ChemoMetec A/S (CHEMM) Earnings Call Transcript & Summary

Hello. I would like to welcome everybody to our ChemoMetec webcast, where we will present the half year financial results from our fiscal year '23/'24. My name is Rasmus Kofoed. I'm, as of August last year, the CEO of the company, so now 6 months old in the organization. We expect our presentation today will take approximately 50 minutes, where we will present a business update and the financial results, followed by Q&A, where we will take any questions you might have either via the phone or webcast. As all of you know, please be aware of our disclaimer around forward-looking statements. And today's speakers is myself as well as our group CFO from ChemoMetec, Niels Høy Nielsen. As a short introduction and for those of you not familiar with ChemoMetec, we are one of the global leading players providing high-quality equipment and services within the field of cell counting and analysis of cells. The company was founded almost 30 years ago in Denmark by three founders. Historically, ChemoMetec's primary market has been within the field of cell and gene therapy. However, also other markets like bioprocessing are markets we would like to play an important role in. We are represented at the moment with our products and services in more than 100 countries. And we employ 170 full-time employees. We have our own value chain with global competencies in both sales and marketing. We have our own team of service engineers, R&D team as well as Q&A and production. Our teams are present across Europe and U.S. And in APAC, we mainly operate through partners and distributors. We normally say that ChemoMetec operates what we call a scalable business model, also known as the razor and blade or Nespresso model, where we sell an instrument typically lasting for years with recurring revenues in consumables and services. Shifting gears, and with this slide, we would like to speak to some of the key highlights from the first half of our fiscal year '23/'24. Yesterday, we released what we, under the circumstances and despite continued challenging market conditions, see as an acceptable and solid financial performance for the first half of fiscal year '23 and '24. The financial results are in line with our own expectations and in line to reach our financial guidance for the full year. We saw strong growth in sales of Services, low single-digit growth in Consumables while sales of Instruments continued to decline significantly. Despite an increase in biotech funding in Europe and U.S. in 2023 versus '22, we have seen a continued dampened funding environment within the cell and gene therapy market linked to macroeconomic factors like high inflation, high interest rates and insecurity in general. Still, we do see great opportunities and attractive prospects linked to our future products and services portfolio. As mentioned during our webcast in September of last year, we expect to launch four new instruments by the end of this calendar year, namely the XcytoMatic 40 and 30, the Xcyto5 and NC-203. This is still our ambition. With XM40 and XM30, they will help us unlock significant opportunities within the bioprocessing market. With XM40, we have now completed several market tests over the last month with some of our key customers. And the feedback and reactions are positive and promising. By now, we have completed more than 20 customer trials with XM40. We have sold the first instruments and are closely monitoring several hundred active leads. We're excited to share that as of April this year, we will officially release our XM40 for sales and broader global launch. At the same time, we have worked hard to complete the development of XM30, which is a fully automated instrument, tailor-made and aligned to customers in need of automating their processes. XM30 are already out there being tested with customers as we speak. And also here, prospects are promising. Another important highlight for the first half of '23/'24 and in order to establish our foundation for future growth, we have now set a new, ambitious, strong and experienced and what I would actually call a high-competence executive leadership team, whom together with me and the rest of the ChemoMetec team will be laser-focused on reigniting and following through all of our key opportunities. And one of the key focus areas for us as a team has been and still is to revamp our culture and strategy in the company to ensure we align to and fully utilize our strength and opportunities while being focused on the right priorities. We have by now initiated the process of forming a new growth strategy, which we will share more of as soon as we are ready. One of the other key strategic priorities for us in the first half of the year has been within ESG, which Niels in a few minutes will elaborate a little bit more. But before handing over to Niels, please have a look at the development of capital raised in the biotech and cell and gene therapy market over the last 6 years. I mentioned earlier that our market has been challenged due to global economic headwinds. This is well illustrated in our eyes by the funding level -- by this slide and what we see here with the funding level in our markets. If you look at the left-hand side of the slide, you will see the amount of capital raised by the biotech industry in Europe and the U.S. over the past 6 years. As the figure shows, capital became very accessible in 2020 and '21. As interest rates started to rise in early '22, it had a strong negative effect on the funding environment in general. Bearing in mind that 2022 is a low level of comparison, we see that the broader industry have been getting more access to capital in 2023, illustrated by an estimated increase of up to 60%. If we look at our key market, the cell and gene therapy market, and at the top right area of the slide, we see a very similar situation. Global funding with a large jump in '19 to '20 almost cut close to half in 2022. However, a big difference between the broader biotech industry and our key market is that we are still waiting for the upturn. In fact, funding on the global cell and gene therapy market have led a minor decrease of 7% compared to last year. We expect our key markets to follow the evolution in the broader industry as outlook to lower inflation rates and interest rates seems more optimistic. There has been a lot of indications that the tighter funding market for many biotechs have led to reductions in workforce and streamlining our project pipelines. I remind robust global pipeline of trial, as seen in the graph in the down right corner, signals that there's still strong clinical data, proven companies that are ready to accelerate as soon as the market normalizes. Despite the headwinds, we keep adding reminded of the great progress that our market is making. In December, many of you might recall that two gene therapies were actually approved in the U.S. and Europe for the treatment of sickle cell disease, which marked a milestone in the industry, an example that reminds us that our market keeps going despite current economic headwinds. From here, I would like to hand over to Niels, our CFO, for a little more insight on our financial performance in the first half of fiscal year '23/'24. So Niels, over to you.

