I was just wondering, does that open up for competitive tendering on the service side of your business every year? Or do you still have some sort of, I guess, multiyear agreements on it to make sure that you actually get continued service?

I mean in many regions, we, in general, see a very high, what we call service attachment rate close to 100% in the mature market. Less so in development market and then we have a certain perspective on how to increase that service attachment rate, both within our product and in our commercial execution. So I actually feel we have untapped potential in the service area.

Okay. Just last question then. I saw that the regional adjusted margins were down quite a bit. And then obviously, global costs were down dramatically year-over-year. So I was just trying to reconcile is there any sort of change in reporting now that you're running a more decentralized business or costs just moved around? Or are there any like nonrecurring items, you can talk about in terms of like central costs when it comes to, say, more hedging, et cetera, so we can understand that a bit more.

Yes. So the Q4, I understand and it's a good catch. It's a little bit of a transition quarter. We changed a lot of reporting lines, 1st of February, and that then linked into cost centers. So we have a number of global functions now being decentralized into regions. So it's really the total number you can look at. And when we look at it, we can just say cost have come down very, very significantly, both supporting our gross margin because we actually had bill of material increase, but there was more than -- that was strongly compensated by service and installation efficiency. And then obviously, on OpEx and what I said in the beginning, stands, of course, that we expect now the cost savings to significantly exceed the SEK 500 million.

Next question is from Ludwig Germunder at Handelsbank.

Ludwig Germunder from Handelsbank. I'd like to start with a more general question on the cost savings, and pick up on where you ended there, Jakob. So you've been talking about those SEK 500 million in annualized savings before and now you predicted, I think, that you expect cost savings to exceed the SEK 500 million. Would it be possible to give any number of how much you expect them to exceed the SEK 500 million? And also a second question to that part, since you mentioned that a significant share of those were realized already now in Q4, would you be willing to give any sort of ballpark number, what the significant share is equal to?

Yes. I think we would like to reserve that for our CMD. That's our thinking because then we very quickly get into a more detailed guide for the year, and we think it's important we deliver that as a total package. But I think we take a step in that direction by saying that a significant in part has been achieved in Q4. We saw that accelerating throughout the quarter that I can say.

And then we do expect the amount to significantly exceed SEK 500 million. And we are ahead of plan actually on it. So -- but most importantly, Ludwig, if I just come back to, we did it really to accelerate the pace of the company. And I see that's happening throughout the company. But we'll give you a very detailed OpEx, but we feel good about where we are. And that's, of course, also evidenced in what we report in EBITC. It's quite a big improvement year-on-year by 4.5%. And a lot of it stems from these operational efficiencies.

Okay. I see. And then just one more question, please, on the impairments that you take in the quarter. Would you be willing to give any comment around why you're doing this now and not together with the order book write-down back in Q2, for example? I'm just trying to understand what's happened now and how to think about how things are going.

All right. Yes. So I'll do it very short and then to you, Klara because -- but the reason why we did it now was really coming into the company, first priority was on order intake. I do think we have guided that we wanted to improve quality of earnings. And then I wanted a new CFO in who could look at the balance sheet with a fresh perspective. So that was one of the first assignments you got. So we have your view, Klara?

Yes. No, exactly. I mean as a new CFO, I think it made sense to do that as part of me coming on board. So -- and I wasn't here when you did the rightsizing of the order backlog.

And just a quick follow-up, if I may. How does this impairment now change the year-on-year amortization levels going forward? How should we think about that?

They will go down a little bit, but the amortization levels are also, of course, dependent on what products that we commercialize and so going forward. So it's a give and take. But if you just look at the effect from the write-downs now, there is a small effect on the amortization going forward. But also some of the write-downs that we did are related to things that were not set to start to amortize in -- it was set to -- start to amortized in a few years also. So you need to -- it's hard to be super specific on that, but of course, a small effect, yes.

I think you should model that capitalization will equal amortization. That's at least our base assumption.

And we will have Kavya Deshpande from UBS coming up here.

Two from me, please. The first on the order revenue -- sorry, the order criteria. Am I correct that it was nearly applied in Q4? Is it stricter than the criteria that had led to the previous backlog cancellations that we've seen over the last 12 months? And if so, could we see a further review of the backlog going forward?

And the second question is on service revenue growth. So by region, it looks in the Americas, it was flat in constant currencies despite a very weak comp. Is there anything to call out specifically for Americas service sales growth in Q4?

Yes. So on the order intake, no, same criteria that has been applied throughout the year, I would say. So same criteria, same interpretation. Those criteria were not to the same extent in place Q4 last year and hence part of the comp difference. And then we did get fewer orders than expected, particularly in the Middle East. Yes. So on the service side, we do show overall growth for the company. I don't have specific comments on the U.S.

We'll move to the next question from Veronika Dubajova at Citi.

It's Giang Nguyen from Citi on behalf of Veronika. I have two, please, and one modeling follow-up for Klara if I may. So the first question is, and apologies back on the order intake growth. Can you comment on the dynamics in order intake in Q4 outside the Middle East and Southeast Asia? So the U.S., we talked about it, but how about EMEA, ex Middle East and the rest of APAC? And the second question is related to the reduction in absolute R&D spend. What was behind this in the quarter? And what's your outlook for gross R&D going forward? And then I will ask a follow-up for Klara after.

Yes. So we did have substantial impact by specific orders in specific North Africa and Middle East countries that led to lower than what we expected order intake in Q4. And then as I said, it really also linked into fairly firm interpretation of what we put in the order backlog. And I'll come back to what I've said that with the order backlog, it's now a more appropriate guide for future revenue growth. So that's where I would say we are on the order backlog. Yes, what was the second question again?

That was on R&D spend.

On R&D spend, yes. I don't want to give a guide for next year. But part of our OpEx savings is linked to a more focused R&D strategy and more R&D efficiencies, and we have been also delayering and setting up a new organization structure within R&D that reduces the overall R&D spend. But we still expect to maintain a very healthy and high R&D spend, gross spend in percentage of revenue because we can see there's a lot of innovation to be harvested.

And then you had a detailed question or...

Yes. For Klara, if I could. Can you provide any color on the FX impact for fiscal '26-'27 on revenues and also through the margin -- gross and EBIT margin, please?

Yes. So for the full year of -- sorry, you mean the full year of '25-26?

You mean the quarter, right?

No, sorry. Yes, for the coming fiscal year.

For the coming fiscal year. No, I don't think we speculate any currency effects going forward. So I don't think I'm going to -- is that okay, Peter, to say that?

Sure. Absolutely. We'll move to Oliver Reinberg at Kepler.

Three questions from my side. Firstly, just on inflation and tariffs. Can you provide a bit of color what you have in mind in terms of the inflation impact for the new upcoming year and whether tariffs are still a headwind or potential tailwind? And any kind of quantified guidance would be helpful.

Secondly, on services, I mean, it's usually a stable growth driver. We had, I think, overall globally now flat sales in Q4. Also, the full year was a bit more moderate with 3% growth only, while normally pricing should provide a support. I assume there's not any kind of large impact from moving from multiyear to single-year contracts, but any kind of color on that would be great. And then thirdly, just checking, it sounded like on the outlook for this year, which is a bit weak. Can we actually expect this to become more granular as part of the CMD?

Do you want to start?

Yes, absolutely. So when we look at inflation, it has two dimensions, cost and price. We clearly see on cost certain inflationary impact from logistics. We have -- we put tungsten in our machine. Prices have come up a bit. Now it's dropped by 55%, by the way. And -- but also other microchips that we put and apply in our software also. So we are under pressure on bill of material, but we expect to offset that by operational execution and then price increases throughout the system. It goes back to the point I said on price discipline. So we really come in with some very strong floor pricing requirement and margin requirement.

On service growth, yes. So we have a 3% growth, you can say it's modest. But it's service growth. And in general, our business is on the service side, predictable. Many of our contracts have a CPI clause. Those who do not have, we will review and renegotiate because cost is coming up. We don't want to be further specific on the outlook, except we'll come back to that at CMD, where we hope to be more granular or we expect to be more granular on this year and our midterm target.

We'll move to the next question from Kristofer Liljeberg at Carnegie.

Just one question on orders and this more stricter criteria. Could you comment on what you think the average time now from order to sales is? And the reason I'm asking is your comment also that the book-to-bill of 1.04 is a better indication of sales growth. So would that imply that you could grow 4% or so in the new fiscal year?

Yes. As I said, we don't want to give the guide for this fiscal year until we meet on the 17th of June. So book-to-bill, it actually varies a lot from region. So if we take our Asia Pacific region, it's faster, it's actually a little bit longer in more mature markets, but give and take, 12 months. But as I said, there are quite significant regional differences.

Do you have another, Kristofer?

Sorry, I was muted. but do you think it's fair to assume that orders that has been booked now this fiscal year is a better indication of sales growth in the new fiscal year than it has been for many years. I remember, if you go back to a long time, that was a pretty good indication, but it hasn't been for at least 10 years, maybe more.

Yes. So it's not a guide. But as I said, part of our quality of earnings is to make sure we have a backlog that is actually a better indicator for future revenue growth. That's really the purpose of disclosing it. So what I can say, it's a better guide than prior years. And then we will share the specific guide with you when we meet on 17th of June.

We are now open for the last question for this session, and that's from Sten Gustafsson at ABG Sundal Collier.

So a lot of good questions on the order criteria. So I think we can maybe move to something else. In terms of sales and just to clarify, you said something like your sales growth for the quarter would have been in line with previous quarters if it wasn't for the Middle East. Can you confirm that I heard that correctly and preferably also maybe quantify the -- what you're referring to? Is that like 2% or something like that?

Yes, I think we would have been 1%, 2% organic growth if we didn't have specific projects being delayed in the Middle East.

Okay. Perfect. And my last question then would be, do you think that some clients mainly in the U.S. or other regions are hesitant to book Evo until they see the new Siemens machine coming up during the fall or expected to be launched in the fall?

It's not what we see, Sten. I mean we see our funnel, our orders developing as per plan. But keep in mind, we come from a small base. So we are the challenger, and not the incumbent. And there is a strong systemic demand for having a vendor competition in the U.S. So we actually just don't see it play out. And that's why we also call out here, we expect double-digit order growth in the U.S. for this fiscal.

And that concludes the Q&A session for the Q4 earnings call. And maybe Jakob, some final remarks before we close the call.

Yes. So we closed the year. It has been an eventful year. I think a lot has been achieved, but we -- as I started out by saying we are not at full potential. We are not happy with the top line growth, Middle East and up Middle East, but it was in line with our plan because we are focused on reset and stabilized. Now we need to improve the underlying profitability. Here, I will say the quarter is a significant step in that direction. We see a very significant EBITC uptake from Q4 last year. We see that translate into cash flow. We see our net debt coming down. But as I also ended up by saying long term for Elekta to be at full potential, we need to grow at or above the market.

Great. Thank you, Jakob, and thank you, Klara, for the first presentation here at this call. And by that, we close the call. And I look forward to see you all at the CMD in Stockholm on June 17. There is still opportunities to sign up for that on our web page. So please do that. And it's going to be an exciting event. Thank you, and goodbye.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Hi, and good morning, everyone. My name is Peter Nyquist, I'm heading up Investor Relations here at Elekta. With me here in Stockholm, I have our CEO, Jakob Just-Bomholt. I have our CFO, Tobias Hagglov, who's doing his last quarter as well as our incoming CFO, Klara Eiritz, who will not present today, but she will be available here in the studio.

Tobias and Jakob will present the result, as always, for the fiscal third quarter -- fiscal year 2025-2026, third quarter. We will start the presentation with Jakob giving away the takeaways from the third quarter as well as an update where we are in the strategic execution and the change of operating model and the cost savings related to that as well. Tobias then will talk about the financials and the Elekta's outlook. After presentation, as always, we will have time for questions and answers.

But before we start, I would like to remind you that some of the information discussed on this call contains forward-looking statements. This can include projections regarding revenue, operating result, cash flow as well as product and product development. These statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements.

With that said, I would like to give the word to you, Jakob. Please, Jakob.

Thank you, Peter. Thanks, and welcome to all of you. So before I get into the quarter, let me just share some overall reflections. It's a solid quarter, but Elekta, we still are not trading at what I believe is the long-term potential of the company. So that calls for a clear strategy. It calls for decisiveness. It calls for execution, bias to action, bold decisions. And I would say we are on that journey.

I would say, specifically related to the change in our operating model, I really appreciate the support from leaders within Elekta, Elekta colleagues. We're changing a lot. We are changing the structure. We are changing layers. We are letting go of people who are highly valued and deeply competent. But we had to change coming back to my point that we are not trading at full potential. But the support in getting there has been spectacular. And as I'll outline, essentially by the end of this week, we are running consultations in U.K. We will be concluded with the change we outlined end of November. That's very good. And then big thanks to you, Tobias. You have ensured that we have had a very orderly transition in leadership within the finance function. To you, Klara, and welcome to you at this call, and we look forward to you presenting the numbers at our Q4 and annual accounts.

But let me then turn into what this call is really about our Q3. As I said, it's a solid quarter. We have to recognize significant impact from FX, and we will also see impact coming into Q4. And then clearly, also in line with the guidance we gave at Q2, a significant impact in reported EBIT from a restructuring charge of a bit more than SEK 400 million. We stand by the guidance that it will be less than SEK 500 million.

On orders, I would say good, a book-to-bill of 1.17, it was 1.15 last year. Keep in mind that typically, Q3 is a good order intake quarter because we roll on a lot of the service contracts, particularly in Europe, that given quarter. And then we saw -- and I'll come back to China, we did see order growth. We did see revenue growth. So that's pleasing, but it was also expected. On U.S., I'll come back to. But there year-to-date, we have seen good orders coming in. It was also much needed, and then we continued the momentum on Europe. So all in all, when I look at the book-to-bill rolling 12 months of 1.09, I think it's healthy. We would like to see it higher, but it's healthy.

In terms of organic growth, we are at 2%, continue to see good momentum in Europe. And as I said, China returning to growth. And we stand by the view that we expect both on orders and revenue double-digit growth, probably around 10% in China for second half of the year. And then what our Chinese General Manager, Anming outlined in the strategy update, we do see the market bouncing back almost to pre-anticorruption levels in terms of units.

Gross margin at 38.3% supported by product launches. And also pricing, we actually do see a bit of tailwind on that mix and pricing, but a headwind on the cost, and that's a big focus area. I'll come back to that later on. But of course, it's going to be a significant focus area for us going forward.

EBIT margin at 11.9%, a bit higher than last year. But just keep in mind, on a comparable basis, we get headwind from less capitalization, more amortization, relatively speaking. So adjusting for it, the EBIT cash margin that we look a lot at, at Elekta is significantly higher, and you will outline that, Tobias, on rolling 12-month basis is really good news. I can say my sincere hope is that coming into next year, the EBIT cash and the reported EBIT will be roughly the same number, meaning that our amortization and capitalization will be a match. Let's see if we get there.

In terms of cash flow, less good than last quarter -- same quarter last year, but we should keep in mind that overall, year-to-date, we see good cash flow improvement, and we have paid out roughly SEK 100 million in the quarter linked to restructuring charge.

So if we move on to the next page on commercial development, Americas, a decrease of 6%, fundamentally, of course, not attractive. That's why we have a must-win battle to address it. We did outline last time that we were positive on getting Evo approval. I think it's important as part of our commitment that we have a good say-do ratio, and we were, of course, pleased to see that on 16th of January, we could announce Evo approval.

Year-to-date, as I said, we have double-digit order growth, substantial double-digit order growth in the U.S. alone. That's also needed because our decrease in revenue reflects a depleted order backlog. So we have a lot of work ahead of us. But of course, every quarter that goes well and is growing is a good quarter. And year-to-date, we have been doing well. We have sold 2 customers on the promise of Evo upgrade. That's now happening. And we are building our funnel going forward. But you shouldn't expect that it's just going to be a huge splash going forward because a lot of the orders have been already taking year-to-date. But of course, the customer interest is good going forward, and we will look at commercializing Elekta Evo the way we have done in Europe. We continue to see growth in South America linked to very strong order intake prior years.

On APAC, as I said, and as expected, China is returning to growth. We do see a little bit slowdown in other large countries, notably Japan, also Indonesia, where there's a big tender. So the market is really awaiting what will happen there. And then on EMEA, we see a good increase, continued strong momentum in Europe. And of course, we need to sustain that going forward.

