Revenio Group Oyj

Jouni Toijala: Good afternoon, and welcome to Revenio Group Q2 earnings call. My name is Jouni Toijala, and I am extremely happy to have Jukka Kainulainen joining in a call with me today. Jukka has started as a new CFO about a week ago, right? Jukka Kainulainen: Yeah. Jouni Toijala: Right, Jukka? Or two weeks in a row almost. Jukka Kainulainen: Yeah. Jouni Toijala: Would you like to introduce, Jukka, first yourself, and then we.. Jukka Kainulainen: Yes Jouni Toijala: Get to the agenda. Jukka Kainulainen: Yeah. Thank you, Jouni, and of course, very excited to be here. It is so exciting moment for Revenio after the strategic acquisition and starting totally new journey as a new combined company. So, great to be here and previously has been spending my last 10 years in the global technology growth companies, of course, focusing always on the growth, profitability and also capital allocation and also acquisition a little bit earlier in my career and the related integration topic. So great to be here and thanks a lot, Jouni. Jouni Toijala: Hey, thank you, Jukka. Let us jump to the agenda. We are going to run a bit more different earnings call today. We start actually with the Visionix integration status. Then we are also going to go through where do we stand regarding to the synergy. We discussed, during the transaction closing and announcement regarding to the EUR 20 million EBITDA uplift target. We are going to recap that one. Then, of course, going through the highlights of Q2 first half, Q2 and first half 2026. And then, Jukka is going to do deep dive for the finance part. And then, of course, we have a guidance at the very end. Before jumping to the integration and synergy. Like Jukka said, it is nice to join in for the company because we are having a quite historic moment now ongoing. I would compare this one to the CenterVue acquisition at the time in terms of the significance. Of course, now the size is bigger, but of course, the old Revenio, if I may use the word, so that is of course considerably sizable compared to 2019. This is the first quarter when we now have one-month numbers in from the ex Visionix side. And based on the now kind of a last or first 100 days, if I may use the 100-day word here, everything is actually progressing well and according to the plan. The strategic logic, why we closed the transaction, it is still as strong as it was at the time of the signing and closing, which I found extremely encouraging and good. From the integration perspective, integration is progressing really well. We have a couple of scenarios here. I would summarize that we are now leaning towards the best scenario in terms of the speed of getting the synergies in and the speed of integrating the actual organization. If you look the couple of key areas here, first from the overall integration perspective. We have now nailed down even end of May, the leadership team organization, of course, the board structure, overall governance. And then during the summertime, we have been then moving further down to the organization in order to clarify the organization and operative model. That is going really well. In terms of the culture, we run an extensive culture audit also during the summer, and cultures are actually matching together extremely well, and at least for me, this is a more positive thing that I was expecting. Then we have been putting a lot of effort to the commercial activation and to securing the business continuity. The U.S. sales team, we have actually combined already the U.S. organization, including the sales, and the new team has been running operationally from the beginning of August. What we have done in the U.S.A., we have also finalized all product training related to the different products to the team, and then also now bit by bit, moving to cross-sales targets, et cetera, and really moving to the execution in the past four to five weeks. On the international sales side, which Umberto is running, John is running the U.S. sales organization. From the international side, we have clear plans now how to start moving forward with the different countries, whether they are direct or through the distribution. That has moved to the execution in last two weeks' time. I would say that the overall things have been progressing really well. Then coming back to the EUR 20 million EBITDA uplift. We have already secured a bit ahead of time, the EUR 5 million run rate saving regarding to the EUR 20 million EBITDA uplift. There we are on track. Then we also have plans regarding the next steps regarding the operating model, and then also things related to the procurement, et cetera, in order to be able to get the remaining part of EUR 15 million EBITDA uplift in the coming quarters. If summarizing the integration status in one sentence, it's going well and according to the plan. Then to the numbers. Of course, top line up 39.3, roughly 50% up. What we saw on the profitability side is, of course, we have been coming down due to the couple of things on the profitability. The first one is the acquisition related one-off costs, which