Thank you, Rasmus. Hello, everyone. I am Niels Høy Nielsen, the CFO of the company. So I'll take you through the financials, the ESG update as well as the financial outlook. The financial results for the first half of the fiscal year '23/'24 came in more or less as expected. Despite headwinds on the top line, the revenue, the first half year ended at DKK 199 million, minus 17% compared with the same period the year earlier. At constant exchange rate, the half year decline was 14%. For the second -- for the revenue ended -- for the second quarter, the revenue ended at solid DKK 108 million. And that's actually up from DKK 91 million in Q1. EBITDA for the first half year ended at DKK 93 million and declining by 36% as activity level was maintained through the first half year. At constant exchange rate, the EBITDA was down by 32%. The decline in EBITDA was mainly due to the decrease in revenue, increasing prices on materials and components and increase in personnel costs. As a consequence, the EBITDA margin declined to 47% for the first half from 60% a year earlier. Profit before tax also declined in line with EBITDA by 35% to DKK 89 million. We generated cash flow from operations of DKK 41 million. This was down from last year, mainly due to the EBITDA decline and slightly increased inventory and receivables and decrease in trade payables. Our inventory increases as we build up for the launch of the XM40 and also the other new instruments. The company's level of solvency increased to solid 84% from 81% 6 months ago. So all in all, acceptable financial results, taking the headwind into account and as we prepare for the launch of the new products in calendar year 2024. Looking at the geographical split. The share of revenue remains between the regions, it's unchanged. North America is still the main market. But we also see all markets with declining revenues. For the first half, North America declined by 18%. You can see Europe only declined by 7% as we did see some European market seems more resistant to the overall downturn. Keying in on the product segments. It is obvious that the overall revenue decline is caused by the decline in the sale of Instruments, which for the first half year declined by 43% and for Q2, 37%. The NucleoCounter 202 instrument generated the largest part of the revenue for the first half compared to the total sales of the Instruments with 43%. Sales from Consumables increased by 1% for the half year and by 5% for Q2, which was also in line with expectations also according to guidance. Sales from Services grew double digit by 12% for the half year and 7% for Q2. Despite the double-digit growth in Services for the half year, the level of Services is impacted by the lower number of installations and implicitly the decline in the sales of Instruments. Now if we turn to our ESG. We have during the first half year of the fiscal year '23/'24 been focusing on executing on our ESG roadmap that we actually developed more or less 1 year ago. Firstly, we have implemented our Code of Conduct to guide our employees internally but also provide insight to external parties how we conduct our business in terms of behavioral aspects and ethics. Now most of our employees have been trained in the Code of Conduct. Secondly, we have performed an employee engagement survey, the first -- for the first time in the history of ChemoMetec and met with positive results. The overall score was 78 on a scale from 1 to 100. And compared to benchmark of 72, this was actually fairly good. We have collected feedback and have also formed actions accordingly. Thirdly, we have added an extra full-time resource to the ESG work for us in time to prepare for the reporting on ESG that is coming up as part of our reporting within the CSRD framework for fiscal year '25/'26. That means that we will report in September '26. So what are the next steps? Well, the next step, firstly, will be to implement a Supplier Code of Conduct to ensure that our suppliers are also living up to the standards required. Furthermore, we will focus on the Double Materiality Assessment in preparation for our reporting on CSRD, as already mentioned. And finally, we will, according to the feedback from the engagement survey, work on improving the talent development processes with aim to also reduce our employee turnover rate going forward. Now outlook '23/'24. It remains unchanged. Based on the still subdued market outlook, the results for the first half and activities planned for the second half, we still expect the revenue in the range of DKK 400 million to DKK 435 million. In this guidance, we see a positive contribution from price increases and also from the sales of XM40. For XM40, we have still dialed in a low double-digit million DKK amount into the guidance. On EBITDA, we still expect to end in the range of DKK 200 million to DKK 220 million as price increases would have a significant positive impact on margins as we aspire to reach an EBITDA margin of at least 50%. This concludes the presentation of the financial results and ESG highlights and outlook for '23/'24. So back to you, Rasmus.

