Tobii AB (publ)

Good morning, everybody. This is Fadi Faron, new CEO at Tobii, and I'm joined here by Åsa Virén, our interim CFO, and Rasmus Löfvenmo Bukhari, who's head in communications. It's my absolute pleasure to be addressing you today in my new role at Tobii, and I'm really looking forward for a good collaboration together. So let's start. We ended the year with solid and significant cost efficiency measures that are here to support our journey towards profitability. However, the fourth quarter of 2025 has been weak in terms of both revenue and results. We've witnessed continued headwinds from the global states of geoeconomics, as well as currency-related challenges, as the Swedish krona continued to strengthen. All in all, this has led to generally weaker sales. But at the same time, the solid work towards cost efficiencies has continued. And in Q4, 43 million Swedish kronas have been achieved in run rate cost reductions. Well, this means that we have already achieved 72 million SEC in total cost reductions since Q2 of last year. And hence, we are moving steadily towards the 100 million SEC target. Now these lowered costs have contributed to an underlying EBIT for the company of negative 1 million SEC. Furthermore, we've made substantial non-cash fair value adjustments and write-offs to a net value of negative 195 million SEC. So these comprise write-offs of goodwill and projects, as well as fair value adjustments of contingent considerations for previous acquisitions, mainly related to auto sales. These adjustments are mainly because new business deals haven't materialized in the anticipated rate, and that has delayed the original plans for auto sales. In addition, we've seen that the international automotive market has developed weaker than expected at the time of the acquisition. has further now affected negatively so all in all the reported ebit for q4 is negative 196 million now for those wondering why we published the report earlier than planned it's because as as soon as the board decided on these adjustments and write-offs we released the press lease as well as the report Now we're also encouraged by the fact that our free cash flow has strengthened during this period to positive 57 million sec. And as we've informed earlier, Tobii continues to evaluate and engage in strategic initiatives that will help us strengthen this cash position. As one outcome of such initiatives, we had a driver monitoring system technology asset licensing deal was actually secured in Q4. And that resulted in one time revenues that we partially paid in Q4, while the remaining majority will actually be paid in the first half of 2026. So now let's review the performance of the three year business segments. As you know, we at Tobii have three business units. We address different use cases and different customer segments. I'll start from the top with the products and solutions business unit, which delivers vertical solutions to thousands of customers yearly, ranging from university research lab to enterprises, as well as PC games. In Q4 of 2025, the products and solution business represented 57% of Tobii's net sales. The EBIT result in Q4 is negative 1 million SEC, and it's not been impacted by any adjustments or write-offs. The result is partially due to the strengthened Swedish Corona, but mainly due to trade barriers that continue to affect our product sales in the US as well in China. We are focusing on our consultancy services as a way forward to balance out the mix. Second, the integrations business. This unit engages with customers who want to integrate Tobii's technologies into their own offerings, like assistive communication or VR technologies. Again, in Q4 of 2025, this business represented 24% of Tobii's net sales, and the EBIT was negative 24 million SEC. But if we exclude the adjustments and write-offs, the EBIT would be, or would have been, a positive 8 million SEC. We also saw a new design win for a VR headset, which was secured during the quarter. And we noted an uptick in interest in smart glasses. And the third business unit, AutoSense, is one that focuses on developing and providing driver and occupant monitoring solutions to automotive OEMs and tier ones. And in the fourth quarter of 25, this unit represented 19% of Tobii's overall net sales. This is actually a significant increase compared to last year. And the reason for that is the one time off revenues that were generated by the DMS technology licensing agreement that was signed in that quarter. As I mentioned, the majority of the revenue of this agreement will come in the first half of 2026. This segment delivered a negative 172 million sec EBIT. And if we again exclude adjustments and write-offs, it would have been a negative 9 million sec. Here, I'd like to invite our CFO Åsa to please go through the financials.