during Q2 were roughly EUR 3.4 million. So Jukka is going to cover that one a bit more detail. Then I think that we should pay also attention to the gross margin, which was exceptionally high in a previous year Q2, so roughly 72.6%. If we go back to the Q2 last year, we actually didn't have a tariff impact almost at all at the time. We were stacking a lot of products into the warehouse, so we didn't pay any tariffs on the imaging products. We didn't pay any tariffs regarding to the tonometers. We started to pay a bit tariffs towards the end of Q2 last year regarding to the probes. If we look then from the gross margin perspective, Q3, Q4, and Q1 this year, I think we are able to say that we had the gross margin beyond the 70%. So that's partly explaining why gross margin is down, and of course, we have a Visionix dilution. But Jukka is going to cover this one in more detail. Then regarding the whole first half, net sales EUR 66.6 up from EUR 52.6. Operating profit EUR 4.8. Then we had, in addition to the EUR 3.4 million, we had roughly same amount of acquisition related one-off costs during the Q1 as well. So the whole acquisition related expenses were a ballpark of EUR 6.9 million. Then regarding to cash flow, Jukka is going to cover this one. But the cash flow was negative, and let's also come back on the Jukka's presentation. We had a really strong cash flow, exceptionally strong Q4 last year, roughly EUR 15 million. Part of the costs were actually occurring during the Q1. Then after the Q2, a couple of highlights from the other parts of the business. We have been now receiving and working, of course, together with iHealthScreen regarding the DRSplus and the FDA clearance. We managed now to get the first FDA cleared AI solution for the U.S.A., so that's an extremely good news. Now working closely with iHealthScreen in order to approach the customers and start pitching the product, and we look this one, of course, to boost the DRSplus sales in the coming quarters and years in the U.S.A. And another thing where we have been active and working for a long time in the U.S.A. and, of course, in the other parts of the world, and this is really linking to the macro trends what we are seeing. The amount of the patients is increasing. The resources on the eye health professional side is limited, and we are not able to treat and diagnose all the patients. In the constant communications, we have been emphasizing the ease of the use and automation what comes to the devices and here we go. So this is a prime example of that one. We closed a strategic partnership in the U.S.A. with a company called EyeCheq, which is providing the kiosk where we have been integrating the DRSplus for autonomous use and for the screening purposes. This kiosk is connected to the back-end platform, and then the patient is able to come to the kiosk and then do the holistic screening of the eyes. Extremely good thing for us in terms of the long run and just shows clearly where the market is going in the future. With these words, let's move to more detailed finances. Jukka Kainulainen: Yeah. Jouni Toijala: Jukka, over to you, please. Jukka Kainulainen: Thank you, Jouni. Let's start from the key figures for the quarter, maybe starting first from the Visionix. It's good to remember that Visionix has been now consolidated to the group numbers starting from the beginning of June. So one month Visionix in our quarter two numbers. Looking at the top-line development, net sales increased 48.1%, currency-adjusted growth 50.7%. When looking as underlying business, our organic growth, that was more or less flat for the quarter. Gross margin went down to 65%, when rounding it up, comparing high comparables of 73% for the quarter two last year. I'm going to go a little bit more in details in the following slide. And then when looking at the adjusted EBIT for the quarter, it was EUR 5.8 million, so 14.6% from the net sales, that included 3.4 million acquisition-related non-recurring expenses. Overall, this was quite a good start for the new combined company, it's good to build the future based on this one. Let's look net sales development a little bit more in details. The step-up in revenue, as you see in quarter two, was coming from the Visionix impact, like I commented in the previous slide. Organic growth was more or less flat. When looking at the net sales development and different geographies, it was negatively affected by the market environments when looking at the regions Middle East and Asia. At the same time, we see some positive development in our Europe region overall. When moving to the profitability, like I commented, adjusted operating profit, EUR 5.8 million during the quarter, 14.6% of the net sales. And then gross margin declined to 64.7%, comparing to 72.6% during the quarter two 2025. It's good to remember that it was a really high comparable in gross margin, like Jouni commented. When looking at whole last year gross margin, it was 71%, so quarter two 2025 was a really high comparable. But then at the same time, when Visionix was consolidated to the group