Tobii Dynavox AB (publ)

Now I will hand the conference over to the speakers. Please go ahead. Okay. Thank you and welcome again, everyone. This is Anand Srivatsa. I'm the CEO of Tobii. Joining me today is Osa Viren, who is our interim CFO, along with Rasmus, who heads our investor relations. I want to remind you that I have announced my decision to resign from Tobii in August of this year. My intention is to move back to the United States for family reasons, and my family has already relocated. I will remain with Tobii in my current role until the end of January, 2026. And the board is in the process of looking for a new CEO. And at this point, we do not have any additional information to share on the process. Now let's move on to the quarterly results. Q3 was a weak result for Tobii on both the net sales basis as well as on overall results. The net sales reduction is related to the end of acquisition related revenue as well as lower than expected revenue in all three segments. In the products and solutions segment, we saw a year on year decline in revenue because of weakness in the US market while other regions demonstrated growth. In the integration segment, we saw weakness in our XR NRE project pipeline, but we do expect to see some improvement in Q4 as customers shift their focus to new smart glasses type of solutions. On the AutoSense side, we had a reduction in year-on-year revenue, but this is related largely to revenue recognition timing based on NRE projects. We expect that the AutoSense business will show robust growth on a full year basis, and we expect that quarterly revenue levels will become more stable as we transition from NRE to licensed revenue over the next couple of years. The overall lower levels of revenue resulted in lower overall result, but we have still taken steps to move towards profitability, with one clear example of our cash-related OPEX being 30% lower than the comparable quarter last year. Beyond the financials for the quarter, this was a milestone quarter for our AutoSense business with our single camera DMS and OMS offering launching at IAA Munich. I will speak more about the significance of where we are with AutoSense at the end of this presentation. Finally, we continue to be extremely focused on addressing our financing needs for the company. This has been an explicit focus over the last year and a half. Evaluating where we stand at the end of Q3 2025, we assess that we need additional cash to ensure that we are adequately financed for the next year. We intend to take the following steps to address this. We're taking a new cost savings target to reduce cash-related OPEX by 100 million SEC versus our Q2 2025 baseline for the 12 months that follow that timeline, starting in Q3 2025. We're also continuing our strategic review process, including the divestment of assets. And this effort has made progress over the quarter. And we expect that a successful outcome will substantially strengthen our cash reserves. The board has also selected an external advisor to evaluate capital market options as a backup for these strategic initiatives, if needed. With the combinations of these tools, we believe that we can address our financing need for 2026. Before we discuss our financial results in detail, let's take a quick overview of our three business segments. Tobii is organized into three business segments with each of them at different stages of maturity and scale. Our expectations are that the products and solutions and integration business segment will be profitable in the near term while AutoSense is still in an investment phase. The products and solutions business delivers vertical solutions to thousands of customers every year, ranging from university research labs to enterprises and PC gamers. In Q3 of 2025, the products and solutions business represented 53% of Tobii's net sales. The EBIT result of Q3 of negative 22 million SEC is a slight improvement versus our last year results, despite revenue decline because of our lower OpEx level. The integration business segment engages customers who integrate Tobii's technologies into their offerings. This segment also includes some revenue from acquisition-related revenue. The one-time effects of that have ended in Q2 2025. In Q3 2025, this business represented 43% of Tobii's net sales, and this business was profitable for the sixth straight quarter. The result for the quarter does reflect temporary effects of the Dynavox contract that we signed in Q2 2025. The AutoSense business segment sells driver monitoring and occupancy monitoring software solutions to automotive OEMs and tier ones. In Q3 2025, this business represented 4% of Tobii's overall net sales and delivered overall net sales. The business delivered minus 42 million sec EBIT, a slight improvement versus last year, despite a lower revenue level, lower capitalization, and higher levels of depreciation. We expect the AutoSense business to show solid revenue and profitability improvement on a full year basis. Now, over to Osa for the detailed financials.