Thank you, Fadi, and good morning to everyone. The fourth quarter continued with weak revenue development, with total revenue amounting to 193 million SEK. The stronger Swedish krona had a negative impact of 17 million in the quarter. Reported EBIT amounted to minus 196 million and includes the non-cash impairments of goodwill and projects together with adjustments of contingent considerations totaling a net of minus 195 million resulting in an underlying EBIT of 1 million. Although this represents a decrease to previous years, cost reductions have efficiently offset lower revenue. This is also evident when looking at the development over the past eight quarters. Please turn to the next page for further comments regarding products and solutions. Fadi mentioned explanations for weaker sales, but here it's clear how cost reductions are having an impact. The drop in results in Q2, as you may recall, was impacted by project impairments of 33 million SEK. On the next page, we can see the development for integrations with both lower revenue and margins. One contributing factor is the imagining-related revenue that ceased in the second quarter of 2025. The margin on this revenue was 100%. Underlying EBIT adjusted for goodwill impairment of 32 million amounted to a positive 8 million SEK. On the next page, we can see the development for AutoSense during the quarter. Revenue have been positively impacted by the initial part from the DMS agreement. Reported EBIT includes non-cash goodwill impairments, a minor part, 36 million SEK regarding Tobii's legacy automotive business, and 176 million relating to the acquisition of Fotonation. The seller's opportunity to receive additional considerations in the first case expired on last of December, 2025, resulting in the reversal of a previously recognized earn-out liability of 18 million. 49 million of the reversal is attributable to the revaluation of variable considerations related to the Fotonation acquisition. In addition to this, projects have been impaired by 18 million during the quarter. All in all, as previously mentioned, non-cash adjustments add up to minus 195 million. Underlying EBIT adjusted for non-cash impairments and revaluation amounted to minus 9 million. The goodwill impairment is a result of the annual goodwill review for which Fadi previously presented the reason in his presentation. The reported values represent management's and the board's best assessment at the time of the report. And then if we turn to the next page and take a look at the balance sheet. Tobis' balance sheet has naturally been affected by actions taken, such as lower intangible assets via impairment, reduced liabilities due to repayments to the Swedish tax authority earlier this year or last year, reduced liabilities due to revaluation, but also due to the stronger Swedish krona, which decreased the debt denominated in US dollar. Cash and cash equivalents as of December 31st amounted to 117 million SEK. We report a strong free cash flow for the period, 57 million SEK. Key components include the payment of 47 million from Dynavox, which I mentioned already in the third quarter was to come in the fourth, and the initial payment for the DMS transaction in the fourth quarter. Our credit facility of 50 million SEK was utilized with 47 million as of the balance sheet date. And as reported in the Q1 2025 report, the credit runs until 31st of March this year. And we are in ongoing discussions regarding financing solutions. During 2025, 91 million relating to the COVID loans was repaid to the Swedish tax agency and a further 40 million will be repaid during Q1 2026. Given the company's current position, there remains a risk that Tobii may not have sufficient financing for the coming 12 months. Addressing this is one of our top priorities and also described additionally in the year-end report. I would like to take this opportunity to summarize a number of the strategic measures that have been implemented during the year. The ongoing strategic review encompass the entire organization and can be structured into four different categories. One being cost adjustments, Another one being product portfolio evaluation. A third divestments or development of partnerships for various business segments. And the fourth, of course, being strengthening our financial position. Some examples when it comes to cost adjustments. In 2025, the initial savings program was completed, resulting in a reduction of OPEX by 263 million SEK. The goal was 200 million SEK. A further savings initiative of 100 million SEK was launched in Q3, with additional cost reductions already identified, 43 million in Q4 and 29 in Q3. Several projects aim to enhance competitiveness and improve cash flow. When it comes to product portfolio evaluation, such as duplicated functions arising from the acquisition have been consolidated and a clearer prioritization is being applied to future investments with unprofitable segments discontinued. For the investments and partnerships, non-core assets have been divested, including the ATT&CK spin-off, as well as non-strategic patents that were divested during the first quarter of 2025. And new forms of collaboration and partnerships are being developed. And the DMS deal presented in Q4 is a notable example to that one. And to strengthen our financial positions, all the mentioned categories are designed to improve the company's financial position and cash flow, resulting in a more focused and efficient Tobii. In addition to operational measures and divestment, work is being conducted in parallel with advisors to explore various financing and capital market solutions. While significant progress has been made across all areas, the review process is ongoing and will continue over several quarters. By that, I would like to hand over to you, Fadi, for some final words.