numbers, that had actually 2 percentage points dilutive impact due to lower margin profile in Visionix business. When looking at the old Revenio underlying business over there, the gross margin in that business went down by 5 percentage points. That was driven by, for example, the tariffs, which we didn't have in last year quarter two numbers and then there was some increase in the unit cost, for example, in the electronic component side. Also overall, there were some increases in our fixed costs during the quarter two 2026. Moving on the cash flow. Cash flow from operations was negative by 2.4 million during the quarter. It's good to remember that that included around EUR 3 million of payments regarding the acquisition and the related project we are running. At the same time, our networking capital increased at the end of the quarter, especially relating to accounts receivables. This is not kind of normalized run rate, of course. It's more like a temporary situation regarding the acquisition. When looking at both companies' cash flow generation, like you know, Revenio has been always really strong cash flow-wise, H2, especially quarter four, there is similar kind of cash flow profile also in the Visionix business. So a major part of the cash flow is generated in H2 comparing to H1 for the calendar year. Then moving on the balance sheet and balance sheet metrics, of course, quite a lot reflected by acquisition financing. Net debt now EUR 238 million, so temporarily up, including the EUR 130 million term loan from what we closed in quarter two, also bridge to equity financing EUR 80 million and the EUR 17 million vendor loan also relating on the acquisition. On top of that, we have revolving credit facilities in use, around EUR 20 million at the moment. When looking at these metrics, balance sheet metrics, equity ratio at the moment 31.2%, and net debt-adjusted EBITDA is temporarily up in 5.3x. It is good to remember what we have communicated also earlier. We are planning this post-completion rights issue worth of EUR 80 million. That will happen during the H2 2026. The purpose in that rights issue is to pay out this bridge to equity facility and through that, of course, strengthen our balance sheet and improve our leverage metrics overall. Then, briefly, our shareholder space. So latest cap table, as you know, Revenio is quite global when looking from the shareholder's point of view. More than 50% of the ownership is outside Finland. Of course, recent changes you see in this cap table in top 10, we have two new major owners, number two, Caravelle Capital, and then number 10, Marc Abitbol. These, of course, are the big changes and relating on this acquisition, Visionix acquisition we completed during quarter two 2026. Then, as the next, let's cover the financial guidance for 2026. In top line, we guide currency rate adjusted net sales to be between EUR 190 million up to EUR 205 million. EBITDA, excluding non-recurring items, we estimate to remain at satisfactory level. The assumptions behind the guidance in the lower end, we expect a little bit softer market environment and slower customer activity. In upper end, we expect improvement in the market condition, and then, of course, successful sales execution as well. Jouni Toijala: Jukka, if I may. Jukka Kainulainen: Yeah, sure. Jouni Toijala: Jump in. Jukka Kainulainen: Let me go back. Jouni Toijala: I think that we have had the questions now regarding to the guidance, what the satisfactory. Jukka Kainulainen: Yeah Jouni Toijala: means. Jukka Kainulainen: Sure. Jouni Toijala: And we have been long time in a good level. Jukka Kainulainen: Yeah Jouni Toijala: Would you open that one a bit? Jukka Kainulainen: Yeah, sure. It is an excellent comment. When looking, for example, our last year operative adjusted EBIT for the year, so we were in 24%. Now when we look quarter two 2026, adjusted EBITDA, we were in 17%. And now we guide that we expect that to stay on satisfactory level when we communicated last year to profitability to stay on good level. That is the way to give you conclusions on our profitability guidance levels. Then next one, a little bit also reminder, one week from here, we are organizing Capital Market Day, 15th of September, where we of course will present our new strategy. We will present our combined company go-to-market plan, combined company product portfolio, our synergies, and then of course, on top of that, the numbers, our new financial targets. Welcome everyone who is able to join to that event. At the end, also, like I already mentioned, we are planning this compulsory rights issue. That is worth EUR 80 million altogether. Nordea is our global coordinator and actually underwriter for the right issue as well. We target to arrange that during the mid to late H2 2026. Our main owners, William Demant Invest, and also the sellers of the acquisition, owning altogether close to 31% of the shares, have irrevocably committed to subscribe the shares pro rata based on that right issue. Like I already commented, target is to use the funds to repay our EUR 80 million bridge to equity