And then I'll just flag here, Middle East could potentially impact timing of installation. It's way too early to indicate how many we have a sense for what are the installations at risk, and it's not going to be material, and it will just be a time delay if that happens from Q4 to Q1. So all in all, I would say a solid quarter commercially. But of course, we would like to see that number go up. And that's what our strategy is all about, yes.

So if we take the next slide and look at our must-win battles, this is what we outlined end of January. We feel very good about them. They have been working through. Some we are far on, some we are less far on. And I'll give you more details on simplifying power speed. But we did this. I'll just remind you, not to save cost. Of course, we take that in, but we did it to increase velocity of our decision-making within operations, within commercial and most notably also within our innovation department. We are delayering. We are empowering. We are driving culture. It's part of performance management. I think it's going to deliver a lot of good results. And I actually start to feel that the puzzle is getting assembled. We are moving on from having it as an initiative that we needed to execute on to kind of things are settling down.

And as I started out by saying, thanks to great work by the leaders and colleagues at Elekta. It's a lot of change. We have asked people to come back to the office because we feel being an innovation-driven company, we can really benefit from problem solving together rather than at a distance.

Two focused innovation. There are a lot I could say, but there's also a lot that could be used against us commercially. But I would highlight that we continue to invest in innovation. We believe there is significant need for our solutions going forward. Our current product portfolio will become even better going forward linked to what we have in our pipeline, but we will do it more focused. We will have a stronger commercial lens on it, and we will unfold more of that thought process when we meet at the Capital Market Day in June.

Then our third initiative, expand in China, win in the U.S. China is important for Elekta. We are market leaders. We did unfold what does that mean, but it really goes into localizing Elekta in China. We are both from a product point of view, we have a very, very strong organization. We are localizing our supply chain, and then we also continue -- we have both local products, and we are saying should we have even a broader made in China for China product portfolio. So we actually feel good about our China position, not least also because what we said is that the market is going to recover.

And then with Elekta Evo, it's now about competing in the U.S. This is Elekta's biggest opportunity because this is the market where our relative share is the lowest compared to other places. And I believe we have every right to compete in the market. That's what I hear from our customers, there is systemic demand for having strong competition, and we are ready.

And then lastly, the fourth on continuous COGS reduction. I would really say in today's quite volatile world, it has 2 dimensions. And one is to continually address our bill of material, our ability to install and service our installed base. So that's on cost. A lot of focus will be on continuous engineering to update our tech stack and work with our vendors to continuously increase quality, lower cost. But we also focus a lot on pricing to ensure that we can mitigate certain cost increases in today's volatile world. So we are establishing a pricing desk here in Stockholm. I feel good about that, and we certainly have potential to become more dynamic in how we approach that top line part of our business. So that's where we are.

If we then go into our operating model, I have to say, actually, I think we have done well. And by the end of this week, we will almost have executed all the changes that we outlined to you end of November. So that's in 3 months. And we are now at 83%, but the remaining 17% is due to a consultation in U.K., which is happening this week. Of course, it's been tough for us within Elekta, but it will serve the company very, very well to clarify roles, responsibilities who are accountable for what, reduce layers, decentralize, push decision-makings to those who has the best knowledge and then move with a bias to action.

So we stand by what we state that we will have a run rate savings without jeopardizing commercial or innovation of more than SEK 500 million, full impact Q1 next year, i.e., from 1st of May. The mix is 30% COGS, 70% OpEx. We're still simulating, but that's our best evaluation. Restructuring charge to be taken this year between SEK 450 million and SEK 500 million. We have taken SEK 417 million here in Q3. And then as I said, we are moving well. And then in parallel, we are now linked to budget and also, Klara, with your support, we are now assessing all the discretionary spend because I do think there is a potential for Elekta to just be very, very, very prudent in terms of where we allocate resource and cost and that should also support us into next year. So that's where we are.

And then with that, over to you, Tobias.

Thank you, Jakob, and good morning, everyone. So let's look into the third quarter then a little bit more in detail. And I think you, Jakob alluded to several of the points here on the slide. Net sales in the quarter increased by 2%, and we had a growth here in Solutions by 1% and Service by 3%. We can see a continued strong momentum in Europe, supported by our product launches, Elekta Evo, Elekta ONE. And also when looking into our Chinese operations, as you know, this has been impacted by the anticorruption campaign here over the last years. It's actually returning here to growth in the quarter after 2 years, which is a very positive signal.

Then moving down in the P&L, looking into the gross margin, we have an improvement here of 120 basis points. In the quarter, we have a negative impact from tariffs of 100 basis points and then furthermore from FX of 130 basis points. But including this, we are improving our gross margin. It is supported by the product launches. It's also, as you heard Jakob mentioned, supported by general price improvements that we see across our products.

If we then look at the operating margin, we have an improvement here of 20 basis points, amounting to 11.9 percentage points in the quarter. This is driven by the improved gross margin. We also can see that we have lower R&D investments and also lower admin costs here year-over-year in the quarter. And what also Jakob mentioned here is that we do have lower capitalization of R&D and higher amortizations. And if you actually would look at the cash EBIT margin, adjusted cash EBIT margin is actually up 170 basis points in the quarter year-over-year. And then also here, we do have restructuring charges here of SEK 417 million reported as items affecting comparability, which is also then reflected in the earnings per share.

What we have seen in the quarter is a quite a rapid move of the currencies. And here, we have outlined the effect here both from operations and then also sorted out the currency impact. So what we see in our P&L is that our net sales are impacted by more than SEK 500 million negative in the quarter from the FX moves. And in terms of growth, this corresponds to minus 12%. This is predominantly driven by a stronger Swedish krona versus our main revenue currencies, the U.S. dollar and the euro.

When you then look further down in the P&L, we have a negative impact on our gross margin of 130 basis points, which I just mentioned, and furthermore here on the operating margin of 180 basis points. And in addition to the translational currency impact, which I just mentioned, this is also driven then by the dollar depreciation versus our main cost currencies in euro and pound.

If we then look at the cash flow, and Jakob also mentioned this, we do have a lower cash flow year-over-year in the third quarter. Still though that year-to-date, our cash flow is more than SEK 400 million better than last year. We have also had a more smooth development of our working capital in the inventory development, especially. In this slide here, we have sorted out the effect of restructuring provisions and then here stated more solely the working capital development in the quarter, which was stable.

Then investments are lower than last year, both here in the quarter as well as year-to-date. And taxes, interest, net and other are on the same level as Q3 last year. The cash flow generation this year has led to that we have a net debt decrease of more than SEK 200 million compared to Q3 last year.

Then looking at the trends here, I was talking about the currency impact and in nominal terms, we have seen a bit of a slight decline of the revenues, although currency adjusted growth here in the quarters. But when you look at it, and I was talking about the improved gross margin, there is a steady trend here, strongly supported by the product launches and price improvements and also which, of course, then with the must-win battles that Jakob was on will be further supported by the gross -- to the gross margin development. So a steady improvement here over the quarters on the gross margin. We have also an improvement here on a 12-month rolling basis on the operating margin improvement. And if you then would look again at the cash operating margin, it's a strong improvement here, which has been ongoing here quarter-by-quarter sequentially.

Then looking at the cash flow. We have a lower cash flow in Q3. But if you look at the -- as well as the year-to-date, you look at the 12-month rolling, it's a significant stronger cash flow over the last 12 months than what we had here a year ago.

And if we then look at the outlook, we reiterate our '25, '26 outlook. We expect net sales in constant currency to grow year-over-year. And we also expect a negative impact here on earnings and from tariffs in Q4 as well. And the midterm targets, no change there, and they are confirmed.

So by that, I would like to, before the Q&A session, say a big thank you to all here over the years here. Working with you has been a pleasure.

And I then hand over the word to you, Jakob.

So the closing remarks should reflect what you just heard. So solid quarter, solid performance. We have launched Evo now in the U.S. also. We are building up the funnel, good order growth year-to-date. Obviously, we have strong currency headwind and also increased tariff headwind despite gross margin is at 38.3%. And as you outlined, Tobias, with an improving trend, and we need to sustain that. And then we focus a lot on what we can control as part of our must-win battles, super important, and we are well on the way of resetting how we operate and how we think and how we execute within Elekta. And by the way, it will also lead to cost reduction of more than SEK 500 million. And then we focus obviously on cash flow generation also. That's also why we can report here year-to-date an increase of almost SEK 0.5 billion.

Great. Thanks. And before we start with the Q&A, I just want to remind you that we have the Capital Markets Day here in Stockholm set for June 17. So it will be here in Stockholm. More information will be distributed later on.

And with that, I think we have -- yes, and this is the calendar for the following report. So the next one comes in May 28, our Q4 earnings report.

So with that, I would like to open up for questions, operator.

And I think the first question comes from UBS and Kavya Deshpande, please.

Can you hear me?

Yes, we can hear you, perfect.

Two, please, both on China. The first was, would you be able to share how much China order growth actually was in the quarter and remind us how this compared to Q2 and Q1, please? Just because you've been quite specific about the target to grow orders around 10% in H2. So it would be a bit helpful to get some more specificity on the year-to-date trend. And then just more generally, would you be able to remind us, please, why you think the radiotherapy category in China differs to other capital equipment markets where we've obviously seen this acceleration in share shift towards Chinese players over the past year and a bit. Specifically to United Imaging, you look like they're getting good traction with their new O-ring linac and adaptive radiotherapy product as well, please?

Yes. Thanks, Kavya. Good questions, of course. So we'll stick to second half, we say double-digit growth on orders, but we have positive both on revenue and orders here in Q3. So that's good. And it is linked to market recovery. Of course, we have also asked ourselves why are we an outlier on China versus other MedTech companies. But I think the short answer is the market is heavily underpenetrated. You have 1.8 linac accelerator per capita, and there is a growing cancer burden in the country. So there has now been pent-up demand, and we used to have 300 linacs, it dropped to 170 and now it could very well be 260, 270 linacs going forward. So we are not entirely back. Then in terms of competitive situation, we also outlined, there are a lot of local ring-based competitors, but there's really one who has traction, that's United Imaging. Despite, I would say, and also because of we have localized our products and our market presence, we remain the market leader. We have lost a bit of share, but we remain in the high 30s in terms of market share, and that's also our aspiration going forward.

And we'll move to the next question, Kepler Cheuvreux, and that's Oliver Reinberg.

Quick questions from my side, if I may. Firstly, can you just provide us a bit of color on the order intake composition? I would assume that a large part is driven by Evo. Can you just confirm that ideally quantified? And if that's the case, what kind of product categories you have seen any kind of declines? That's question number one.

Secondly, just looking forward into Q4, we had a very strong comparison in terms of gross margin. I just wondered if you can share any kind of thoughts on that, what to expect going forward now? And lastly, just on strategy, Jakob, I just wondered, can you just discuss how you think about the critical size of Elekta overall and obviously, you have to pay for your marketing installation service infrastructure. How easy is that? And related to that, how do you think about the role of partnerships in the past, there was always a discussion of the importance of independence. It would be helpful to get your thoughts on that.

All right. I'll take the very easy one first. Gross margin Q4, we don't give that guidance, I'm sorry. We will stay with our guidance. We believe in organic growth positive for this year. So I hope you understand that. In terms of order intake, what I will share is that, of course, we just got the approval in U.S. mid-January and our quarter ended January. But we have seen a very substantial order growth in the U.S. It's still too low, but very substantial relative to prior years linked to the expectation of Evo getting approved. And as we got more certain, then we saw that pick up.

We are now converting that order backlog from Versa HD into Evo. So that's working. We are, by the way, also upgrading to Iris. And then we can just see the funnel opportunity. I would dare to say, quite rapidly expanding in terms of prospective customers having interest. And of course, we hope to see the same commercial traction in U.S. And why shouldn't we, as we have seen in Europe, and there are roughly 2/3 of what we sell of new solutions are Evo related. So that gives you a good indication.

And it's also a nice system, I have to say it's versatile, it's adaptive, it's competitive. So we'll continue to build from that. Then the last one in terms of Elekta's critical side, I would almost say I would love to answer it. It will probably also take 10 minutes, and it's certainly a worthwhile topic for our Capital Market Day. But if you will get my helicopter perspective, then relative to our main competitor, of course, we are smaller. But I would just dare to say that we are the focused radiation therapy market, and that comes with a lot of benefits.

Then we have assessed our product portfolio. The product portfolio logic is absolutely sound from Brachy to Neuro to linear accelerator, CT, MR to supporting software suite. So the logic stands, and we believe we can build that ecosystem that is relevant. And then there will be a choice. You can have Elekta. We are a little bit more open, not fully open, but a little bit more open than others or you can go for a more closed system. And that's good. We want to give customers choice, and then we want to compete for our fair market share.

We'll move to Handelsbanken and Ludwig Germunder.

I have a few. I want to start with the cost savings program, please. And you've been talking about it, of course. But would you say that the underlying impact from savings during this quarter has been in line with your own expectations? Or would you say that the -- for the quarter has been above your own expectations in terms of how fast you've been able to get the impact from it? That's my first one.

As expected, very little impact this quarter. It will have a significant impact in Q4. But the model we did was really focused on Q1 and there we are, I would say, on par with maybe a little bit above our expectations.

Okay. And just to make sure regarding this restructuring charge of SEK 417 million in the P&L, is it fair to assume that most of this was a cash expense in the quarter as well?

No. Most of it is actually a provision, but you also have a certain degree of payments in the quarter cash cost.

Yes. So what we guide is roughly SEK 100 million was paid out in the quarter. That means remaining SEK 300 million remains to be paid out and that's in line with the expectation. And then we will have some further provisions to be made. So the guidance we have given is SEK 450 million to SEK 500 million, of which we have paid out, if you will, SEK 100 million.

Great. Very helpful. And then just one final on the Middle East situation you mentioned. I know you said it's too early to quantify, but would you be willing to give us any context here, like how much of sales or orders are related to the region where you see a risk of any delayed installations? Just to get some sense on how to think about it.

Sure, sure. So -- but take it with a grain of salt because, as you all know, the situation is fluid. But in terms of potentially impacted installations and thereby sale would be 2% of Q4 sales. So I would say it's a very manageable amount, and then we follow in real time those installations. That number may change given where we are and what we see, but I would still dare to say it's manageable. Then our perspective may look different in a week's time.

So we'll move to Mattias Vadsten at SEB.

Can you hear me?

Yes, we can hear you perfect.

First question, maybe another one that takes 10 minutes to answer, but you talked about commercially driven innovation in the presentation. So if you could give just some examples on what this statement really means, focus on software vis-a-vis hardware, new platforms versus refining current platforms, et cetera, et cetera? That's the first one.

Yes. It's also a fundamental question, and we outlined a little bit in the strategy outlook. We'll outline more, of course, and find the boundary between what we want to say and what we can say and so forth. But yes, commercially driven means a little bit less big platform, more modular-driven innovation. It's deliberately vague. Sorry about that, Mattias. But I would say we reduce the risk profile in our innovation. We increase the traction.

And I would say when I -- and we spent a lot of time over the last 4 months in assessing our innovation pipeline. I'm also hands-on involved in it. I have to say. We put a customer lens on and a commercial lens on. And you should expect that over the next 24 months, we will significantly enhance the portfolio of our CM linac portfolio, and that goes both for hardware and software. So I feel very good. That's also why we are willing to fund continued investment. As I said, we are not asking our investors to underwrite, an increase in gross R&D, it will come down a little bit, but we should be able to see more output. And then let's not forget, it's not only resources put in, it's also how efficient you are. So we are also structurally addressing the efficiency within our R&D engine, if you will.

And then you talked a little bit about Evo and the comparison to Europe and so on. But from what you've heard and seen now in terms of customer behavior, customer feedback, what conclusions can be drawn if you compare sort of what you've seen in Europe since sort of late 2024? And also, if you could give an update on sort of upgrade versus new linac?

Yes. If I take the latter first, then given that we have sold quite a few units this year with the promise of upgrading technical obsolescence against the fee, then you can say we have essentially already sold Evos in the U.S. and we'll continue to sell Evo. Then we are now upgrading. We will build reference sites. We will prove -- provide clinical evidence. And it matters a lot that we shouldn't ask U.S.-based customers. I met some of them here 3 weeks ago in Holland, but then they had to fly to Europe. That's not very efficient. So we are now building our reference sites with Evo so we can demonstrate the value.