Thanks, Anand, and good morning, everyone. Needless to say, Q3 was a weak quarter. Product and solutions has its market challenges. For example, in the US, integrations where the last part of the Dynavox deal did not fully compensate for the acquisition related revenue that ended in Q2. For Autosense, we see a timing matter. Operating result and margin have decreased compared to last year, even if our cost levels is significantly lower. On that note, I will already now put some more flavor to our new savings target that Anand mentioned. When we presented our Q2 results, we emphasized that our cost reduction and efficiency focus still remains. Our target is to lower cost by at least another 100 million SEK for the four quarters starting Q3 2025 compared to Q2 2025. This is the same methodology we used for our previous initiative for which we reached savings of 263 million SEK, 63 million above the target. This demonstrates that we have the ability to deliver. The savings will further right-size the company for us being able to continue our product development and meet customer demands. That being said, let's move to page six and look at some group details. I've already commented on the figures as such, But what this illustrates is the impact of the work that has been done. We see overall EBIT and EBIT margins lower than the comparable quarters last year. This is of course driven by lower revenue levels, but also by lower levels of capitalization and higher level of depreciation in this quarter. If we normalize for effects of capitalization and depreciation, we would have an improved level of profitability in this quarter. This improvement is due to the significant progress we have made on cost reductions. We are on the right track, but more work needs to be done. Turn to page 7 for some product and solutions comments. The negative sales trend continues with a decline of 5% in organic growth and is mainly related to the Americas. Cost level is lower than previously, and to remind ourselves, in Q2 this year, write downs of 33 million impacted EBIT. Turn to page eight for some integrations comments. The last part of the Dynavox pre-purchase deal did not fully compensate for the acquired imaging-related revenue that ended in Q2. As mentioned in Q2, From Q3 and onwards, there is a quarterly minimum guarantee in the Dynavox deal until 2029. We also saw fewer non-recurring revenue projects during the third quarter. Turn to page 9 for the Autosense segment. This segment is still in a phase with lumpy, timeline-dependent revenue as well as with non-recurring revenue. These elements impact both how revenue is recognized and cost, such as capitalization and depreciation, as mentioned before. In Q3, revenue was pushed forward, capitalization decreased and depreciation increased. Let's continue to page 12 for comments on our balance sheet and cash flow. During Q3, Tobii repaid 91 million of its COVID-related tax reliefs. The remaining debt has been reclassified to short-term and long-term interest-bearing debt, previously reported as current liabilities. In Q4, we received the last 45 million SEK from Dynavox pre-purchase deal. Where we are right now, there is a risk of insufficient financing for the coming 12 months. Having said that, with the measures taken and in progress, I repeat that we believe we can address this financing needs for 2026. With that said, thank you for your time and over to you again, Arnold.