Thank you, Niels, for that one. And as a closure for our presentation today and before opening up for Q&A, we would like to highlight just a couple of key focus areas for us. I would like to reiterate what Niels just mentioned. We will continue being laser-focused on delivering on our financial outlook for the year, both on top line with our revenue as well as on our top line with our EBITDA. We will do that by ensuring focus on four key priorities: one, successfully launching our new innovations by end of this calendar year, starting with the XM40, XM30, followed by Xcyto5 and NC-203 later this year; two, we want to be more margin-focused with balanced and smart investments while ensuring cost consciousness; and three, we have initially started, but we will continue our focus on transforming the organization by revamping culture, shaping our growth strategy and with that, build upon our strength and opportunities and create an even stronger foundation for the company; and finally, the fourth priority, ESG, as Niels just mentioned. ESG remains a key strategic priority for us in everything we do going forward. We believe that these priorities will help us remain focused around a few important and vital priorities supporting a stronger foundation, bringing us back to solid growth. So all in all and despite the headwinds we faced in the first half of the year from macroeconomic factors, we remain optimistic about the future of our company, our abilities and our opportunities ahead of us. Thank you for listening in. And with that, I would like to hand it back over to our host, Sharon, to facilitate the Q&A.

[Operator Instructions] And your question comes from the line of Simon Larsson from Danske Bank.

Yes. So maybe two questions from my end. First, on the overall market, so we're seeing some mixed signals here from your international peers in the Q4 reporting around biotech market environment and so on. And it sounded a bit on you, Rasmus, the CEO, that you're seeing some green shoots here during the quarter. So it would be interesting to hear your thoughts on the current market environment and maybe how you experience the market activity now versus maybe, let's say, 0.5 year ago and if you are sort of confident that the worst is behind, so to speak, or sort of -- or do you think the market will continue to be quite muted here for the coming quarters?

Thank you, Simon, for the question. And yes, you're right. I would say, I would probably put it that we are cautiously optimistic. That's probably how I would put it, right? So we do see also, as we presented, I think it was on Slide 6 around the funding situation in general, we do see that funding seems to increase at least within the biotech industry in 2023 versus '22. However, '22, as mentioned, we're still on a relatively low level, so to speak. But we do see, when we zoom in on the cell and gene therapy market globally, that the funding still seems to be at a lower level. Similarly as 2022, we saw similar levels in 2023 actually with a small decline of 7%. So I think we see some optimism here and there. I was actually coming back from a Customer Week, I would say, in the U.S., a couple of weeks back, where I had the chance to speak with many of our customers, also feeling back that the sense is that maybe we have reached the bottom. And hopefully there, we will see some increase going forward. But I would probably underline it as cautiously optimistic, Simon.

Yes, that's very clear. And maybe also, I mean, obviously very encouraging that you already booked a few XcytoMatic 40 sales here already in Q2, as I understood it, that you were sort of guiding us for more sales contribution during second half of this fiscal year. So how -- could you comment anything on sort of how the XM40 sales funnel is building up here? Are you confident, I guess, in your around roughly DKK 10 million guidance for the fiscal year? Or I mean, how do you see the sales funnel building up here initially in the launch phase?

