Good morning. Thank you, Henrik and Henrik. What a beautiful cold day here in Stockholm. Hopefully, everybody is warm and cozy and have filled up on coffees and whatever you need, also at home because we have quite a content rich agenda. A quick intro about us. Who are you, Linda?
I'm Linda Tybring, CFO of Tobii Dynavox. I'm a mother of two. I grew up in Motala, so I'm a Östergötlander by heart. Love to spend time with my family and to spend time at the golf course. Unfortunately, Fredrik have kept me busy, so my score just keep going in the wrong direction. I've been the CFO for Tobii Dynavox for three years. Last year, I was working as the acting CFO for Tobii Group. I just love my job. I probably have the best job in the world. I get to work with all the fantastic people, but also I get to work with a product that really gets close to your heart. I also have a background both being CFO and CEO for different software companies. What about you, Fredrik?
Good morning, everyone. I'm Fredrik. For almost the past eight years, I've been in the current position heading up what is today Tobii Dynavox. I'm a father of three. I have another job too. On Wednesdays, I'm a Sea Scout leader, and that's important to me. If you don't find me in the office, you won't find me, unfortunately, on the golf course, but you will find me somewhere outdoors, sailing, skiing, hiking. My background is I'm an engineer by education, and I've been the CEO for a various set of typically software companies, also in the public domain. Again, since the past eight years, I'm a true Tobii-an, and I've been dedicated to creating what is today Tobii Dynavox. Welcome here. Good to meet you.
As Henrik Mawby quickly alluded to, we will split the day as follows, the first half of the day. We will start by giving you a brief overview introduction about Tobii Dynavox, whereafter we go a little bit deeper into the markets that we're addressing and the products and solutions that we're offering to that market. We'll take a break. I really encourage everyone to meet with my three colleagues, Idaly, Juan, and Björn, who are outside here in the foyer to try out our products in reality. For those of you who are online, we also try to make some surprises for you so that you feel somewhat included also in the technology part.
After a fill-up of coffee and maybe something to nibble on, we will continue to work to dig deeper into how will we grow this company, what's our strategy for the growth. Then Linda will take us through the financial performance and the financial outlook. Then after some concluding remarks, we will open up the floor both to questions here in the room, but of course, any questions that has come through the online platforms through Henrik. Are we ready? Great. Tobii Dynavox, we are the world leader in assistive technology for communication. This is different from what we'll learn about in the afternoon, but it's also a fundamental part of what we do. It's assistive technology for communication, specifically.
Working in this type of industry and in this type of company, it's a lot about our mission and what we do and what we can enable people to do. Our big tagline for what we eventually provide to our users is the power to be you, the power to be themselves, the power to be their true inner potential come to life. We do this through a lot of our decisions in daily works through our mission statement, which reads, "We empower people with disabilities to do what they once did or never thought possible." In this mission statement, you actually have two distinct stories.
The do what you once did, that's the person who maybe could be any one of us, who at some point later in life are diagnosed with a condition such as ALS, you're in a tragic accident, you get Parkinson's, MS, et cetera. You're rendered unable to do what you once did. We can change that. Because of our solutions, you will be able to once again do what you once did. Then you have the other story. That's the never thought possible. That's the child who at birth or at a very early age is diagnosed with something rendering him or her unable to do what maybe other children can do. This is the children with cerebral palsy, autism, Down syndrome, et cetera, where maybe they even get the label, she will never be able to. We fundamentally disagree.
Because of the solutions and the technology and the support that we provide to these users, we believe that they can be much more than whatever people thought. Never thought possible is a part, the second part of our mission. This is dear to us because we use this as a really important guiding principles when we do business, planning, when we build our products, when we go out to the market and market what we do. This is important. I wasn't supposed to click there. I'm gonna train this now. We're gonna watch a video, and I would like to introduce you to one of our super users. Her name is Delaina Parrish. She lives down in sunny Florida, which maybe is a nicer place than where we're at today.
