Dynavox Group Ab

Right, it's nine o'clock. Good morning and welcome to this earnings call where we will mainly cover the fourth quarter of 2025, summarizing our business then in October, November and December, and also some comments regarding the full year of 2025. I am Fredrik Rubin. I am the CEO of Dynavox Group.

And hi, I'm Linda Tybring and I'm the CFO of Dynavox and I will cover the financials at the end.

Yeah. So for those of you who have participated in these calls before, you will be familiar that we'll start with a quick recap about what Dynavox Group does. And then we will summarize the main takeaways from the quarter and the full year. We will dive deeper into the financials and thereafter there will be a Q&A session. And you can submit questions during the Q&A session in the chat function here in Teams, or you can ask them live if you have been given prior notice to our team. And of course, we always welcome offline questions sent by email to the above email address, which is lindas.tybring at dynavoxgroup.com. Alrighty, so a brief overview of Dynavox Group. First and foremost, it's important to reiterate our mission and our vision, which I know is very dear, not only to now our over 1,000 colleagues around the world, but also to our ecosystem of partners and investors. And our vision is a world where everyone can communicate, and we will contribute to this by 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 do-what-you-once-did, that may be a person who lived a normal life until a diagnosis such as ALS, which rendered her unable to control the body or communicate like before. The other story is the never-thought-possible, and that can refer to the child diagnosed at an early age with a condition such as autism or cerebral palsy. where, thanks to our solution, he can do much more than the world around him ever thought possible. On the picture here, you see Elaine from Lawrenceburg in Kentucky in the U.S., and she's one of our amazing users diagnosed with cerebral palsy, and she's a great example of this. So the market that we serve remains hugely underserved. We estimate some 50 million people have a condition so grave they simply cannot communicate unless they have a solution like ours. And every year, about 2 million people are being diagnosed, and yet we estimate that only some 2% of those are actually being helped, and the rest remain silent. And the main reason for this spells lack of awareness, also among the professionals and the prescribers tasked to assist these users and poor healthcare reimbursement systems. We operate with a global footprint. Today, some three-quarters of our business stems out of the U.S., largely because of a reasonably well-functioning funding system established some 20-30 years ago. But our products are also sold in more than 65 markets around the world, of which 11 are markets where we sell directly, while the others are sold by a network of some 100 reseller partners. Our own staff is distributed in a similar way as the revenue, meaning that some 60% or so of our staff are based in North America, with our US headquarters in Pittsburgh, in Pennsylvania. And our second largest office is our headquarters here in Stockholm. But we have branch offices in several European countries, as well as in Suzhou, in China, in Adelaide, in Australia. As of today, we are just north of 1,000 employees in total. We provide a comprehensive portfolio of solutions, ranging from A, the content and the language system, such as the world's leading library of communication symbols, and they're called PCFs, and the leading solutions for off-the-shelf or custom-made synthetic voices of the highest quality with a large diversity of languages, ages and ethnicities. Then we also do highly sophisticated communication software tailored to the type of user, which of course can vary greatly based on the need of that individual. Then we develop and design devices with cutting edge technology and medically certified durability, including communication aids, controlled via eye tracking and accessories such as the ReHadapt mounts. We have a services portfolio to help our users through the complexity of obtaining and getting funding for solutions. And then last but not least, we are there to help our users, the therapists, the caregivers through a global team of support resources. Then, as mentioned, we operate this model globally, and it's important to note that each piece is critically important and also a significant differentiator for us, making us absolutely unique. Our go-to-market model is predominantly as prescribed aids. That means that some 90% of our revenue comes from public or private insurance providers. And this also means that we have solid paying customers and have always been resilient towards changes in the overall economic climate. Alrighty, but now we will go back at focusing on the main topic of today, namely the earnings report for the fourth quarter 2025. If I would be looking at the highlights, we had another strong quarter when it comes to revenue growth. The growth compared to the same quarter previous year sums up to 31% after adjusting for the currency effects. And this marks a further acceleration of an already strong trajectory over the past four years. The demand for our solutions remains high, proving the solidity of our underlying business, obviously, but we also see a robust growth across all geographies and markets. We continue seeing increased growth in the touch control product portfolio, which typically then serves younger users with autism. However, in the quarter, we also continue to see good traction in the eye gaze control solution, serving users with more complex needs. Our EBIT came in at 103 million SEC, and this includes non-recurring costs of roughly 17 million SEC in the quarter, and that implies then, of course, an even stronger underlying profitability. In November, we moved our entire North American headquarters and logistics hub to a brand new location from where you will see pictures during this presentation, including on this one. And then last but not least, on December 23rd, we entered into an agreement to acquire all the shares of our Italian reselling partner, SR Labs Healthcare. And I will come back to that in a little bit. If we then instead look at the full year of 2025, we can conclude that it was a solid regarding our top-line growth. In local currencies, the growth was 34%. Our profitability improved in the year. The EBIT grew by 11%. Earnings per share grew by 13%. And this really proves the case that our business is continuing to scale quite well. And the fundamental factor behind this is, again, the hugely underserved potential in the market that we addressed. The growth in profitability during 2025 should be seen in the light of the investments that hit our P&L with around 100 million SEC in total of non-recurring nature related to two main projects. First, the new ERP system that was successfully launched in North America on July 1, which represents some three quarters of our business. And this new system lays the foundation for a modern, highly digitalized and scalable backbone. And then in November, we finalized the consolidation of the product and development organization into a central hub in Stockholm, reducing our U.S.-based team by some 50 FTE and in parallel building up an even larger team here in Stockholm. And as a company with a clear focus on innovation, having our product and development function concentrated in one location enables further scalability and resilience. Another important way to scale and grow our business is to expand our direct market and the presence there. More than 70% of our revenue from Europe and the rest of the world comes from markets where we have direct presence. In 2025, we completed the acquisition of former reseller partners Zenemy in France and RehaMedia in Germany. And, as mentioned, on December 23rd, we announced our third acquisition for the year, this time in Italy, where we agreed to acquire our reselling partner SR Labs Healthcare. The company reported revenue of approximately 3 million euros in 2024. And we are paying the current owner 4.2 million euro in cash at closing. And the closing is expected during the next half year when we look forward to welcoming some 10 amazing new colleagues to our team. But now I hand over to you, Linda, to take us deeper into the financials.