And then we look at our funnel and so far, so good. But I'm not going to commit to a number. I think it's too early days, but why -- I would just say why wouldn't we see the same demand in U.S. as we have seen in Europe. And there, we have just seen a good traction. But I would rather demonstrate it through actions and promise here for the future. But so far, so good, I would say.

Perfect. And then I will squeeze in one final quick one. So you said book-to-bill was 1.3 first half in the Q2 report for China. Could you give that year-to-date figure now, book-to-bill for China?

Yes, it's above 1.1 for China. And so we will end up with a book-to-bill. I'll just do the math here, but it will be above 1.1. And that's an important milestone because we have seen a depletion in our China backlog. So we actually had a good revenue year after the anticorruption, but we were depleting the backlog and now we are building the backlog again. And that's why we essentially feel pretty okay about our China position, recognizing everything that is said in terms of competing. And we're also using it, I would say, we very often, as Europeans, we are a bit defensive. I look at it differently, how can we tap into China speed? How can we build competitiveness in China? And if we can compete in China, when we can, we can also take that know-how elsewhere in the world.

We'll move to Veronika Dubajova from Citi.

I'm going to keep it to 2, please. My first one is just to understand the sort of process of converting some of the older orders in U.S. to Evo. Can you sort of maybe talk through from a customer perspective, how that works? And also just from an accounting perspective, when you do trigger that conversion, does that show up in the gross order number? Or is it just because it's a conversion of an older order, there is no incremental impact on that? If you could just touch upon how that works. That's the first one.

And then obviously, you guys are pushing ahead with the restructuring with the strategic changes. And so it would be great to sort of just get a little bit of a pulse on the organization and what's the feedback? Where does morale sit? Anything that sort of is worrying you in terms of how the organization is dealing with the changes that you put into place?

Yes, I can do that. So if we talk about upgrades to Evo, that will now happen and there will be incremental charges. I don't want to share the specifics, but it's substantial, and then it will be triggered from a revenue recognition point of view when we install the units. That's typically when we recognize the revenue. So that's how it's going to go.

In terms of restructuring, as I started out by saying, I have to say, I've just been super impressed all around with the behaviors from, I would say, owners to leadership to employees. We knew we needed to change. And then at the same time, we empathize because the change is tough. And it is not only in terms of fewer people, it's also the way of working. And I have to say, I've just seen so many people who work, including a few here in this room until very last day, and it's massively impressive.

I think the morale is good, where we -- you can say, biggest impact on morale is actually we have implemented a 4-day in the office policy. But we do that because Elekta, our purpose is so important. We need to innovate for customers and patients around the world. There's more than 2 million patients being treated on our ecosystem, you can say. And we feel that we need to increase momentum and velocity. And part of that is inspiring each other.

But all in all, I have to say I'm very pleased with where we are. We haven't lost focus on commercial, on customer and cost and so forth. But I have to say there's a lot more to do. So the must-win battles we have outlined is really meant for the next 24 months. And as I said, as part of that must-win battle 1, we are now addressing our discretionary spend, and we are just going through line by line. And that's important because we only want to spend money where it adds value either for our customers, patients and investors.

And just to clarify, so when you upgrade, I don't know, Versa from to Evo. What's the impact on the order backlog? Do you recognize the whole order, the price uplift? How does that work?

Yes. Then we -- once we upgrade, we recognize it in the order backlog. And when we install it, we recognize it in revenue. And obviously, it's quite good margin perspective. Yes.

Yes. But from an order perspective?

Yes. So when we then commit to the order, then there is an order backlog increase. But the way you should think about it, you will not see it in the -- yes, you will see it, but it's not going to be that significant in the total order backlog number.

And it's the upgrade value. It's not like we double counted here, Veronika, if that's your question.

Okay. Perfect. That's just what I was trying to get at.

The next question will come from Kristofer Liljeberg at Carnegie.

Three questions. The first one is you said that you're looking at other costs here besides the restructuring program. So should we interpret that as you expect or that you see potential for more savings than the SEK 500 million in the next fiscal year?

Kristofer, you should interpret what we have said is we are committed to run rate of more than SEK 500 million. And now we'll just -- we are running through the machine and then let's see where we get to.

Okay. And I don't -- I understand you don't want to be specific, but just to clarify, do you expect China and U.S. sales growth to be positive now in the fourth quarter, given what's happening with better order momentum?

I think the only thing I'll say on China is we have guided towards second half growth, right, double-digit growth, probably around 10%. On U.S., I will put that under the overall group umbrella and say we guide at a positive organic growth for the year. I know we are vague, I hope we can be more precise, but I'll stick to the guidance here now.

Okay. But when you say 10% in China, is that for orders or sales?

Both.

Both. Okay. That makes sense. And then my final question, I noticed you said here that you would like cash EBIT to be in line with reported EBIT, i.e., a much less positive effect from capitalized R&D. In such a scenario, would you say that this midterm EBIT margin target of 14% is still valid, i.e. that cash EBIT improvement would be even bigger.

Let's get back to at our Capital Markets Day. But if I just address in isolation, and I think many of you on this call will agree, if we look a couple of years ago, difference between reported and cash-based EBIT was 4%. Last year, it was 3%. This year, it's 1.3%. And it's complex. And I personally like to keep things simple. So within Elekta, we look at gross R&D spend. And why not then take the next step in the simplification and match capitalization with amortization. How that will be executed, we are evaluating. But I do think I said that we are committed to improving the quality of earnings, and I think this is an important part of it.

So next question, we'll go to Sten Gustafsson at ABG.

Two questions. And the first one is a follow-up. Did I hear you correctly when you said that you expect to see a substantial part of the cost saving program to materialize in Q4? I think previously, you talked about it to come in Q1 next fiscal year. But do you expect to see it already now in Q4?

Not full amount, but substantial. So you heard correctly, Sten.

Very positive to hear. My second question is related to China. Obviously, you book orders there now for Evo, but have you also started to book sales? Or when will you start installations of Evo in China?

So it goes into what I outlined here that we expect in second half, both from orders and revenue growth of around 10%. Specifically on Evo in China, yes, we got approval. We also see it's a relatively smaller part of the overall portfolio from a commercial point of view. We sell Harmony Pro also with adaptive treatment possibility.

Okay. I mean, but you are allowed to make installations of Evo in China now?

Yes. That's right. Correct.

And I would like to welcome in David Adlington at JPMorgan into the call to ask question.

Just on the U.S., please. So firstly, I assume you saw some pent-up demand on orders with the approval of the Evo. I just wondered if you could sort of quantify how much of that was pent-up demand and how you're expecting orders to develop in the U.S. in the coming quarter? And then secondly, I just wonder if you've seen any customer reaction to the Varian announcement that they're launching a new platform in the late summer.

Yes. So if I take Varian first, David, I don't comment on competitors' product. We are very well aware, both from an IP point of view and in the market performance. I think it's actually fundamentally good because it's more adaptive, and we are just very early on in the S-curve of making adaptive radiation therapy treatment the main product. So I think for more options to a customer will expand that piece of the market. And then we look at our own innovation road map and feel actually good about our relative strength today, tomorrow and in 2 years.

Specifically on U.S., I mean, obviously, it's helpful to have your best product available for commercialization. As I said, part of that pent-up demand was taking in the quarters up to. So we also had a good Q3 and some of the orders we had prior to FDA approval because we included a provision in the contract that they would be upgraded once we got the approval. And now we have the work ahead of us in building the funnel, building the reference sites and really get into the track of what we have seen in Europe.

I would say -- so I don't want to give specific guidance. I don't think that's appropriate for Q4. I would say that overall, we are not getting our fair market share in U.S. That's why we have it as a must-win battle. We now have the product portfolio, I would say, to compete. We have set the organization. We know what we need to do. Now we just need to do it and demonstrate it in actions actually.

Maybe just a quick follow-up...

Go ahead.

A quick follow-up?

Yes, absolutely.

Just wondering, with the announcement that they are launching in September, has that seen any customers who were potentially looking at Evo just sort of pause and wait to see what's coming in September?

It's not the feedback I'm getting. I mean, I look at our funnel and how it develops and that part looks okay.

Next question will go to Richard Felton at Goldman Sachs.

Two for me, please. First one is on one of the must-win battles winning in the U.S. So obviously, having Evo in the market is an important part of that. But can you talk about what you're potentially doing differently from a commercial execution perspective in that market going forward? And then the second question, just coming back to China, you alluded to a little bit of market share losses, but there's still a market share in the high 30s in that market. Could you just clarify, are those comments based on the installed base overall or share of new placements?

China share of new placements. Basically, we look at how many linacs been purchased, and it's very transparent in the China market and then what has been our share. On U.S., yes, I can share a bit. I mean, it, of course, always starts with suitable product, but then commercial execution matters a lot. And that's going back into our decentralized model. So we are pushing P&L responsibility to our 5 regions. We report here 3, but we have 5 reporting directly to me. We have delayered the organization. We are centralizing part of the pricing, strategic pricing framework, but otherwise, we are out there. Then we have spent a lot of time mapping our existing installed base, what our retention strategy.

We look at aging profile, we look at flips, we look at greenfields. We are mapping out the market. And then we really -- and I have to say, I'm pushing a lot on let's build the funnel because funnel should be a predictor for order intake, which is -- should be a predictor for revenue generation. I'm not saying we are there yet, but we are doing quite some swings, I would say, in structured commercial execution, but that goes for all regions.

And then maybe I'll just say -- and then at the same time and very, very importantly, we recognize we are on a burning platform, and we are deeply frustrated about where we are in U.S., not least because I think it's good for our customers and our patients or their patients to have a strong competitive alternative. We think we have that now. They are part of our portfolio. We want to do even better, and that's what we are addressing in focused innovation, and we need to address it fast.

Great. Thanks, Richard, for those questions. We move to SB1 Markets with Johan Unnerus has the next question. We lost you there, Johan or maybe you. Can you hear us?

Can you?

Yes. Now we can hear you. Good.

Can you hear me? Yes. I think we will double [ command ] to that. Yes. A follow-up on the funnel in the U.S. Evo is, of course, extremely important in the U.S. and clearly a very important bit of that win -- must-win battle. What about the funnel so far? Can you see any new Elekta? Any orders coming from centers and accounts which are new to Elekta? Or is this Elekta users already?

Yes. So if we look at it, funnel is important. Let's not forget funnel on service and our TPS OIS software is extremely important. We have Brachy and Neuro also important. But if we get to linac, I mean, quite pleasing, we have done some flips taken from competitors. I think that's very important. When they flip us, we flip them. And then it's less a greenfield market actually because it's so mature. If we look at the funnel, I would say I think we are on track in building it. I still -- before I commit to saying that we are at the same track as Europe, I want to see that converted in execution. But as I said, we just got the approval. So I think it's also okay. But so far, so good. So far, so good.

Yes. And a follow-up to that, obviously very important to have centers and reference sites. You referred to that earlier. What -- how long will it take to get that in place, 3 to 6 months?

It will happen very quickly. It will happen very quickly. Some of them here in Q4 also.

Good. And what about the sense of time from order to installation in the funnel? Are most of them fairly sort of imminent orders, so to speak?

I don't want to give the specific here in terms of maturity from funnel to orders. And then the way you should think about it is from order to revenue, it's typically 12 months, but with significant variations from order to order. But it's, of course, important if you look at U.S., we have a very favorable working capital. I mean people pay upfront and so forth. So I think it's not only from a revenue and EBIT, it's also from a cash perspective, favorable that we get our fair market share.

Is it fair to say that, that dynamic is in line with what to be expected in the linac hardware market in general? Or could it be [ offset ]?

I think if it relates to Evo, we are on expectations, but I still would say we need a bit more time. We got approval mid-January. We have received quite a few orders. You saw order intake Q3 linked to Evo. So that's good. I look at year-to-date, and I can see a substantial, substantial increase in U.S.-based, not Americas-based, but U.S.-based orders. I like that. Let's see how we sustain it over the next couple of quarters and our ability to then convert funnel into actual wins. That's what I'm looking at.

We will now move to the last question for this session, and that will be Ludvig Lundgren at Nordea.

So a bit of a follow-up to the Evo and the U.S. So I think in Europe, you actually initially saw sales being driven by Iris upgrades for like previous Versa installations. And as these have shorter lead times than new installations, so I just wonder if you will expect to see a similar pattern in the U.S. And then also, if you can remind us of the margins of these type of installations.

Yes. So the margins, I think, let me put it this way, 80% plus. So they're obviously attractive. And we are looking at upgrade. It will be less than in Europe from that point of view. But we will do Iris upgrades here in Q4. And -- but we also did that last year. So when you look at the comp, we look at Q4 that is a tough comparable quarter last year, but we still stand by, of course, the guidance we have given in terms of organic growth for the year.

Okay. Understood. And then my final one, just on -- if you have any updates on the Section 232 investigation. And also, if you can comment on this recent U.S. tariff changes and how you expect that to affect?

Yes. We are evaluating it. We actually report here this quarter a bit higher tariff impact, but it's also linked to selling more in U.S. So in a way, it's a positive problem, but we are still evaluating and understanding. So I think we need a bit more time with everything that's going on.

Maybe before we close the call, any final remarks from your side, Jakob?

Solid quarter. We are busy. We execute a lot. We have to continue the momentum, bias to action, clear strategy, then we look forward to Capital Market Day where -- so with your support, Klara, I hope and endorsed by the Board, we can outline a financial plan that management stands behind.

Thanks.

Thank you very much.

Thank you.

Good afternoon, everyone, and a warm welcome to today's strategy update presentation by Elekta. My name is Peter Nyquist, and I'm Head of Investor Relations at Elekta. With me here in different time zones around the world, I have Jakob, our CEO, in the studio here in Stockholm. In Cawley, just outside London, we have Christopher Busch, Chief Product and Technology Officer. And in Beijing, China, we have Anming Gong, Head of the region China. And finally, we have our Head of North America, Ardie Ermers speaking from Atlanta U.S.

So today, we will talk about 4 priorities. We call them must-win battles. The first one, Simplify, Empower and Speed. That was one we presented actually as we report our Q2 numbers. And today, we will go mere into how we established our new operating model and talk about the SEK 500 million in yearly savings that generated from that new operating model. But we will also present further 3 must-win battle. One is focused innovation; the second one is win in the U.S. and expand in China; and the third one is continuous COGS reduction.

Today, the presentation will not include any new financials. We will host a Capital Markets Day in Stockholm on June 17, where we have the opportunity to go into the financial plans and present targets in more details. Today's presentation is only about Elekta's strategic direction and ongoing transformation. We will not talk about the current trading conditions in quarter 3. Then you have to wait until March 5 when we present our Q3 earnings.

So please, when you do your Q&A or questions, think about that and focus on the topic and the discussion we have today and not have questions around Q3 and the short-term issues. So if we look at the agenda, we will start with Jakob, who will give an historic view of the market and also of Elekta and some reflections and challenging going ahead. And then he will present the overall must-win battles, 4 of them. And then he will actually go into more details when it comes to the Simplify, Empower and Speed, the first of those.

And then we will have Christopher talking about the second one, which is focused innovation and then expand in China must win in U.S. will then be presented by Anming and Ardie. And then Jakob will come back and conclude the presentation by talking about continuous cost reductions. And after the presentations, there will be time for questions. And again, as I said before, please focus the questions around the topics we have today.

So before I start, I want to remind you that some of the information discussed in this call contains forward-looking statements. This can include revenues, operating results, cash flow, product and product development. Since these assumptions or statements involve assumptions and estimates, there are subject to risks and uncertainties, results could differ materially for those set out in this call Certain of these reason you can actually read about in the annual report under the section as uncertainty or certainties, risks and uncertainties.

By that, I will actually hand over to you Jakob to kick off the presentation.

All right. Thanks, Peter. Yes. First of all, a warm welcome to all of you. It's great to listen in. I would also say we really appreciate every feedback question. We have had the opportunity to engage with many of you. And actually, it really shapes our thinking as well.