Have a look at what Delaina's world look like.
When you're born into a world not designed for you learn to roll with the flow. Pun most definitely intended. I'm the co-owner of Fearless Independence, a public speaker, a disability advocate, influencer, lifelong adventurer, and a proud university graduate. Oh, and I also have cerebral palsy. Hey, can I please have a tropical wonderland? Thanks. Which means communication can be a challenge. But the I-Series cracked open the door enough to let me bust through. Cheers. With it, I've chatted with peers, questioned professors, challenged brands and companies to be more inclusive, and told my story both online and in front of a packed audience. The I-Series didn't make me who I am. It just gave me a voice. My name is Delaina Parrish, and I live fearless.
This is what we do, but this is just one story. The impact of our users, the people around them, their friends, and society at large cannot be underestimated. When we think about Delaina and all of those users out there, if we look at the market that we're addressing, there are roughly 200 million people out there who have some sort of communication impairment. Out of those 200, some 50 million have such severe impairments that they simply cannot communicate on their own unless they have the type of solutions and technology that Tobii Dynavox provides. 50 million people. That's what we call prevalence, how many people are currently on the face of this earth. Then we talk about something called incidence. That's how many people are then being diagnosed every year.
We estimate that roughly two million people are being diagnosed with conditions such as cerebral palsy. Here comes the almost scary number. The estimate is that less than 2% of those two million are actually being served. Less than 2% are being able to receive some sort of communication aid and a solution like Tobii Dynavox provides. The rest are silent. We talk about conditions, the ones that you acquired later in life. ALS is a very big user group among ours, but Parkinson's, MS, spinal cord injuries, et cetera. Among the conditions that you were either born or diagnosed with at a very early age, we have, of course, autism, cerebral palsy, Down syndrome, and so forth. Remember, this is a very, very untapped market.
Tobii Dynavox does not just sell the device that you saw that Delaina had. We do a quite big portfolio of solutions that that's what eventually we sell, and this is something I will hopefully teach you a little bit more about during today. It starts with the content. It's the software that you eventually put into a hardware that is sometimes controlled with your eyes or sometimes controlled with your fingers or joysticks. We take an active part in the assessment and the funding part to make sure that our users eventually can actually get the products, and then we help with implementation and support. This is what Tobii Dynavox does.
If you talk a little bit about the history of Tobii Dynavox, one of the first things I did just six months after I joined Tobii was the acquisition of DynaVox, which was actually founded well before Tobii. DynaVox, by then, was the leader in the U.S. market, typically when it came to the clinical side and the content side. Since then, we have refined and built the company, including launching a completely new set of products and platforms, standing on where we're at today. Just a couple of weeks ago, we announced another acquisition of the Belgian company, Acapela Group, which in our space, in the communication aids, is considered the leaders when it comes to synthetic voices. Then, of course, we're all gearing up for next Thursday when Tobii Dynavox will be a completely standalone company.
We're roughly 500 people in the Tobii Dynavox team, but the majority of these colleagues are in the U.S. Some 70 plus percent of our staff are in the U.S., but our headquarters is here in Stockholm. We have offices also in the U.K. and in China, in addition to U.S. and Sweden. We have a set of remote employees that looks after the markets where we don't have our own offices.
Looking at the snapshot of Tobii Dynavox, Fredrik already said we have about 500 awesome employees. Last year, we had roughly SEK 900 million in revenue and about 14% in EBIT. If we look at that 2020 versus 2019, we had 1% growth. At a first glance, it could look like we were resilient to COVID, but we were highly impacted by COVID. We weren't able to meet our users. They were in the risk zone. Schools, et cetera, was closed. Going into 2020, we had anticipated much higher growth. If we look before the pandemic, we had an organic growth of about 11%. Our products are sold in over 60 markets.
We have more than 400 contracts with different insurance companies, both public and private, and 90% of our revenue actually come from those type of customers.