Thank you, Fredrik. So let's start with Q4. Revenue for the fourth quarter came in at 677 million SEC, a 31% year-on-year growth after adjusting for the currency effects. Recent acquisitions contributed by 3%, and the organic growth was a solid 27%. And this marks another chapter in our four-year strike of robust growth and consistent execution. Currency fluctuation had 15% negative impact on revenue, hence the report that revenue growth was 16%. Service continued to grow across all our markets. Also in previous quarters, we continued to see growth among younger users with autism using handheld touch control devices. At the same time, we continued to see good traction in our eye gaze control solutions, serving users with more complex needs. The gross margin ended up at 69%, a decrease of 1.1 percentage points, and the gross margin was at the same time negatively affected by currency fluctuation, resulting in 13 million sec loss. But also some was strengthened by sales growth and the addition of new direct markets contributed an extra layer of the gross margin. So EBIT for the quarter was 103 million SEC, and the EBIT margin was 15.2%. Our OPEX increased with 17% organically, and the OPEX increase was affected by factors such as staff increases, mainly within the sales and marketing organization. In total, we added 155 FDs, including M&A versus last year. During the quarter, as Fredrik Waller mentioned, we continued to invest in new systems and tools to strengthen scalability. The total non-recurring spend related to this in the quarter was 6 million SEK, which was 4 million SEK lower than prior year. Operating expenses was also affected by non-recurring costs related to the restructuring cost in the product and development organization. The total non-recurring spend in the quarter was 8 million SEK, which was 6 million SEK higher than prior year. Both these two investments are in line with the announced strategic plan. The development of the Tobbe Dynavox Group share price has rendered an increased cost for employee long-term incentive programs of 3 million SEK compared to fourth quarter last year. All in all, non-recurring cost in the quarter sums up to 17 million SEK, but this was partly offset by operating income that was positively impacted by 6 million SEK related to adjustments of earn-out liabilities. In addition, currency effects both from lower exchange rates versus prior year and together with transactional timing effects had a negative impact of 36 million SEK on EBIT for the period. Net R&D cost decreased by 3 million SEK and this includes non-recurring cost of 8 million related to the restructuring within research and development organization. If we look at the basic earnings per share, it totaled at 0.72 SEC per share to be compared with the last year's 0.51 SEC per share. So to the full year, at 2025 financials, revenue for the year came in at 2.467 billion SEK, a 25% year-on-year growth. Excluding currency effects, revenue grew by 34%. Acquisition contributed to 2%, and the organic growth was a solid 32%. As with the quarter, we see growth across the board in not just regions, but also product and user groups. We also see the trend where markets where we go direct grew stronger. The gross margin ended up at 68%, a decrease of 0.34 percentage point. And this was negatively impacted by the currency effect about 31 million SEC. And this relates to that inventory purchase in US dollar at the higher exchange rate, resulting in the loss up on sale due to the strengthening of SEC. At the same time, the margin was strengthened by additional of new markets, which contributed to an extra layer of gross margin. EBIT for 2024 was 254 ms, corresponding to a margin of 10.3% versus 11.6% last year. Our OPs increased organically with 27% versus prior year. The obvious increase mainly relates to staff increases in the sales and marketing organization and salary adjustment that came into force in April 1st. During the period, we continued to invest in systems and tools to strengthen scalability. These non-recurring costs contributed approximately with 28 million SEK to the cost increase, with a total cost of 46 million SEK in the period. Operating expenses was also affected by the non-recurring cost of approximately 41 million SEK related to the restructuring of product and development organization. The cost of the long-term incentive program increased by 18 million SEK driven by the share price development during the year. The amount also includes a non-recurring cost of 5 million SEK related to historical long-term incentive cost. To summarize, a total of non-recurring costs amounted to 106 million SEK. We should also say that currency effects both from the lower exchange rates versus prior year and transactional timing effects had a negative impact of 78 million SEK on EBIT for the period, an impact of 3 percentage points on EBIT. R&D expenses had a negative impact on EBIT of 61 million SEK compared with corresponding period last year, This includes non-recurring costs of 35 million SEK related to restructuring within the research and development organization. Of course, we are very happy with our revenue growth and how we delivered on our strategic investment. Adjusting for this, we are now seeing an EBIT in line with our financial target. For the quarter, cash flow after continuous investment was positive with 46 million SEK, and cash at hand at the end of the quarter was 195 million SEK. Net debt was 909 million SEK, and the total unused credit facility at the end of the period was 300 million SEK. The net debt over the last 12 months EBITDA was 1.7 times. That was a lot of numbers. Back to you.

