Tobii AB (publ)

Welcome to TOBI Q2 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, everybody. This is Fadi Farron, CEO of TOBI. I'm joined today by Osa Biriyan, our interim CFO, and Henrik Wikström, our interim head of communications. Thank you all for joining our Q2 2026 earnings call. So let's start with the quarter. The market environment remained challenging during this quarter, Q2, and we continue to act decisively to strengthen Tobii's financial profile and also move towards a sustainable positive operating cash flow from 2027. The net sales were 154 million SEC, which compares with 284 million SEC for last year. This represents a reported decline of 46% and an organic decline of 39%. Obviously, the current level of sales is not sufficient. and improving our commercial performance is a clear priority. Having said that, Q2 last year also included a large pre-purchase deal as well as non-retiring revenue. So, adjusted for these items, the underlying revenue growth was positive 7% in the quarter. The gross margin was 82%, compared with 82% last year, despite actually the significantly lower revenue. The reported EBIT was positive 15 million SEC, compared with 24 million SEC, and also included a positive non-cash re-measurement of contingent consideration of 49 million SEC. What does that mean? Well, in plain terms, This means it's a potential acquisition-related payment which is no longer expected to be made. And that has increased the reported EBIT, but it did not bring in cash. So, the underlying result was negatively affected by lower net sales combined with increased amortization of development costs within Autosense. If we look at the cost reduction program that was initiated in the third quarter of 2025, It contributed 43 million SEK in quarter two and has delivered total savings of 163 million SEK over the past four quarters. This is clearly above our target of 100 million SEK. Now, cost efficiency remains a high priority for us. And against this backdrop, we're initiating a further cost reduction program which will focus on our outer sense business. is expected to reduce the annual cost base by $50 million. This will be incremental to the $163 million which we already achieved and continues our group-wide work on cost efficiency. So together with sharper product priorities and increased focus on our commercial execution, these measures help lay a more stable foundation for the future and support our target of sustainable, positive operating cash flow from 2020. The cash flow from the operating activities was positive at 22 million SEC. But after investing 32 million SEC, almost all in product development, the free cash flow was negative 10 million SEC in the quarter. While if you look at the free cash flow for the latest 12 month periods, that was positive 35 million. The cash at the end of the quarter was 37 million. Let's now review the performance of our three business segments. I'll start with products and solutions, which represented 50% of the group net sales in Q2. The net sales amounted to 76 million SEC, which compares with 93 million SEC last year. And that corresponds to an organic decline of 16%. EBIT was negative $21 million. At the same time, the gross margin improved to 68% from 64%, which reflects, among other things, a more efficient organization and also providing some resilience despite the lower revenues. The revenue decline in products and solutions was mainly related to temporary procurement delays, following China's new five-year plan, which we also discussed in the previous quarter, continued weakness in Japan, and longer contract negotiations in the United States. We saw that Enea delivered organic growth of 10%. During the quarter, we also launched webcam eye tracking for research, enabling remote and large-scale eye tracking studies using ordinary webcam. Let's move over to Integrations Business Unit, which represented 24% of the group net sales. Net sales were at 37 million kronas, compared with 178 million kronas last year. ABIP was achieved at 0 million SEC. So, as I noted before, the Q2 2025 included a significant pre-purchase deal for Nanovox, as well as one-off revenues from the acquired imaging business. These items together affected the net sales by around 114 million seconds total in Q2 last year. Also during the quarter, we have Tobii Nexus, which reached its first consumer product when Lenovo launched the Legion Y913 tablet. This was an important milestone for our webcam-based eye-tracking software and for our ability to reach users through standard camera hardware. I move to the third business unit, AutoSense. It represented 26% of the group net sales. The net sales increased to 40 million SEK from 12 million SEK last year, and that corresponds to an organic growth of 230%. Now, the increase was primarily driven by the previously announced license agreement for driver monitoring systems was a major automotive tier one. The reported EBIT was positive, $36 million. Commercially, AutoSense secured during the quarter a new driving monitoring program with a European premium sports car manufacturer with start of production in 2026. We also extended an existing commercial vehicle design win by moving the program to a Qualcomm-based platform with start of production in 2028. These wins are valuable validations of our technology and our relevance to automotive customers. However, I want to be clear that these are relatively small programs and are not expected to make a material contribution to group freedom. Let me move further in giving an update on AutoSense. We are taking measures to evolve how AutoSense operates. I already mentioned that we have decided to reduce costs by 50 million SEK. We're also broadening the commercial model to include licensing of software components and technology platforms, as well as support for customers that want greater control over integration and further development. This creates opportunities for earlier revenue and a more balanced allocation of investment and commercial risk between Tobi and the customer. In fact, this direction began in Q4 2025 when we announced a similar DLS licensing agreement with a major automotive tier one supplier. We will continue to selectively pursue complete production-ready solutions where the terms and expected returns are attractive. Now, as part of Tobi's strategic review, we're also considering different forms of partnership for Autosense. This could be potential partners who would add complementary technology, stronger access to customers and markets, or greater scale. Together, the cost actions, the broader commercial model, and the partnership alternatives are intended to build a more focused, flexible, and financially sustainable AutoSense business. With that, I'd like to invite Osa to please walk us through the financials.