facility and reduce our leverage ratio and strengthen our balance sheet altogether. Thank you. Jouni Toijala: Hey, thank you. I think it's time to move for the questions, please. Operator: If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Nikko Ruokangas from SEB. Please go ahead. Nikko Ruokangas: Hello, this is Nikko Ruokangas from SEB. Thank you for the presentation. I have three questions. I'd like to go one by one and start with old Revenio or organic sales development, which was flat year-on-year. To open that a bit more, given that it seems clearly lower than the original guidance you had entering this year in the winter. So has something changed in the market or your own performance or can you elaborate a bit more? Jouni Toijala: I could perhaps pick that one up. If you look the Q2 old Revenio perspective, and this one we have had also the earlier. It might be that in the certain quarters, demand might be different, or then we have one or two bit more slower months. If you look now, and we go a bit and we break down the performance. Like Jukka said so, APAC was lagging behind on the growth like it was Q3 last year, Q4 last year, Q1 this year compared to the previous comparable quarters. But the positive side is that the situation is basically improving quarter-by-quarter. Part of the growth we were missing from the APAC. Then, everyone knows the Middle East status. Middle East side of the business was extremely slow regarding to the Iran conflict. Then if we go for Europe in reasonably good shape, I would say. Customer activity good and pipeline looks good. In the U.S.A., we saw a slight growth in the U.S.A., and tonometers were performing well, imaging slightly shy. I wouldn't draw too critical conclusions based on one or two months inside the one quarter yet. This is now the case. Q1, old Revenio, we had a growth, and it was reasonably stable and flat during the Q2. But now if we look how the Q3 has started, I mean, old Revenio back on the growth track. Hopefully that, Nikko, answered to your question. Nikko Ruokangas: Yes. Just a follow-up. How much, on rough terms, was the impact from Middle East? Jouni Toijala: We don't give the country specific numbers and Visionix is having a Middle East business. That's kind of visible then on Visionix one month numbers regarding to the June. Nikko Ruokangas: Yeah. Understand. Thanks. Then I'd like to go a bit deeper still on gross margin, which was down year-on-year in old Revenio. You explained a bit more already, but I was wondering whether you can go a bit deeper into the topic, given that, I guess that the gross margin was weaker than in Q4 and Q1, when price increases in the U.S. had not been implemented completely. Have you now been able to do all the price increases, related tariffs, and then can you a bit more open the component inflation situation and what will you do about it? Jouni Toijala: Maybe I comment the price increases. The price increases are in. Jukka, do you want to comment? Jukka Kainulainen: Yeah, I can. Jouni Toijala: I shortly commented on tariffs, but do you want to comment on component side? Jukka Kainulainen: Yeah, of course, I can do that. Of course, the tariff impact when looking year-on-year was quite significant, so we are not talking only hundreds of thousands. But it was more significant impact, and then the unit cost impact on top of that contributed basically the rest. Like we commented, the electronic component cost. This is, of course, going further that of course we will review what kind of actions we do, either reducing the unit cost or from the pricing side. Those are the tools, of course, how we manage the situation going forward. Nikko Ruokangas: Okay. Thank you. Then one last from me. You were reporting, I guess, EUR 13 million of adjusted EBITDA consolidated, but not pro forma in H1. The pro forma was EUR 14.6 million. So is it so that Visionix generated only EUR 1.6 million of EBITDA from January till end of May? Has it declined in H1 year-on-year, or is the profitability in Visionix extremely H2 weighted? Can you open that a bit more? Jukka Kainulainen: Yeah, Nikko, I can comment. This is a great question, and this is, of course, I know challenging for the investors when January and May are not in the numbers. But actually in Visionix, of course, we know the H1 numbers, so there was quite a high weight in the profitability until the end of the H1. That is the thing, and that usually there is some seasonality in that sense in the Visionix business. More, of course, I do not comment about the January, May Visionix numbers. When looking the pro forma, it is good to remember how pro forma is completed. It is based on the assumption that the deal is executed already 1st of January 2025. So it is some kind of the theoretical way also to build it up, so that gives some slightly differences when looking pro forma and where we are at the moment. But of course, it gives a good enough picture. Those I would highlight based on your question. Nikko Ruokangas: Okay. If we look at kind of a year-on-year basis, purely.. Jukka Kainulainen: No. Yeah, overall, that I can comment. Sorry, Nikko, I forgot to answer. When looking H1 Visionix, comparing last year H1, even though we have only one month in, no significant change in the profitability profile year-on-year. Nikko Ruokangas: All right. Thank you. That's all from me at this point. Jouni Toijala: Thank you, Nikko. Operator: The next question comes from Pia Rosqvist-Heinsalmi from DNB Carnegie. Please go ahead. Pia Rosqvist-Heinsalmi: Hi, gentlemen. It is Pia Rosqvist from DNB Carnegie. I have got a few questions, so I try to limit myself. If I start with your sales development now in the second quarter, and I know, Jukka, you said you do not comment on Visionix particular for the first half, but is there any light you can share on how Visionix fared now in the first half of this year compared to last year's first half? Did sales for Visionix decline in the first half of this year? Jouni Toijala: No. On the top-line perspective, flat. Pia Rosqvist-Heinsalmi: All right. Jouni Toijala: If we now look at the competition and we compare the performance, even though that iCare X or old Revenio grew during the Q1, and now if we look at a flattish Q2, and then the Q3 now looking good, and then Visionix staying on the flat in the market where we operate. So I would consider, of course, not a stellar performance, but it is a quite robust performance compared to the competition. But Jukka, anything you would like to add on this? Jukka Kainulainen: No, I fully agree. Nothing to add on that. Pia Rosqvist-Heinsalmi: Great. Thank you. Still going back to your first quarter report where you told that the price increases had been applied, and I think, yeah, starting to impact from February onwards. Now you said you reported flattish sales for the old Revenio. Is it actually so that the volumes declined in the first half and were compensated by the announced price increases? Jouni Toijala: I wouldn't say so, but we have also seen the Q2, like Jukka mentioned, so we have been also seeing the increases on the component prices. Whether is it the memory, whether is it the CPU, whether is it the increased price on the gold, which is then used in the probes. I wouldn't draw that conclusion. What now comes when going forward, we now start to go through the details bill of materials now during the second half, and then doing decisions in the remaining part of the year that should we adjust the prices if the memory and CPU and raw material prices are going to remain high. That's a standard procedure, what we do. Pia Rosqvist-Heinsalmi: Okay. Thank you. Then in general, looking at the market sentiment and the demand, and now given your broader footprint in the market, what do you see with regards to the market demand and your sales pipeline? I know you have always underlined that the Revenio sales pipeline is short, but in Visionix, you have slightly more visibility. So, what is the current market demand? Jouni Toijala: So maybe I pick that one, and Jukka, please help me. U.S., like we discussed in the earlier quarter, that has been surprisingly robust. And now we have a new sales team in place, so the new combined sales team, we have split all the care graphics, et cetera. Of course, there is a certain ramp-up time, but actually if we look the start for the Q3, it looks good. Then we have a lot of cases in a pipeline, type of cases where we haven't been before because we have a combined portfolio. Of course, the key is to turn them to wins. That is a crucial thing. Then if we go for Europe has been steady, and then I hope that the APAC turns in a bit more better shape. We have had a positive trend now quarter-by-quarter. We have seen the bit more better activity as an example in South Korea, et cetera. We did the distributor change in Australia. That is the reason why that part has been a bit sluggish, if I may use the word earlier this year. Hopefully, that is going to help up the situation in APAC because that is one of the biggest countries for us in APAC. Of course, now we have to remember when we report now the Q3. Then it is going to be first month where we also have Visionix numbers fully in a quarter. That is going to be interesting to see. Jukka Kainulainen: Yeah. Jouni Toijala: Anything, Jukka, you would like to Jukka Kainulainen: No, and it was, of course, positive highlight when looking the underlying businesses that Europe region developed quite positively when looking the quarter two overall. Pia Rosqvist-Heinsalmi: Right. Thank you. Still, sorry, coming back to the gross margin and the discussion about the factors burdening that. Do you have some kind of guidance for your gross margin for the remainder of 2026? Jukka Kainulainen: Yeah. No. Like you saw, we were guiding the EBITDA and then, of course, the top line. It is good to remember now when we consolidated Visionix only one month, then, of course, with the lower margin profile in the Visionix. Of course, we will now when we consolidate the whole company that generating absolute terms, lots of more gross margin, but then this dilution impact will be whole quarter starting from quarter