Thank you very much, Rosa. So let's summarize the quarter. Q4 2025 was a weak quarter for us. but with strong delivery on our 100 million sec cost-cutting program, as well as a strategic review initiative with the DMS technology licensing agreement as one proof point. This has enabled us to achieve a healthy cash flow for the quarter of 57 million sec. Now, we took significant write-offs and adjustments, mainly towards AutoSense. We remain fully committed to grow our business with DMS and OMS and the recent single camera DMS plus OMS launch was a premium European OEM has garnered keen interest in our interior sensing offering. Our ambition for the longterm is to achieve a sustainable positive cashflow. So we can enable value creation and also ensure we have the full capabilities to drive profitable growth. we will continue our focus on our sales and commercial initiatives to do so. Now in the near term, we remain focused on addressing our financial needs. These previously announced cost reduction target is progressing well, and it will definitely improve our liquidity in 2026. We continue executing on strategic reviews, which include potential divestments. And as earlier announced, the board has engaged an external advisor to evaluate financing and capital market options. So the ongoing work is aimed at resolving our financial needs, and that allows us to further focus on our objective to achieve sustained profitability and positive cashflow. Considering all of what I mentioned, the board decided to remove the current financial targets announced in 2024. And we will be sharing new ones in due times. Finally, on a personal note, I'd like to share that I'm very delighted to join Toby and I'm highly motivated and energized to work closely together with the team in shaping the company's trajectory forward. Thank you very much for listening. And Rasmus, can we please now open the Q&A?

Yes, thank you. And we will start with questions. We have a question from Daniel Thorson from ABG Sundahl Collier. Let me let you into the call, Daniel.

The next question comes from Daniel Thorson from ABG Sundahl Collier. Please unmute your microphone.

Yes, hi Fadi and Åsa, can you hear me?

Yes, hey Daniel.

Excellent, hi. So a couple of questions. I'm a bit curious how large was the free cash flow from the DMS deal in Q4 alone and what do you expect in H1 from this one?

No, we don't comment on specific customers or projects. But as we've said, there was a part coming in Q4, but the significant part will come in Q1 and during the first half year of 2026.

Okay, so more expected than we saw in Q4.

Yes.

Was the underlying business in Q4 free cash flow positive?

Yes.

and then for your full year 2026 you mentioned a comment that you if I heard correct that you may not be 100 financed throughout the next 12 months but do you expect a positive or a negative free cash flow in 2026 based on what you see today you know we don't comment we don't do

forecast or outlooks in that way. We have mentioned like the long term and the assessment of the 12 months ahead of us. And I think that is what I'm what I can comment on at this stage.

Okay, excellent. Then I have two questions regarding the business. First one, in terms of automotive progress, is the market more challenging due to higher competition and price pressure? Or is it just customers delaying some projects that you expect to come later?

Well, the market is part of the explanation for the delays. As we all know, the automotive market has had a lot of different competitive forces, strategies between conventional fuels and electricity. So there's a lot of moving parts, let's say, in the entire supply chain. And that would naturally sometimes lead for certain delays. However, of course, with the EU regulation coming in in this 2026 year, we will see that, you know, putting an acceleration on those plans.

Okay, so it's not, it doesn't sound like you have lost business to competitors. It's more the market being delayed. Is that correct?

Now we're seeing now more and more keen interest actually in our single camera DMS and OMS solution since we have press released last year that we are working with a premium European OEM. So we believe that we will have to work of course on all this keen interest and do our utmost to put it in a pipeline. Okay, excellent.

And then the last question on the business here. I'm a little bit curious around the smart glasses market. Do you have any design wins that you can share or customer names or any expected design wins that will result in product launches within the next 12 months or so?

No, I mean, we don't share any forward-looking statements on design ways or not, but I mean, as you can see from the general trend, the smart glasses is a developing market. It's still being shaped. I would say early days, a lot of course of technology interest and eye tracking, you know, would play a certain role in the smart glasses market. So we are very keen here at Tobii to make sure that we cement our role in that market and let's see where that would lead us.

Okay, but can you comment if you are involved in any projects that you expect to start production phase in the next 12 months or not?

Once these events take place, we will be able to communicate it. At this moment, we won't comment on any projects.

Okay, fair enough. That's all for me. Thank you very much.

