Tobii AB (publ)

Good morning and a warm welcome to the presentation of Tobii's Q1 2025 results. My name is Karolina Strömlid and I'm Head of Investor Relations. With me today, I have our CEO Anand Srivatsa and our CFO Magdalena Rodell Andersson to walk you through the highlights of the quarter. After the presentation, we will open up for questions either posted in the chat or asked live. With that, let's kick off today's presentation.

Thank you, Carolina. And welcome again, everyone. Q1 2025 was a solid quarter where we continue to demonstrate sustained progress towards profitability. I am particularly pleased that all of our business segments helped contribute to this improved performance. This was our best ever Q1 result with our first positive EBIT in Q1. The improved profitability comes from reasonable top-line growth and is significantly supported by the cost reduction actions we have been taking since last year. We are expecting to meet the goal that we've set out in July last year around cost reductions, and you will hear more details of cost reductions about the cost reduction program when Magdalena goes through our detailed financials. The focus on cost reductions has helped us improve our cashflow where we see significant improvement on a year on year basis in Q1, 2025 versus the same period last year. We continue to be hyper-focused on our cash situation and we have multiple actions in play to continue to strengthen our position as we go forward. In the quarter, we also saw some early results from our ongoing strategic review with the divestment of some non-core patents in the quarter. This quarter was also marked with significant macro uncertainties, but thus far, I'm happy to see that most of these issues have had a limited impact for us in the quarter this far. We believe that this situation continues to merit us to monitor the situation and take corrective actions as needed. Now, before we jump into the detailed financial results, let's talk through how Tobii is organized and remind you of our different business units. Tobii is organized into three different business segments, each of which are at a different level of maturity and scale. The products and solutions and integrations business segment are more mature and expected to get to profitability in the near term. On the other hand, our AutoSense business is in an investment phase and we expect it to be in an investment phase for the foreseeable future. Now in Q1, 2025, our products and solutions business, which delivers vertical solutions to thousands of customers across the world, from universities to enterprises, to PC gamers, this particular business unit represented 52% of our overall revenue for the quarter and delivered an EBIT of minus 12 million sec. This was an improvement over last year, largely supported by the cost reduction actions we have been taking in 2024. The integration business services customers who integrate Tobii solutions into their own offerings. And in Q1, this business represented 41% of our net sales and delivered the fourth straight profitable result. The AutoSense business is our focus on delivering driver monitoring and occupancy monitoring systems into automobile OEMs and tier ones. In Q1, this business represented 7% of our overall revenue, and we saw an EBIT result of 24 million sec negative, which is better than last year. Again, this improvement is notable because when we compare with the period last year, the automotive business only had two months worth of the increased costs related to the acquisition of the Fotonation business. So this improvement, I think, is quite notable for this business as well. Again, as I mentioned before, I'm quite pleased that all of the three business segments continue to contribute to our improvements in profitability and cash flow. And with that, I would like to hand it over to Magdalena to describe the detailed financial performance for the quarter.

Thanks, Anand. So yes, as a financial overview, I'm happy to be able to say exactly what is stated on this slide. That is, in Q1, we significantly improved our cash flow compared to Q1 last year. And we had a positive EBIT of 12 million SEK or a 6% EBIT margin. We grew net sales both in total and organically. And in more detail, total net sales growth in the quarter was 23% and organic growth was 5%. So what was the difference here in between? Well, last year, after having made the acquisition of Fotonation on the 1st of February, we talked about an acquired revenue stream within the segment integration that was to end in 2025. This revenue stream of 25 million SEC now in Q1 has been excluded from the organic growth. In Q2, we will have the same amount as now in Q1, and after this, this revenue stream will end. Therefore, we have a total growth of 23%, where the organic growth is five, currency is minus one, and non-recurring revenue is 18%. The gross margin in the quarter was 77% compared to 74% last year, and this is due to a mixed shift between the segments. And then EBIT was positive in this first quarters, plus 12 million SEK, an improvement with 86 million SEK compared to last year's minus 75 million SEK. The improvement between those two quarters was a combination of higher net sales and lower costs. When we compare this quarter with Q2 and Q3 last year, where the top line is more similar with this quarter, we see the effect of the cost reductions even clearer. and to continue to talk about cost reductions. In Q2 last year, we launched a cost reduction program targeting to reduce cash-related operational expenses with 200 million over the coming four quarters when comparing with Q2 2024, which was the first quarter where the acquisition was consolidated a full quarter. This was going to be accomplished through three different work streams. First, an optimization of our product portfolio investments. Second, increased efficiency and streamlined operations across all functions. And thirdly, realizing the acquisition synergies. We have continuously been working on all three work streams and at the end of the year, we had lowered the cost with 73 million SEK accumulated for Q3 and Q4. Now in Q1, the cash-related operational expenses are 93 million SEK lower than in Q2 last year. This means that this quarter's cash-related operational space is over 30% lower than in Q2 last year. And in practice, it means that we have reduced the number of FTEs by around 300 since the peak after the acquisition. From a program perspective, the accumulated cash-related cost cuts after three quarters were 166 million SEK, meaning that we are well on our way to reaching the goal of reducing costs with over 200 million SEK on a yearly basis. The results coming up in Q2 will not be the end of cost reductions though. Initiatives already taken during the fall and additional initiatives taken now during the spring will continue to drive the cash-related cost base further down when we enter the second half of the year. And so, going over to the segments. Products and solutions had an organic net sales decline of 8%. In Asia, where demand was weak last year, we saw an improved demand. Europe was somewhat reserved and Americas was clearly negatively impacted by uncertainty related to academic funding. The gross margin in the quarter was 62% compared to last year's 64% and was impacted by a combination of mix and volume. EBIT improved from minus 23 million SEK last year to minus 12 million SEK this year thanks to the implemented cost reductions. This is a development in the right direction, although not good enough, and thus the cost reductions will continue as previously mentioned. Integrations net sale grew in total with 87%, of which the organic growth was 23%. As mentioned before, the difference came from acquired image-related revenue, which will end after Q2 this year. The gross margin in the quarter was 91% compared to 96% last year, and the difference is due to mix. And EBIT in the quarter was 48 million SEK, an improvement with 61 million SEK versus last year, thanks to a combination of higher sales, divestment of non-core IP and lower costs. And the AutoSense segment had a net sale of 14 million SEK compared to last year's 7 million SEK, which corresponds to an organic growth of 114%. The gross margin in this segment was very high and will continue to be so since licensed revenues will be met with costs from depreciations and change requests will be met with R&D costs. The EBIT was minus 24 million SEK in the quarter compared to last year's minus 38 million SEK. An improvement even though last year only contained the acquired AutoSense business for two months and this year for the whole quarter. Also, this improvement is thanks to a combination of higher sales and lower costs. And then balance sheet and cash flow. The free cash flow of the continuous investments was minus 14 million SEK in Q1, which was a significant improvement compared to last year's minus 115 million SEK. Again, this is done through a combination of higher net sales and lower costs. We end the quarter with a cash position of 89 million SEK. And in addition, we have an unused revolving credit facility of 50 million SEK that has been prolonged during the quarter. With the lower run rate of costs, the continued work to reduce costs even further, the discussion with certain customers to advance order, in combination with the review of our product portfolio, where we have identified certain assets for a potential divestment, we are confident in a solid progress towards financial stability going forward. And with that, over to you, Arnold.