Yes, I would say we have seen, as mentioned here, we have sold the first instruments. We have completed more than 20 trials with key customers of ours we've had. And we've also taken the time to adjust, you can say, the 40 accordingly so that we are ready, you can say, and finishing off with that prelaunch phase we've been in so that officially as of April, we will be going out much broader into the market with a full-blown launch. We do see quite some positive vibes. And as mentioned, we actually follow quite closely several hundred asset leads within the XM40 frame, right? So we are optimistic around this. And we also believe that we are able to still see sales in the magnitude of low double-digit millions of DKK for the remainder -- or for the total of the year, right? So we remain positive here, Simon.

And your next question comes from the line of Viktor Sundberg from Nordea.

Viktor Sundberg from Nordea. I have a few ones. I will start off with three quick questions here on kind of the same theme. The first one on Europe, that really stood out, I think, in terms of Instruments sales, if you look at the sequential growth. I wonder if you -- could you perhaps give some more color on what drove that strong performance? And just maybe also, overall, I mean, we have seen this kind of seasonality pattern of your sales overall being strong in Q2. How much of this is just seasonality, i.e., what you would call maybe a budget flush? And how much would you say this signifies some kind of light at the end of the tunnel for you guys? And finally, we have heard that some customers knew about the price hike going into 2024. Did you see any stocking pattern in Q2 due to this fact? I'll start with that.

Okay. Thank you for that, Viktor. I think for the first one, again with the market, and as we just mentioned, we -- yes, we remain relatively optimistic, cautiously optimistic in what we see in the market, right? And I would also say this is very much -- what we delivered in the first half, this is very much aligned to our own expectations. Would we have liked it to be even higher? Of course, we would. We are still waiting for that, I would say, upturn in the market, in the funding markets, specifically where our cell and gene therapy customers are still, I would say, at a relatively low level in terms of funding and investment in general. So we're still waiting for the upturn. So when we're talking about the optimism in general, we are definitely looking at our four new innovations that we will bring into the market. That's a key component of the optimism. And the fact that we will, with some of those with XM40, XM30, we'll be able to penetrate into the bioprocessing field, which for us is a super interesting market to be gaining ground in. So I think that's probably where you should see it. I think the performance are very much linked according to we expected 6 months ago. I don't know, Niels, if you want to add anything on that one.

No. I mean, in terms of the Q1, Q2, of course, Q1 is normally the low quarter -- one of the low quarters, right, because you have July and August in there. And Q2 is normally a quite good quarter. So you're correct, there are something there about seasonality for sure. And then about the budget flush, I would not say that, that was significant. So that will be my comment to that. And in terms of stocking pattern as well, of course, our customers knew about the price increases well ahead. But I don't think that, that was a main thing also for November, December. So that will be my comment on that.

Okay. And just on Europe, on the strong quarter-on-quarter growth there, it would be also great if you have some more color on what drove that strong performance.

Yes, we can only see geographically a little bit where we did see some actually good tendencies and trends, that was in the French and also in the Scandinavian markets that were actually holding up quite well, and even though you can also say U.K. was actually also fairly good. So it seems that in terms of the downturn that they were -- those markets were actually performing comparatively quite well, yes.

Okay. And just a quick one on another seasonality pattern here that we've seen before. On EBITDA, you usually have a bit weaker margin in the second half of the year versus the first half. So could you help me understand maybe your assumptions to reach your guidance range here and maybe give some color on why that has been the case historically but might not be the case maybe here in 2023 and '24 fiscal year? You talked about price hikes that you've -- as one reason. But you also had price hikes in previous H2 years historically. That will also be interesting to know.

Yes, sure. I'll take that, Rasmus. I think historically, we have basically not done any price hikes. Our revenue, you can say is only -- you can say actually increasing with prices as we introduce a new instrument, for example, right? So I mean, this is the first time we might introduce really a price increase. And we also did communicate that when we were actually out on our roadshow back in September that we will actually increase prices, but we didn't know exactly how much. And now we will increase it to between 5% and 10%, 10% on the Consumables and 5% on the rest. So that will drive -- of course, also help top line, but it will also certainly help on the margins, on the EBITDA margins as well. So we have seen some inflation impact tripping in on our gross margins. And of course, we need to counter that one. So that's the reason for the price hikes.

And that kind of seasonality pattern we've seen historically with a bit weaker EBITDA margin for the second half of the year, has that just been due to random patterns? Or is there something we should read into that going into the second half of this year or...

