Dynavox Group Ab

All right. Good morning, everyone, and a heartfelt welcome to this earnings call where we will cover the third quarter 2023, summarizing our business in July, August, and September of this year. I'm Fredrik Rubin. I am the CEO of Tobii Dynavox, and with me on this call, I also have our CFO.

Yeah, Linda Theibring, and I will cover the financials in more details.

Great. We're broadcasting this earnings call from our new head office here in central Stockholm to where we moved just a few weeks ago, which brings even more excitement to an already exciting development of our business, which, of course, we will cover in more detail during this call. So first, in our usual manner, we'll take you through some brief fundamentals about the company, and then we will summarize the main takeaways from the quarter. We will take a deeper dive into the financials. and thereafter we will open up for a Q&A session. And in the audience, you can submit questions during the live session in the chat function in Teams. We of course always welcome offline questions sent by email to the above email address of Linda. Right. All right. So I'm starting with a short summary on what Tobii Dynavox is about, and this may be a repetition for some, but still fundamental to really understand the company. First and most important is to reiterate our mission and vision, which I know is very dear to not only our roughly 650 colleagues around the world, but also to our ecosystems of partners and investors. And our vision is a world where everyone can communicate and we will contribute to this via focusing on our mission, which reads to empower people with disabilities to do what they once did or never thought possible. And this also summarizes two of our main user stories. The first one, they do what you once did that may refer to a person who led a normal life until a diagnosis such as ALS. which rendered her unable to control the body or communicate like before. The other part is the never thought possible, and that can refer to the child diagnosed at an early age with a condition such as autism, cerebral palsy, where thanks to our solutions, he can do much more than the world around him ever thought possible. And Brock The little boy in the picture to the right from Louisiana, USA, is one of our amazing young users diagnosed with nonverbal autism, and he's a great example of this. The market that we serve is hugely underserved. Some 50 million people have a condition so grave they simply cannot communicate unless they have a solution like ours. Every year, some 2 million people are being diagnosed, and yet we estimate that only about 2% of those are actually being helped, and the rest, they remain silent. The main reason for this spells a lack of awareness also among the professionals and the prescribers tasked to assist these users and in combination with a poor healthcare reimbursement system. We operate our company on a global footprint. Today, some three quarters of our business stems out of the US and largely because a reasonably well functioning funding system established some 20, 30 years ago. Our products are sold in about 65 markets around the world of which the US, Canada, UK, Ireland, Denmark, Sweden, Norway are the markets where we sell directly while the other markets are served by a network of some hundred plus reseller partners. Our staff is distributed in a similar way as the revenue, meaning that some 70 plus percent of our staff are based in North America with our US headquarters in Pittsburgh, Pennsylvania. And our second largest office is our headquarter here in Stockholm. But we have branch offices in several European countries as well as in Suzhou, China. And as of today, we're roughly 650 employees in total. During the quarter, and I'll come back to that, we added a new division to our team via the acquisition of Readapt, which also means that we welcome some 50 new colleagues, mainly based in Readapt's office in Kassel in central Germany. And with prior acquisitions, we have established or increased our presence specifically in Belgium, France, Ireland and Denmark. Tobii Dynavox, we provide a comprehensive portfolio of solutions ranging, if you start from the top on this slide, the content, such as the world's leading library of communication symbols, they're called PCS, and the leading solutions of off-the-shelf or custom-made synthetic voices of the highest quality with a large diversity in terms of languages, ages, and ethnicities. If we then go down one step, we have highly sophisticated communication software tailored towards the type of user, which can, of course, vary greatly based on the need. Further down, we develop and design devices with cutting edge technology and medically certified durability. That includes communication aid that you can control via eye tracking. And this category has then during the quarter being complemented by the leading product line of medically certified mounting solutions, which are critical to specifically users that communicate from a bed or a wheelchair. Further down, we have a services portfolio to help our users through the complexity of obtaining the device and getting funding. And last but not least, we're here to help our users, our therapists, our caregivers through the global teams of support resources. We operate this model globally, and it's important to note that each piece of this, of this pyramid here is critically important. Also significant differentiator for us, making us absolutely unique. Our go-to market is predominantly as prescribed aids. So some 90% of our revenue come from public or private insurance providers. And this also means that we have solid paying customers and we've always been resilient towards changes in the overall economic climate. But now we will go back to focusing on the main topic of the day, namely our earnings report for the third quarter 2023. So looking at the highlights first, we had another very solid quarter when it comes to revenue growth. The growth compared to the same quarter last year sums up to 33%. Adjusted for currency effects, the growth was 28%. And this basically continues the trend that we've seen for the past six quarters. And that's pretty strong. And during the quarter, we continue to report good growth across the board, basically in all geographies, all product segments and all user groups. We benefit from a market and an up-to-date, a market leading and up-to-date product portfolio continues improved with new products and features. We continue in the quarter to invest in sales and marketing, including furthering strengthening our US funding organization. And this is key to navigate each customer through the complexities of obtaining funding for their new communication aid through the public or private insurance systems. Our work to improve awareness and competence continues specifically among prescribers and professionals. And the value of being able to meet our customers in person is of major significance, both internally, but also within our teams, as well as with our customers. The North American market continues to show strong growth is the largest and most influential market, both for us and for the industry at large, but we have similar growth rates also in Europe and other countries. The strong momentum among younger user base continues such as children with autism that rely on our products and our symbol communication solutions. And in particular the software that is called the TD snap. We see a clear trend that the market where we sell directly, including the recently added Irish and Danish markets are the ones showing the strongest growth. The reason is primarily that we have a much better opportunity to effectively train and support the prescribers in those markets, while at the same time, we obviously get a deeper understanding of the local requirements, the processes, reimbursement systems, and so forth. Our OPEX levels do increase, but at the lower rate compared to our sales. In addition to acquisitions, we continue to invest in our staff, mainly then within sales and marketing, but we also invest in systems and tools to manage this fast growing business. We completed the acquisition of ReHadapt Engineering in Germany early in September, and I'd like just to come back and shed some more light on that acquisition. So the acquisition of our long-term partner ReHadapt, which we completed on September 1, complements in a very natural way our product portfolio, but it also strengthens our presence in the German market. The company is absolutely unique with their offering of high quality, medically certified mounting systems or mounts, as we typically refer to them as. A mounting solution is something that either we or our local dealers or the prescribing entity combine with a communication aid when these are fixed to, for example, a wheelchair or a bed. The acquisition means that we can create solutions that make it easier for our users to access and use their communication aids, but also improves our ability to better design and innovate further around the physical setup of each individual user. And Readapt will remain an independent subsidiary under its own brand, its own organization, and they will continue to serve the entire industry and all customer segments. And as mentioned, we welcome some 50 new colleagues, mainly in the Kassel office in Germany, but also a smaller team in the US. In 2022, ReaDapt had worldwide revenues of about 10 million euros and an EBIT margin of roughly 20%. And the sole seller and CEO, Uli Ehrlert, will remain in position with the company. Tobbe Randvox, we paid some 16.6 million euros upfront in cash with a potential earn out of up to three and a half million euros after 12 months based on the financial development of the company. And the deal was financed from our own cash and an extended credit facility with our bank. But Linda, over to you for some more financial details.