Thank you, Fadi. Good morning, everyone. I'll be presenting Tobbe's financial results for the second quarter of 2026, and with some repetition from what you've already heard from Fadi. I'd like to highlight three key areas, being sales, EBIT and cash flow. Net sales totaled to 154 million SEK, which represents a significant decrease compared to the previous year. Last year included a volume deal with Dynavox, 70 million, a one-off royalty, 45 million, and non-recurring revenue of 25 million. Adjusting for these items, we achieved organic growth of 7%. And the stronger Swedish krona had a negative impact on sales of 4 million SEK. Operating profit EBIT was 15 million SEK, down 9 million from the same period last year. The decrease is primarily attributable to the previously mentioned revenue factors, but was also positively impacted by the reversal of a variable continued consideration of actually 55 million SEK. The cost savings program launched in the third quarter last year reduced costs by 43 million SEK in the quarter compared to the base quarter in 2025. And as mentioned, 163 million SEK over four quarters, significantly exceeding the target of 100 million SEK. And the company's cost structure continues to improve and will further do. Depreciation, which does not affect cash flow, increased by 22 million and EBIT for the second quarter 2026 was negatively impacted by impairments of 2 million compared to 48 million SEK in the same period last year. Free cash flow for the quarter was minus 10 million and I'll come back to the financial position later in the presentation. A few words about the products and solutions business unit. As previously mentioned by far, the market developments are reflected in figures as continued lower sales. The gross margin stands at 68%, an improvement from last year's 64%. The implemented savings measures reduced OPEX by 26 million compared to last year, and depreciation increased by 4 million compared to last year, which last year was also impacted by impairments of 33 million SEK. Operating profit EBIT was minus 21 million compared to minus 59 million previous year. For integrations, revenue decreased substantially, as last year included both repayment agreements and one of revenue totaling 104 million. Adjusted for these items, revenue is in line with previous year. Depreciation, which does not affect cash flow, increased by 2 million. And in the second quarter of 2025, EBIT was negatively impacted by impairments of 12 million. Operating profit EBIT was zero compared to 112 million in the previous year. And if we then go to AutoSense, the AutoSense business reported revenue of 40 million, partly thanks to the DMS license agreement announced in the fourth quarter of 2025. All revenues attributable to this agreement have now been recognized. EBIT for the business area was positively impacted by the non-cash reversal of the variable continued consideration amounting to 51 million. Depreciation, which does not affect cash flow, increased by 22 million compared to the previous year. In the second quarter of 2025, EBIT was negatively affected by impairments of 3 million ZET. Operating profit was 36 million compared to minus 28 million in the previous year. And I'd like to conclude with comments on cash flow and financial position. free cash flow in the second quarter was negative at 10 million. Cost savings cannot fully offset lower revenues. Our cash balance at the end of the quarter was 37 million and to be utilized 14 million of the 25 million credit facility obtained during the quarter. As mentioned in the report, our liquidity is strained and together with the debt structure Thank you, Åsa. But first, I'd like to highlight