At our November call, we said that Elekta, we are not operating at full potential, that still stands. So we needed to transform, that also stands, and then we need to change with a high sense of urgency and high execution pace. The latter I leave for you to decide whether we are living up to that commitment. But I would say when I look at Elekta our colleagues, employees, the leadership team, that's really a strong commitment and understanding that to fulfill our mission and fighting cancer, we need to change, and I'm really grateful for all the support we are receiving throughout the organization, also from colleagues now leaving Elekta to do other things.

But with that, let me get into it. And I just want to say that when we look at the radiation therapy market, historically, it has grown at a very respectable CAGR. I would say a bit notch above MedTech average. And it's important to understand when we also look ahead it's not a sure sum game where we take a bit from our competitors, and they take a bit from us with the innovation that is happening within radiation therapy, and it's really coming at quite a fast pace. We see radiation therapy being more and more relevant for treatment. So I say, yes, we have competitors, but we are also having the opportunity to substitute in radiation therapy instead of surgery or other ways of treating.

So there is a potential for market expansion. In doing so, there's also -- we have an aging installed base. So there are replacement opportunities, obviously, with that upgrade opportunities for more innovative solutions. So example, I was in Holland a few days ago, and they only install now adaptive solutions into the market. So obviously, that's something that we can offer for. And then we still see many markets being underserved. Anming will come later on, but when he talks about the systems we have in China, they operate at 22 hours a day, 7 days a week, that's not sustainable. It's not good for patients. And that's why we need to have more installations.

And then we do see back to innovation and Christopher will come into it that there is a potential for getting more accuracy guided by AI imaging solutions and with better accuracy, you can deliver a higher dose and with higher dose, you can do more patients on the same system with fewer fractions or treatments and better patient outcome. So in many ways the industry is attractive. Then at the same time, when we say that we -- the market has grown by 6%, and we, as Elekta, have grown 3%. It's clearly not satisfactory. And we have been -- we have chosen to be very open about that we have challenges at Elekta. I think that's part of the improvement process to voice it out very directly, both internally and externally.

So we have been losing share over the last decade really accelerating the last half decade. We think we know why. And we have -- and part of the must-win battles are exactly to address that because, of course, over time, it's not sustainable to lose market share, particularly when there is systemic demand for having a strong Elekta in the market providing a strong competitive alternative. No one wants to see the industry monopolize.

We also -- if you look to the right, have seen in our numbers that the gross margin has come down pre-COVID, it used to be in the mid-40s, you can say. It came down to the 40s and then it has been stopping around 38% or 37% which is low for a company that invests 12% in gross R&D spend to deliver innovative solutions to the market. So we know we have a challenge when it comes to gross margin.

If we then go in and we look at why we state that we are not at full potential as a company. Then I would -- before getting there, start to say that we are well positioned. We are clearly #2 in the market, we have chosen to be in and let's not forget that we have very strong solutions for brachytherapy and with our Gamma Knife for neuro with global market leadership positions and a good margin profile. Then geographically, outside U.S., we'll get back to U.S. We have many geographical strongholds, one of them being China that we will address. The portfolio logic is strong. Christopher will illustrate it. So we don't need to go in really and do hard core pruning of the product portfolio. We have a direct sales force. So we are really in control of our own commercial execution, do a bit of distributor sales, but really vast majority is directly from us, and we have built over more than 5 decades, a very strong brand within our industry.

We continue to invest. We have invested a lot in R&D. So when we look ahead, we look at the current level and maybe we can even prune that a little bit. But we feel that the current spending is more than sufficient to deliver best-in-class competitive solutions to the market. And then we have, if you will, a razor and blade model. So we sell equipment, very sophisticated equipment and with that comes software upgrade opportunities and not least service opportunities during the lifespan of the equipment. So a very attractive -- inherently attractive predictable business model.

But as we said, we do have challenges evidenced in the financial performance. And we last time stated that we have had a layered organization, I said had because we have addressed it now. So we have moved the organization from 9 to 6 organizational layers. We have reduced the number of material positions within Elekta dramatically to have a higher doer to manage ratio, if you will. When you lose market share, of course, you have to take a very critical look at how you execute your product -- commercially execute your product portfolio. And so we have done quite some changes. Part of that is the [indiscernible] flattening out. They get our leaders closer to the commercial action decentralized decision-making and they will get back to the U.S. But clearly, we are not at full potential with only a bit more than 20% of our revenue coming from U.S., which as a global MedTech company is too low.

We have had long innovation cycles. It's complicated what we do, but Christopher will talk to some of the changes dependency on single suppliers sometimes needed, but it can also be costly if we start to see cost inflation. And then I personally feel looking at Elekta, we can crank up the cost discipline within the organization, and we are in that process.

And lastly, and I think also voiced by many of you in this call, we would like to see a stronger link between reported EBIT and cash flow generation, so less capitalization going forward. So that's where we are. But then maybe more importantly, what we're going to do about it because I do think we have some exciting years ahead of us. And we collectively as a team was really a long, painful, very, very interesting 360 forensic exercise we did as a team, and we came up with what we believe are 4 must-win battles that will really move the needle on our financial performance, but also from the eyes of our customers and colleagues.

So the first one, I'll give color on Simplify, Empower and Speed, as you said, Peter, right? And I'll give you some additional details where are we in the process? I think we are well under way in terms of execution. Christopher, you will talk Focused Innovation, quite some changes, actually. We'll discuss our expand in China and win in the U.S. strategy from Beijing and Atlanta. And then I'll give you an update on continuous COGS reduction. You told me I couldn't call it relentless, but that's what we are going to do because we need to get those costs down.

But a little bit on Simplify, Empower and just to tell you, so where are we? Some of you have said, "Oh, it's a cost out." And I start I said, "No, it's not." What this is about is really resetting Elekta's operating model to increase the velocity throughout the organization really get us moving faster and make the right decisions. So we are decentralizing to regions, we'll decentralize the ownership of P&L to regions, but we will also decentralize and empower our business lines and functions. So we really take decisions much closer to customers and product ownership.

So what we have solved for is clear accountability, speed, speed, speed, agility, of course, cost discipline. And then, yes, just get very, very close to our customers. And I think, Christopher, you will share some very concrete examples of what that means in Elekta real life. If we then do a status on where we are I would say we are on plan. I'm quite happy with where we are. I have to say we feel good about it when we announced it in November that we had a firm plan and nothing deviates from that. So we restate that it will have full run rate effect Q4 or Q1 next year.

So what we say here is that it will lead to recurring net cost savings of more than SEK 500 million. We are now at a point where we have a good estimate of the restructuring costs between SEK 450 million and SEK 500 million, we expect to incur it this fiscal year. And then in terms of process status, more than 60% of the workforce have been notified and have agreed. And then the remaining part has actually also been notified, but then we are through consultation in particular, in U.K. So we are very confident that we'll see it through by the end of this fiscal year. And then keep in mind, we're also rebuilding our leadership team. We had new CFO starting first of March. We'll have new Head of HR. Eventually, we will also have the COO joining the company. So a lot of things are changing, but it's moving at the pace we in fact, hope for.

So with that, Christopher over to you.

Yes. Thank you, Jakob. And I will give you a few examples of some of the things that Jakob has already mentioned linked to must-win battle one. But I will also a little bit more in detail on what we want -- what we mean when we talk about focused innovation and how we believe we will have a winning portfolio now already and moving into the future, an even stronger portfolio for our customers.

So if you move to the next slide. So you see based on where we are, we have a very strong and solid existing portfolio both from a logic perspective, but also from a value proposition that we offer to our customers. You see from the left, you see our image-guided Gamma Knife for brain surgeries. Then you have our image-guided brachy therapies, suite that we call Elekta Studio. And then, of course, our 2 flagship image-guided and adaptive MR NCT Linacs, Unity and EVO, respectively and then very important and under-proportionally shown in the real estate of this page, our Elekta ONE workflow solution. This is really important to point out because here, we see a significant growth.

What we also -- you can read, we are, of course, in the past, have been building up products from the ground up whether that was in Europe, whether it was in the Linacs or whether it was in software. And what we are now doing, you see us increasingly building software based on workflows and workflow outcomes, efficiencies, ease of use can have different meanings for our customers, but they are the things that they experience in everyday life and also how they measure their own performance, how fast is it for to treat a single patient, how easy is it to train a new RTT and so forth.

So while we, of course, still build our products to some degree, bottom up, we increasingly have a logic that is both top down based on our workflows. So this will also be a competitive differentiator, we feel moving forward in the age of increasingly integrated and adaptive radiation therapy treatments where you specifically need to have deep integration between the devices and the software that together make the real difference in outcomes and efficiency. This will be, I think, 2-point solution providers, specifically on the software side, a key differentiator.

If you move to the next slide, a very important statement that also Jakob has already made, but here it's a little bit more quantified. We, as Elekta, we have traditionally been investing a lot in new into innovation, whether it was at the origin of the company with the invention of the Gamma Knife or when we introduced ConeBeam image guided CT in the early 2000s or the introduction of the high-field MR-guided radiation therapy with Unity in the late 2010. Now we do it with major innovations on the software side, Elekta ONE planning.

And we are committed to continue to do this at the levels around that you see here, which is over the average in the MedTech industry. But we believe it is intentional because there is a clear need from our customers, either providers and clinicians, but also, of course, our cancer patients where the gap between what society needs in efficient cancer treatments with the number of people of trained clinical staff to actually provide that and increasingly complex treatment methodologies is growing every year. And innovation is one of the key ways to address this gap. So there is a huge desire and need to have high levels of innovation. And we see that the innovation pace in radiation therapy is growing, and it's growing exponentially based on the compute power, the ongoing AI breakthroughs and the ever-improving imaging capabilities.

So the technology enablers are all there. There, then the question comes, what do you invest in? Because you cannot invest in everything and all. So this is the second bullet point that we increasingly are spending where we really address these gaps that I just mentioned between providing care and the need for care, driven by customer workflow requirements, I mentioned it before, and the technology advances are very important, has enabled us but the key performance indicators at the end are increasing patient throughput, elevating treatment outcomes while keeping patient safety high and even improving moving forward. And that is really, for us, these criteria will determine where we put our talented innovation people and our money are at moving forward.

If you go to the next slide. The next slide -- this slide is actually addressing Must-win battle one, and it's a little bit detailed on the left side, but I will explain the logic here. We want and need to become more efficient as an innovation team. So what we have we done? First of all, we created actually a new function, a product and technology office that didn't exist before. And what we did then because the functionalities did the roles did exist, we moved 1 business layer in the vertical hierarchy of the company and have this new function integrated and report directly to the CEO. One vertical layer less, faster decision-making and the innovation function is now sitting at the executive table as part of the Executive Committee. So this is a vertical change we made.

At the same time, you see on the right side of the chart, our regions, our commercial people here in this call represented by Anming and Ardie. And in the past, we had a business line Linac and software solution team layer organizationally between the innovation function and the regions. There were good reasons to do it like that, but it also meant that the regions talked to innovation and the other way around, a little bit through an intermediate managing layer and that has been removed as well. So now there is nothing between the innovation team and the regions. And the regions, of course, act as the voice of the customer inside of Elekta. So this brings us also closer to the customer directly.

And lastly, there is, of course, a necessary part of this. By doing so, we also removed managerial layers, teams, leading to a more streamlined and simple organization and of course, that has also associated cost efficiencies. But driving this was to bring innovation up to the Executive Committee layer, removing one business layer and bringing it very close to the regions, removing another one.

If you go to the next slide, yes, here, it is about what is now actually our from and to? And what are the expected outcomes. Traditionally, in Elekta, but also many other MedTech companies, our innovation agenda has been very strong -- has very strongly relied on our engineering team to create new technology options and to work on them and when they were ready to bring them then to the market through our businesses. And this, of course, as I mentioned before, high-tech MedTech radiation therapy industry, this will not go away. But the decision on to how to evolve our portfolio and where to focus our innovation and innovation investments needs to be much more based on real, what we call, customer decision criteria.

So what is truly important to our customers, where are they willing to spend their money and with the customers increasingly, it is not just the clinicians, very important now in the future, but also the payers and the providers who are running operational health systems that need to be profitable at the end of the day. And these different customer segments have also different criteria sets. And these are considerations that you cannot ask a technology team to drive this must come from the markets and from the business.

Second one is that in the past, our portfolio has depended very much on big bet initiatives, which are large long-term development programs that are betting a lot of our investments for a very long time that we make the right choice. So that is still something we will do, but very, very selectively because a Unity concept, you don't bring out onto the market in small incremental steps. But for the majority of innovation programs, we are switching over to a strategy of compounding innovation cycles that are much faster. So where big bet might take 8 years to develop in a very large team, now we are talking about maybe 1 to 2 years for a device development and maybe less than a year. And software down to a few weeks when we talk about topics like cybersecurity, where you need to immediately respond. And that changes the organization set up, that changes the processes of how you drive innovation. So this is a fundamental change in our behavior.

And this is not only bringing value to the market more predictably and faster, but it provides us also the feedback from our customers much quicker about what works, what has to be improved and then we can adjust our development and our innovation strategy accordingly. So it's also a much closer, faster feedback loop from our customers. So the third one is that we do, of course, as was also visible on our overview slide regarding our portfolio, have a proud history of device innovation. And we, as Elekta, often still perceived to be a device-driven company. And devices, of course, are absolutely necessary if you want to provide treatment that you cannot do in software alone.

But we are now in a world increasingly of software enabled and even software-defined treatments and devices or software solutions themselves. So high quality and fast software innovation is going to be key for us now and increasingly in the future because this is then in the end focus on the workflow, the service, the solutions. And let's not forget, life cycle management because when a customer chooses for Elekta, either in OIS or on the device side, this is a partnership for the next 10 to 15 years. So we have to keep our customers up to date, up to speed in the age of increasing innovation speed where the world changes now in 5 years more than it did change maybe in the past in 10 or 15 years. So we need to make life cycle management a very key value proposition visible to our customers.

And the last point that I want to talk about is the expected outcomes. Best customer-led innovation, speed, faster cycles already mentioned. I also indicated that the predictability of our road map will increase because we don't have to have these 8-year bets, but we can do it in 4 x 2 kind of cycles or even faster when we talk about software. Overall, this will lead to an increased R&D efficiency. But most importantly, at the end of the day, it will result in a higher return on investment on our R&D investments. And that, of course, is, first, very importantly, a higher return on investment for Elekta, but also for investors and most importantly, for our customers because every euro, yen or whatever currency they spend on Elekta is then also an investment in the future of what their equipment and their software will do. So for them, going with Elekta, knowing that we increase our innovation efficiency is going to be a very important asset that we have. I know this is still a very high level. We will go in more detail in the Capital Markets Day in June.

But with that, I want to hand over to Anming, Head of our China operations, who, of course, we work very closely together to innovate also specifically in and with China. Anming?

Thanks, Christopher. Good afternoon, ladies and gentlemen. My name is Anming Gong, Head of Region China. It's my pleasure to have a chance to introduce Chinese RT market and Elekta business operations in China. We started the sales activities in China, from 1982. It is almost simultaneously with China's reforms and the opening up to the world. Thanks, Larry, board and the executive management team made a wise and originally decisions, we started to build up facilities in China 25 years ago. Now we have the most competent sales, marketing, service, R&D, productive and the training and education system in China. We also become the market leader of Linac, Brachy, TPS, oncology information systems and the [indiscernible] also become very strong, #1 total RT solutions provider in China. Within 3 years, in order to adapt the changes in market development, especially the Chinese government health care policy changes.

We have established a joint venture with China largest pharmaceutical company, Sinopharm to further improve our public penetration and provide financing solutions to lower and the private segment market. We also established a software joint venture in Beijing to further strengthen our total solutions provider positions in China. At the end of 2025, we also completed all regulatory clearance to manufacture and the sales of Brachy, Gamma Knife in Beijing to secure the market leader position. Growth in China, we will focus -- we will continue to do the investment in training and education, localizing manufacturing and the supply chain work together with our local partners to be more competitive in China.

Next slide. Chinese market is quite transparent market. Because it is mandatory for all public institution to go with the international bidding process to purchase over $100,000 medical equipment and all radiotherapy equipment is managed by license. And also Chinese market is a very competitive market. It has a very high market, similar with Europe, the U.S. at the same time, they are also a very big emerging market, similar with some other emerging market.