three. So that is a good remember when looking the percentages. Jouni Toijala: I do not know, Pia, is it helping on sorry to jump in, sorry to interrupt. If you think that we look the quarter three, quarter four, I think the old Revenio side, we have been roughly 68%, 69%, depending on the quarter, then we have a Visionix dilution part of the package, so further diluting. I think that is- Jukka Kainulainen: Yes Jouni Toijala: Ballpark right, Jukka. Jukka Kainulainen: Yes. Jouni Toijala: Maybe it helps. Pia Rosqvist-Heinsalmi: All right. Yeah, thank you. I have further questions, but for now, I go back in the queue. Thank you. Jouni Toijala: Okay. Thank you, Pia. Operator: The next question comes from Daniel Lepistö from Danske Bank. Please go ahead. Daniel Lepistö: Hi, it's Daniel Lepistö from Danske Bank. Thanks for taking my questions. I have a couple, maybe starting still with or continuing on the organic growth of, for the revenue. I mean, if you didn't execute this Visionix transaction, would this previous guidance of 8%-15% growth this year, would it still be in place after the Q2? That's the first question. Jouni Toijala: I think that, not too sure is it a relevant question at this new state, but I wouldn't see. We have also the big deals in a pipeline, for the remaining part of the year in Q3 or Q4 is basically strong. I mean, forecast looks good. Daniel Lepistö: Okay. Just a follow-up would've been on those larger deals that you discussed. They are still on the table, and I guess there would be a better second half to go for- Jouni Toijala: So- Daniel Lepistö: Revenue. Yeah. Jouni Toijala: Yeah, for certain cases we have been receiving kind of a single product POs. Still live and kicking. Of course, the timing and rollout always a question mark. Daniel Lepistö: Okay. That is clear. Then on this margin guidance, the satisfactory margin. I mean, how wide should we think the range is here? Because I guess historically, with the EBIT margin, I guess it used to be even 10 percentage point. At least it felt like it. But basically, how wide can this range be actually? Can you go single digit and it is EBIT and it will be still satisfactory? Jukka Kainulainen: You were not far off what you commented in the beginning, but maybe I kind of repeat myself. Last year, adjusted EBIT was 24%. And now when you look the adjusted EBITDA in the quarter two, we were in 17%. I apologize that I cannot comment that more, because that is what we have disclosed. But I hope that little bit helps you to understand what kind of range we have in place for that wording. Daniel Lepistö: Okay. Then maybe on the standalone revenue gross margin, there was comment was 5 percentage points down year-over-year, so clearly below 70%. The comparison was of course difficult, but I guess in the midterm, I guess 70% is the target that you are looking for revenue or has this changed? Thinking change over the component shortage and whatnot. Jouni Toijala: Maybe I pick that one, Daniel. I think it's realistic to think that yes, we have had the target before the tariffs hit to the place to keep it above the 70%, which we have been able to do. And now when the tariffs are full in, we have been ballpark of bit depending on the quarter 68%, 69% and so forth. I think that it would be reasonable to expect, and of course we don't anymore in Q3 like in a Q1 report the old Revenio if we use that term. But if we go for old Revenio, I think it's fair to assume that being constantly over 70%, so that's undoable with the tariffs. Daniel Lepistö: Okay. That's clear. Then maybe the final question on this, iCare ILLUME AI solution, clinical trials. Obviously, we saw that now the third party solution was approved. Can you update us on the timeline with your own solution? What's the status of the clinical trials and what's the approval timeline that you seek? Jouni Toijala: We have now concluded the pre-study. That went well. Results are okay. Now we are doing a new pre-submission just to be sure. Of course, now the iHealthScreen a bit reduced the pressure to push aggressively forward rather now in a mode that we guarantee that we get the clearance when we do it. So the status is that the pre-study done. Now we drew another pre-sub for FDA to be sure that the house is in order. Then we have start another study then towards the end of the year or early next year, and we communicated earlier that we are going to be ready by clearance by the end of the first half 2027. I would be now more leaning towards the second half, hopefully Q3 2027. The reason is that now we have the iHealthScreen clearance, so we just want to be sure that we are able to get the clearance, so we do the pre-sub now to the FDA again. Daniel Lepistö: All right. That is clear. So all from me. Thank you. Operator: The next question comes from Erik Karlsson from CapeView Capital . Please go ahead. Erik Karlsson: Yeah. Hi, thanks for taking my questions. Erik Karlsson from CapeView Capital. Just on Visionix, if we look at the first half performance, you said basically flat sales and kind of flat margins. How much worse is that