We're not the only player in this space, but we're the by far largest and most complete player in this space. If you look at the market for communication aids as such, regardless of technology, we estimate that we have a roughly 40% market share, making us more than twice as big as the second largest player, and then a much smaller set of competitors in this space. If you look specifically at the eye tracking enabled devices, we have an even stronger market position. We are also serving another audience. That's the teachers and the schools in the special education segment, and here our offering is estimated to have a roughly 25% market share, but that in itself is a much smaller market. Linda alluded a little bit to the team.
I'm happy to see actually some of my colleagues are here, even though they're from far, far away from the U.S. in this specific case. The management team, aside from me and Linda, consists of a set of highly skilled and highly experienced professionals. Some of them bring their experience from outer worlds, and some of them have almost grown up inside of this industry. Just to name one example, we have actually Tara in the back of the room here. Tara is not just the President of our market unit, North America. She's also the President for the industry association, so we have quite a strong position in the market as such.
If I look at the board of directors for Tobii Dynavox, which has been operational since first of July this year, having meetings and making all kinds of decisions, the board of directors consists of three individuals that has an experience from the past within Tobii. The chair is Åsa, sits here at the up front, leading the work of the board of Tobii Dynavox. Åsa has up until recently also been a member of the Tobii's board of directors and has been with us since before the IPO in 2015. Henrik probably doesn't need a longer introduction, but of course, is now changing roles to a fairly big degree, I think, Henrik, and serving as a board member. We also have Charlotta.
Charlotta will continue to serve similar to Henrik as a board member of the Tobii board, but also the Tobii Dynavox board. Charlotta brings in a wealth of knowledge also from the Tobii Dynavox perspective. We have two additional board members. We have Caroline, who joins us being one of the most prominent experts and clinicians in the field of ALS, so bringing in an additional competence when it comes to clinical understanding and operation to the board of directors. You also have Carl, who joined the board of directors.
Carl is currently serving as the Chief Financial Officer for the Swedish construction and buildings company JM, but maybe more relevant in this space for the past 10 years, has been the CFO for the Swedish assistive technology company, Permobil, who serves the mobility area, so highly relevant skills and backgrounds. Very much looking forward to already having started the work with not just, of course, our fantastic management team, but also this great board of directors. I will conclude today's presentation with just summarizing why do we believe and why we hope you also will believe in Tobii Dynavox as both an investment and as a company, in fact. The products that Tobii Dynavox do are life-changing. It's a fundamental part. This is not a nice to have, this is a must-have type of product.
They have revolutionary benefits, not just for the Delainas of the world, but like I mentioned, the people around her. I have to say an anecdote. This morning, Delaina posted on Facebook, "I loved making this movie because we had to do so many retakes of the beer cheering," because they had to refill the glass every time. That, that's just me. That is normalcy. That's that really says something about what these types of products does. We are the clear global leader, but in a very niche market. We are second to none with our operation and our offering. But this market is providing some profound secular growth into the future because people with disabilities an asset to society at large.
We have a portfolio of solutions, again, second to none, not just when it comes to the actual products, but also the distribution and where they're available. We're there for the entire journey of that user, not just the product part, but we start from day one, and we're their lifelong companion. We have a track record of profitable growth, also during times when it has been somewhat challenging, COVID included. Of course, this is something we believe we will embark on even stronger going forward. Lastly, the separation of Tobii and Tobii Dynavox will have quite a big impact, both to us as a team. We'll be much more nimble, much more focused, much more entrepreneurial, focused on our respective user segment. Also from an investor perspective, you will have two much more clear-cut investment opportunities.
We believe that all these things play into a fundamental why we believe, and we believe that you should believe in this company. I think there's maybe one more thing to add. If you really want to impact the world and make this world a better place and do something, you know, talking with your money to make sure that we're building a better planet to live on for everyone, Tobii Dynavox is definitely there for you. That's the high level. Now you can leave if you want to, but I really suggest that you would listen a bit more for now, because now I will tell you the really juicy parts of where we're at. Are you with me? Great. Market fundamentals. We need to start by going up with the helicopter a little bit and think about assistive technologies.
