Release Date: July 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tobii AB (TBIIF, Financial) completed a significant acquisition of FotoNation, establishing itself as the number three player in the automotive interior sensing software market.
- The company initiated a comprehensive cost reduction program aimed at meeting free cash flow and profitability goals.
- Tobii AB (TBIIF) released three new software products to strengthen its product portfolio, including two cloud-based SaaS solutions and Tobii Nexus.
- Net sales increased by 8% in the quarter, largely due to the acquisition.
- The integration segment saw a total growth of 52%, with a positive EBIT of SEK21 million for the quarter.
Negative Points
- Organic growth declined by 16% in the quarter, with continued weakness in the products and solutions segment.
- EBIT for the quarter was negative SEK66 million, including SEK10 million in one-off costs related to redundancies.
- The products and solutions segment experienced an organic growth decline of 15% and a gross margin drop from 71% to 66%.
- Free cash flow was negative SEK125 million for the quarter, indicating high cash consumption.
- The AutoSense segment, still in its investment phase, had a negative EBIT of SEK60 million for the quarter.
Q & A Highlights
Q: You mentioned three individual product launches for the quarter. Can you elaborate a bit about these products?
A: Absolutely. We launched three new products into our integration and products and solutions portfolios. On the products and solutions side, we introduced two new cloud-based SaaS products: Glasses Explore and UX Reveal. Glasses Explore helps customers gain insights more easily during attention-computing studies with our wearable eye-tracking solutions. UX Reveal is intended to speed insights for screen-based research, aiding in optimizing digital experiences and applications. On the integration side, we launched Tobii Nexus, which enables broader customer integration of attention computing using standard webcam-based hardware.
Q: On the Q1 earnings call, Tobii stated that we have all the cash that we need until positive cash flow is expected. Is that statement still valid so that the shareholders will not have to participate in one more share issue this year or in 2025?
A: Yes, we are working on this. The steps we are taking are intended to secure that we do not need another share issue.
Q: Cost measures of SEK200 million, the coming four quarters is very positive to us. SEK10 million rightsizing costs taken in the quarter. What level of restructuring cost should we expect coming quarters as well as in total to reach the 200 million run rate level? Also, from which quarter should the SEK200 million be fully implemented?
A: You should expect to see the SEK200 million reduction summed up over the coming four quarters. The full effect will not come in Q3 but will start in Q3 and increase progressively. Additional cost predictions will be provided if needed.
Q: Net sales in integration from FotoNation acquisition represented some SEK37 million to SEK38 million of quarterly revenue. Should we expect a similar level in Q3 and Q4 and a slight decline in Q1 2025 and then a sharper decline from the second-quarter 2025? How many customers are represented in this legacy revenue stream?
A: We won't share specific customer numbers, but we guided that the acquisition would contribute SEK180 million to SEK220 million in revenue for the full year. Based on the timing of closure, the total revenue for the acquisition in 2024 is trending to the lower end of the range. The revenue from the imaging business acquired will be lower in 2025 versus 2024.
Q: Apple is more and more focusing on eye tracking for XR and also for accessibility offerings. In my world, this should at least trigger interest in eye tracking by OEMs that lack eye-tracking functionality, or is your hardware-based technology a tad obsolete, i.e., will it be only a software game and where your technology is more nice to have than need to have?
A: High-quality eye tracking is critical, and Tobii still licenses software for wearable space. We see more OEMs engaging with us post-Apple launch to evaluate eye tracking in wearable devices. The trend towards attention computing using webcams aligns with our Tobii Nexus launch. We offer both high-quality hardware-based and software-only solutions, catering to various market needs.
Q: Is it possible to say to what extent the SEK200 million in cost savings are attributable to Tobii and to FotoNation?
A: We try to keep track of it, but we will not share the details.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