Thank you, Åsa. Now I'm going to spend a few minutes talking a little bit more about AutoSense. Q3 2025 was a milestone quarter for this business, and I want to share with you where we stand in our journey to become a leader in automotive interior sensing. First, let's take a look back at what has happened since our acquisition of the Photonation business in February 2024. Since making the acquisition, we have built a comprehensive and combined roadmap that enables us to offer a leading in-cabin sensing product portfolio. This was capped off with the successful launch and final release acceptance of our SCDO product in Q3. We have continued to demonstrate our credibility in bringing our solutions to vehicles on the road over the last year and a half. We've increased the number of OEMs who are choosing Tobii solutions from nine to 12, and our solutions are being deployed in volume from 300K vehicles on the road at the time of the acquisition to more than 800K vehicles currently. We are working hard on ensuring that our solutions meet the demanding requirements of the automotive industry in terms of quality and process. Notably, we have achieved a spice level two for our SCDO program operating as a software tier one to a leading European OEM. Our solutions have also achieved regulatory approval with EU homologation for both our DMS and SCDO offering. Finally, we have built an efficient and empowered team where AutoSense engineering has been consolidated into Romania and the organization has more centralized responsibility to deliver on our ambition by having functions from engineering to sales reporting into the same leader. We have realized the investment synergies as part of getting this efficiency by reducing our investment levels by more than 40% versus our 2024 peak. Looking back, I would say that we have substantially realized the rationale for the acquisition, including the synergies we expected. We have done this by reducing our overall investment, building a leading product portfolio and increasing our credibility in the automotive industry. A critical aspect of building automotive credibility is showing that your technology can get through the rigorous testing and validation of OEMs and start shipping in vehicles on the road. Tobii's AutoSense interior solutions have been shipping in vehicles on the road in 2019, and we continue to see significant growth in this footprint. As of the end of Q3 2025, we have more than 875,000 vehicles on the road with Tobi solutions, and we expect that this number will continue to accelerate as our high volume passenger car wins get into production in 2026. Now, I wanna talk a little bit more about building a leading product portfolio for in-cabin sensing. The rationale for making the acquisition of Fotonation was the realization that for success in this space, Tobii required a full offering, not just driver monitoring systems. We could already see in 2023 that RFQs were looking for offerings that could support both driver and occupancy monitoring. Our belief was that the market would see increased adoption of DMS and OMS to the point that they would both become required capabilities. We are already seeing the early stages of this play out as we expected. Camera-based EMS is already a requirement in the EU starting in 2026, and we now see that Euro NCAP requirements for five-star safety require more occupancy monitoring capabilities over the next few years. We believe that for new platform shipping in 2028, OMS will be required to get a five-star rating. Tobii has been shipping DMS and OMS systems into vehicles in the road since 2019 and 2021, respectively. We recognize that while in DMS, we are not the market leader, our bet has been that a move into a leading position in the space is based on our leadership in single camera DMS OMS, and that this method will be the preferred deployment for in-cabin sensing systems in the future. Over the last three years, AutoSense has pitched single camera DMS OMS, but this approach has been met with skepticism as companies were unsure whether DMS from a rear view mirror location would get regulatory approval. This concern from the industry reflects the fact that DMS methodology from a rear view mirror position is quite different than the typical DMS systems that are deployed today, which have a much clearer and closer view of the driver's face. Given this context, our achievement this quarter is extremely meaningful in both getting EU homologation for our support, regulatory approval, and getting acceptance for our final release for our premium European OEMs launch in the second half of this year. We expect that our SCDO system will start shipping with our OEM in the second half of 2025 and be in end customer's hands in early 2026. Now we have expected over the last three years that as single camera DMS and OMS solutions mature, that the industry as a whole will also validate our view that this approach is not only feasible, but the most cost-effective approach for in-cabin sensing. The question of course is, when would the industry take notice of SCDO and share their view on this approach? I am thrilled that we have seen significant industry momentum already this month with the keynotes and presentations at InCabin Barcelona two weeks ago. At the event, Volkswagen, Magna, and Gentex, leading OEMs and tier ones in the industry, shared their view of the suitability of doing DMS and OMS from the rear view mirror position. Volkswagen was even more specific, as you can see the slide that's shared on the screen, about the benefits that this approach offers over traditional DMS and OMS systems that require two cameras. They shared that the single camera approach from a rear view mirror position saved over 30% of BOM cost, implementation cost, design complexity, et cetera. This is a stunning number that validates our view that SCDO will likely be the volume deployment for in-cabin sensing in the future. The outcome from this event is certainly surprising to us, but surprising for industry analysts as well. To quote Colin Barnden, principal analyst from Semicast Research from his posts on LinkedIn following this event, He says, what came over me in Barcelona is the sudden shift in industry awareness of the viability of both driver and occupant monitoring from the mirror. For several years, it has been clear there was a campaign of misinformation from some parties saying that the mirror is unsuitable for driver cabin monitoring. Those voices magically have become advocates of this idea already. He declares in his post that after the event, the question is, why wouldn't an OEM do DMS and OMS from the mirror? We at Tobii could not agree more. With a proven and mature offering that has gone through grueling acceptance tests at one of the most demanding OEMs in the world, Toby is well positioned to win as more OEMs come to the conclusion that DMS and OMS from the mirror is the most cost-effective and scalable approach for in-cabin sensing. Okay, let's wrap up. Q3 2025 was a mixed quarter where we saw significant milestones achieved in AutoSense, but where we saw weak revenue in the quarter that resulted in lower profitability. Our ambition in the long term is clear that we intend to be leaders in all of our business segments and execute in a profitable and financially self-sustainable way going forward. We are already leaders in our integrations and products and solutions business segments. And the progress that we have made so far in the AutoSense business segment and industry validation of our approach puts us in a great position to build a leadership position as SCDO scales in the market. In the near term, we have a key focus on addressing our financing needs. We will address this with three major approaches. The first is our new cost reduction target, which will reduce our cash need in 2026. We're also executing on a strategic review, which includes potential divestments, and our belief is that a successful outcome in this area will substantially strengthen our cash reserves. Finally, the board has engaged an external advisor to evaluate capital markets options as a backup for these strategic initiatives. We are confident that with these tools, we will be able to resolve our near-term financial needs and allow us to focus on our objective to achieve sustained profitability, which we remain fully committed to. With that, thank you and over to Q&A.