Assistive technology is nothing new. That has been around since more or less the Stone Age. We're talking about various kinds of assistive technologies out there, however. We have the mobility aids. I mentioned the Swedish company, Permobil. We have manual and powered mobility aids. Frankly, you have canes and walkers and everything in that space. You have the low vision and blind aids. That's the Braille readers, magnifiers, et cetera. You have hearing aids, which is the biggest industry when it comes to assistive technologies. We have what we refer to as AAC, Augmentative and Alternative Communication. That is where Tobii Dynavox plays. We provide a quite wide portfolio into that space. It starts with maybe the gestures that you can decipher the grunts or the mimics or whatever your own child says. That probably only takes you that far.
We start with something called low tech. That's the symbols, that's the signs, and we all are actually accustomed to low-tech and symbols. There's an exit sign. There's a no parking sign. This is the same thing for our users, but you have the entire vocabulary using symbols. Tobii Dynavox does that. You have the high tech aids. That's when you take the symbols, the communication aids, and you put it into a software, you put it into a hardware. This hardware is rugged, medically certified, has big speakers, big batteries, and can be prescribed for through insurance systems. This is kind of the bigger market as such. If we think then a little bit about the numbers, I showed you briefly the left column here about the addressable market.
200 million people with speech impairments, 50 million of those currently on the face of this earth are unable to communicate unless they have some sort of communication aid. I say it again, 2 million are being diagnosed every year, and we believe that less than 40,000 of those users, 2% or so, are actually being served, so the vast majority are silent.
Okay. Hold on, Fredrik. I'm a numbers person, but this is actually pretty hard, so could you please take it a little bit slower so everyone really understands?
Right. Out of the 50 million people that are unable to communicate or the two million that get the diagnosis every year, the vast majority of those are not being served by anyone, not by Tobii Dynavox, not by any other player in this industry. There are some fundamental reasons why that is not happening, and the number one reason is called awareness. The competence and awareness about the sheer existence of these types of solutions is more or less nonexistent, even in very well-developed markets.
What you're saying is that we are hardly scratching the surface.
We are hardly scratching the surface. We need to do more, and we need to help more. If we convert that into numbers, well, of course, if you look at the 50 million people, if we would serve them, we believe that this already today would be a $5 billion market. In fact, as of today, we estimate if we combine the entire market size, including Tobii Dynavox, it's roughly a $230 million market. There is a fairly big discrepancy on the reality and the potential here. We believe that the market, as such, will grow by roughly 9% over the coming 10-year period or until 2030. What needs to happen is, of course, that the population of the world will grow, the demographics will grow.
We also see good trends that the healthcare systems are developing in most markets. In addition to that, the general awareness about these types of solutions and products, they are increasingly happening. This is a good example of you having you in the audience, and you're learning a little bit more about this. The reimbursement system, so the public or the private insurance bodies that exist around the world will recognize that these types of solutions are also something you will reimburse, similar to how you do with wheelchairs or hearing aids, et cetera. We also see that the competence among the people that are supposed to know about this, the prescribers, the therapists of our products, is increasingly, even though at a painfully slow pace, increasingly becoming better. We see also among these professionals, the awareness is growing somewhat.
We believe as a company, we can put more people on the ground, more consultants, more users, sorry, more colleagues in our own team that basically on an everyday basis are out there to educate, assess, and see whether our products can help or not. Then obviously, maybe the most important, and actually the one that probably feels the best, in your belly, is the user success. The Delainas of the world. When she's standing on a stage there, she's fearless, and she's communicating, and there are 100,000 people out there who could be just like Delaina doing that. When we all carry the same water, of course, this is how we grow this market. It's not about innovation, for example.
