Revenio Q4'24 preview: Strong quarter behind, but it’s all about guidance

Translation: Original published in Finnish on 2/10/2025 at 7:00 am EET.

Revenio will publish its Q4 report on Thursday at around 9.00 am EEST. We expect Revenio's revenue growth to exceed 10% in Q4, but we estimate that approximately half of this growth will be currency driven. We expect relative profitability to weaken slightly due to cost pressures, resulting in only modest earnings growth in Q4. The report naturally focuses on the outlook, which is expected to show an acceleration in growth and a return to earnings growth after two challenging periods. We have detailed the company's investment story and performance in our recent extensive report (available here).

Year-end growth strongly supported by currencies 

Revenio has guided for a 5-10% year-on-year increase in 2024 revenue at constant exchange rates. For the first nine months, the currency-adjusted growth rate was 8.9%, but we expect the currency-adjusted pace to moderate to around 5% for the rest of the year, due to a very strong Q4'23 comparison period. However, we expect growth to be strongly supported by currency effects and therefore estimate reported net sales to have increased by more than 10% to 32.2. MEUR in Q4. We estimate that more than half of Revenio's revenue comes from the US, so the weakening of the euro against the US dollar means more reported euros. A similar but negative effect was seen in Q3. We believe that sales of both tonometers and imaging devices performed well towards the end of the year, although we expect the latter to have grown at a slightly faster rate. Among the products, the iCare IC200 tonometer, the iCare DRSplus fundus imaging device, and the EIDON family of products are expected to lead the way. The new iCare ST500 is unlikely to be a significant contributor to the group's growth yet, but the comments on the start of sales are interesting. At the same time, we believe that probe sales are on a steady upward trajectory.

Cost pressures continue to limit earnings growth

Revenio is coming off its seasonally strongest quarter and the result should be very good. We expect Q4 EBIT to be 9.8 MEUR (Q4’23: 9.5 MEUR), which would translate to an EBIT margin of 30.4% (Q4’23: 32.6%). Expectations are therefore for moderate earnings growth, slower than revenue growth. We expect the gross margin to remain above 70%, but profitability will be under pressure, especially from higher personnel costs (including bonuses). Last year was a weak year for the company, and we understand that performance bonuses were minimal, so this is more of a normalization after an exceptional year. In addition, we estimate that other costs were under significant upward pressure, including costs related to the FDA filing of the ILLUME solution (timing uncertain) and marketing related to new products. Revenio has guided its profitability for 2024 at a "good level" excluding one-offs, which should be sufficient to achieve our forecast EBIT margin of just over 25%. The figure is weak by Revenio standards, but it is still by far the best profitability in the industry.

We expect Revenio's Board of Directors to propose a dividend of EUR 0.39 per share (2023: EUR 0.38), representing a payout ratio of 55%. In connection with this pre-comment, we slightly raised our dividend estimate (EUR 0.37) as we do not believe that Revenio will break the streak of increasing dividends. There is plenty of room for an increase as the balance sheet is strong.

Guidance should indicate accelerating growth

The main focus of the financial statements is on outlook and guidance. In 2025, we estimate that revenue will grow by 13% to 119 MEUR. In our view, the market outlook is still not good, but the company has its own growth drivers. In tonometers, the IC200 continues its upward trend, driving up the average price, HOME continues its strong growth trajectory, and probe sales increase almost automatically as the installed base and usage increase. In addition, we expect the newly launched ST500 to make a good contribution to tonometer growth. On the imaging side, DRSplus is benefiting from increased use of screening, and we expect the EIDON product family to continue its good growth trajectory. We estimate that it is realistic to expect at least around 5 MEUR of revenue from the comeback of the MAIA product, which would mean direct growth from 2024. In addition, software growth is driven by ILLUME and, to a lesser extent, Thirona Retina AI. For 2025, we forecast an EBIT of around 33 MEUR, which would imply an EBIT margin of around 28%. Revenio's profitability is typically scalable thanks to very high gross margins, but we expect the company's fixed costs to remain under slight upward pressure and AI investments to be fully reflected in the cost structure by 2025. Nevertheless, we expect a return to significant earnings growth after two challenging years, which should be supported by the guidance and outlook. We expect the company to deliver double-digit revenue growth and a good level of profitability (excluding one-off items).