Tobii AB (publ)

Welcome to TOBI Q1 2026 report presentation. 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 raising their hand or typing them in the form below. Now I will hand the conference over to CEO Fadi Farron and Interim CFO Asa Warren. Please go ahead.

Good morning, everyone. This is Badi Paroon speaking to you, CEO of Tobii. I'm joined today by Olsa Diweyan, our interim CFO, and Rasmus Levenberg-Bokhari, who leads our communications team. And thank you, everybody, for joining our Q1 2026 hearing. So let's start with the quarter. Q1 was a quarter with clear areas of progress, but also challenges that we are addressing. As you can see, the reported net sales declined year on year with 17%. However, organic sales actually increased by 5%. We additionally had an improved gross margin for the group by 7 percentage points. And furthermore, during and shortly after the quarter, we secured strategically important design needs. All of these developments together show that despite currency and timing-related headwinds, we continue to see underlying momentum in parts of our business. We've continued our disciplined focus on cost reduction and operational efficiency. So during this quarter, we reached 48 million Swedish krona in cost reductions, if you compare it to Q2 2025. Since that point, we've actually achieved hundreds of millions in total cost reductions, which actually exceeds our previously communicated target of 100 million SEC. And still we have one more quarter to go in that program. If we move to free cash flow, that was positive for the second consecutive quarter now, at 17 million SEC. And our cash position stands at 39 million SEC, even after repaying the 39 million SEC of deferred qualitative taxes, and the 47 million SEC of our previously utilized revolving credit facility. We've also agreed on a revolving credit facility with our bank for an amount of 25 million SEC. Let's now review the performance of our three business units. For those who are new to the call, Toby has three business units, each addressing different use cases and customer segments. If we start with products and solutions at the top here, it's the unit that delivers vertical solutions to thousands of customers annually. The portfolio ranges, or the segment I would say, ranges from university research labs to enterprises and PC gamers. So in Q1 of 0.26, product and solutions represented 48% of the business sales. The EBIT for the segment was negative 12 million cents. And this was partly due to the strengthening of the Swedish Corona and partly due to the late implementation of the five-year plan policy in China, which has affected our sales in that market. At the same time, though, we saw organic growth in EMEA and the US markets as well. During the quarter, we also launched a new rental model for our wearables portfolio. And the aim of that is to lower the initial barrier for customers who want to evaluate how eye tracking and attention computing can actually create value in their operations. In addition, we have launched a remote live review for Tobii Glasses X, a feature which I will return to a bit later in the presentation to talk more about. If you go to the second row, which is the integrations business unit, that unit serves customers who embed Tobii's technology into their own offerings. There you can see segments like assistive and augmented communication solutions, as well as XR technologies. This business, as we know, can be lumpy, and we've seen that bookings and revenue recognition may vary significantly between the quarters. So for Q1 2016, integrations represented 25% of total event sales, and the EBIT was positive 5 million. After the end of the quarter, we secured a design win with a global technology provider to integrate Tobii's webcam eye tracking software into one of their premium tablets. And the third row then, the AutoSense business unit, which develops and provides driver and occupant monitoring solutions to automotive OEMs as well as tier one suppliers. And in Q1 2026, AutoSense represented 27% of Tobii's net sales. which actually is a significant increase compared with last year. And this was mainly driven by revenues related to the EMS Technology Licensing Agreement, which was signed in Q4 2025. The AutoSense EBIT was negative 21 million SEC, and this was mainly due to project mix and timing effects, and also we'll come back to that. AutoSense won a new design win, and here we will be providing our driver monitoring system to a premium, sports-cost European win. Additionally, we will also be extending an existing DMS design to a new commercial vehicle platform. Now, in regards of the integrations and AutoSense design zones I just mentioned, we are very pleased to secure deals with globally recognized brands. However, these wins are not expected to be financially meaningful, but they are very strategically important because they demonstrate the continued relevance of SOGIS technology in demanding customer environments. And this was sent in our with other global customers and it forces actually our position as a leading innovator in efficient computing. Now, continuing with AutoSense, I'd like to share that we are managing a dynamic and developing sales pipeline and supported by continued customer engagements and increasing market relevance for driver and occupant monitoring solutions. And considering that, let me shed some light on Autosense's staged business model. In the short term, customer programs will or may generate non-recurring engineering, we call it NRE, funding, which supports custom development and integration and validation work. Now, the larger long-term opportunity typically comes later. And that's when the awarded vehicle platforms enter the production. And then revenue is then generated through licenses that apply to vehicles that are using our technology. Also, good to know that the tenders take place usually two to three years ahead of start of production. With that, I'd like to invite Osa to walk us through the financials, please.

