Sectra posts higher Q1 sales as profitability dips

2020 02 20 17 57 8385 Sectra Rsna 2019 400

Enterprise imaging and digital pathology vendor Sectra reported higher revenues for the company's first fiscal quarter, although the company's profitability declined during the period as it transitions to a cloud-based model for delivering its software and services.

During the quarter, Sectra reported revenue of 484.1 million Swedish krona ($44.8 million), an increase of 19.7% compared with 405.7 million Swedish krona ($37.6 million) after adjusting for currency fluctuations. At unadjusted currency rates, revenues grew 10.7%.

Sectra reported operating profit of 64.4 million krona ($6 million) for the first quarter, compared with operating profit of 90.1 million krona ($8.3 million) in the same period the year before. The company's net profit was 54.1 million krona ($5 million), compared with 73.1 million krona ($6.8 million) in the corresponding period the year before.

Sectra said revenues were boosted by two major multiyear customer contracts for enterprise imaging software subscriptions during the quarter. The company said the lower profitability was due to "strengthened delivery capacity, as well as the company's transition to cloud deliveries and an "accumulated need for sales and marketing activities."

Sectra is transitioning to a cloud-based model for its software and services, which "involves substantial initial costs and will generate revenue at a later stage." The company believes that while the cloud-based model will contribute to a more stable business as opposed to traditional license sales for its software, "growth in sales and profit will be hampered in the short to medium term."

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