Tobii AB (publ)

Good morning and welcome to the presentation of Tobii's Q1 results 2024. My name is Karolina Strömlid and I'm Head of Investor Relations here at Tobii. As usual, our CEO Anand Srivatsa and our CFO Magdalena Rodella Andersson will guide you through the highlights and the financial development of the quarter. After the presentation, there will be a Q&A session, so please feel free to start posting your questions in the chat already. And for those of you who have registered to ask questions live, you simply have to raise your hand to participate. Now I will hand over to you, Anand.

Thank you very much, Carolina. So let me start by giving a quick summary of how Q1 2024 was for Tobii as a company. This quarter was a very important quarter for Tobii as we completed the transformative acquisition of Photonation and established ourselves as a top three player in the automotive interior sensing market. The acquisition itself was completed on January 31st, and we also successfully completed an oversubscribed rights issue on April 3rd. I'm really pleased that automotive customers in tier ones are leaning in and happy with the new capabilities that Tobii is bringing into the space. We are definitely establishing ourselves as a much more credible player. And I'm also really pleased that in this quarter we were able to show some tangible results of that momentum, announcing a new DMS design win that we shared after the quarter. This was for commercial vehicles. We also shared that our existing OMS design win had expanded to a new OEM. This brings the total number of OEMs that we count as customers up to nine and continues to demonstrate that we are building momentum in this space. I will share some additional details on the AutoSense business at the end of this presentation. As most of you may imagine, this quarter has also been very much focused on successfully integrating the acquisition we have made, and I'm happy that so far our progress is on track. Our expectation and our ambition is to combine the leading capabilities of Tobii and Photonation to deliver the most competitive interior sensing offering on the market. We also expect that as we go through this integration process, we will be able to leverage technology and cost synergies and realize the impact of those synergies in the second half of 2024. Now, if we move on to the financial development, which Magdalena will talk about in more detail, for this quarter, we saw a decline in overall revenue, and that was led primarily by our products and solutions business. The integration business, on the other hand, had a solid quarter. When we look forward for the rest of the year, our ambition continues to be that we are very much focused on profitability, and I expect that we will improve our EBIT substantially for the year 2024 versus 2023. Now, before we jump in and share our financial development on a segment basis, I wanted to start out by laying some context for who Tobii is after this acquisition. Tobii is now organized into three different segments versus the two segments we operated under before. The products and solutions business engages thousands of customers from university labs that are pushing the boundaries of science with our technologies to enterprises who are understanding insights about their employees and their customers with the power of attention computing, all the way to gamers who are enjoying much more immersive gameplay with the technologies that we build. This segment represented 70% of Tobii's 2023 revenue. The integration business is engaging customers who take our technologies and make them part of their own solutions. Today, this segment is primarily focused on enabling customers that make virtual reality and augmented reality headsets. It also engages companies that are building medical devices that use our technologies in them, as well as personal computing OEMs. This business in 2023 represented 29% of our overall revenue. Finally, we have the AutoSense business. And this is a new segment for us. And in this segment, we are engaging automotive OEMs and tier ones by providing them with driver monitoring and occupant monitoring software solutions that they can embed into their vehicles. This segment is relatively new and early in its maturity phase. And in 2023, it would have represented 1% of Tobii's overall revenue. Our expectation is that going forward on a quarterly basis, we are going to share both top line revenue for each of these segments, as well as the gross margin for each of the segments, and finally the EBIT level for each of these segments as well. This will allow investors to better understand how these segments are performing and get a better gauge of their maturity as we make progress towards profitability for the overall company. With that, I'd like to hand it over to Magdalena, who will share more details on our financial development.

Thanks, Anand. So. Q1 delivered an overall growth of minus 4%, an organic growth of minus 9% and an EBIT of minus 75 million SEK. The integration segment had a solid development while the products and solutions segments development was weaker. The total net sales development of minus 4% for the quarter comprised then of this organic growth of minus 9%, a currency effect of minus 2% and then an effect from the acquisition of plus 7%. The net sales from the acquisition in this quarter is pretty much equally divided between the integration and the AutoSense segment. We closed the acquisition on January 31st, and when identifying the revenue already booked in January before getting the company consolidated into our books, we now conclude that the full year's estimate on net sales from the acquisition previously communicated as being in between 180 to 220 million is now closer to the lower range of this estimate. For the 11 months, we now will consolidate in 2024. and the majority of these net sales is expected to come in the second half of the year. The gross margin was 74% compared to 73% last year, where the product mix effect drove the margin upwards. The weakness in products and solutions is visible in a worse EBIT performance than we expected for the quarter. The EBIT was minus 75 million compared to minus 53 million last year, And to rectify this, we are now taking further steps in reducing our cost base throughout the year. This will be done through streamlining our product portfolio, prioritizing investments, and of course, by leveraging synergies when integrating the Autosense business. And so going over to the segments. Products and solutions, today the largest segment within Tobii with 69% of net sales, had a weak quarter with an organic growth of minus 15%. We saw a sustained weaker demand in Asia. Since some costs within cost of goods sold are fixed, the lower sales also drew the gross margin to 64% compared to 69% last year. And as Anna pointed out earlier, we will from this quarter and onwards present our segments down to the EBIT level. And the EBIT for products and solutions was minus 23 million SEK in this quarter, which is a disappointment in this mature segment. And as commented earlier, we are already now taking further steps to reduce costs on top of the actions already taken in Q4. The integration segment, which stood for 27% of Tobii's net sales in the quarter, had a total growth of 41%. The organic growth was 23%, currency effects was plus 1%, and the acquisition contributed with 18%. The gross margin was 96% compared to 91% last year, which was a result of a higher share of software and services. The EBIT was minus 13 million SEK. And then the Autosense segment, which is still in an investment phase, had a net sales in the quarter of 7 million SEK, mainly stemming from the acquisition. The gross margin was 99%, reflecting the high level of software and services, and the EBIT was minus 38 million SEK. And then going over to the balance sheet and cash flow. The free cash flow of the continuous investments was minus 126 million SEC in the quarter compared to last year's 46 million. Besides the lower result, we had a difference in the change in working capital between the years. This year's two millions of change in working capital was negatively affected by one-off costs and cash outflow in relation to the acquisition, while last year's 123 million was positively affected by 63 million of temporary COVID-related tax reliefs. With that, we ended the quarter with a cash position of 107 million SEK and a net debt position excluding IFRS 16 of minus 202 million SEK. After closing of the quarter, a rights issue of a net 267 million SEK was completed. And in addition, we also have an unutilized revolving credit facility of 50 million SEK. And so, despite this first quarter, we are very much committed to our new long-term financial goals, which we presented earlier this year. We are thus working to secure a positive free cash flow for the full year of 2026, an EBIT margin of around 10% for the full year of 2026, and an EBIT margin of around 20% for the full year of 2028. And with that, over to you, Annab.