Fredrik, can I ask another question?
Yes.
This is how we work all the time. Why isn't the market growing faster?
We come back to the point again. If you're diagnosed with a condition, fine, then you know or you have a label on why your fingers are twitching or why your child isn't developing like the sibling. The next part comes to how can we overcome, how can we compensate for this? This requires competence among the ecosystem that is helping or serving your child or yourself. This awareness is painfully low.
Thank you.
This is how we work. We also have to understand that when Tobii Dynavox produces and sells and services products, we have to think about the entire ecosystem of people around the user. You obviously have the user in the middle of this circle. Most commonly, you have a caretaker, that could be the parent or the spouse, et cetera. We need to make sure that not just the single parent, but the entire family and community, the people around the user, the neighbor needs to understand the implementation because we're all there to support the user. We, of course, need to work a lot with the payers and the insurance companies to make them, A, understand, and B, of course, implement the policies to get reimbursement. We need to work with the professionals to teach them what is success in your work.
How are you successful with your work with this specific patient of yours? The schools and the institutions, you know, many of the children are hopefully in some way captured by an educational system. We need to be there to serve also that stakeholder group. We have the policymakers, the ones that write the laws to make sure that we have equality here. A plethora of users and stakeholders around there. We need to make sure that when we build and service products, we need to have this entire ecosystem in the back of our heads. Where does this happen? We're trying to make a stab at segmenting the market.
As I briefly mentioned in the beginning, 75% of our business currently stems out of the U.S., which means that if we wanna bucket the different geographies or markets into some sort of segments, U.S. stands out as a segment of itself. This is actually quite interesting. U.S. was the leading country in the world 20 years ago to basically put an equality sign between the impairment of being unable to communicate is no different from your impairment of being able to walk or see or hear. This makes the U.S. quite unique. We may have all kinds of thoughts around U.S. welfare and healthcare systems, but U.S. definitely stands out and is the biggest market, not just for us, but for this industry as a whole. We have a second segment, which we defined as well-funded or other well-funded markets.
They're okay, but there's a huge discrepancy between these markets, but they're quite few, as you can see. There's only a handful of them, Norway standing out as probably the best market, both when it comes to the rules and the regulations, but maybe more importantly, the implementation. There's a low level of complexity and bureaucracy in the Norwegian system compared to many other markets. Being here in Sweden, I think that the general conclusion is that the legal framework is okay, but the implementation is very, very unequal depending on which region you happen to live in. We have a third market segment, which is what we refer to as the less well-funded markets.
Here we see markets which have very, very meager support and reimbursement for these types of products, or it's very bureaucratic or very complicated and very slow. Imagine again, the diagnosis of ALS could probably have a quite rapid development. If the process to obtain a communication aid is two years, it doesn't matter how good the laws are written if the implementation is that poor. It's interesting to see that in this less well-funded, this doesn't sound very good, right? We see countries such as France, U.K., Finland, and so forth. We don't have to travel all that far away. These are, in many cases, countries with a fairly generous healthcare system overall, but the implementation here is quite meager.
Basically the rest of the world, there is more or less no infrastructure, no reimbursement in a lot of markets outside of this handful. This is the current addressable market that we're serving today and the reality that we're looking at.
Fredrik, I know that we will come back to how Tobii Dynavox can affect this, but have we seen any improvements of this?
Yes, we definitely see but gradual improvement. To name a few examples, in the U.S., we have three consecutive presidents who have signed a bill to empower the reimbursement bodies to specifically serve people with ALS. That, of course, makes it specifically for that segment. We also see that there is some reimbursement having popped up over the past five six years in the U.K., for example. Even though it's not great, it's something similar with France, et cetera. We even see some interesting trends with COVID, where people were now forced to do things remotely, where there has been a lot of typical paperwork and manual processing, face-to-face meetings. They have been abolished and maybe streamlined or digitized.