Good morning, everyone. Let's take a look at Tobits financials for the first quarter of 2026. I'd like to highlight three areas to start with. Net sales amounted to 164 million SEK, which is a decrease compared to the previous year. However, last year included non-recurring revenue of 27 million, and the stronger Swedish krona had a negative impact of 15 million SEK. Adjusted for these factors, We had organic growth of 5%, and the gross margin, as Fadi mentioned, increased to 84% compared to 71% last year. Operating profit, EBIT, was minus 28 million, a decrease of 40 million compared to the same period last year. This decline is not only due to lower net sales. but was also affected by increased depreciation of 20 million SEK and an impairment of 6 million. Free cash flow for the quarter improved by 31 million despite the lower sales. The main explanations are improved working capital, reduced operating costs and lower investments. Let's also look at developments over the past two years, with AutoSense fully included from the second quarter of 2024. When reviewing performance, looking at net sales, it's important to note that the Swedish krona has strengthened during the period. The quarters from Q2 2024 to Q2 2025 each included a portion of non-recurring revenue linked to the image business following the acquisition of Photonation. And Q2 2025 was affected by the volume transaction with the Dynavox transaction. Turning to Earbit, we also see an impact from other operating income and expenses that vary between quarters. In Q1 2025, for example, we divested some non-core patents, and operating profit in the fourth quarter of 2025 was significantly negatively affected by goodwill impairments. During 2024-2025, a savings program was executed which reduced non-cash operating costs by 263 million. Furthermore, the savings program launched in the third quarter of 2025 has reduced costs by 120 million over three quarters. Altogether, the company's cost structure has improved significantly over the past two years. For example, administrative costs per quarter have been reduced by approximately 20 million. Today, we see a more right-sized and cost-conscious Tobii. So a few words about the Publisher Solutions business area. Fagi previously reported on market development, which are reflected in the figures as lower sales compared to the previous year. The gross margin stands at a strong 71%, thanks in part to a more efficient delivery organization. The savings measures implemented have reduced OPEX by approximately 25 million SEC compared to last year. As a result, EBIT is broadly in line with the previous year, minus 12. As regards integrations, we see a decline in net sales, as last year's quarter included non-recurring revenue of 27 million SEK. Gross margin has increased slightly, and here too, OPEX has fallen by over 10 million. Integrations delivered a positive operating profit of 5 million SEK. The Autosense business unit reports its highest ever sales, 45 million SEK, thanks in part to the DMS license agreement announced in the fourth quarter of 2025. Costs have also been substantially reduced, but are offset by higher depreciation triggered by license sales. The Autosense business mainly consists of two different revenue cost models linked to what Fadi previously described. One is the NRE project part, where revenue and costs are recognized as the project advances, so-called percentage of completion. And another part, the product project development, where relevant time and expenses are recorded as assets on the balance sheet. Once license revenue starts coming in, these costs are gradually written off as depreciation, which shows up in the financial results. This also explains the gross margin of 100%. We see the effects of this in the quarter as depreciation increased by 20 million compared to last year, partly as a result of the DMS deal. So finally, let's spend a moment on our cash flow and balance sheet. Free cash flow improved, as mentioned earlier, by 31 million compared to 2025. Our cash balance at the quarter end was 39 million SEK. During the quarter, 39 million was repaid to the Swedish tax agency, the COVID-related tax reliefs, and the credit facility was repaid by 47 million. After the end of the quarter, an agreement was reached with the company's bank for a credit facility of 25 million. We assess that this is sized according to our operational needs. Given the debt structure in the coming years, there remains a risk that Tobi may not have sufficient financing for the coming 12 months. Addressing this is at our top priority. And by that, I'll hand over to Fadi for some final comments.