Tobii Dynavox Year-End Report 2022

Tobii Dynavox AB (publ) today announced its results for the fourth quarter and full year of 2022. 

Comment from the Tobii Dynavox CEO Fredrik Ruben:
The strong sales trend continued in the fourth quarter, with Europe and the rest of the world now also showing good growth, breaking with the previous trend from the beginning of the year. Our underlying profitability continues to develop strongly in the right direction, but earnings continue to be affected by cost increases of temporary nature related to components and shipping, as well as some one-time costs. Costs were also affected by the normalization of operations following the lower level of activity during the pandemic. In the US, Medicare announced in December that it is increasing the reimbursement rate of our products for 2023 by just over 9%. Medicare, which accounts for about 25% of our sales in the US, also sets the standard for reimbursement rates for the rest of the insurance companies in that country. The new level will be gradually phased in during 2023. This improvement, combined with the likelihood of decreased component prices and shipping costs in the near future, gives us an optimistic outlook about the profitability trend going forward.

QUARTER: OCTOBER - DECEMBER 2022 
•    Revenue grew 48% to SEK 362 million (245). Organic growth was 18%.  
•    Gross margin was 65% (64).  
•    Operating profit totaled SEK 25 million (13), corresponding to an operating margin of 6.8% (5.4). 
•    Cash flow after current investments was SEK 41 million (-274). 
•    Basic and diluted earnings per share were SEK 0.16 (0.05). 
 
PERIOD JANUARY – DECEMBER 2022  
•    Revenue grew 40% to SEK 1 216 million (872). The organic growth was 16%. 
•    Gross margin was 65% (65).  
•    Operating profit totaled SEK 82 million (60), corresponding to an operating margin of 6.8% (6.9). 
•    Cash flow after current investments was SEK -26 million (-234). 
•    Basic and diluted earnings per share were SEK 0.46 (0.30). 
•    The Board of Directors proposes to the Annual General Meeting that no dividend be paid for fiscal year 2022. 

SIGNIFICANT EVENTS DURING THE QUARTER 
•    In early October, a new three-year financing agreement was signed with Swedbank. The credit facilities include the same financing framework as before, SEK 700 million, and are classified as social loans. This means that Tobii Dynavox qualifies as a company that contributes to the development of society through sustainable social initiatives. 
•    In early November, TD Browse, a custom-built browser for I-Series users that allows them to easily browse the Internet using eye control, was launched. 
•    In December, the TD Phone app for the I-Series was launched. This app enables users to control a phone with their eyes for both calls and texts.

Comments from the CEO:
The strong sales trend continued in the fourth quarter, with Europe and the rest of the world now also showing good growth, breaking with the previous trend from the beginning of the year. Our underlying profitability continues to develop strongly in the right direction, but earnings continue to be affected by cost increases of temporary nature related to components and shipping, as well as some one-time costs. Costs were also affected by the normalization of operations following the lower level of activity during the pandemic. In the US, Medicare announced in December that it is increasing the reimbursement rate of our products for 2023 by just over 9%. Medicare, which accounts for about 25% of our sales in the US, also sets the standard for reimbursement rates for the rest of the insurance companies in that country. The new level will be gradually phased in during 2023. This improvement, combined with the likelihood of decreased component prices and shipping costs in the near future, gives us an optimistic outlook about the profitability trend going forward. 

Organic growth was a robust 18% in the quarter. The effect of high component and shipping costs on gross margin was about 2 percentage points. The majority of our sales consisted of products with components purchased at higher prices than we pay today, which will help margins going forward. We also expect shipping costs to drop. Profit was impacted by certain one-time costs during the quarter, for a total of approximately SEK 7 million. 

SEVERAL MAJOR PRODUCT LAUNCHES   
During the quarter, we launched two important software applications that strengthen our eye-controlled flagship product, the I-Series. In early November, we launched TD Browse, a custom-built browser for I-Series users that allows them to easily browse the Internet using eye control. Most of us take access to the web for granted and with the launch of TD Browse, people with disabilities can can enjoy a more natural web browsing experience. The product has been very well-received by our users. 
In December, we launched TD Phone, which enables users to control a phone with their eyes for both calls and texts in the I-Series. This functionality has been long-awaited among our users. At the same time, we released new features that enable users to play Xbox games and draw with their eyes. 

At the end of November, it was announced that our subsidiary Acapela Group's voice banking solution, my-own-voice, had won the CES 2023 innovation award in the Digital Health category. This achievement confirms the importance of my-own-voice for people with voice impairment by creating a personalized synthetic voice quickly and easily. My-own-voice is an excellent example of the new solutions that can be created by combining Acapela Group's leading position in voice synthesis with our communication tools. 

In 2022, we dedicated considerable effort to putting the structures and procedures in place that are required in an independent, listed company. This task has been both challenging and stimulating. With the lifting of the pandemic restrictions, business has largely returned to normal, including travel, client meetings and participation in trade fairs and conferences, along with the associated costs. We are now entering a phase during which we dedicate even greater focus to our business and our users, with the overarching goal of delivering on our significant growth and profitability potential. The long-term growth opportunities are underpinned by generally low awareness of our products and the life-changing differences they often make for individuals with communication disabilities. Therefore, our educational initiatives are a very high priority to drive future growth. The current limited and unfavorable reimbursement systems also represent an opportunity for growth over time when coverage improves. Overall, the market outlook is bright and has historically not been affected by economic downturns. We therefore look to the future with confidence. 

Fredrik Ruben, CEO

Webcast:
Today at 9:00 a.m. CET, Tobii Dynavox will host a webcast presentation for media, analysts and investors. If you want to attend the webcast click the following link, The year-end report and a recording of the webcast will be available here after the webcast.

This information is inside information that Tobii Dynavox AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out below, at 07.30 CET on Feb 8, 2023.