Revenio Q1'25: Exemplary performance

Translation: Original published in Finnish on 04/30/2025 at 07:30 am EEST

We reiterate our Accumulate recommendation and EUR 30.0 target price for Revenio. The Q1 result operationally exceeded our expectations, both in terms of revenue growth and EBIT. The outlook remains unchanged and the trade war does not seem to cause the company greater problems, at least in the light of current information. We feel the report dispersed many concerns, which was also reflected in the share price yesterday. We consider the valuation very reasonable considering the company’s attractive long-term outlook. 

Profitable growth on a broad front

In Q1, Revenio’ revenue grew by 10.5% to 26.1 MEUR, exceeding our 25.4 MEUR estimate. Growth was supported by a few larger one-off orders during the quarter, but similar orders are received from time to time. However, the positive development was broad-based, with growth in all markets, both in imaging and tonometry products Among market areas, China and India stood out positively, and they could become good long-term growth markets for the company. Earnings also exceeded our forecast, with Q1 EBIT reaching 6.6 MEUR, while our estimate was one million lower. The cost structure continued to rise clearly, but with the stronger increase in the topline, costs scaled quite well. Changes in exchange rates were reflected in financial expenses due to the company's new reporting method, and as these increased, EPS was ultimately in line with our forecasts. Cash flow was scarcer compared to the earning level, wich was explained by incentives paid early in the year. As a whole, we feel the Q1 result proved that profitable growth can be achieved even in this environment.

Growth drivers are developing and the trade war is not yet a concern

Revenio reiterated its guidance expecting 6-15% comparable growth and good profitability (excluding non-recurring costs). The outlook was generally good on several fronts, and the trade war does not yet seem to be a major concern for the company. The company expects the impact of the current level of tariffs to be around 0.8-1.4 MEUR this year, but the company intends to pass them on to its prices in the US and thereby eliminate the majority of the impact. Given the company's good pricing power, we do not expect price increases to be a real challenge, especially as competitors' products are also subject to tariffs (no significant production in the US).

Deliveries of the new MAIA version have started and will clearly support the company’s growth outlook toward the end of the year. The company seemed satisfied with the product’s sales pipeline and longer-term outlook. The company's screening solutions are also expanding at a good rate into new markets and the number of iCare ILLUME-based screening sites is growing at a good pace (almost 50% by the end of 2024). These will enable the company to continue to grow its highly scalable software and AI-based revenue streams in the longer term. Overall, we feel the report showed that the company’s long-term growth outlook is progressing on schedule.

No material changes to the valuation

The attractiveness of Revenio's valuation is strongly linked to the growth rate of its revenue and consequently its profit. Based on the Q1 report, we believe that the company has the potential to grow at a double-digit rate in the next few years, when profitability also has good preconditions to scale up. Considering this, Revenio'svaluation (2025 adj. EV/EBIT 22x) is very reasonable, even though the company still requires patience. We believe the relative valuation is reasonable and the cash flow model supports our view. We consider the risk/reward ratio attractive. In the short term, the trade war will keep risks elevated, but we believe the company will survive the turbulence in one piece. If this happens, we consider it possible that the valuation premium will rise further.