Hi.
Hello.
Welcome to this little chat of ours. We are gonna talk about Tobii Dynavox today. My name is Alexandra, and I work in Investor Relations at Tobii Dynavox. Fredrik and Linda, who are you?
Hi, I'm Linda Tybring, CFO of Tobii Dynavox. Been working here for three years, and last year I worked as acting CFO for Tobii AB, and I have a history of both working as CFO and CEO in other software companies. I also privately have two kids, which I love to spend time with. I also love to be at the golf course.
Very good.
Great. Hi, everyone. I'm Fredrik Ruben. I am the CEO of Tobii Dynavox, and I've been in this position for the past eight years. I'm an engineer by education, and before joining Tobii, I was the CEO of a number of different software companies, also in a public context. I'm a father of three, and on Wednesdays I have another job actually. I'm also a Sea Scout leader.
Very good. Fellow Sea Scout right here. Why don't we talk a bit about why we're here today? Could you tell us a bit more about the split?
Sure. Tobii Dynavox has been operating as a business unit in the publicly listed Swedish company, Tobii. Tobii, which was founded some 20 years ago, circling around the innovation of eye tracking. What Tobii Dynavox does and has been doing from the get-go is to focus on assistive technology for communication. That is communication aids for people who cannot communicate on their own, and a fair amount of them are also unable to move their limbs, which means that the movement of their eyes is actually the only way they can control things around them, and hence, eye tracking is, for some of our users, a fundamental piece of simply being able to live their daily lives.
Tobii Dynavox and Tobii decided to split the group in two, in a so-called Lex Asea split, which means that the shares of Tobii Dynavox are distributed for free to all the shareholders of Tobii AB. That split is happening now on the December 9th, 2021 where you will basically have the two shares, the Tobii share and the Tobii Dynavox share being traded, completely separated as two independent companies on Nasdaq Stockholm.
Very exciting. I think it would be good to go through a bit what Tobii Dynavox actually does, you know, the mission, the market, and everything like that, just so we get a deeper understanding. If you could maybe start.
Sure. We can tag team a little bit, Linda.
Yes.
First of all, what Tobii Dynavox does, again, is circling around communication aids and enabling people with disabilities to communicate. We have a mission which is very dear to us. Wouldn't you say so, Linda?
Absolutely.
Basically it spells out that we empower people with disabilities to do what they once did or never thought possible. Within that mission, we basically have two separate stories. We have do what you once did. What is that, Linda?
For example, that you were able to talk earlier, or you were able to control things in your home earlier.
Correct. Conditions includes ALS, spinal cord injuries, MS, Parkinson's. We have the other story, the do what you want never thought possible. That's about the kids, and who are they?
It could be a kid with cerebral palsy that you never thought was possible to maybe communicate or read or anything like that.
Yeah. As we can all imagine, in conditions such as autism, cerebral palsy, Down syndrome, where you basically get a label on yourself at a very early age, we, the people around him or her, believe that he or her will never be able to, and we seriously disagree, because with the help of the types of solutions that Tobii Dynavox provide, they can truly do what was never thought possible. We have our products and maybe the markets. Perhaps we can start looking at the market a little bit. We estimate that there are roughly 50 million people on the face of this earth that are unable to communicate unless they have the types of communication aids that Tobii Dynavox provides. Here comes the scary part.
How many of the people that gets diagnosed every year actually get one of these, aids and are actually being served? Do we have a guess from the audience? Do you know? I guess we all know here.
Yeah.
Yeah. What is the number, Linda?
Did we say around 40,000 people every year?
Right. Less than 2% of people being diagnosed every year are actually being helped. The rest are silent. This is, of course, a horrible number. This is something we as a company really wanna make a change to, and this is also what our products are all about, solving.
Very good. Thank you. Should we take a look at a snapshot?
Yeah. Let's talk about.
Financial
Tobii Dynavox from an overall perspective.
Mm-hmm.
We have about 500 awesome employees to start with. Last year, we reached SEK 900 million in revenue. It could look like we were resilient to COVID, but historically we actually received a growth of over 11%. Last year we had an growth of 1% because we were highly impacted by COVID, and we were not able to reach our users because they were in risk groups and you all know about that.
Mm.
We also reached an EBIT of 14%. We serve about 65 markets out there. 90% of our revenue comes from some private or public funding bodies. 75% of our revenue comes from U.S., so U.S. is a large market to us.
Mm.
Yeah, we can also say that, in the market that we're serving, Tobii Dynavox is the clear industry leader. We estimate that we have a roughly 40% worldwide market share when it comes to all types of communication aids out there, which makes us more than twice as large as the second-largest player in the field.
I mean, obviously you're the market leader. That's for a reason of course. Could you tell us a bit about the offering? What is your service actually? 'Cause you're not just a product.
Right. First of all, our offering consists and is typically symbolized by our communication aids. That could be hardware mounted to your wheelchair or something you carry around which basically replaces your voice. It has a software to help you communicate. It and your communication basically comes out as a synthetic voice out of this device. These devices are medically certified, rugged, and they're developed and designed by ourselves. They are sometimes controlled with your eyes. We estimate that roughly 90% of the users that cannot communicate, they don't need eye tracking, but some 10% are also physically disabled, so they need eye tracking.