Great. Thank you, Linda. A lot of numbers, but on the other hand, we're also summarizing both the quarter and the year. So, before we open up for questions, I'd like to reiterate the main takeaways and bring further nuance to our performance and outlook. We continue our strong trajectory, and that's a trend that started early in the spring of 2022. As we said, the revenue grew by 31%, adjusted for currency, which, of course, is highly satisfactory. And going forward, we are clearly meeting tougher comps. As noted as well, the strengthened SEC to the US dollar poses headwinds, both on revenue and earnings. But we still saw that sales continue to grow across all markets. We continue to see the growing adoption among younger users, typically with autism. At the same time, we also see good traction in the eye gaze controlled solutions, serving users with more complex needs. Our profitability was negatively affected by non-recurring costs totaling some 100 million SEC in the year, or over four percentage points. And that relates to the long-term investments that focus on building a more robust company and a more resilient company. And obviously, the strengthened SEC and the weaker dollar posed significant headwinds. Our operations infrastructure got a significant upgrade with the opening of our brand new and modern offices and operating hub in Pittsburgh, Pennsylvania, serving our entire North American market, and that represents some three quarters of our business. We continue to expand our direct market presence by agreeing to acquire our Italian reseller partner, SR Labs Healthcare. The overall exposure to import tariffs to the US is limited, since our products generally are classified as medically certified assistive devices, and that exempts them from tariffs under the so-called Nairobi Protocol. While the recent US government shutdown and general uncertainty on policies had no apparent impact on our business, We acknowledge the broader societal effects that this may cause. It may cause some slowdown to the business, but the financial impacts are quite difficult to quantify at this point. It continues, obviously, to be a very fluid situation in and around the U.S., and we continue to monitor all macroeconomic and policy change developments very closely. All in all, we remain confident there is ample opportunity for growth over a long period of time, given the low penetration of communication aids, and we continue our efforts in helping more users by expanding and service a market that is largely underpenetrated. As we have learned from the history, it will never, ever be a straight path forward, but our past performance solidifies our long-term confidence. Our current financial targets were communicated in February of 2024 and then expressed with a time horizon of three to four years. The first target to on average grow revenue by 20% per year adjusted for currency effects but includes contributions from acquisitions. And in local currency, the fourth quarter growth for 2025 was 31, which means that we've found a revenue growth momentum to build on. The market reserve remains hugely underserved, but also quite immature. With the example of growth levers such as sales team expansion, adding direct markets and operational excellence, we continue to build our growth journey. The second target is to deliver an annual EBIT margin that reaches and exceeds 15%. And we have proven to build strong growth with incremental improved in profitability. And we need to continue to invest, obviously, in future growth with improvements in scale. And the recipe for us is quite simple. Continued revenue growth, high and stable gross margins, and then a total operating expense that increase at a lower pace than the revenue growth. And as a consequence, we see good opportunity to further leverage how revenue growth translates to reaching and exceeding an EBIT margin of 15%. Last but not least, the dividends policy. So we do have an attractive cash flow profile, and given the growth opportunities, we need to maintain a capital structure that enables strategic flexibility to pursue growth investment, and that obviously includes acquisitions.