We have received several questions about our combined DMS and OMS solution, how our offering compares to our competitors, what Tobii's position in the market is relative to our competitors, and how we view the timeline regarding ramp up of SCDO. Can you please provide a comment on these questions?

Absolutely. As I shared in my deeper dive on AutoSense, we believe that we have been the clearest voice around the fact that the most scalable and most cost-effective approach for in-cabin sensing is a single camera DMS and OMS offering from the rear view mirror position. There are other players who have launched hardware solutions. And from our proprietary research, we believe that at the time of our launch, we have the most complete offering as well as an offering that delivers both DMS and OMS. We believe that our position in this space is that we have the leading offering here as well as an offering that has both proven itself and has matured as we have had to go through acceptance tests as a software tier one for one of the most demanding OEMs in the space. We acknowledge that, of course, in this in-cabin sensing arena, we are not the included in driver monitoring systems, but our bet for getting to a long-term leadership position is that as SCDO sales, our leading position will put us in a great place to go and win future RFQs. We recognize again that over the last couple of years, there has been industry skepticism about whether a single camera approach will work, especially because the position of the sensors are farther away from the driver. We believe that a lot of these concerns are being addressed now with the successful launch that we have enabled, and we believe that RFQs will increasingly request this type of approach, and we are well positioned to win in the space.

Is Tobii provider for eye tracking to Samsung Mohan?

Samsung announced a new high-end VR headset. We are not the eye tracking provider for that headset.

Thank you. Did you receive the 30 million out of the 100 in Dynavox revenue in cash this quarter? And did you also receive the 45 million in royalty from Dynavox from previous quarter this quarter?

And I'll let Osa take that and clarify that question.

We received the 30 million in Q3 and 45 in Q4.

What types of assets are you planning to divest? Would you consider divesting one of the business units?

Again, as you can imagine, these strategic reviews are extremely sensitive. We're not going to go into details of exactly what assets we are planning on divesting, except for the fact that we believe that a successful outcome here will substantially strengthen our cash reserves. We will share more details as possible as these activities progress into maturity.

Hi, and thank you for this presentation. On AutoSense, in materials from Qualcomm, Tobii is a pre-integrated partner. What does this mean? Also, this seemed to be a much wider opportunity than with EU regulatory requirements. What is your look on this?

One of the big advantages of the engagement that we have had is that our solution is shipping on Qualcomm's Snapdragon Ride platform with our premium OEM. This has meant that we have done substantial work to go and pre-integrate the solution. Qualcomm's expectation is that they want to sell a pre-integrated solution that delivers their domain controller architecture along with their ADAS functionality. The ADAS functionality does depend on capabilities that are enabled by in-cabin sensing technologies like we have. We believe this is a big asset for Tobii, not only that we've gone and delivered a mature and proven platform, but that partners like Qualcomm see our solution as pre-integrated and an easy way for them to scale their offerings into the automotive industry as well.

What is the total cost in absolute numbers for OMS and DMS for the car manufacturer? Please elaborate on the topic.

We cannot, of course, share algorithm pricing levels. And in terms of overall system cost, you will have to go and speak to the tier ones who typically provide the hardware. Again, what I think is super meaningful as we look at the in-cabin sensing opportunity as a whole is that DMS and OMS are increasingly becoming requirements in this market. And therefore, from a regulatory perspective, these are required systems. And again, there's high interest from the OEMs to offer these in the most cost effective and scalable way possible. The fact that Volkswagen has been clear that there is a substantial cost savings by offering DMS and OMS from a rear view mirror position in a single camera offering validates our view that this will be the way that in-cabin sensing is typically delivered to go and ensure that you can meet your regulatory needs.

Is it correct to assume that you are involved in Samsung XR through your collaboration with Qualcomm?

So you should assume that we are talking to lots of different companies in the XR space. We're talking to most of their leaders. We understand that people make decisions on their choices of algorithms for a variety of reasons. As I've mentioned before, on the specific Samsung MUHAN VR headset, we are not the eye-tracking provider in that system.

Is the total Dynavox royalty 52 million or 45 from Dynavox? In that case, when are the remaining 7 million received in cash?

The total is 52 and the cash was delivered in Q4.

Congratulations to Fast Acting. Is Tobii eye tracking integrated in Sony Siemens XR headset?

I don't think we have made any announcement there. Again, we will not comment on that particular headset. Okay, thank you very much. That's the end of the Q&A section. Thank you all very much for participating, and we look forward to sharing our next set of results with you in 2026. Thank you.