compared to your business case you bought it? I guess at the time you thought they would grow and have increasing margins even before synergies. Just trying to understand how far below they are tracking currently. Jouni Toijala: That's according to the expectations, what was in the model. We had the closing then- Erik Karlsson: You didn't think it would grow, and you didn't think they would improve margins without- Jouni Toijala: No, if you look the timing and the process, of course, we had to forecast for the first half and for the second half, and then we started to bake in the numbers by the closing so that we are able to start getting the synergies in in terms of the OpEx savings and in terms of then the commercial synergies. So basically, Visionix in one sentence, Visionix has been performing during the first half what was our expectation at the timing of the signing and closing the deal. Erik Karlsson: Okay. It sounded like when you did the acquisition, that they had an internal plan to improve gross margins and margins, because I think it was quite shocked by the low profitability they had at the time. Jouni Toijala: I think if we compare the profitability of ex-Revenio and Visionix and the industry in general, Visionix had the numbers on black, almost everyone else on red. That was basically known. Then we have, if you think Visionix, we have had this internal efficiency plan, which they put in place at the time of the negotiations and a bit before that one. That is progressing. As I said earlier, we have been able to now secure out from EUR 20 million EBITDA uplift to EUR 5 million already in. That work is constantly moving forward. The plan is to get the EBITDA level and improve the margins then up to 25% by the end of 2029. So the plan is there and it is progressing according to the plan. Erik Karlsson: Okay. Got it. Then on the profit guidance, I do not know who advised you on this, but I think there are two ways to go. One is that you do not want to tell the market and then do not guide, or you want to help the market and you do guide, and what the market wants is numbers. They do not want to work that hard. It just becomes like a game to translate that into numbers. I think either way is fine to go, but to start coming and saying, "Well, such structure for you might not be it for me." So we just get into this ridiculous game. I think if I were you, I would either not guide on it or I would just put a number out there or arrange them. Does that make sense to you? Jukka Kainulainen: Great feedback. Thanks a lot. We appreciate that a lot. We will, of course. Jouni Toijala: I agree. That one, that has been the history that, like Jukka said, we have objective to describe the growth and describe the profitability. Now what we have been trying to improve is now that we gave a bracket for the top line and still did the decision that we used the objective on the bottom line part. That is going to remain for sure for the remaining part of the level for the year. But I think this is constantly asked from us that should we actually give a euro amount or should we give a percentage amount? We take that input in and see then on February, how do we go forward? Jukka Kainulainen: Sure. Jouni Toijala: Thank you, Erik, for very good feedback. Jukka Kainulainen: Yeah, definitely. Jouni Toijala: We have heard that one earlier that it's not fully clear. Jukka Kainulainen: Super. Thank you so much. Jouni Toijala: Thank you for the good questions. Operator: The next question comes from Pia Rosqvist-Heinsalmi from DNB Carnegie. Please go ahead. Pia Rosqvist-Heinsalmi: Yeah. Hi, gentlemen. Thank you. Still a few questions, if I may. Now I'm going back to the synergy potential you have presented. You target an adjusted EBITDA uplift of EUR 20 million by the end of 2029. I'm just trying to guess here. This uplift of EUR 20 million, how is operational leverage included or is it not included in this uplift? Jouni Toijala: Are you able to open a bit the question of what do you mean with the operational uplift? Pia Rosqvist-Heinsalmi: Yeah. The operational leverage, I mean from assuming your sales will grow, there is some operational leverage in your system. If I understood your ambition to raise the adjusted EBITDA level by EUR 20 million. Jouni Toijala: Yeah. Okay. Pia Rosqvist-Heinsalmi: In this discussion, how about growth and the implications from that? Jouni Toijala: Okay. Hey, thank you. Jukka, now correct me if I am wrong. At the time of when we announced the transaction and at the time of the closing, we reiterated the EUR 20 million EBITDA uplift then. The big part of that one comes from the OpEx related synergies, right? Jukka. Now if we think now the first EUR 5 million, so what we now have been able to achieve. That is coming from the operational side in order to combine the Visionix U.S. team and then ex-Revenio U.S. team, and that is coming from the OpEx side. Then we also have a commercial cross-sell, up-sell part, which is then the part of the EUR 20 million EBITDA uplift, which then comes more from the operational side. We haven't split