Tobii AB (publ)

Welcome to the conference call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. 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 seven 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 these financing needs for 2026. With that said, thank you for your time and over to you again, Anand.