In the past 3 years, China's RT market has declined very quickly, especially from July 2023, 7 ministries and commissions decided to conduct a anti-corruption review of China's health care systems, which has a great impact on the entire market, but to the needs of users have not changed. Starting May 2025, the market is starting to recover significantly. And according to the statistics from China medical equipment association radiotherapy equipment is recovering significantly faster than imaging and ultrasound. At the same time, we also see that the government is actively promote even request to establish oncology departments and purchase radiotherapy equipment in county and city hospitals. This gives us much more opportunities to develop RT segment.

Next slide. China revenue in the past has -- Elekta in China, we still maintain a very high market share, but only for Linac also for Brachy for TPS for oncology information system. But in the past -- in the last fiscal year, you can see that in the past 2 years, just I mentioned that the market decline is over 40% to 50%. But China revenue has only fallen by 4% to 5%. But at the same time, the EBIT continued growth. It is still, but we are working very hard, not only for the Linac also getting very good business for the people to continue double-digit growth for service. And also in the past 4 years, we also installed 16 units of Linac. So in general, that this market still continue very big potential for the future.

Next slide. To further reinforce Elekta market position in China, we will focus on the several priorities: number one, deepen localization of Elekta portfolio and supply chain. Just I mentioned that China is very mixed market, also very complicated. So we needed to very localized some portfolio to meet the marketing expectations to strength within the market.

Number two, strengthen innovation partnership across China's RT ecosystem to further reinforce Elekta market position and drive double-digit service growth. Number three, advanced China-focused product innovation to expand into the underserved segments, especially for private segment, county and the city segment in line with national healthcare investments.

So thanks for your time. Now I hand over to Ardie, the Head of North America.

Ardie?

Thank you, Anming, and great job. I'm really envious of your market share position. So I look forward to see how we can do the same thing in the United States. Thank you, everybody. My name is Ardie Ermers. I'm the Head of Region Americas. And I'm going to talk a little bit about how we're going to address this market share position of Elekta in the United States.

Next slide, please. So if you look at the performance of Elekta over the last 5 years, like Jakob said, we cannot be happy as Elekta with this performance. Our revenue over the last 5 years has seen a slight decline and if you then look at the position of Elekta's share across all the other regions, like Jakob said, we cannot be happy about our position. I've been in MedTech almost 30 years, and the U.S. market is the biggest market for MedTech, and that's the market where you need to win, where we have good margins and obviously a lot of innovation. And as you can see on this slide, we have been underperforming in this specific market.

If you analyze why this is, you can actually see the clear focus area that we have been missing. Because if you look at our performance, for instance, in Brachy, which is market leading in Gamma Knife, which is market-leading, introduction of MR-Linac with Unity really driving market acceptance and a good share in OIS, you see that the real area that needs to be improved is our CT-Linac space. And so I'm very happy now that we can obviously announce some big news that you probably have seen in the news is that we have received clearance for our Evo platform in the United States. So as soon as we got 510(k) clearance, our customers are calling us where we have been able to showcase Evo already in Europe where we have seen those market share gains where we have seen the expansion of margin. We are now happy to say we're going to start doing this in the United States.

Like I said, the high interest from our customers because they see that this platform is going to enable them to do the future of radiotherapy. And that opens up not just installed base opportunities and upgrade opportunities. But we also see that there is a high interest from our competitive customers. And so we already can celebrate some customers that are willing to switch to the Evo platform because they see that market-leading adaptive therapies that Elekta showcases with Evo and also with Unity can now be applied in the United States, which is a very highly competitive marketplace.

So we are in the process right now to upgrade our reference sites so that we can take our customers to showcase this in the United States instead of having to fly them over to Europe and showcasing how we can do this based on U.S. workflows. And we are currently already working with our manufacturing and get those products produced so that we can start the installations in Q4 and already see a revenue impact based on Evo installations. So you can imagine the U.S. team is very happy now to go to market and be able to sell the new Evo platform.

What is the opportunity for us? I just alluded to the fact that we have a big installed base. And that big installed base is looking for a replacement. And if you look at the average years of Linacs in the U.S.A. you see that the average age is between 12 to 14 years. That means that we have a great opportunity to go to those customers and start replacing those older Linacs with the Evo platform. Now why are they interested? They're interested because with this platform, you can start doing hypofractionation.

And in this marketplace, where we see aging population and a bigger incidence of cancer they are looking for better ways to treat. And we know with adaptive therapy, you can unlock hypofractionation with more accuracy and better patient outcomes. And those workflows are something that can be combined with our Elekta ONE platform. So the combination that Christopher talked about, by combining the device with an integrated software suite is really what makes Evo shine. We believe that this is going to have a big impact for our patients, but also from a competitive standpoint for our customers.

And last but not least, the focus on bundled payments in the U.S. will remain. The pay per fraction model is starting to change, but we're already happy to report that there are very successful ways to treat and to also build for SBRT treatments. So we believe that the combination of good technology, good clinical outcomes and obviously, the financial impact is going to create a winning success formula for us to turn this market share position around in the United States.

We have a competitive portfolio. Like I said, let's not forget that this is not just about, Evo. I mean while we are very happy about Evo being cleared, where we can showcase these proof points like we are showcasing in Europe, where you can do online and adaptive treatments in a very fast and efficient way. We are paving the way with our technologies in this space. For those are customers that are now used to using our Unity for MR-Linac, they are showcasing why adaptive therapy is so important. And what we have learned in that platform, we are now translating into our CT-Linac platform, which makes this really a leading platform for the future.

Like I said, while Rocker is still in motion, we already see that customers are doing a great job with SBRT treatments and the financial incentive system is in place. So we have customers that are able to make actually some good money by applying these capabilities. We are market-leading in Brachy and Neuro, and we're going to continue to be market-leading in Brachy and Neuro. The new innovations that we showcased on our Esprit platform with our Flexitron platform and the new applicators is showing that by keep innovating in this space, you also can keep a market-leading position.

And last but not least, like Christopher explained, Elekta ONE is crucial to integrate all these workflows into the department make it easy to use and make sure that the best treatment can be selected for the patient based on the perfect therapy that needs to be matched. So when you add this all up, you can sense my excitement that we are now starting to really turn the corner in the United States.

So to summarize. Next slide, please. We are going to attack this must-win battle with full force. We're energetic about it. We now have wind in our back with the approval of Evo and we believe that over the next coming months, you'll see more and more news about our installations and the excitement that our U.S. customers have for the Evo platform.

So with that, I hand it back over to you, Jakob. Thank you so much.

Thanks Anming. Thanks Christopher. So just to supplement innovative product portfolio with commercial execution, we just got it demonstrated from China and U.S. Clearly, we also need to be able to offer our customers a cost-competitive solution. And that really rests by having a cost structure internally, so we can pass that benefit on to our customers. If you look to the left, as I said in the beginning, we have seen our gross margin decline. And it's not linked to pricing. It's really linked to higher bill of material cost, higher service costs.

So the way you should think about Elekta is that roughly, roughly 2/3 of our cost of goods sold. Be that 60% in totality of revenue, 2/3 of that, i.e., 40% relates to components we source in. And then the remaining 1/3 relates to manufacturing, logistics, installation and not least the service. Keep in mind, we are actually asset-light company. So we have simply really more than manufacturing in U.K., in China and in Holland. Holland for our Brachy business. And we are now committed to have a, I would say, a continuous strong focus on sourcing at lower cost our bill of material, but also introduce excellence into how we manufacture, probably not that much potential, but certainly a lot of potential into how we install logistics and not least, service our very large installed base.

So we will, as a company, do a structural change. We are lifting in the LSS operation into the Executive Committee of Elekta really to ensure that at the executive committee level, we have equal partner to you Christopher and to the commercial who will safeguard cost and safeguard the quality of our products, and we're in the process of looking for another high-caliber executive to join the Elekta journey.

So the way I would like you to think through what our mindset is we will over time, transition from single source supplier dependency to either deliver it low-cost alternatives, but with long-term contract duration or dual source to ensure that our suppliers, like we are exposed to competition, they will be exposed to competition. We as part of our re-org, we are moving from centralized operations to decentralize the ownership of the installation and service of our business with our 5 regions. And then lastly, we are rolling out actually quite exciting AI tools to our more than 1,500 field service engineers to ensure they have knowledge at a fingertip, and we can move more into preventive, predictive maintenance and less reactive.

So what I would like you to take away is that there's more to be done at Elekta in addressing our cost of goods sold. We just got started, but we can see a lot of potential. So I think, Peter, I'll close here if okay.

Yes, sure. That's correct.

Just to reiterate, we most certainly believe and I think data supports this radiation therapy is a niche, large niche, very attractive market. We have identified 4 must-win battles for Elekta that is now under way of execution. It also means there are a lot of things within the company, we are saying to our colleagues don't do it. Here, we have really the transformation focus. We have a new leadership team in place. We have many great leaders already, but there's been a lot of change announced some of them also a few months ago.

So we have a team in place during our first half this calendar year. We will have our new operating model established by the end of our Q4, i.e., end of April. And then we have our new ways of working built into both our budgets, our incentives with certain guardrails to the organization. So we are good to go. I mean that's really the things should be done this fiscal year, and then we are ready for next fiscal year and we are excited about that.

Yes. And that sort of concludes then later on with the Capital Market Day that we are planning for in June where we will have much more financials. And most but not least, we will also be able to present new financial targets at that point.

I think that's important, right, Peter, that you say give us a little bit of time. Right now, we just focus on execution. But I think it's important lets have the new members of the leadership team to join, give us a better time to really build a financial outlook for the next couple of years and make sure it's activity based. And it has ownership, not only for me, but it's really from the wider leadership team. So we feel we can stand by it, and we support it and we can see a clear direction. So we -- yes, already now, even though it's cold in Stockholm, we look forward to June.

Okay. By that, actually, we can start the Q&A session and use your rise hand functions, and I will try to distribute the questions here. And after you asked the question, please then take away that function, so we can go to the next person asking questions.

So let's start. And if I was correct, I think the first question here comes from, see here from Jonathon Unwin at Equity Research. So Jonathon, please.

I have 2 questions, please. The first 1 is on gross margin. You spoke a lot about potential to reduce the cost of materials, but could you like perhaps quantify what impact increased software sales and Elekta ONE could have on the gross margin, could we realistically see a gross margin above pre-COVID levels if you reduce costs and change the mix. And then my second question is on China. You said you've maintained share in China, but local competition is gaining share. Who do you think they're gaining share from and do you think that United Imaging or the local competitors can gain share in Europe? That's my questions.

I guess, Jakob, could you start with the mixed question?

Yes. Yes. And I can also take in China. In terms of gross margin, as I said, we will have focus on reducing our cost. Clearly, the more software sale that comes at very high gross margin, the more we do the higher improvement we are going to see in our gross margin. We don't want to quantify it at this stage. We will come back to that at the Capital Market Day in terms of what is a realistic ambition. So give us a bit of time, and then we'll get back to you on what we believe is realistic for Elekta.

And then on China specific, Anming, please comments from your side.

Okay. Just I mentioned that the Chinese market is a very transparent market because it's a big market, and also the Linac even the radiotherapy equivalents managed by license. So we -- yes, there we are very clear market leader. Of course, even though we lost some market share to the local competitors. And also, as you know that -- everybody can see that, now the Chinese government also give more favorable policy to local branded. This also give us some impact. But now we also very hard, we still maintain a very high market share. So in general that we are quite clear, the market leader in the market here.

Exactly. So we are a clear market leader. We lost a few percentage points that could change up or down. As you saw, it's roughly 200 units, it doesn't take a lot.

We are in the Brachy in the oncology information systems and also in the Gamma Knife in [indiscernible] we also make that big progress. So that's a little bit compensated some market share lost in the Linac. Thanks again.

Thanks, Anming. Thanks, Jakob. Then we'll move to the next question, and I think that is from Veronika Dubajova from Citi.

I will keep it to 2, please. Just the first one, and thank you for all the content you've given us. But just in terms of this kind of more faster-paced incremental innovation, I guess, I'm just curious what your views are in terms of the future direction of the industry, and whether -- if indeed, it is sort of in the direction of AI and also imaging, whether you think you have all the skill sets and all the know-how that you need within the business? And just thinking, obviously, relative to Varian, that is part of a much larger imaging complex. So that's kind of the first one.

And the second one, I just want to follow up on the comments around Evo that you've made in the U.S. Obviously, you've only been in the market for a couple of weeks. So just curious to what extent those kind of competitive wins are coming from folks who have been waiting for a product for a long time. Are they coming from folks who had a very old Siemens machine? Just if you can sort of help us understand where those kind of hard to win conversions have come in such a short time frame?

Thanks, Veronika. We'll start with your first question, Christopher. You can take that one, and then the U.S. question is for Ardie. So please, Christopher.

Yes. Thank you. So regarding the question of where the industry will go with faster innovation cycle, I think it's inevitable set the gap between what is needed in care and what can be provided with the current methodologies becoming too large to bear for societies. So there needs to be an increase in a faster innovation cycle to bring to close the gap or at least reduce the speed of how it widens. So that's I think is a given.

Secondly, as I said, there is the underlying technology revolution, not evolution that makes these things also possible. So the innovation speed will increase significantly, that's a given. Of course, healthcare systems have to adapt to that, also reimbursement has to adapt to that. We see that what Ardie was talking about in the U.S. So this is still a process where society needs to catch up, I think, with the -- on demand and as well the technology advances.

To your point about does Elekta have the skill sets to address this? Of course, Elekta will never be a company that can do everything and anything and that probably can -- our competitors can also not do? Because there will always be new ideas, new things coming up, specifically in these revolutionary times that you don't have in your skill set baked in yet. So what we are doing, and there I think we are quite nimble as a smaller company compared to a few of our competitors to have really important partnerships, whether that's with other companies or with also very important with our key opinion leaders in the academia that do have these skill sets. And they do have these -- the hunger to try new things as an exploratory thing before a bigger company like Elekta or others can make a big leap and say now we are betting the future on that.

So for us, and Jakob alluded to it, we visited a very important partner of our this week in the Netherlands, and they are very, very eager to partner up with us even more so than in the past to bring their skill sets, but also their innovation hunger to Elekta. And also here, in the end, radiation therapy is a boutique industry compared to some others. So we don't need to invent new AI large language models. We don't need to invent new CT or MR-based imaging methodologies. We can leverage what is being invented in other industry, whether it's the car industry, autonomous driving, whether that's in AI basic LLMs for service, for example, support or whether it's an imaging in radiology.

So I think we have the benefit of a fast follower in the industry, not as a company, we will make choices where we want to be leading, where we are going to be a fast follower. But I'm very confident that with these sets, we are going to be in a good position to compete very efficiently with our larger competitors.

Thanks, Christopher. And Ardie, on the U.S. question?

Yes, Veronika, thanks for your question. And I think the RT industry is actually a pretty tight net community on a global basis. And I think customers obviously been following how Evo has been performing in Europe, where we showcased that these online adaptive capabilities are fast and integrated. And I think also based on our leadership on the Unity side, they have been following us closely. But we were not in a position, obviously, to promote and to actively sell Evo until we got FDA clearance. So these customers are basically waiting for us to get FDA clearance. So as soon as we got that we engage with them and convert obviously those PLAs and making sure that we can move forward with Evo orders. So that's the reason why we saw some pent-up demand, and then we are now able to convert into Evo orders. Hope that answers your question.

Anything to add Jakob? or Veronica you're happy?

I guess just I'm kind of curious if you can characterize the types of customers who are interested in Evo? Is this hospitals with multiple Linacs that have historically not a hyperfractionation that are moving to hypofractionation. I don't know if there's sort of a common theme that you have this early on, but I'd be curious to see what those look like?

Yes. So those are customers that are indeed looking at adaptive therapies, Veronica. So if they want to do hypofractionation, they want to benefit from this new trend in radiation therapy. So really, their specific ask is we want to do adaptive treatments.

Thanks, Ardie, and thanks, Christopher. We'll move to the next question. I think that is from Richard Felton at Goldman Sachs.

Two questions for me, please, both going to be on China. So first of all, in terms of market size, the slide that you showed had between 310 and 340 units per year in 2021 and 2022. Do you expect the market to go back to that size? And if so, over what time frame?

Then the second question, sorry, if I misheard, I think you did reference a few points of market share losses specifically in Linacs in China. Given that you are framing China is a must-win market? What are you doing as an organization to address those market share challenges now that United Imaging is in the market?

So if we start with you Anming on these 2 questions, did you hear them?