But it's still expected that over time...

Okay, let's try with Jakob instead. So Jakob, maybe if you can try and unmute by pressing star six.

Can you hear me? Yes.

Do we have Jakob on the line?

Yes, I'm on the line.

Good. So please ask your question.

Okay, thank you. My first question is on the sort of growth outlook you see. Obviously very good momentum here continuing in Q4, but given that now that from Q1 you are facing these more tougher comparables, do you still see that you can sustain a sort of 20-plus organic growth momentum?

I think you're absolutely right, Jakob. Hi, by the way, sorry for the technical issues. This is Fredrik. You're absolutely right. We are seeing tougher comps. And without kind of talking too much into the future, we also remain confident in our long-term predictions. And that is expressed as we believe in an annual growth of 20% adjusted for currencies and contributions from acquisitions. So we're making no change to the outlook. We have never been in a situation where the current growth has been, you know, something we have commented on in more detail.

Do you have any more questions?

Can I continue? Yeah. Sure. Yeah. Another question, if you can elaborate on the development in your U.S. Salesforce here, Salesforce during the last year, sort of how much it has grown from the beginning of 2025 to where you are now, and also what trends you're seeing in sort of Salesforce efficiency?

Sure. Can I hand over to Linda to maybe elaborate on that?

I mean, we have added more feet on the street. Over 20 people in the sales organization or solution consultant, as we call them, have been added during the year. We also see an improvement in efficiency for our sales organization on a good trajectory, which is a really good sign considering how many people we have added during the past year.

so that's great and and that equates to roughly 20 percent uh or is it it's about 10 percent sorry the growth in terms in terms of number of feet yes that's about 20 percent increase yeah good any further questions yeah then i'm also wondering a bit on your balance sheet i mean it's good to see the dividend here you announce uh today uh but Given the sort of stronger profitability, I guess we will come down to quite low leverage level here towards the end of 2026. What are your thoughts on how you will use the balance sheet going forward?

I mean, we should always prioritize and make sure that we look at future investments. It could be M&A, et cetera. So we need to make sure that we have access cash for that. But if we, for the future, I mean, now we have a good situation, and that's why we decided on doing a dividend this year.