Yes, I think that's more random. That's not something we have actually really picked up on, no.

And your next question comes from the line of Yiwei Zhou from SEB.

It's Yiwei from SEB. I also have a couple of questions here, I'll do one at a time. Firstly, on -- just a follow-up question on the Instruments sales, a big improvement in Q2. And you also said that Q3 is normally a large quarter and no significant budget flush. But my question is if there has been any one-off order or sales from specific customers. I'm asking because, Rasmus, you also mentioned we have seen some cell-based therapies approval late part of last year. I was wondering if you have a benefit from those approvals.

Thanks for the question there. And we can confirm that Q2 did not have, you can say, a bulk order or any major orders for Instruments. So it was actually quite scattered and definitely at a higher level than we saw in Q1. So no specific major orders were the key driver behind.

Great. And my next question here is on the sales price increase. It starts 1st of January. And so far, have you got any pushback from your customers? And do you expect any loss of sales volume after the increased price?

I think we have not received any actually negative response from customers. Actually, I would say, the opposite that I think most of our customers understand the situation. You might recall that when we had our webcast 6 months ago, we did not specifically mention that we -- we didn't know exactly what price increase level we would decide to go with. We were tracing also the inflation rates in general and tried to find a level that were acceptable and fair. And we actually communicated to those customers upfront in the end of Q4 of last calendar year to those customers -- to many of our customers, actually. So many knew that it was there. We did not see any, you can say, stocking effect as we just talked about. But I think in general, we have received relatively fair and positive feedback from customers. So it's not that we see that we are losing customers because of this one, actually opposite.

Great. And then my last question here, I noticed you mentioned there was a nonrecurring cost in the first half. Could you maybe quantify a bit the impact here?

I cannot go into specifics there, Wei, in terms of there were some on the personnel cost, there was a one-off there. But I will not quantify them as such.

[Operator Instructions] And the question comes from the line of Jesper Ingildsen from DNB.

Just a couple of questions from my side. I think you also previously talked about you have been facing headwinds from inventory reductions, so not just purely end market headwinds. Could you comment a bit about that, how far you are with those headwinds and how much drag that might have been in the quarter and when you expect that to clear? And then secondly, maybe on the XM40 launch, if you could give a bit more -- or generally speaking, moving into the bioprocessing, if you can give a bit more insight to how you might expect that to impact your margins. But also, on the Consumables sort of side of things concerning the higher put-through here, can we expect the Consumables to account for a higher proportion of sales within this part of the business and thereby also your total business?

Thank you, Jesper. I think maybe, Niels, if you want to address the inventory.

In terms of the inventory, of course, there are two pieces into this one. There's Consumables. And here, we reckon there's a full flush-out now, so nothing left basically also with a shelf life of 15 months. So back to the COVID-19, I think also that stocking is basically out there. And then you have the Instruments, and that's probably the key thing to your question here. And we -- there is probably -- and we know there are some instruments that have now been installed out there. So yes, we still have some stocking in the market. Exactly how much, it's really difficult to quantify as well. But there are some stocking there.

And for the -- Jesper, thanks for the question also on the XM40 and linked to the bioprocessing. Let me see if I captured all of your nuances in the question. First of all, in the bioprocessing field, we have high expectation, right? Today, we might have only a couple of percentage share in the bioprocessing market. And we would like to be at -- maybe take our fair share of that market as well. And we believe that actually XM40 and XM30, that they are perfect, I think, pieces of equipment for that market. It's actually tailor-made for that market. We have already now, as mentioned, received quite some feedback from customers. So we did these more than 20 trials and been in super close contact with each single customer in terms of what we could do to adjust here and there to make it an even better instrument. So we have now sold the first few instruments. And we are, as mentioned, following through quite a long list of potential leads here in the marketplace. So we are, at the moment, supporting our sales team and ensuring that we have a geographical overview of where do we see interesting prospects in terms of bioprocessing customers, where we might be able to have a good dialogue around what XM40 can do for a given customer. So we have high expectations there. Margin-wise, we stay true to the business model we have right now. So I think we will definitely not sacrifice margins with the XM40 when we see more of those being sold within the next months and years. To your question around Consumables, if that will have a higher weight going forward, I don't think it will have necessarily a higher weight. It could be. But it will probably be at least similar to what we have today. You might recall the XM40 comes with -- it's not a cassette-based instrument. It is coming with chemicals in containers, so to speak, so that the machine itself basically takes the dye and the chemicals it needs for each given test. It is true that it is a high throughput. So that means, obviously, the quantity of test might increase. But I also think that the test -- the price or the cost, so to speak, per test will be a little bit lower than maybe what you would see with the cassette today. So I think all in all, I think we'll be true to the model. I think it will not necessarily be much higher or lower compared to what we have today. Is that a fair a question back -- or sorry, answer back, Jesper? Or did I miss something?