Thank you. It's really good questions. Yes, before the anticorruption, in China, the -- every year, the units is going to the over 340 units. Just I mentioned that this is a very transparent market.

Yes, absolutely. And also from last year in the middle of the 2025, the market is very quickly recovery. And also, I think in this calendar year, they should be going 260, 280 is very possible. And I think that we still need another 2 or 3 years could back to the 340 because you know that the Chinese government now is doing a lot of motivation and a lot of the investments trying to promote even request the county or city level, they must have their oncology department. It means that if they want to promote to the Class III, must get the oncology department and Linac systems.

So but at the same time, in China, we also face some challenges about the professional bottlenecks. So this will come back slowly, step by step. And also in Chinese government, the Chinese market, all radiotherapy equipments managed by the license for the Unity be classified by the central government for other equipment licensed by the local government. So in general, that absolutely a step by step to recovery to over 300 units.

About your -- you mentioned about the competition. Yes, United Imaging is the only 1 of the local supplier in China actually in that is over 15 local suppliers. So United Imaging, yes, because they are successful in the imaging diagnosis even in the ultrasound. So they've got a good branding, they're more competitive and got a very good supporting from government side. So they're getting some market share.

But in general, if you look at the performance outcomes, clinical that, absolutely, we are very strong in the market as a clear -- very clear market leaders. At the same time, we also maintained a very good market share for the Brachy, for TPS, for oncology information systems. Also you know that in China, the proton is very active. So we have more than half we got the oncology information from Elekta. So we also have a very big installation base. So we can continue to do that.

At the same time, from this fiscal year -- from this calendar year, the government adjustment -- the reimbursement, but they just slow down for the operation treatment, but they clearly increased the reimbursement for as well as SBRT even attractive. So in general that for this market absolutely motivates the high technology, high-performance system. Elekta in this part is quite strong.

Thanks Anming. Thanks, Richard, for those questions. We'll move to the next question, which I think is from Erik Cassel at Danske Bank.

First, I have a question for Ardie. When it comes to gaining market share in the U.S., I guess, for it to be meaningful, you'd need to convert customers from, I guess, mainly using Eclipse and ARIA to sell Evo to those sort of customers since you're sort of ring-fencing the online adaptive. My best guess would be that you have sort of a smaller market share in software than you do in hardware, which comes to U.S. at least for customers using us as main sort of TPS. So could you talk about how you're planning to win customers over on the software side and get them to use your TPS systems more? Because that seems to be fairly sticky and also sort of a leading indicator for where hardware market share is heading.

Ardie?

Yes. Thanks for your question. Yes, I think we are in a very interesting phase. If you look at the ecosystem to do adaptive treatments, and so when we launched Elekta ONE planning, we basically made a choice to go with a market-leading contouring company called MEM, which is, in this case, really what's driving a lot of the preference of the physicians. And we tied into that a very good and very fast dose planning engine. So the combination of those 2 together and then putting that into the, let's say, ecosystem of adaptive planning. We actually see that customers, while they are still using for off-line their main TPS, they're starting to move into the Elekta ONE planning environment. For them, I think the key is that they can do fast, reliable and accurate treatments.

And so what we're seeing, the same thing as with Unity, where we have built this integrated solution, including Monaco, we see that customers are starting to use that. in an integrated fashion. So how do you win market share in that case?

We are starting to see transition for people to say, hey, we want to do this treatment, and we're not just focused on the individual boxes. And so Elekta ONE planning is the answer to this puzzle, but also integrating that within the OIS. And we see that our footprint in OIS is still very strong, but the combination of the device in this case, the treatment planning and the OIS, that -- those 3 pieces together, that's what's driving that acceptance. And so I think what you'll start to see is that customers are going to say, yes, we still have a main treatment planning system like Eclipse but we are starting to work within this Elekta ONE environment to do adaptive treatments. And that's how we think we can start really penetrating that position.

Thanks, Ardie.

Okay. Then can I just ask on Europe. Can you perhaps comment on how successful you've been on upgrading the loyal customer base that you do have in Europe from going to Monaco to using the full Elekta ONE suits, if you can sort of talk about some sort of ratio for the number of centers approached versus the one who decided to go with ONE?

Yes, we don't -- over and above the guidance we gave here last Q2 in terms of growth in Europe. We don't share more details at this call. But in general, I mean, of course, what we hope for is we see the same uptake in the U.S. as we are seeing in Europe on Evo.

We'll move to the next question. And that's from Sten Gustafsson at ABG.

So I was wondering if you could share with us your installed base of Versa HD in particularly in the U.S. but it would also be interesting to hear, for example, in China, how many systems you have today and preferably also the age of the fleet, that would be very helpful.

Yes, Sten, I fully understand, but I wouldn't want us to share our details on our IP in U.S. or China. I don't think that would be very smart from a competitive point of view. But of course, we -- I think Ardie showed the overall age profile of the market in U.S., of course, we have it fully mapped as well in China, but I hope you understand it's not something we want to share because we may also have competitors listening in.

I understand, I just thought it was worth asking the question.

Yes, but it's also a great question.

I can add maybe a little bit of color here, Jakob, which I think is important to note is that we also create upgrade opportunities, right? It's not just all replacement. And for the younger fleet, we can also upgrade them to Evo capabilities. So it's really -- it's a double whamming and it's not just upgrading to new systems, but we also have the capability to upgrade our existing systems. So that's exciting opportunity.

And this is also the very same with China. I just mentioned that Chinese government adjust the reimbursement. They will be floating operation treatment, they lower down the reimbursement, but they increased SBRT, we made, SBRT adaptive. So -- but in China, we -- more than half even maybe 1/3, we're still doing some routing operations this time for them to upgrade to meet the market requirements in order to increase their income, the revenue of the treatment. So it's a very interesting topic. We also -- tomorrow, we have a user meeting. This is a very important topic with the customers. So the more and more customer approach us try to ask us to do the upgrade it with the systems.

Thanks for enlighting us Ardie and Anming. Thank you for those questions. If you don't have any further questions, we'll move to the next one, which I think is from Kristofer Liljeberg at DNB Carnegie.

Two questions, one on U.S. and one on China. If I take U.S. first. Given that the U.S. approval and launch was too much delayed and the pent-up demand you highlighted today, how soon do you think we could expect to see a ramp-up in meaningful order growth in the U.S.

Yes. Thank you, Christopher. And yes, like I said, it's -- we have not been sitting still and waiting until Evo approval happens. We obviously have been working with our customers and educating them about what the capabilities are once we get FDA clearance. So I think you'll start to see that that is now starting to happen already here in Q3. We already seen some orders coming in, and that will continue, I think, into Q4. And then as far as revenue goes, first, you obviously need to do bunker preparation, you need to make sure that the customer is ready to receive and obviously, manufacturing the equipment. So that's a little bit more lagging. But the excitement is there and the funnel has grown.

Great. And then on China, the pickup presented here for China Linac sales in 2026, how certain could we be about this really happening? And do you expect to take your 40%, 45% share of these Linacs?

Thanks ,very big challenge question. Yes. I'm sure that the market will be in the 2 or 3 years Evo suite will come to pick, there's no doubt. If you look at that from -- in the middle of last year, is they are recovering significantly. Secondly, the government more and more investment even in the beginning of this year, the government emphasized that they will continue to investment in healthcare. For Elekta, yes, we are facing more and more challenge. I just mentioned that in China, it's a very unique market. In the other countries, might be only 3 or 4 competitors, but for us, maybe more than 16 to 17 even more will be coming. So we absolutely face more challenge, but we are very confident because now only 1 company, Elekta, we provide the total solutions. That's not only for the Linac also Brachy, TPS, oncology information systems, Unity, Gamma Knife. So for the hand, we are dominant in the market.

Of course, we got some pressure challenge. It's not about the clinical outcomes, more pressure is from the government's some policy to motivate some customers, especially public to purchase local branding. But now we get more and more localization in China, even just I mentioned that by the end of 2025, we also got our regulatory clearance for the Brachy and Gamma Knife. At the same time, we are working on for the Unity to be into the local regulatory clearance, try to meet the government policies. So I don't believe that we are confident we'll continue. We lose some share, but we're still very strong market leaders in the market in China market here.

Thanks, Anming. Anything to add Jakob or Christopher. Thank you for those 2 questions. We'll move to the next question, which I think is from [indiscernible] at SB1 Markets.

Follow-up, especially for Ardie on the U.S. side. You have a sizable installed base of Linacs. I don't know if it's approaching 1,000 perhaps. Evo is obviously a premium system with premium price without referring to any potential list price. It will not be for all accounts, but presumably a sizable proportion. Can you be elaborate further on the most likely characteristic on the early interest in Evo on your side? Is it sort of multiple Linacs sites that also operates other premium alternative systems and university sites and the likes?

Ardie?

Yes. Thank you for the question. What we are proud of with Evo is that it's a very versatile system. And so what we mean with versatile system is that it can actually treat all kinds of indications, including SRS. So even if you are on Linac shop, you want to make sure that you can treat all your patients. And so Evo can provide that capability. And then the customer can decide to either buy Evo with Iris or they can decide to further upgrade later on if they really want to go to high-end adaptive treatments. So I think the platform is scalable for U.S. customers. So we don't see a difference between freestanding clearing that has on Linac or an academic site that has multiple, it really depends a little bit on what capabilities they want to buy.

And then lastly, I think Evo is also a platform that can be expanded towards the future. So we believe that it addresses most of the market segments. And if you look at price sensitivity, the market pricing for U.S. is actually really good. So we are not too worried that we're not going to be able to serve a certain part of that industry.

Of course, you are going to be sensitive to price rebates and so on. It's a premium new system, but you alluded to earlier that there is an option to upgrade existing systems as well Linacs. Is that a way to sort of be more flexible on price perhaps on freestanding that are -- some of them have also economic pressure?

Yes. Yes. Correct. And so that's, I think, the nice thing about our strategy is that we just -- we don't need to buy a new system to get these capabilities. But we have to be also careful not to just upgrade everything. And so we are looking at a certain age of the machine to make sure that we don't upgrade 15-year-old units. And so we work with customers to make sure that they can get access to this technology, but it also needs to make sense from an investment standpoint.

And finally, on our side, you obviously slim costs and take out costs and increase efficacy. But presumably, given the position you are in now over the last 3, 4 years in the U.S., is it really possible to do this without stepping up the field force and the footprint?

Jakob?

Yes. If it relates to the U.S. Ardie, should maybe answer, but I think I can answer on his behalf. It goes across Elekta, we can save our way to glory. But of course, it helps to be competitive on the cost side. So we have been looking extensively at what is the right market coverage. And then we have -- we have really gone through with the lens of making sure we get our leaders and our sales people that are very close to our customers. And that's why we say this was not a cost-cutting exercise. It was a reset in how we operate. And I think we are pretty happy with where we are now.

We have 2 more questions in the audience here. We take the next one from -- I think it's from Kavya Deshpande at UBS.

Yes. I just had 2 on China, please. So the first was I think your strategy there mentioned deepening localization of your supply chain. I was wondering if it would be possible to elaborate on that, please? Because I understand you've already got localized assembly for the majority of your Linacs. So would further localization covers raw materials? And what about software would that be in scope as well?

And then my second question was again on China when you mentioned sort of expanding into different segments where you haven't traditionally played. I think private hospitals were mentioned, for instance. I mean who are the players that dominate there now. Is that -- does it resemble the broader market? Or would you be aiming to take share from the local players in these new segments as you expand into them?

So let me take on supply chain software and then Anming over to you on the go-to-market. Yes, we feel there's untapped potential in really localizing supply chain. I was just there with the team with Anming a few weeks ago. And clearly, the market in China and Asia is so competitive. And we don't always need suppliers around the corner in U.K., we can absolutely look at leveraging our global footprint and harvest savings. So I think the way you should think about it, that's very much part of our continuous COGS reduction drive to really go for both resilient but also low-cost, high-quality suppliers.

On the software, we have a big software development team out of Shanghai, and I have to say they are spectacular phenomenon. We call it China speed, but they really operate at high pace as we can see, China in general for us. And part of our expand China is actually how can we tap into China speed even more -- and I would -- today, we have roughly 700 people in China, I would not be surprised if that number is higher in the years to come. And then to you, Anming, on the go-to-market.

Okay, thank you for the question. Yes, you are right, we are very strong in the market about the software. Just I mentioned that 3 years ago, we established a joint venture with a local company for the software joint venture. So -- and also that the top 50 RT centers more than 80%, we provide oncology information systems in China. And at the same time, more than 50 proton centers, we provide a total solution to them for the oncology information systems. Not only for proton, also you know that these top RT centers, the proton always the connection with the Linacs. So this is a very good profitable business.

And also, just you mentioned that we will be continuing to do this kind of investment to work together with our partners to go to provide more products, not only for top RT centers, also going to the next level. Because in China, we are less of professionals. Also, we also work together with the local companies trying to provide remote diagnosis, remote planning systems to support some private and low-level hospitals to get high quality control on the planning for the treatment.

And also just you mentioned that for the private segment, yes, we are very strong in the private segment, even much higher, even dominant for the private segment for the Linac. As you know that the -- for the public, sometimes they got more influenced with the government policy. But for private, they only focus on the performance and the price. But for this part, we also provide a very good training systems, training education in China. We have the 1 learning and innovation center in Beijing. 52 weeks, we got more -- every week, we have training and education cost and the free of charge to all our customers.

So -- and also, we also work together with the top RT centers, universities to deliver their training education. And also in general, that this part, we are very famous in China because we do a lot not only for the trading and education also getting more with the Unity for the top RT centers. We provide academic support. So we have 1 big team only focused on advanced training education and academic support. So in general, that Elekta region China, we do a lot of investment, trying to give the customer a special hand top and private to let them to get more professionals support this part absolutely is the big bottlenecks for the -- in China.

Thanks Anming. and thanks, Kavya. We'll now move to the last question of this event. And if I'm correct, that should be from Handelsbanken and Ludwig Germunder. So please, Ludwig, you're up for the last question.

I have 2 quick ones, please. The first one would be on the 4 must-win battles you presented today. Would you say that you have any ranking order for the must-win battles or are they all equally important to you in order to unlock the full potential of Elekta. And the second one is on the U.S. competitive situation. So prior to the FDA clearance for Evo, you told us that your customers were waiting for the Evo approval as they loyal to you. And now Varian has been teasing us that they are close to launching their next-gen Linac as well. Have you got any feedback from current Varian users that they want to stay loyal to Varian and wait for that next-gen Linac? And if so, to what extent have you got that feedback from the customers?

If we start with Jakob, for the first one and then move to Ardie.

If you think about it, to win in both China and U.S. we have to U.S., we need to come back to what I think -- what should be our fair market share. Clearly, our customers wants us to win. We need a strong focused product portfolio through driven by innovations. Clearly, and then we need to be cost competitive so we can compete in the market. So I think I wouldn't want to sit here and rank them 1 higher than the other. But there's a reason why there are only 4 because we have the bandwidth to execute all 4 of them.

Then in terms of competition. I mean, Ludwig, great question. I really have a principle about not commenting specifically on products of competition. I think we'll stick to that. We know what we need to do. Of course, we know what products they will come with and then we'll move on and execute on our innovation plans. We invest a lot, as Christopher said and then of course, we feel we have good plans ahead of us.

All right. Great. Thanks. That's it when it comes to question. But before we close this session, a few closing remarks from your side, Jakob?

Yes. Yes. Almost started, we have potential ahead of us. We know what we need to do. Now it's just a grind of execution. And then we look forward soon to connect again early March on our Q3 numbers. So thanks for your attention. Thanks for your questions. Thanks for facilitating.

No problem. My pleasure. Thank you all.

Hi, and good morning, everyone, and welcome to this second quarter Investor and Analyst Call. My name is Peter Nyquist. I'm heading up Investor Relations at Elekta.

With me here, I have, for the first time, our new President and CEO, Jakob Just-Bomholt, and welcome Jakob for the first call, and hopefully, many to follow. Together with Jakob, we have our CFO, Tobias Hagglov. Jakob and Tobias will present the results for the second quarter and in the fiscal year of '25-'26.

