RaySearch's Record Quarter Was Bought, Not Sold
Record sales, 18% organic growth — and license revenue down 10%. The Pinnacle tailwind is gone, the GPU bill is arriving, and Q4 now has to be 'stellar' to hit a margin promise management has repeated for a year.
RAY-B.ST · Earnings Call · 2026-11-03
The record that wasn't
RaySearch reported its highest-ever quarterly revenue on 3 November: SEK 394 million, up 19% reported and 18% organic, with a 21% EBIT margin and a book-to-bill of 1.0. On the headline, a growth software company compounding at double digits into a 25% margin target. Underneath, the quarter was something else entirely. CFO Nina Grönberg said it plainly: “The growth was driven by the temporary increase in hardware sales, while license sales were down 10%.” — Nina Grönberg, CFO · 2026-11-03 That is the whole story in one sentence. RaySearch's highest revenue quarter ever came with its most valuable revenue line shrinking. The hardware sales surge is low-margin pass-through: high hardware volumes dragged gross margin from 96% a year ago to 84%, against a normalised 92%. EBIT fell to SEK 85 million from SEK 89 million, and the margin compressed six points to 21%. In other words: revenue up 19%, profit down 4%. That is the arithmetic of a mix accident, not a business accelerating.The AI bill arrives in Lund
Why the hardware spike? Johan Löf gave two reasons and one of them is the most interesting thing said on the call — a small Swedish medical-software company accidentally standing in the path of the AI capex cycle, on the paying side: “The graphical cards, GPU cards from NVIDIA are the same that we need for our calculations. So they are becoming -- the price for those are just skyrocketing.” — Johan Löf, CEO and Founder · 2026-11-03 Asked how much hardware prices had risen, Löf guessed "maybe doubled." This is the same force visible in the global tape as memory pricing and AI data center buildout — except RaySearch is a consumer of that inflation, not a beneficiary. Its treatment planning calculations need the same silicon the hyperscalers are hoarding. Customers who would normally buy their own Dell boxes elected to have RaySearch configure and manage the deal, converting a software sale into a hardware pass-through at the exact moment component costs peaked. Löf was emphatic it does not repeat: "it was just a coincidence... I don't think we'll see that going forward." Which means the 18% organic growth number should be read as a one-off gift, not a run-rate. The market's problem is that the P&L doesn't label it as such.What management stopped talking about
The keyword shift in this quarter's transcript is the clearest signal in the whole dataset. For four straight quarters, Pinnacle conversion was the company's defining theme — ranked second in its own keyword set in Q1 2026, the engine of the Philips end-of-life windfall. On this call, it barely registered, and for a reason: “There was a quite low contribution, small contribution from Pinnacle this particular quarter, only 3%... there's not much left in terms of Pinnacle conversion going forward.” — Johan Löf, CEO and Founder · 2026-11-03 Trace the decay: 23% of license sales for full-year 2025, 22% in Q1, 13% in Q2, 3% in Q3. The time-limited opportunity that management told investors to focus on throughout 2026 is essentially exhausted. What replaces it is ECLIPSE, Monaco and Precision conversions. Asked whether that pace has improved year-on-year, Löf would not quantify it — "I don't have the number in front of me, but it has increased." That is the pivotal number of the equity story, and it remains undisclosed.The promise, fourth time
Here is where the prior calls matter. RaySearch has now carried an "at least 25% EBIT margin" target through the better part of a year, and the distance to it keeps growing. Nine months in, the company sits at a 19% EBIT margin. To reach 25% for the full year requires a Q4 that Oscar Bergman of Redeye correctly called out as needing to be extraordinary.The language has softened measurably. In August, after two consecutive quarters of order delays, Löf was still saying he was "quite confident" the slipped orders would be recovered and that the year's promise would be delivered. The same analyst pressed then: “we have had 2 quarters with delays... That requires a very strong comeback in both Q3 and Q4.” — Johan Löf, CEO and Founder · 2026-08-13 Q3 revenue did come back — but through hardware, not licenses. And the reimbursement headwind in the U.S. that management originally described as a temporary procurement slowdown is now acknowledged as an ongoing factor, with hopes pinned on 2027 rate levels improving. Order intake was the genuinely good news: license orders up 65%, total orders up 30%, book-to-bill of 1.0, backlog of SEK 1,722 million with SEK 665 million expected to convert within twelve months — helped by a significant Accuray order worth $8 million, only SEK 33 million of which was recognised in the quarter. That remaining Q4 recognition is now load-bearing for the margin target. A single commercial relationship is doing a lot of work in this guidance.It's going to be, as you say, a stellar Q4 to achieve the 25% EBIT margin. So we estimate, I mean, it's not a given, it's reasonable, and we believe that we can reach it given the -- where we are today and looking at the pipeline.