Tobii AB (publ)

Good morning and welcome to the presentation of Tobii's Q4 2024 results. My name is Karolina Strömlid and I'm Head of Investor Relations. We will follow the same procedure as usual. Our CEO, Anand Srivatsa, and our CFO, Magdalena Rodell Andersson, will give you an update on the operational and financial development in the quarter. After the presentation, there will be a Q&A session, and you're welcome to start posting your questions in the chat at any time. For those of you who have registered to ask questions live, simply raise your hand to participate. Anand, over to you.

Thank you, Carolina. And welcome again, everyone. Oops. Let's see if we can move the clicker over. Here we go. There we go. Perfect. A little bit of snafu in the morning, but it's only 9 o'clock. Perfect. We ended the year on a strong note, delivering profitability of 50 million sec. This is our best ever EBIT as a company. and included actually some one-off items without which our result would have been even better. Looking back over the full year, I'm quite happy that we've made tangible progress towards our two main focus areas. The first was to demonstrate that we are on a path to profitability. And on a full year basis, we have shown that we have improved our EBIT from a full year basis compared to 2023 with a baseline of 184 million sec to minus 107 million sec on a full year basis. This of course has been supported by our cost reduction program that we announced in Q2, which has been a significant help for us to go and focus the company and support our profitability ambitions. The other big goal for us this year was to successfully integrate the AutoSense business. And largely at the end of the year, we are now complete with that endeavor, resulting in a much stronger combined roadmap, and we are starting to realize the synergies of the acquisition with a lower overall investment pace. On a Q4 basis, this is our seasonally highest quarter, and we continue to see strong net sales growth here, including in our products and solutions business. We saw the seasonal effects in Q4, but for this business and the integration business, we saw weakness in an organic growth from a year-on-year perspective. Magdalena will speak to those details more in the financial section. Finally, looking at our AutoSense business, we continue to demonstrate our position in the space as a top three player and our ambition going forward to become the leader in the space. Looking back at 2024, we've seen continued growth in the number of vehicles on the road, good progress with our customer programs that are going to go into production in 2025 and 2026. And we of course shared a couple of new design wins that we've been awarded in Q4, 24. Now, before we discuss the financial results in detail, I want to review the current Tobii organization. Tobii is organized in three business segments and each of them are in slightly different phases in terms of maturity and scale. Our expectation is that our products and solutions and integration business are more mature and much closer to profitability, whereas our AutoSense business will continue to be in an investment phase for a couple of years. I'm glad to see that the results in Q4 24 demonstrate the reality of where these businesses stand with both the products and solution and integration businesses delivering profitable results this quarter. The products and solutions business delivers vertical solutions to thousands of customers ranging from university labs to enterprises to PC gamers. In Q4, this business represented 50% of the overall net sales of the company and delivered a 31 million sec EBIT result. The integration business engages customers who utilize our technologies in their solutions. This segment also includes some revenue from our Photonation acquisition from a legacy imaging business that will likely decline in 2025. In Q4 24, this business represented 42% of Tobii's net sales, and this business was profitable for the third straight quarter. We expect the integration business to continue on this profitable track going forward. Finally, the AutoSense business sells driver monitoring systems and occupancy monitoring systems to automotive OEMs and Tier 1s. This business represented 8% of the revenue in Q4 and showed substantial quarter-on-quarter and year-on-year revenue growth. The result for this business was minus 54 million SEC in the quarter, but that included some one-off costs that Magdalena will speak to in her financial section. With that, let me hand it over to Magdalena to provide some more details.