So we'll start off with Jakob giving some initial reflections on his first quarter as CEO, followed by a summary of the Q2 financials, including the order view announced today. Then, Tobias will go into the more details around the financials and Elekta's outlook. Jakob will then present the change in operating model and the organizational structure, leading to the cost reductions that we announced today as well. And after presentation, we will, as usual, be available for a Q&A session.

But before I start, I want to remind you that some of the information discussed in this call contains forward-looking statements. These can include projections regarding revenues, operating results, cash flow as well as products and product development. These statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in the statements.

With that said, I will hand over the word to you, Jakob.

Yes. Thank you very much. Yes. So let me start by talking a bit about some of the initial reflections and then give highlights on Q2. Then, Tobias, you will go into Q2 financials in greater details. And then, importantly, we'll get back to Elekta Reset if you will, our new operating model. But on initial reflections, before I go into the details here on that slide, I would just say, fundamentally I like what I see. I'm now 4 months into the position. Obviously, prospectus will modify somewhat, but I do think directionally, what we will outline here in terms of strength and challenges and opportunities, we'll set the direction for the company ahead of us.

We have been very open. Elekta is not performing at full potential. As incoming CEO, I think that's great, give us a lot to do. It also gives us an opportunity to do better. When we look at the company, we don't feel, and I don't feel that there are structural headwind. Of course, we have competition like for any company. But the challenges are really within our control to face. And that's what we're about to do.

Today, we disclosed our must-win battle 1, we call simplify and power speed, but I'll get back to it. But let me go a little bit in details with some of the reflections. And if I start on the positive side, it's not positive, cancer burden is increasing. You all know that. Cancer incidence is on the rise, but fortunately, due to aging population and growing population, we see more and more that cancer is a chronic disease, so you get treated, you're cured, you come back, and then, you're using Elekta equipment again.

Then, the second mega trend is that there is a shortage of professionals. I've heard numbers up to shortage of 80 million. So that really speaks for us as a vendor into the industry to innovate, to support the professionals with speed and better treatment and more precision.

At Elekta, if I turn to the right, we're well positioned. We are #2. We are not #1. That's in many ways attractive position to be in, but we are clearly #2. Radiation therapy is an attractive and growing MedTech segment. We look at the segment likely to grow faster than the average MedTech segment.

Then, we have many strongholds built up over many years in key markets outside U.S., strong in Europe, strong in many Middle East Africa markets, strong, very strong in China, strong in a number of Asia Pacific regions. But clearly, what we also imply here is that we are not strong enough in the U.S., and I'll get back to that on some of the challenges and opportunities.

We are the only dedicated -- 100% dedicated company focused on radiotherapy. I think it's such a strength because when you're dedicated, you have to have product passion, you have to focus on your customers, you have to execute fast. We have a well-recognized brand. And what I truly cherish coming from a company with more indirect sales force, we have a direct sales force. So we are really in control of our commercial execution.

When we look at R&D spend, we have been willing to spend on innovation. I think that's right because when you look at the graphic, again, to the left, there is a need for us to innovate. We need more precision, we need more speed. We are not mature or end of the road in terms of innovation. When you look at gross spend, we spent roughly 12%. So it's very high for a MedTech company. So it's certainly sufficient to realize what I would call future best-in-class solutions because that is the future of Elekta that we have best-in-class products, highly innovative, and the current spending run rate supports that.

And then, we have, if you will, a razor blade model. So we sell our solutions, but then we supplement that revenue generation by more predictable, profitable software upgrades, but also service markets. And as you see, our service business continues to grow. So it's -- there are a lot of strength. We are fairly asset-light. We have, as you will outline, Tobias, good net working capital. Our physical CapEx requirements are relatively low. So there are many things to like about Elekta.

And if we go on the next page, then importantly, also, we have a strong portfolio logic. If I just speak a little bit to it, then perhaps many of you know. But the products are complementary, both from a brand commercial, but also workflow perspective. So if I start from the right, we are building software that really connect the different modalities because that's a customer need. And often when we tender, it's not only a Linac, it's bundled with other products as well.

But our Gamma Knife, what started Elekta, that is the gold standard for stereotactic radiosurgery of the brain, and we are uniquely positioned with -- and clear market leader. Same for brachytherapy actually. It's highly targeted, internally delivered dose for specific cancers. It's not for all. It's cost effective. So it's also attractive for emerging markets. And very often, it complements the Linac's treatment so you can get a boost, and then, you get your Linac treatments or the other way around.

And then, we have our Linacs. And we are the only one with both MR-guided and CT-guided Linacs. So the CT-guided Linac is really the workhorse for high volume, broad cancer treatment, and MR-guided is top of the line with the ultimate precision. So I want to take away -- my takeaway is, and hopefully, yours as well, the portfolio logic is good. That's not where we have a challenge. We don't need to slice off or do big portfolio changes. It really makes sense.

But then, of course, if we get into improvement areas, and we also believe in the statement that we are not at full potential and the industry attractive, then what do we need to look at? If we look at gross margin, it's too low. We used to be in the 40s, better up actually in 40s. We did see a dip post-pandemic or during the pandemic. And we never really recovered. And if we look at it now, we have too much single source, too much supplier dependencies. Some of them take advantage, and we will double down on continuous engineering to make sure that we have a relentless COGS reduction focus in the years ahead. It's not -- there's not a quick fix, but it's going to happen, and it's certainly viable.

Then, we -- when we look at our 12% gross spend on innovation, I do think we need to become more focused, more commercially driven. Elekta comes with very strong scientific routes, strong within academia. I would certainly push us to be a little bit more commercially focused when we take innovation bets in the future. And then, of course, over time, we need to grow at or above the market. When we look at our growth rate, we have to accept that we have been growing over the last really half a decade, even a bit longer, a bit slower, somewhat slower actually than main competitors. We don't like that. Specifically, we need a turnaround in our U.S. business. We'll get back on the FDA, I'm sure.

And then, we want to preserve our China position, where Elekta very cleverly have been early in the market, have localized our supply chain. And then, overall, when I look at the commercial organization, and as you know, I've taken the regions in direct report, we need stronger commercial execution. We will have to apply cost focus across all spend categories, standardizing our processes. And then, I'll get back to organization, but we're looking at simplification. But it really starts with a new operating model, that's a starting point that then leads into a simplified organizational structure to target faster speed, faster speed on product development, operational execution, commercial execution, really with the goal of focusing on our customers and patients.

And then, on quality of earnings, we will work hard to make the link between EBIT and cash strength. So these are some of the reflections I initially want to share with you. As we'll disclose in the end, we'll give a strategy update with further details during January.

If we then look at Q2 specifically, and I'll do it fairly fast, a decent quarter, I would say. We did 1% organic growth, 2% on orders, strongest in Europe, 11%. So we continue to see momentum of our product launches. That's good. APAC saw revenue growth outside China, but it couldn't compensate for the double-digit decline in China. But on China, it's quite positive that we are now seeing growth in orders. They had a depleted backlog. We knew that. We now saw in Q2 order growth, and when we look at the momentum, it looks quite positive for second half skewed towards Q4.

Then, negative growth of 8% in U.S. despite actually quite good order intake, but clearly, we need a commercial turnaround. I'll say the commercial organization needs Elekta Evo, but we need a turnaround in the U.S. We did have growth in LatAm.

Then, one of my first actions as CEO was to change the reporting lines of the regional heads reporting to me. And then we initiated an action to review, to make a comprehensive review of the order backlog. And that's what I want to update you on today. Compared to the order review presented in June, we have implemented, I would say, a little bit firmer interpretation of order criteria in areas such as delivery times, end customer side, down payment price indexation, et cetera.

There will always be a judgmental call, is a license there, is a site ready, and now, we apply a firmer interpretation. It's predominantly old orders that we are now canceling. But this action, I would say, we should have better forecasting accuracy, both in terms of sales development and profitability. The cancellation is SEK 2.2 billion. I would say this is it. We don't expect further structural revision of the order backlog. That's for me important to communicate. I've been in it at great detail. I would also like to stress that it has no revenue impact for this year or next year as such. And there's no cash flow impact. So we are not going to pay back any customer deposits. So that's where we stand.

I would like to end by saying it's quite important to take away that we have an order backlog that I consider at a healthy level, 2x annual sales give and take, based on last year's sale. So we have a lot of business to look forward to, if you will. So if I close on Q2, book-to-bill of 1, all right. Rolling 12 months, importantly, 1.09. We continue to see good momentum in Europe. Of course, I like to see over time higher net sales growth than 1%. That's clear. Good margin uptake, close to 38%. On EBIT, 10.1% versus last year, 9.8%. But if you adjust for lower capitalization and higher amortization, it's actually quite a significant improvement in, if you will, cash-based EBIT margin. And then, you will outline to be as -- but if we look at year-to-date cash generation significantly better than same period last year and good to see that net debt versus a year ago has been reduced by almost SEK 700 million.

So that concludes, and then, I look forward to coming back to the operating model.

Okay. Yes. Thank you, Jakob, and good to have you on board here. So I will then move into the quarter here a little bit more in detail. You mentioned that, Jakob, that we grew here in the quarter by 1%. This is then in constant exchange rates. We had a decline in our solutions operations by 4%, while our service grew by 7%. And also, I would like to mention here that the product launches of Elekta ONE and Elekta Evo had a continued positive contribution in the quarter.

Then, looking at the profitability, we land here in the second quarter a gross margin of 37.9%, which then means 220 basis points improvement year-over-year. We see that our new products continued to contribute positively. We also have a higher share of our service business in the quarter. Our Brachy and Neuro business, strong development, strong growth in the quarter. Price continues to be positive. And then, here, as we had in the previous quarter, we have a negative impact then from tariffs and FX, and this negative impact is then 70 and 50 basis points, respectively, corresponding to a total of SEK 163 million in the quarter.

The operating margin, adjusted EBIT margin, amounted to 10.1%, a 30 basis points improvement, and you are fully correct Jakob that we have a reduction in our gross R&D. When you see the impact in net R&D, it's increasing in the quarter, driven then by both lower capitalizations and higher amortizations. Selling and admin expenses increased somewhat in the quarter, and this was selective investments in marketing and IT and a bit of the phasing of the ASTRO cost here compared to last year as well as then some transition-related costs. But we will come back, as you were pointing out Jakob here to the program that we are on here. Net income amounted to SEK 229 million, and adjusted earnings per share amounted to SEK 0.65.

So let's move into next slide. And FX, I think that we have a similar view here of the FX movements as we had in the previous quarter. So how does FX then impact our operations? The first point being is that, as you know, our reporting currency is the Swedish krona. And when you have a strengthening of the Swedish krona versus the main currencies, U.S. and euro, this means that the sales in dollars and euro actually becomes less worth in Swedish krona, which then leads to in nominating terms lower revenues and earnings in SEK everything else equal, the translation effect as such.

Then, secondly here, we also have more revenues and cost in dollars. And when you actually then have a depreciation of the U.S. dollar versus our main cost currencies, euro and pounds, we also have then an unfavorable currency transactional impact in the quarter. And as you see in this table then, FX then had a negative impact of 50 basis points on the adjusted gross margin and 60 basis points on the adjusted EBIT margin.

Then, coming back here to Jakob's point here, we have a reduction of the net debt of SEK 700 million year-over-year, and it's obviously then driven by the cash flow generation. If you look now year-to-date, we have -- in the seasonal weak start since we're building working capital in the first 2 quarters to larger quarters later in the year, we normally have a weak start of our cash flow generation. But if you compare this to last year, we are about SEK 900 million better when you look at the cash flow after continuous investments.

When you look at the quarter, we improved our cash flow year-over-year by SEK 389 million. And this is then driven here, to your point, Jakob, to lower R&D spend as well as more favorable development of working capital here with more customer advances as well as a reduction of accounts receivables. And our net working capital as a percentage of net sales is now a negative of 7%. If we then look at the cash conversion here, it amounts to 91% compared to 65% a year ago.

And if you then look at some more long-term trends and key financial metrics and look into the net sales, gross margin, EBIT margin and operating cash flows, which obviously are all key metrics here for driving profitable growth and return to our shareholders is that we have seen net sales on a rolling 12-month basis, which is relatively flat year-over-year. However, we see a positive trend for the -- both the gross margin and the EBIT margin.

And then, here, what we just were talking about is that we have seen -- also seen a positive development for the operating cash flow, where we had delivered a significant improvement year-over-year. If we then focus a bit on the outlook for the second half of the current fiscal year '25-'26 and the full fiscal year, we reiterate our full-year '25-'26 outlook, where we expect net sales in constant currency to grow year-over-year. We expect sales in China to start recovering during the second half of '25-'26. And furthermore, we expect a continued negative impact from tariffs and FX at current exchange rates.

So with that, I hand over to you, Jakob.

Yes. Yes. So if we move on in terms of driving improvements, then we commenced really 3 months ago, forensic, if you will, of Elekta data 360 review as a leadership team and together with the Board to assess the situation. And with the outset in that analysis, we then defined 4 must-win battles, of which we are today disclosing the first one. We call it simplify, empower, speed. And it's really about a new operating model. I've seen certain comments saying, "Oh, it's a cost-saving exercise". It's not. It's a new operating model. Then, there are consequences of that new operating model that I'll come back to in terms of cost saving. But the aim was really to increase velocity for our product development organization, our commercial execution and our operational execution.

The secret sauce of a company like Elekta when we compete with the even larger enterprise has to be speed, agility, customer intimacy, product passion. So what we are trying to do with this exercise, and we will do it is to simplify how we are organized. We will eliminate complexity and certainly become a bit more assertive and insist on accountability. But with accountability also comes the ability to empower teams, so we move decision-making closer to our customers.

And then, in doing so, we approached the organizational review, zero-based. We say, okay, this is -- these are the focus areas, this is how we want the operating model to work, what organizational size do we then need to support those priorities? And we have then moved it into a much more decentralized model with regional-based P&L. So we will take our regions P&L that will add up give and take to Elekta's P&L, again, to increase ownership mindset, make sure we drive decisions closer to where we meet customers, increase speed, agility, make people work as owners of their own business, if you will.

If we then look at this slide, there has been changes to the executive committee. It's not all of these boxes that are part of the executive committee, but they do report to me with the exception of Neuro that reports to Brachy. But let me highlight some key functions here. We have made changes in the executive committee. We communicated that almost 3 months ago. We feel good about these changes. We have now hired new CFO, but thank you so much to you, Tobias, for still being here in the interim. We have hired a new Head of HR, soon to be disclosed. We have a search ongoing for COO.

We have strong regional managers. But what we did do when we looked at how we are organized is to say how can we increase the span of control, and some of the consequence, I will outline on the following page really stems from that we have increased the so-called span of control from 6 to 8.5. And we have reduced organizational layers from 9 to 6. And you can say, "Ah, is that a big thing?" It's a big thing because it reduces the chains in the chain of command. It makes us more agile. And obviously, it has significant consequences, not least on management positions.

So if we go on the next one, then I'll outline some of the consequences. So based on the new operating model, and based on the supporting org structure and a zero-based approach, we have then defined that we need to do a net reduction in our workforce, roughly 10%. We are 4,500 today. And we have identified 450. It will happen pretty quick. It has major impact on material positions. The targeted cost reduction is no less than SEK 500 million. It's a net reduction. It will have full impact our Q1 '26-'27, but you're going to start to see impact really from our Q4 this year.

If we give a split because some of the resources are part of COGS today, 30%, we estimate, our COGS goes into gross margin and 70% OpEx. Those numbers may change, but directionally, they are right. And then, we are going to communicate with Q3 latest the restructuring charts. But I'll just reiterate what it is, what is stated to the right. We are doing this to get speed and agility. We are doing this to firm up accountability, so we can empower our teams. Yes, absolutely, we need cost discipline across the organization. And then, we are doing this to increase velocity across the board at Elekta.

So it's a big day. I would also say it's a tough day because we have to disappoint a lot of colleagues that they will no longer be part of the journey. But our job is to continue to be successful, financially successful, so we can invest in life-saving technology, and that's what we are committed to.

And then, we look forward to giving you further strategy update during January '26. We are deliberating the date. We'll get back to you in due course. We will have our interim report early March. And then, we will invite for our Capital Markets Day in June here in Stockholm and very much look forward to that with the leadership team standing behind the updated financials. Thank you.