the ratio, but if you would look the picture what we used the water for, there's first commercial part, then there's OpEx part. So you kind of get the sense and the feeling how it's divided, then the scaling in a way, the OpEx and that part. If it just grow, so okay, so you kind of get the scale from the growing, but there's only this cross-sell, up-sell part that we count as a synergy or not in a way the normal organic side. But Jukka, do you have anything to add on this one? Jukka Kainulainen: Yeah, of course. When you grow, of course, you always lead the business in a way that top line growth quicker than the fixed. If you refer to that, so that's a separate topic, of course. Pia Rosqvist-Heinsalmi: Yeah. Exactly. That was my point. So EUR 20 million that's from the synergy, then anything you might grow upon in addition to that brings more leverage to the equation. Jouni Toijala: Yes. Fully agree. Pia Rosqvist-Heinsalmi: Yes. All right. Thank you. Then just shortly when I skimmed through the report, did you directly comment on sales impacts from Visionix selling your product? So internal sales that will be eliminated or even broadening the question to potential overlapping products. Have you taken this into account in your pro forma numbers? Jukka Kainulainen: Yeah, it has been taken into account. I think it was something about EUR 300,000 when looking 2025 numbers. So that has been taken into account. Pia Rosqvist-Heinsalmi: All right. Okay. Thank you. And then finally, if I still can get the clarification on the networking capital to sales profile for the combined company. In what ballpark do you see the combination, say- Jukka Kainulainen: Yeah Pia Rosqvist-Heinsalmi: -Next year on again? Jukka Kainulainen: Yeah. Overall, roughly numbers when looking networking capital for combined company end of quarter two, it was in around EUR 60 million level. We constantly will continue optimizing that going further. Pia Rosqvist-Heinsalmi: All right. I think this is all for now. Thank you. Jouni Toijala: Thank you, Pia. Jukka Kainulainen: Thank you. Operator: The next question comes from Nikko Ruokangas from SEB. Please go ahead. Nikko Ruokangas: Hello, this is Nikko again. I have couple of clarifying questions still, and maybe now on EBITDA, as you are now starting to report that as headline KPI. So out of amortizations, you are expecting to report in H2 or on run rate basis going forward. How is that divided between the amortization revenue, old Revenio had the standalone Vision amortizations, and then PPA from this transaction? Jukka Kainulainen: Yeah. So this amortization includes, of course, all of those. When looking a little bit the details, the Vision acquisition brings around EUR 6 million new PPA depreciation. Then on top of that, other amortizations, we have around EUR 2 million, a little bit more than EUR 2 million. So we are in around EUR 8 million level, even higher than EUR 8 million annualized number going further. Nikko Ruokangas: Right. Thank you. Then, you were discussing about the leverage post rights issue of roughly 2.5x in time of the announcement of the acquisition. Is this still a relevant target around three-ish? Jukka Kainulainen: Of course, at some point, yes. I think when looking at the current, I think you are talking about net debt EBITDA, which was 5.3x in Q2, and after share issue, it goes to closer to 3x, when looking at the current estimates. Nikko Ruokangas: All right. Jukka Kainulainen: But of course, we continue generating cash and profit going further, so that will always, quarter-over-quarter, improve the leverage ratio. But that is the short-term view. Nikko Ruokangas: Yeah. Thank you. Then, still on tariffs, which we have been already discussing about, but then I guess that the basis for the tariffs has a bit changed now over this one-year period. Do you think that you could receive tariff refunds for the tariffs you have paid under the old basis of tariffs? Jukka Kainulainen: Yeah, this is something we are looking after, the refunds from the tariffs. This is what we are working at the moment, actually. Nikko Ruokangas: All right. Thank you. That is all from me. Jouni Toijala: Thank you, Nikko. Jukka Kainulainen: Thank you. Operator: There are no more questions at this time, so I hand the conference back to the speakers. Jouni Toijala: Thank you all. Extremely active call, and if I may summarize at the end. Integration moving extremely well forward, so I wouldn't be too concerned on that one. We have managed to get EUR 5 million out from EUR 20 million discussed EBITDA uplift already in. Sales teams integrated in the U.S.A. operative model moving swiftly forward. Then also we are on the channel side in the rest of the world. We have moved to the execution. Then we are going to have exciting news coming on ESCRS. We continue working extremely hard here in order to grow the top line, finalize the integration and get the margins up. Thank you for the participation and really looking forward to catch up then during the Q3 earnings call. Thank you for your time and interest. Jukka Kainulainen: Thank you.