I think it's also important to stress the fact that given the type of business that we're in, the type of payers that we are, as a company, we should carry a certain leverage. And we obviously feel quite confident in the ranges where we're currently operating. But, you know, that can change with market interest rates and whatnot. But obviously we feel quite confident at the leverage rate that we're on and hence doing the dividend.

Good. Maybe I can just take one more and then I'll get back.

A quick one.

Yeah, if you can comment on the situation with RAM memory prices and if you see an impact on gross margin or ability to deliver.

Sure. So just for everybody to understand, the prices for high technology memory chips has gone down dramatically, typically associated with the AI boom. uh we do have memory chips in our in our products and yes we have seen that the memory prices have gone up but you should see that in the light of two things first of all we don't use the you know highest specs memory chips uh that you typically use in uh you know in ai computing etc so we're not really in that market and the other part is that the bill of material cost for the memory chip per se in our products is very very small So even if it would look like, you know, a doubling of an energy price, et cetera, et cetera, it only would affect, you know, some tens of percentage points on our gross margin for our products. So we are, you know, with a 70% or so gross margin, the bill of material cost for a specific component doesn't actually affect us all that much.

Good. Thank you so much. I think we also have Daniel Jurberg from Handelsbanken with us on the call. So please, Daniel, unmute by pressing start.

Yes, you have. You have here. Can you hear me? Yes, Daniel. Hey. Yeah. Good morning, and congrats for a great report, I think. And also, thanks for the clarification for some analysts on the COGS side. I have a question on, you mentioned the aerobic protocol. Have you seen any... policy impact or changes so far? I have looked myself. I haven't found anything.

No. No.

Good. Another question. In the autumn on the close down, you were quite safe out due to prepayments. Is something changed this time on, you know, this prepayment thing that could be that it could be a larger impact directly given the close down?

We didn't see any direct impacts of the closed down, and that's because the system is, there are buffers, as you alluded to, in the system. But I need to stress the fact that this type of closed down, and I would also say if you go up in the helicopter and look at the general uncertainty in the U.S. society, it will and have some sort of impact on us. It's affecting schools. It's affecting, you know, the life for our own staff and societies at large. It's, however, super difficult for us to quantify exactly what that meant in terms of dollars. But I would be wrong saying that we are, you know, unaffected largely. But there's nothing that we can really point at or quantify.

Super. And also in terms of ramping up Salesforce, can you comment a bit on the efficiency on, you know, the number of prescribers and so on that this Salesforce can help, i.e. your indirect Salesforce more or less?

yeah um so three factors uh the first one is the number of uh reps that we have in the field and and as we said in the previous question that increased by roughly 20 percent or so or 20 people to be exact in the us last year at the same time we did see a improvement in kind of revenue per rep or sales sales rep efficiency The third element is something that I believe we have talked about before, which is the number of prescribers in the market that prescribe four or more devices per year. And here, too, we saw an uptick compared to last year. I actually don't have the number, but I would say that there were, you know, probably a double-digit percentage, perhaps low, in number of prescribers that are for the lack of a better word, good at their job or et cetera. And that's, of course, a fantastic growth level because they carry our water and they typically have more successful patients.

Perfect. And for my very last question on the competitive landscape, have you seen any larger changes for some of the UK competitive smart box or Sequoia there and also to say something about PRC's old PLO in the U.S. given these are private companies, it's hard to judge from the outside.

The short answer is no. I think it's largely business as usual. If you look at the acquisition of Smartbox, that was announced, not yet closed, I believe. That's merely an ownership change, and... potentially good i i we have we have no no no opinion about that and you did also see that pierce saltillo did acquire two small software companies typically focusing on other markets than their home market u.s but again this this doesn't affect you know our day-to-day life super thank you so much and good luck thank you thank you daniel

Thank you, Daniel. And then we will turn to Kevin, who has posted a question in the chat asking, you increase R&D every year. Will this increase indefinitely or will it flatten out more and get quarterly consistent over time?