So let me conclude here by saying good performance, strong performance in Europe. Yes. Elekta Evo is making an impact. It's also a great product, I have to say. Gross margin, improving. Cash flow, as you outlined, Tobias, continues to be better than last year. We have now disclosed our first must-win battle leading to a simplified organization, but as I said, really with a view of accelerating execution. And then, we have done a comprehensive order review. And based on firmer interpretation of criteria, we canceled SEK 2.2 billion, but no cash flow effect, no revenue impact.

Great. Thanks, Jakob and Tobias, for a little bit longer presentation, but it was very much needed in where we stand right now. So we have still 30 minutes for Q&A. I think Jakob went through the calendar. There's nothing to add to that. So try to keep the questions 2 at each time, so if you have further questions you can line up later in the queue so everybody has a chance to ask question. So by that, operator, we are now open for a Q&A session.

[Operator Instructions] The first question comes from the line of Deshpande, Kavya from UBS.

Two for me, please. First was just around the order review. So I understand your reasoning was just applying stricter criteria on the back of the June review. I don't know if you could provide any more color on sort of the regional exposure of the orders that were canceled.

And then the second was just on the Evo in Europe. So would you be able to compare how it's been doing this quarter versus last quarter? I appreciate you called it out on the call, but it wasn't called out in the press release, hence, the question. And whether the strength was mostly upgrades or whole device sales? I don't know if you could provide color on that.

Sure, I can do that. Yes. So we did the order review. And as I said, we applied the same criteria, but in a firmer context. If we look at regions, it was predominantly our Middle East, Africa region. That's where we saw the biggest impact. There were -- it was old orders. So some of them up to 5 years. And there will always be a degree of subjectiveness, do we think the ride is going to be ready, is there funding in this or that location? And as I said now, we apply the firmer interpretation.

On Evo, up from last quarter in terms of units marginally, and outlook, good second half.

The next question comes from the line of Vadsten, Mattias from SEB.

I'll keep myself to 2 questions. After some commentary on sales growth going forward, perhaps after 2025-'26, so if we look at recent 5, 10 years, Elekta has grown, let's say, around 3% per annum. Order momentum has not been there recently in some areas. It's understandable, for instance, China. With the cost savings also now ahead and the operational improvements, you talked about the third program, I think, so what kind of growth rate do you see doable for the company more structurally, let's say, midterm? Yes, it sounds maybe difficult to outpace the growth we've seen in the recent 5 years. Or am I missing something there? That's the first one. And then, I have another one.

So we don't provide more guidance than what we have for this year, and that's a positive organic growth rate. On mid- to long-term, we will come back to that at Capital Markets Day. On cost savings, I'll just like you to come back to what I said. We are adjusting the operating model to accelerate commercial execution. As a consequence of operating model, there are cost savings. And over time, we clearly need to grow at or above the market. That's our ambition, and we'll come back with the detailed plan latest Capital Market Day next year.

You had a second question.

Yes. You disclosed book-to-bill for China, which is appreciated, and it looks like the order momentum picks up. Could you also remind sort of how book-to-bill for China looked, let's say, last 12 months or now fiscal 2024-'25 just to get a sense of where we are on China right now? That is my second one.

Yes. So, yes, we had a book-to-bill roughly 1.3 this quarter, roughly 1.3 last quarter. I think rolling 12 months, as I recall, 1.14. Then, I think they're important to say, well, we recognize at Elekta, we are bullish than most MedTechs on China, but we have the visibility we have. So Elekta got in early. We have localized our supply chain, then the market was strong. Then, we had the anticorruption campaign. It became much weaker. But if we look at our first half, we have seen the RT market up by a very strong amount. And we are now seeing positive year-on-year order growth. And when we look at our sales funnel, it looks like a strong both revenue order growth, double digit, high double-digit second half. So we -- that's the visibility we have, and we believe in it.

Absolutely. Absolutely. And just to add to that, Mattias, when you look at the book-to-bill here for China, it has actually been a steady increase, and you saw a reported number, but if you would look at the rolling 12, it has actually been a steady improvement here over the quarters here, and it has been ongoing for a while.

We'll move to the next question.

The next question comes from the line of Liljeberg, Kristofer from Carnegie.

Also 2 questions. First, coming back to the implied cost savings from the new operating model, it seems all else equal that would add some 3 percentage points to the EBIT margin. But I think you talked about this being a net effect, but are there some negative factors that might offset this? For example, you mentioned that you want to improve quality of earnings. One way of doing that is, of course, to stop capitalized R&D, and if you were to do that, I guess that would, at least from an accounting perspective, remove part of the, otherwise, positive effect, if you could comment on that.

Yes, we absolutely can. So yes, you should think that way that we say no less than SEK 500 million, and there will be a full impact on the margins with the split I outlined COGS and OpEx, but, of course, come into EBIT. I think let's keep accounting separate. I'd just say that, in general, we like to build a closer link between the EBIT and cash generation. We have heard that from a number of you also that you would like to see that, I agree. I'm not a big fan of too much capitalization, some you have to do, but we are certainly deliberating on what is the right approach going forward, but that's accounting. So I think we need to keep that separate.

Okay. Yes, to be clear, so the way you report EBIT, it might not improve the full SEK 500 million?

I would more say it differently that the 3% you should expect with full run rate for Q1 next fiscal. And whether we will do adjustment in how we do to capitalize is a separate topic. And frankly, we haven't decided on anything except what I'm saying that I would like to see a stronger link between EBIT and cash flow.

Absolutely.

Okay. And then my second question, of course, the importance here of getting Evo approved in the U.S. I saw you comment or said to one of the Swedish news agencies that you expect to have an approval within the 180 days review period. So maybe if you could talk about your confidence? And how this process is ongoing with the FDA?

Yes. Yes. So we have been confident along the way. It's just taking a really long time. So we submitted over the summer. And as you outlined here, you have a 180-day window. There are periods in the submission process where the clock has stopped. But you should say, 180 to 200 days. And we do expect to get approval within. Of course, it's not fully in our control, there is a regulatory body. But based on indications, we are positive. We have been positive all along the way. We are even more positive now than we were 3 months ago.

The next question comes from the line of Germunder, Ludwig from Handelsbanken.

Ludwig Germunder from Handelsbanken. I have 2, please, and I'll take them one by one. So the first one is around the regional restructuring of the P&L. As a consequence of this, do you have any -- or could you say anything about how incentive systems will change to drive the more local P&L ownership?

Yes, I could. And I probably will, in due course, but first, I would like to discuss it with the regional management team. Today, we are announcing the change in structure. But clearly, clearly, we want incentives to match the value creation of Elekta. It's very clear. And I would, in general, like to see a stronger ownership mindset in the company.

Okay. And my second question is on the cost savings as well. You gave us the figure of SEK 500 million annually in cost savings. Would you be willing to give us some more flavor on the different parts? And how they will move in, let's say, next year? So, I mean, if you share up the OpEx and -- or should we expect different parts to move given the SEK 500 million? Or should we expect a decrease? Or in the parts expected to increase?

Yes. Yes, it's a good question. I think the guidance we gave here is no less than SEK 500 million. So the approach has been to start by saying what is the right structure, and then, we are down to now individuals. In general, we have been doing it to increase commercial execution and operational execution, and very importantly, avoid duplicate work, which we have identified, delayering become more agile.

I will not go into the specific details in terms of where are we removing the 450. We -- as you can imagine, we have a town hall this afternoon. We will -- I think our staff deserves to be told first in greater detail. But I think what you should take away is that we do this for enhancing the execution, and then, as a consequence, savings no less than SEK 500 million, and we are fully committed to. You will see the full run rate effect Q1 next year, and that's not too far away.

And you also had allocation there, what's in the gross margin and what's below the gross margin.

Yes. Good point.

We'll move to the next question. I think it's from Erik Cassel at Danske Bank.

First, I want to talk a bit about the software backlog and deliveries in Europe. I mean, we're naturally seeing EMEA margins come up quite significantly. And I just want to get some sort of understanding on how much of that is driven by software? And if possible, I'd like to know if the software book-to-bill is still positive in EMEA?

Yes. Well -- I mean, I think we stated here. I think, as you alluded to here, we have seen a very strong contribution from -- I mean, both in terms of the Elekta Evo per se as well as the upgrades here in -- on the existing Linacs, what we call them, Iris. And when it comes to -- we see a continued strong development here. And you heard Jakob talk about in the second half. So that remains, and that is what we -- still, we view it very positively.

Yes. So I can say -- yes, sequentially, Erik, we had double-digit growth sequentially on Iris and Elekta planning.

Is that on orders or on deliveries?

Both.

And is the book-to-bill still positive?

We don't go in -- it is actually, but we don't go in further details. In general, we keep our book-to-bill at a fairly aggregate level for competitive reasons.

Yes.

Okay. Perfect. Then just last question. Solutions seems to be down some 20% organically in Americas. I was just wondering, how much more is it down in the U.S. since that's a key driver? LatAm seemed pretty strong. And how many more quarters of negative organic growth in the U.S. do you expect to see?

Yes. So we actually had a good order quarter in the U.S. in Q2. But we do expect that solutions will bounce back, obviously, when we get Evo FDA approved. So we look forward to our Q4 this year. Then, we need to get reference sites upgraded. We need to sell into our installed base, make the market recognize the Evo platform, which is versatile and precise. And then, it's going to be the grind of selling and competing.

And I can also add a little bit flavor without giving numbers that both the orders as well as the revenues are better in the U.S. than on average for Americas.

Thanks, Erik. [Audio Gap]

I'm going to keep it to 2, please. The first one is just how you're thinking about the competitive landscape? Obviously, Varian or Healthineer has announced the plan to launch a new next-generation Linac platform sometime in 2026. I'm just curious kind of how you think either will stack up against that as sort of you as fast forward into '26 and '27 and whether this is a concern for you?

And then my second question is a bigger question, obviously, the ambition to return to market growth. I know you guys don't want to guide, but I'm just curious if you might be willing to at least give a little bit of a time line on when you think that is achievable? Is this already a project for '26-'27? Is there more R&D work that's going to take a bit more time and we need to wait a little bit longer? So that -- any color you can give around that, that would be great.

Yes, I can take those. In general, I prefer not to comment on competitive -- competitors' product portfolio. We focus on us. And, of course, in our engine room, we benchmark, and we are taking note of the same data points that you highlight. We look at our competitive situation here now and we think we stack up. Of course, we have certain improvement in areas. We have certain strength. I'm not going to disclose them all. It would not be a smart move.

And then, as I started out by saying we invest 12% of revenue in R&D. So we have a number of pipeline projects ourselves, some exciting, some need tweak. So -- and then let's see how we stack up. But I personally would say, and I live that in other companies as well, being dedicated to RT and being willing to fund investment. And being passionate about what you do from a product development perspective can take you very far, and it should be the secret sauce of a company like Elekta.

Then, when we come to growth, yes, clearly, our ambition is over time to grow at, I would dare to say, above market. No MedTech company would want to lose market share as we have been doing for some years. I've been very clear to the organization, very clear to the commercial part, but also to the product development guys that now is time to shape up.

In terms of when, I think let's come back when we have Capital Market Days. I think that's appropriate. So it's not hip shooting, but it's really anchored in a financial plan.

Thanks, Veronika. We'll move to the next question, Jon Unwin at Barclays.

I just had a question on the R&D expense. You've commented that 12% of revenues, but also that you need to sort of focus on more commercially viable projects. Is there scope for that 12% of percentage of sales to come down over time as you focus the R&D intensity on the commercial projects?

And then, my second question is on the midterm targets and sort of taking over the CEO role, and how confident you are in the ability to increase gross margin to pre-pandemic levels and EBIT margin above 14%? And any color you can give on a time line for those targets would be helpful.

On R&D expense, what I can say is 12% is in general high. It's, in many ways, good because it's funded today in our cash flow at least. What I stated was that when we look at both existing portfolio and future portfolio initiatives, we will have a strong commercial lens as well as scientific and feature lens to really understand what are we solving for. I think, if you take, for instance, our MR-guided Linac, Unity, wonderful product, truly making impact in the market. Commercially, we haven't achieved what we hoped for when we started out that project. And we want to make sure that we learn from that when we move forward.

Is there scope for further reduction? We'll see. I think it starts by saying, do we have the right projects in the pipeline? If we do, we'll keep at 12%. If we don't, we'll reduce.

In terms of midterm targets, I'll restate, we'll get back to that in our Capital Market Day. I would say, though, I think there are opportunities to increase the gross margin. But I'm not going to say whether that's at or above our midterm guidance. We'll come back to that.

And next question will come from Sten Gustafsson at ABG.

So 2 questions on Evo, please. Firstly, regarding going back to the FDA approval process, have they communicated with you that there is a delay related to the government shutdown? Do you think that has had any impact on the timeline for your approval process?

And my second question would be if you could remind me about the -- how you plan to roll out the launch globally of Evo in China, Japan and other key markets?

Yes. To take your first question, no. No impact from shutdown. We have a good dialogue with the FDA, actually very good.

Secondly, rollout, yes, we got the Evo domestic approved in China. So that's good. Focus is on ensuring market access. It's coming in. It's actually proceeding quite nicely. The sore spot is in U.S., but I think we discussed that already.

So it's already approved in China?

Yes.

Excellent.

Yes. We think so also.

Thanks, Sten. Now, we'll move to the next question from David Adlington at JPMorgan.

First one, just a sort of bigger picture one on the 450 roles being cut. Just wondered how you think about eliminating that level of workforce -- tentative workforce without having an impact on R&D, quality of services, manufacturing capacity? Just how you're thinking about that?

And then secondly, as you look into next year, Street has got mid-single-digit top line growth. How comfortable are you with that with -- given the fact that the order book has been tracking some way below that?

So if I take the first one, keep in mind, we solve for something different than reducing headcount by 10%. We solve for speed, execution, accountability, delivering products faster to the market. And in doing so, we have delayered the organization, increased span of control. So as such, if you do the math, then it has a very significant impact on managerial positions.

We are not reducing frontline field service engineers, so it is an office-based managerial reduction. And we do it because we believe we can, frankly. And we believe that we -- it will enable us to move faster with firmer accountability. We have had too many functions with duplicate roles, duplicate managers, and that's what we are resetting.

And then, we also take the liberty to be a little bit less corporate, a little bit more business savvy. So we are streamlining central functions across the board under with due consideration to guardrails and controls. So we feel good about that, and it's confirmed throughout that we should be able to move, I will have to say, faster than we are today from a commercial and product development perspective.

In terms of longer-term guidance, I'll stay at what we said, we guide this year, positive organic growth rate, and then, we'll come back at the Capital Market Day, and we very much look forward to that.

Thanks, David. And now, we'll come up to the last question for this session, and that is a question from Ludvig Lundgren at Nordea.

Yes. So 2 for me. And first one on gross margin. I wonder if you had any effect from tariff mitigation actions here in the quarter and whether you have some further pricing potential here moving ahead?

Yes, we have some. But I think in -- on average here, that the -- what we see as a net impact from the tariffs is actually that it drags down the gross margin in the quarter. But, obviously, here, to your point, and I think also what we alluded to in general, more broad terms that we will continue to work here on the passing through this cost through the value chain and also here addressing in terms of productivity as such.

Okay. Great. And then final one on the order cancellations here. I guess, these were mainly orders that had a very small or no prepayments connected to them. So I wonder, like looking at the remaining part of the order backlog, have all of the remaining orders, some prepayment attached to them? Or how does it look for the main part?

A very significant part. Typically, if it's public tender, we don't get prepayment. Then, we have some older orders that we have deemed very high likelihood will lead to revenue generation that are without prepayment. But in general, you should think that all orders coming in now from private sector will have prepayment or they have to be validated by me and CFO.

Thanks, Ludvig. And that was the end of this call. But maybe before closing, a final remark from your side, Jakob.

Yes. So we are on it. This is a quarter of execution. As you may also sense, we have focused on what happens this quarter, next quarter, the next 18 months. We know that we are not at full potential. It's a lot of hard work. I take a lot of comfort in that everyone from Board of Directors to management team to Elekta employees are committed that we know we need to change. We know we can do better. And we don't do it just for our shareholders, we also do, but we also do it so we can continue to drive our purpose of building hope, invest in technology, as I started out by saying there's a huge unmet need for radiation therapy. And there is a strong need for us to innovate and be a strong competitive alternative to the major player. So look forward to meeting all of you in future engagements.

Thanks.

Thank you.

Thank you very much, everyone.

Thank you.