No, maybe just on the XM30, which seems to be even more automated than that of the XM40, any change to the dynamics there when it comes to Consumables, given that you have even this -- where you only have the chemicals essentially?

It's kind of the XM30 in many ways, similar to the 40, except for the fact that it is a fully automated instrument, meaning that you can really automate your workflow at a complete different level than any of the other instruments we have. It is likely the XM40, but it's also based on a reusable measuring cuvette, where the sample passes through, right? And then you would have -- you can either do it manually. But there will probably be many of our customers, because of the automation focus, that would have potentially a robot arm, so to speak, that would basically take the cell sample and put into the chamber of the XcytoMatic 30. And that will happen automatically. So we have, like mentioned before, high expectations also for the XcytoMatic 30 when we get there. But it's very true, it is a fully automated system.

Thank you. There are currently no further phone questions. I will now hand the call back for web questions.

Thank you, Sharon. So I have the first question here from Oceanside Family Investments, Hai Nguyen. And the question sounds like that -- like this, if I may, to increase long-term shareholders' value, I'd love to know your approaches to capital allocation in general and more specifically share repurchases versus dividends and anything you'd like to add. Yes, in terms of capital, we are generating a quite significant cash flow, of course, and the capital allocation here. And we, of course, want to ensure that we have a long-term growth here. So we do, of course, invest. And the capital investment allocation is, of course, in people and R&D, specifically. We're also investing in some buildings to actually improve the space. And if you look at the capital allocation, share repurchases versus dividends, we actually recently paid out DKK 104 million in dividends, basically 25% of the total revenue. So I think actually -- we actually are also allocating a lot to our investors and shareholders and not sitting on the money as such. Of course, we want to be well consolidated and able to go for our opportunities. But that's how we think about it. Second question here. It's more technical. It's from [ Stefan Heijkoop ], private. Do you use AI in your new products? And to what degree do peers use AI in their products?

Thank you, Stefan, for the question. And we can confirm that, yes, we are actually using AI in our four new instruments that we will put in the market by the end of this calendar year. So you would see that our software platform, which is a complete new one, will actually have quite some AI included that will improve the whole imaging of cell analysis and cell counting in general. So you will be able to do more. You will be able to see more compared to what we were before. I'm not able to speak to what our competitors might be doing on this front. But we can confirm that we are definitely having AI in our portfolio of our software.

Then I have a question from Salim from Moneta Asset Management. And the question sounds like, can you give us more color on what you have seen in January? Same recovery trend? We can, of course, not comment on January as such. I think we have also outlined the guidance and outlook for the remaining part of the year. So I think we have already answer that question. So go to the next one, that's [indiscernible] from [ QBIT Capital ]. Do you see any implications from the recent FDA warning regarding CAR T therapy? Or is it too early to speculate how it will affect the number of coming CAR T therapies?

Yes, thanks for the question. And we don't see a specific impact as of now on that FDA warning, so we cannot confirm that at least from our sales here. What is interesting, I think, when we're talking about CAR T in general, we still see these several thousands of trials here in the cell and gene therapy pipeline, both preclinical but also through Phase I, II, III. And what we know of and according to the American Society of Cell & Gene Therapy, more than 50% of those gene therapy pipeline, so a number of trials, are within the CAR T treatment. So I think despite we see -- and I've seen that FDA warning, we still see quite some activity around CAR T in general with many trials going in this direction.

Thank you, Rasmus. Next question is from [ Kristen France ], retail investor. Could you please elaborate the impact of CRISPR on ChemoMetec's potential turnover and/or a timeline by when this might have an impact on ChemoMetec?