Linda? So, I mean, during 2025, we have talked about the strategic move that we have done from the US to Sweden, which means in 2025, our R&D spend has been very high because a lot of non-recurring costs. What we see over time is that we will not increase our R&D spend in relation to revenue. So that will over time go down. And also why we did this move was to, for the same amount of money that we spend in 2024 or in Q4 2024, we will actually hire more people. So we will get an efficiency in adding more capacity for the same amount of money. So over time, this will go up. But of course, we need to add a couple of heads every year. But it's not significant from a million sec increase perspective.

Good. And he continues also, Kevin, all the quarterly reports for 2025, you have expressed that the demand has been basically the same in Q1, Q2, Q3. What did it look like for Q4? The same. Yes. Good. So let's see now if we do have Philip, and if you can unmute, press star six.

We try again. Yes. Perfect.

Good morning. All right. Most of my questions have been covered, but I was just wondering, has the U.S. reimbursement rate increased going into 2026?

Yes, they have communicated a 1.9% increase in December that we will start to evaluate during the year or implement during the year. But historically, this takes some time for us because we need to update oral appendixes to our agreements with the funding bodies across the U.S.

But it's a good question because as many fear, you know, with the current political climate, it didn't go down. And it's typically associated with inflation. I think this just under 2% increase of reimbursement rates underscores that.

And then I was also wondering about Tobii. They reported the other day and it was quite a disappointment. Does it have any effect on you about their performance and their ability to deliver products to you? No.

Short answer. It's obviously a complex topic, but we are in a position where it doesn't affect us.

And we have a lot of stock when it comes to Tobii components. That's part of the pre-purchase we did during the summer.

All right. That was all for me. Thank you. Thank you.

Thank you, Philip. We also have another question from Jessica at Red Eye. So I just looked for non-recurring costs of SEC 17 million. The EBIT margin reached 18% in Q4, which sits well above your long-term target of 15%. Now that the restructuring of the R&D organization is complete, how do you view the ability to maintain this elevated margin level throughout 2026?

First of all, Jessica, is that the profitability or margin target is expressed as exceeding 15%. So our target is not 15% full stop. It's exceeding 15%. And we remain confident that that's a level where this company should be able to deliver. With that said, we're also... We want to make sure that we make the appropriate investments so that we don't build a card house that could implode here. We want to build something very, very solid and resilient.

We should also remember that Q4 is our strongest quarter. So profitability, both revenue and profitability can increase during the quarter, during the year.

Good. And actually, I see that Kevin had a follow-up question on the R&D that he asked. Would your EBIT margin and therefore your results have been better next year or are they the same since they have been a one-time cost?

Yes. Yes. That's mathematics.

Good. Good to confirm. I think by that, let's see, there was one more here also from Kevin. And another question about the demand. The demand is so consistently high, 32% excluding currency. Can I get some history regarding this? More in regards to if you have seen this demand historically and what may or may not affect this?

Sure. And it's actually quite a complex topic because we are operating in an industry where We are also not only providing the products and the solution, we're also there to create the awareness. So our long-term initiatives on educating prescribers, being active at universities, creating more and more successful use, et cetera, that is a very, very slow-moving ship. and it it's quite difficult to kind of exactly calculate the impact from when one of our colleagues were out in the street teaching a prescriber how to do their job until until that translate into revenue growth so i would say we are we are responsible for the growth uh because we and and some of our industry peers we largely create the market exactly to predict which percentage points that will end up in is genuinely hard. But we feel obviously that we've found the momentum, but I expect that it will be a bumpy road. Sometimes we will have very strong growth and sometimes we will have weaker growth, but if you zoom out a little bit and look at the overall curve over longer periods of time, we are obviously quite confident in long-term growth. And when I say long-term, I'm probably more talking decades than quarters. All right.

With that, all the questions have been asked and we concluded.

All right. Thank you, everybody, for listening in. We apologize for the technical mishaps that happened, but obviously we were able to hear the voices of some of our dear analysts and followers, so something worked. We will now continue to work. And next time we have a session like this will be on April 24th. It's a Friday. And then we will conclude the first quarter of 2026 in our earnings. Thank you very much.

Thank you.