All these communication aids are filled with a lot of content, the symbols, the synthetic voices, the language systems, of course localized to your local language, and a whole series of services and support offering. There's also another element, Linda, which is sets us apart, and what is that?
We actually have over 400 contracts with insurance companies to help the user through the process of actually getting a device. For specifically in U.S., we have more than 50 employees working as funding experts. They really help the SLP and the user with all the documentation and that is needed to actually get the device and be able to use it to use your voice.
Right. This is important for everybody who's new to Tobii Dynavox, that it's not just about the devices and the product that you may see. It starts through the entire journey of the user, again, with the content, the symbols, the language systems, the synthetic voices, the software, the hardware, and the service and support. Also important to note that we help them through the journey of sometimes quite bureaucratic and very complicated and cumbersome process of actually obtaining a device.
Maybe we should explain a little bit who are the people around the user, because we are not just working with the user, because there are a lot of people around them. Fredrik, could you elaborate?
Yeah. Obviously, like Linda says, we have the user in the middle. He or she gains independence and the ability to control things around her or communicate. Of course you have the prescriber, and the prescriber who prescribes this product is typically a speech-language pathologist or an occupational therapist. You have special education teachers, but obviously you have the family members, the spouses, the parents, and all the different types of caregivers and assistants that you may have around a user. Last but not least, we also have, as Linda mentioned, the funding bodies. That's the ones who in most cases actually pay for the product that we provide, and represents over 90% of our actual revenue.
Thank you. I think a question that we get quite a lot is if the penetration is so low at the moment, why isn't the market growing any faster?
Our by far biggest hurdle, as a company, but also for our market, is that the awareness about the sheer existence of these types of solutions is very, very low, also among the people who are professionals, the prescribers, and the ones who are supposed to know about this. In addition to that, we also of course see that a lot of countries don't have efficient reimbursement systems. Either the laws aren't good enough or the implementation of the laws aren't good enough. There's only a small handful of countries where the U.S. is by far the biggest market, followed by 10 or so countries where there is, you know, some sort of existence of funding.
The vast majority of professionals that work in this space, but also countries, lack adequate knowledge or reimbursement systems to provide this. As the industry leader, as the biggest company in the industry, we also have the biggest responsibility to increase the awareness and make sure that the market understands, knows, and hopefully embraces these types of solutions.
I think, Linda, you mentioned briefly how Tobii Dynavox was affected by COVID. Shall we mention a little bit more about what happened?
Yeah, I think it's important to understand that, as I mentioned, we were not able to meet our users. It's been easier to meet our ALS patients because they are up and running in that perspective. An autistic kid has been super hard to meet, so our sales process has been very challenging. We got to remember that the need for this type of solutions is still out there during and after a pandemic.
Mm.
Yeah.
Finally, let's touch on financial targets.
Right. We expressed our financial targets, our long-term targets, a couple of months ago, which basically can be summarized that the aim for Tobii Dynavox is to grow our revenue, adjusted for currency, by more than 10% per year. For us it's all about profitable growth. Our long-term ambition is to maintain an EBIT margin of 15% or more while doing that. We have a cash conversion model, which is quite interesting, which means that this company is quite suitable for a certain amount of debt leverage, which means which summarizes net to have a debt leverage of roughly 2.5 x our last 12 months EBITDA, plus minus 0.5 x. Between 2x and 3 x our last 12 months EBITDA.
Yeah, what we have produced in the past, and this is also what we're quite confident we will be able to produce in the future. We should all bear in mind that the penetration of this market as a whole is ultra low. The growth opportunities on revenue is something we should see in the light of decades ahead.
Mm.
We will still have a lot to dig from also in a few years to come.
Very good. What about dividend?
Tobii Dynavox's board has basically expressed that this is a company which is fit for paying dividends once we have secured A, M&A opportunities, and B, other strategic investments. The kind of third on that list includes paying dividends to our shareholders. We would also like to land ourselves a little bit more on the stock markets before we have a better picture about that.
Thank you. As a final question, can we talk about why should people invest in Tobii Dynavox?
Right. First of all, I really encourage everyone to visit us on the web and learn more about what we do, tobiidynavox.com. There you will learn, of course, that the products and the solutions that Tobii Dynavox provides have a revolutionary and truly life-changing impact of our users. We are the clear global leader in a very niche market, but this is a market which, of course, sees some really solid underlying growth trends. We have a very comprehensive offering. It's not just about a piece of hardware or software. We have the entire offering for the entire journey of the user. We have a quick, clear track record of profitable growth, even in some quite challenging circumstances.
The opportunity created by the split of Tobii and Tobii Dynavox provides not only for us in the team a clear opportunity to be much smaller. We're just 500 people in the team, much more entrepreneurial, much more focused, but also from an investor's perspective, a much more clear-cut investment opportunity where Tobii represents a technology shift opportunity, whilst Tobii Dynavox is a clear medical device company with both underlying growth and profitability already today.
Very good. Thank you very much.
Thank you.
Linda and Fredrik. Thank you for listening.