I think it's difficult to say specifically, right? So it's not that the exact same day where we might have, let's say, a therapy being approved that we will have an impact in our sales, right? So I think it's difficult to say. But we obviously follow that one with interest, right, so yes.

Thank you. And I have a question from [indiscernible] from [ Lamia Capital ]. Could you please explain why the revenue growth for animal semen was particularly strong during Q2? Should we expect this growth to continue in the coming quarters?

Again, thanks for the question here. I think there's definitely some seasonality here when it comes to the growth that we've seen in the animal business. For us, we provide the instrument we call SP-100 for the animal semen business. And not that we see a particular changing trends or anything in Q2, so I think it's more a coincidence. It is a relatively, you can say, stable, growing market. So we are selling around 30 to 40 SP-100s per year across the globe. And you are right that Q2 seems like it was a little higher than what we've seen in average per quarter. But I think it's more a coincidence more than anything else.

All right. Then we have another question. We have from Michael Raun, Raun Holding ApS. And this is in Danish. [Foreign Language] So this is a question about the new machines and to which market they will hit or be in. So maybe a question to you, Rasmus.

Yes. And maybe I can speak to that one. I think what Michael refers to here is probably the bioprocessing market that we already talked a little bit about with our XcytoMatic 40 and 30 that are tailor-made for the bioprocessing market. I mean, do we see the same impact there as we might see in the cell and gene therapy market? And actually, I think it's difficult, Michael, to just find a report that confirms specific details on each of these markets. But there are indications that the bioprocessing market will probably be growing at least 10% to 15% year-over-year. So this is a market, as mentioned earlier, that we are only scratching the surface of. At the moment, we might have only a couple of percentage share there. But our ambition is much higher than that. And the weapon, the tools to get there are obviously the XM40 and the XM30 as mentioned.

Then I have a question from [ Lars Rasmussen ] from [indiscernible]. You say you are a global leader. What about competition?

Yes. I think that's a great question as well. I think when we're talking about a global leader, we're probably talking about the classical cell and gene therapy market. Again, we don't have reports. There were actually an older report by SDI Global Assessment that put out a report a couple of years ago. It was updated in the end of 2023 around the market share for those companies doing cell counters. In there, we were the second highest with 20% market share in the cell and gene therapy market. But as mentioned, we are significantly lower in terms of share when it comes to the bioprocessing field. So this is where we would like to enter. This is why we have developed a big part of our new portfolio here, the XM40, XM30, tailor-made for that market. This is important for us in the future that we also have that leg, so to speak, to stand on. But at the moment, I think we are probably among the top 3 players in terms of market share within the classical cell and gene therapy market.

The next question is from [ Christopher Kristiansen ]. What went wrong with the Xcyto5 launch? And what are you doing different with this -- the relaunch?

Yes, I don't think that something per se went wrong with the Xcyto5. It's true that the Xcyto5 were almost developed and we finished the development of the Xcyto5 a few years ago. Then COVID came. And with that, we also had challenges in getting some of the components from a supply chain perspective to finish the last bits and pieces we needed to finish, right? At the same time, as COVID hit and we had challenges with supply, in general, with some of the components, we had a massive increase of orders coming in for NC-200, NC-202 and the rest of our portfolio. And there were a decision basically to say, "Let's put Xcyto5 maybe on hold for a while and deliver on the expectations from our customers and the orders we were receiving there." So per se, nothing went wrong. It was almost ready. And we are finalizing those elements now to ensure that we'll put the Xcyto5 in the market by the end of this calendar year.

Then I have a question from [indiscernible], private person. Due to a great lack of knowledge about product progress, the stock market has heavy doubts and swings dramatically. Why don't ChemoMetec take the stockholder information about progress to a professional and broader level? I think we have actually moved the piece quite significantly on the information. We have opened up for webcast and I think -- and also been more open to the investor community in the past year. And we will also keep on that going forward. Of course, we are not a huge company, and we don't have a huge communication and Investor Relations department. So we also, of course, need to -- we cannot just be very expensive on that part there. So of course, we will also try to take what's possible there, so -- but I think we have actually already opened and been quite professionally, going forward, we also will. Then I have a question from [ Tom Harbour ] from [indiscernible] Fund Management. What were contributing factors to plus 42% growth in animal semen analysis in Q2?