Thank you, Arnold. Yes. So here we have two positive bubbles, that is an EBIT of 50 million SEK and a total net sales growth of 11%. Then we have the third bubble showing organic decline of 22%. Let's dig into these figures a bit more in the coming slides. So, net sales grew with 11% in the quarter, while the organic growth was minus 22%. The total growth was thus supported by business related to the acquisition, most of which belonging to the integration segment. This new business, as pointed out before, will decline when going into 2025. Year to date, net sales grew with 13% and the organic growth was minus 16%. Gross margin in the quarter was 84% compared to 74% last year, where the increase was due to a shift mix in both between the segments, but also within the segments. Year to date, the gross margin was 80% compared to last year's 75%. And then, we are happy to present an EBIT of 50 million SEK compared to last year's minus 14 million SEK. This year, we had one-off costs of 24 million SEK from severance costs when reducing personnel, meaning that the underlying EBIT was 74 million SEK. Last year, we had one-off costs from the Autosans acquisition of 31 million SEK, meaning that the underlying EBIT then was 17 million SEK. And then comparing the underlying EBIT between the quarters means that we have an improvement with around 60 million SEK comparing 17 to 74. Year to date the EBIT was minus 107 million SEK compared to last year's minus 184 million SEK. This year, this EBIT is of course accomplished to many parameters, net sales being one since this quarter normally is the strongest one for Tobii from a seasonal perspective. However, this is not all there is. In addition, we continue to work on our cost reduction program. In Q2, we presented that we were to reduce our cash-related operational expenses with over 200 million SEK during a 12-month period when comparing with our baseline in Q2 2024. In Q3, the pace was 53 million SEK lower in the quarter. And now in Q4, the cost pace was 20 million SEK lower, where the one-off cost of 24 million SEK hampered the reduction pace. During the second half of the year, we have thus lowered the cost with in total 73 million SEK, leaving a pace of over 100 million for the first half year of 2025, where the cost will continue to go out successively during the spring. And then going over to our segments. Products and solutions had an organic decline of 18%. After a flat third quarter, the negative development from the first half year continued. This quarter not addressable to a specific region, but rather as an effect of overall weakened demand. We are mobilizing in all aspects from offering and marketing to sales organization and go to market to secure improvements when going into 2025. Year to date, the organic decline was 15%. Gross margin in the quarter was 72% compared to last year's 68%. The deviation was mainly due to a mixed effect. And year to date, the gross margin was 66% compared to 69% last year. EBIT in the quarter was 31 million SEK. Yes, positive. And of course, this is a development in the right direction. Albeit this being our strongest net sales quarter for products and solutions, the development from Q1 to Q4 shows the effect of the cost reductions, where the net sales has increased with around 30 million from 112 to 143. EBIT has increased with around 50 million from minus 23 to 31 million. Year to date, the EBIT was minus 40 million SEK. Integrations net sales grew with 47% in the quarter and the organic growth was minus 31%. Net sales from the acquisition thus contributed very positively to this segment, which is according to plan. As previously communicated, this net sale will decline when going into 2025. Year-to-date integrations grew with 61% in total and minus 17% organically. The gross margin was 97% in the quarter compared to last year's 88% and 96% year-to-date versus 90% last year. These very high figures were also a consequence of the acquired net sales which came with a high margin. The gross margin level should thus be expected to go back to 2023 years levels again when entering 2025. EBIT in the quarter was 73 million SEK year to date, the EBIT was 129 million SEK. And then the outer segment had a sale of 23 million SEK in the quarter and 49 million SEK year to date. That is thus in the upper range of our previously communicated guidance of reaching 30 to 50 million of net sales for the full year of 2024. With this, AutoSense makes up 8% of Tobii's total net sales in the quarter and shows good progress quarter on quarter. Of course, the net sales can be somewhat lumpy going forward since most of the net sales consist of non-recurring revenue rather than licenses. The gross margin was 99% in the quarter and 97% year-to-date, a level reflecting the high share of software. The EBIT was minus 54 million SEK in the quarter. Of the one of costs this quarter, 20 million stemmed from this segment, meaning that without which the EBIT would have been 34 million SEK, which would then have been the best EBIT for the year and the second straight quarter of EBIT improvement. Year-to-date the EBIT was minus 197 million SEK. This is a large number and going forward this segment will still be in investment phase but during 2024 the investments did reach its peak. Looking at the balance sheet. The free cash flow of the continuous investment was minus 14 million SEK in Q4 compared to in Q1 to Q3, minus 115, minus 121 and minus 96 million SEK. After the acquisition, we have had large cash outflows during the first three quarters since we added many new employees and not an equivalent amount of net sales. In Q4, we now see the effect of, of course, higher net sales, but also a real effect of the cost reductions that we have been implemented already. Going into 2025, more of the cost reductions will be visible, which will continue to affect the cash flow positively. Our cash and cash equivalents were 160 million SEK at the end of the quarter. And in addition, we have an unutilized revolving credit facility of 50 million SEK. So I've been talking a lot now about cost reduction as a means to strengthen the cash position. And let me elaborate some more on that and what we also are doing in addition. As mentioned earlier, we are on track with our cost reduction program and the progress is reflected in our numbers. In Q4, we continue to implement and initiate several initiatives to improve cash flow and profitability. We are working with three buckets where we are evaluating our product portfolio regarding where to invest and where not to. We are organizing the total business to secure efficiencies and we are securing and realizing synergies from merging the two Autosense businesses after the acquisition. In this work, we have now reduced the total number of heads when summing up both employees and consultants from around 900 at the peak earlier this year after the acquisition to around 600 now in Q1 2025. That is a reduction with around 300 or one third. We will now continue to work on these and additional measures, meaning that we will also see further effects in the second half of 2025. In addition to the absolute cost reductions here and now, the strategic review of the product portfolio also has another outcome, and that is an ambition to divest certain assets, which we believe has the possibility to be to our advantage from a cash position perspective going forward. And with that, over to you, Anna.