Thank you, Daniel.

Thank you. We have no more people in the queue. Now, the first question comes from Jeppe asking, can you explain what the major automotive supplier will receive through the DMS licensing agreement and what the total revenue for Autosense will be from this deal?

I'm assuming the question is targeted towards the newly signed EMS technology license agreement. So as the wording itself says, it is actually a technology licenses. So it's a new way for Toby to monetize on the R&D work that we've done. In terms of explicit terms on the value, that's something that we will not be commenting on. But we will see, of course, the outcome of the payments that will come in H1 of 2026.

And a follow-up question from Jeppe. What revenue contribution was recognized from the DMS licensing agreement with the major automotive supplier in Q4, and what contribution is expected in Q1? Additionally, from which quarter should we assume that no further revenue will be recognized under this agreement?

As I mentioned when Daniel asked the question that we are not commenting on specific customer deals or amounts. But what we have said is that part was recognized in Q4 and the remaining part will come during H1 2026.

A follow-up question from Jeppe. Why haven't new business deals materialized in the anticipated rate for AutoSense?

As I mentioned before, partially it's because of the international automotive industry where we've seen a weakened and unexpected development, but also mainly because we have been working very hard on getting that very important single camera DMS and OMS project out with the European premium. And since we've done that, I think it has been a clear signal to the industry that single camera interior sensing does provide a very high value. So we are going to definitely leverage on this kind of a premium flag project that has been now out in the market. And we're going to put all of our efforts to ensure that we can work with all of the interested parties and you know, engage in the sales engagement that's required actually to turn those into hopefully contracts in the future.

Another follow-up question from Jeppe. With no new OEM design wins for SCDO, should we interpret this as evidence that competitive intensity is higher than expected, driven by peers delivering solutions that match or exceed your offering?

I think it is no secret that this is a competitive market and I'm sure you have seen consolidations as well over the past few months. But that's why our strategy is to carve a clear leadership role by being first with a market implemented and validated single camera for DMS and OMS.

Follow-up question from Jeppe. AutoSense competitors have secured design wins that include alcohol impairment detection. When will AutoSense be in a position to deliver this capability?

I think I need to get back to you. I don't have the full roadmap to be honest yet in my head, but let's get back to me. Was this Jeppe offline?

Another follow-up question from Jeppe. What was the license revenue contribution for SCDO in Q4?

We don't comment on that specifically for a CDO.

And Jacob is asking what was the impact of the DMS payment and what is the expected sales of DMS contract in Q1 26 and Q2 26?

And I think I repeat myself once again that we don't comment on specific customer deals and we don't give any forward-looking statements.

And a follow-up question from Jacob. You utilized 47 million of the credit facility. Will you have to repay this in Q1 and will you be able to extend the credit liability?

We have described the situation in the report. And as we say there, we are in discussions. So I think that is what I leave it to that at the moment.

A question from Peter. How much of the performance in Autosense is driven by one-time licensing agreements? And how does the performance excluding any one-time payments compare to Q4 24? How much of the performance in Autosense is related is driven by the commercial market versus the passenger vehicle market? And the fourth question, let's break them up. Let's start with how much of the performance in all the sense is driven by one time licensing agreements and how does the performance excluding any one time payments compared to Q4 24?

You know, the answers to those questions would be too detailed to share publicly, so we don't comment on that.

How much of the performance in Autosense is driven by the commercial market versus the passenger vehicle market?

Again, I would say, same answer that Åse has already given. We're not in a position to deep dive into proprietary information.

And final question from Peter. Does your outlook for this division differ between these two segments versus the performance so far?

Same answer.

A question from Jacob. Have you received cash for the DMS deal? Can you elaborate on the working capital dynamics of the deal?

We have received one part of it, but the main part will come during the first half of 2026. And what was invoiced during the fourth quarter was also received in 2025.

And a question from Emil. So no more revenues from the tier one deal after H1 and the tier one deal referring to the PMS licensing agreements, I understand.

As we've communicated, it will come during the fourth quarter and the first half year of 2026.

And I don't see any further questions in the chat. Is there any other questions?

If not, thank you, everybody, for listening in and your interesting questions. And we'll be meeting you for the next quarter financial report. Thank you very much. Thank you. All the best.