Yes. And we just talked a little bit about it. I think it's more seasonality than anything else. We don't know specifically what was driving that seasonality. And I also do not expect that it will necessarily continue at that pace in the coming quarters. So I think it's more seasonality, Niels.

Yes, I agree. Next question from Rickard from Handelsbanken. Are the XM40 Consumables proprietary and patent-protected, similar to the setup of the system closed in a similar way as it has set with the NucleoCounters? You can say that -- I mean, we have -- I mean, the chemical -- the chemicals are, of course, are not -- is basically white labels that we are doing there. So they are not patent-protected. But of course, the guarantee will not be in place if they use something and destroy the machine in the XM40. So in terms of that, we are trying to protect the Consumables business there, of course. But it's not patent-protected as such. Then we have a question from Bradley Ware from ABG Sundal Collier. Clarify when you'll be able to elaborate more on your reshaping growth strategy, before June 30, 2024, or later?

Yes, I don't think we will commit to a specific date here. But we will certainly share as soon as we are ready to share more. It's a process we have started up. We've also just started it up. And we intend to continue that dialogue. It's super, super important work we have in front of us in terms of where we would like to go, where we would like to double down as a company in the future. So we will definitely come back with more on this one as soon as we are ready.

Then I have a question from Raphael Membrez from BCGE. On your answer about one-off costs incurred in H1 '23/'24, ChemoMetec previously had such a nonrecurring cost as well as prior to the new management. This as well could not be discussed. Is there still some to come? Does that relate to previous owner management or linked to [indiscernible]? I don't expect something to come as such. Of course, you never know the one-off costs, they come just immediately, right? So I cannot really comment more on that one that I already commented on. So I'll go to the next question. And that's a follow-up question from Lars, who asks you say you are among top 3 globally. Why should a customer buy your product?

I think that's a great question. And Lars, I can tell you, I've asked exactly that question to many of our customers over the months that I've been with the company. And the feedback I received is that ChemoMetec has a brilliant quality mindset. We are providing consistent measurements for any instruments we have. We have a very high degree of service in our organization, talented people. We have a, I would say, state-of-the-art R&D approach to our portfolio now seen with four new instruments we are launching by the end of this calendar year. So those are some of the things that our customers are sharing with us that are important. I think also the agility is another element I want to mention here that we, as a company, according to our customers, are very fast and responding. So if they need a helping hand, if they need support, we are there and we are accessible basically 24/7. So I think those are some of the key components that I think our customers value with us.

I am aware there are more questions on the webcast. But I would like to hand over to you, Sharon, on the telephone. I think there is one more in there.

We have one final question today. And the final question comes from the line of Viktor Sundberg from Nordea.

Just had a more high-level question on the XM40. I often get investor questions, if you could see that being used as a high-throughput replacement of the NucleoCounter in some instances, as some customers, I guess, have complained a bit from our channel checks at least that the NucleoCounter, although the leading counter, is still at low throughput with one cassette, one count. And then other follow-up is also in terms of bioprocessing, when you use that term, do you mean both monoclonal antibodies outside of, let's say, cell therapy market? Or do you also push that in lentiviral production, which would be more coupled with your current market?

I think -- thanks, Viktor, for the question around XM40 here. I think when we're talking about replacement, I don't think -- again, it's a high put-through instrument. And if you, as a customer, decide that you would like to move in this direction, right, then obviously, you have a great opportunity with the XM40. So we don't see it as a big threat in terms of cannibalization of our existing portfolio, for example, the NC-200 or 202 per se. XM40 has been designed specifically for the bioprocessing field with high put-through. And as mentioned, we also, at the moment, have very low share. But the ambition is definitely that we will have much higher share in the future here. So we are approaching, you can say, also new customers as we speak within the bioprocessing field. And this is a key focus for us. I think -- yes, sorry, is that okay, Viktor, for now?

Yes, I also wondered in terms of high processing, just when you use that term, if you mean the monoclonal antibody space primarily? Or is it also lentiviral production, which would be in, let's say, the cell therapy space?

So it's both we are aiming for here.

Thank you. I will now hand the call back for closing remarks.

Thank you so much. And I just want to make it very short. Thank you for listening in. Thanks for taking the time. Niels and me really appreciated the interactions here. And we look forward to seeing many of you and interacting with many of you also in the days to come. But thanks again for the interest and your questions. Thank you.

Yes, thank you.