Tobii Interim Report for the second quarter 2022

Tobii AB (publ) today announced its results for the second quarter of 2022.

Comment by Tobii’s CEO Anand Srivatsa:

“Tobii delivered a strong quarter, reaching 21 percent organic revenue growth, enabling us to deliver an all-time high Q2 revenue and improvements in profitability. More importantly, our underlying long-term business dynamics were very encouraging as we made significant strides in several investment initiatives. A noteworthy example was the Sony PS VR2 contract, proving that our investments and perseverance in VR and AR are on the right track.”

Second quarter April – June 2022

• Revenue increased to SEK 167 million (126), corresponding to organic growth of 21 %
• Gross margin increased to 79 % (65 %)
• Operating result (EBIT) was SEK -50 million (-76)
• The net result for the period amounted to SEK -31 million (-114)
• Earnings per share amounted to SEK -0.29 (-0.80)
• Free cash flow amounted to SEK -68 million (-93)

Significant events during the period

• Tobii was selected by Sony Interactive Entertainment to be the eye tracking technology provider for Sony PlayStation VR2 (PS VR2)
• Tobii received six design wins in the quarter. In addition to Sony PS VR2, one was for integration of the IS5 platform in medical displays and four was for our Aware software in PCs and education laptops
• Per Norman was elected as the new Chairman of the Board and Mats Backman as a new board member

Comments from the CEO

Tobii delivered a strong quarter, reaching 21 percent organic revenue growth, enabling us to deliver an all-time high Q2 revenue and improvements in profitability. More importantly, our underlying long-term business dynamics were very encouraging as we made significant strides in several investment initiatives. A noteworthy example was the Sony PS VR2 contract, proving that our investments and perseverance in VR and AR are on the right track.

Strong organic revenue growth and profitability improvement in a seasonally weak quarter
We delivered a strong quarter, with revenue growth reaching 21 percent marking our sixth consecutive quarter of organic growth. Gross profit grew even faster because of a significant 14 percentage points gross margin improvement. This came as a result of a positive product mix, showcasing the expected dynamics when moving towards more license-based revenues. Our operating result improved SEK 26 million to SEK -50 million. Although the headline numbers were positive, the underlying dynamics in our business segments were a tale of two stories.

The Integrations segment was the growth driver with an impressive 99 percent organic growth. This growth resulted from positive momentum in our product offering toward VR clients. The Sony PS VR2 contract resulted in significant upfront revenue, which is reflected in our second quarter result. We expect the Sony deal to continue to deliver revenue contributions in the second half of 2022 and beyond.  Revenue from the Sony PS VR2 deal during the current year is expected to exceed 10 percent of our 2022 revenue. The integration business is seeing a general shift in product mix from hardware to software, the Sony deal being an example, which positively impacts the gross margin. The Integration segment will continue to be characterized by quarter-to-quarter lumpiness in revenue, though it should show sustained strong revenue growth on an annual basis.

Our Product & Solutions segment did not reach our expectations and declined 8 percent organically, which we view as the result of the macro environment. Pandemic-related closures that started at the end of the first quarter in China impacted negatively throughout most of the second quarter. Furthermore, global macro-economic issues related to inflation and recession fears are driving a focus on spending reduction for some of our customers. If the cautiousness regarding the global economic outlook lingers, we expect headwinds will continue to impact the growth of this segment in the coming quarters.
 

Major milestone quarter for Tobii and eye tracking

At the end of the quarter, we closed a marquee agreement for the  Sony PS VR2. This is an important deal for many reasons. It will bring eye tracking to millions of gamers and create a new baseline experience for consumer VR headsets. There is no longer any doubt in the industry that eye tracking is becoming a required feature for both consumer and enterprise devices.

For Tobii, this contract solidifies our position as the world’s leading eye tracking supplier. It is another proof-point of Tobii´s strong execution capabilities and ability to successfully serve the most demanding device manufacturers globally with our technology and expertise. We expect the impact of the Sony deal will be felt across all of Tobii’s businesses by building awareness around eye tracking as a technology and accelerating adoption.

Our momentum continues to build

The VR and AR market continues to be very active, and we are in a better position than ever to take advantage of the momentum building around VR and AR and The metaverse.

Similarly, positive momentum is visible in other investment initiatives, including in Automotive, where we are progressing in tendering processes and partnership discussions.

Despite the macro environment presenting challenges in parts of our business, our strong momentum makes us confident in our ability to execute well also going forward.
 

Anand Srivatsa

CEO

 

Webcast
A conference call and online presentation will be held in English today at 9:00 a.m. (CET). The webcast link and presentation material will be available in the calendar entry on Tobii´s website ahead of the webcast. The year-end report and a recording of the webcast will be available on the same page after the publication and webcast. You can also attend the webcast through the following link.

This information is information that Tobii AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, on August 23, 2022, at 7:30 a.m. CET.