I have a hard time seeing that we will go back to a world when COVID is over, where people wanna go back to writing papers and doing things face-to-face when you actually don't have to. Some improvements. Where will the growth come from? Again, if we put two different glasses on, if we first look at geography, the markets I just mentioned, we believe in the coming 10-year period or so, there definitely will be growth in all the market segments that we're addressing. The U.S. being the biggest market today, we believe also in 10 years will actually be the biggest market from a total revenue perspective. We also see that the less...
The other less well-funded markets, France, the U.K., and Finland, hopefully and most likely will start to catch up and start to become a fairly sizable portion of this market. We see obviously a good increase in the poorly funded market. It goes from zero to something, and will in turn also mean a fair amount of revenue also ten years from today. We see that the other well-funded markets will have a growth. What we wanna show with this picture is probably not so important, the absolute numbers. This is guesswork to some degree, but we don't believe that there's gonna be a fundamental change on where the money comes from in ten years from today.
Similarly, if we look at the types of users that we're serving, we see that currently we have some sort of split between the people who have acquired a condition, the people with spinal cord injuries and ALS, et cetera, and then the children who were diagnosed at an early age. Similarly here, we see that both these markets will continue to grow. The proportionality will be somewhat different, but we still see that these are two market segments that will continue to grow. I think the mathematical answer to this, maybe to speak Linda's language, is quite simple. It's because the vast majority of people out there are not being served.
A lot of these sales, prescriber users will actually be first-time users. You wanna think, well, is there a recurring model into this? Is this all perpetual one-time sales? Well, the communication aids part of what we do, yes, it is typically, as the world looks like today, a one-time sale. We can talk about it a little bit later. We are seeing some tendencies that we might be opening up to recurring models, where rather than us selling a one-time sale to a payer, there is some sort of recurring model. This is a fairly conservative customer and payer group, so we don't see a rapid development into this.
However, if you look at the dynamics of our users, a user who's diagnosed at an early age, who may, in most cases, have a life expectancy as long as humanity at large, he or she will probably replace the communication aid every four, five, six years or so. You don't wanna change your language every five,six years. You don't wanna change the way you communicate. Similarly, provided Tobii Dynavox plays our cards right, we serve our customers, and we stick to our promises, that is likely a recurring customer also for life. We believe that the replacement sales will take a fairly significant portion of our revenue also 10 years from now, maybe a third or so. It's obviously mainly towards the user groups that are younger, born with the condition.
It's rare that the people who have acquired the condition later in life have more than one replacement sales cycle because of the sheer nature of their condition. If we then look a little bit on who we are in this space, we've been boasting on the fact that we consider ourselves the market leader. To put some numbers behind that, we estimate that we have, in the communication aids market, a roughly 40% market share. We are followed by a U.S.-headquartered and I would think it's safe to say rather U.S.-focused company called PRC-Saltillo. PRC-Saltillo has a similar offering to us. We're of course we have our different flavors and our different ways of working, but they're roughly half our size or a little bit less. After that, you don't necessarily find a big player.
After that, the third largest segment is actually the makeshift homemade solution, where you take a consumer tablet, some sort of solution, maybe a wrapper. Sometimes you buy a software from us, et cetera. That's probably the third biggest market share in this market. They are either transitional and definitely if you live in a place where there is reimbursement, that is something that you more use as a proof to, yes, my child is able to communicate this way, but we rather be in a system. About 90% of the users of those 50 million, they don't need eye tracking. They have some sort of capability to control their fingers, their hands, or other parts of their body, then that is probably a better way to interact with your communication aid.
You have touch screens, you know, such as in a tablet, you may have various kinds of joysticks or buttons and switches. 10% of the addressable market, but much more when it comes to revenue currently need eye tracking, 'cause that's the only part of the body that they actually can control. Tobii Dynavox, of course, with a history of being part of this fantastic Tobii family, we have a quite strong market share in that segment. It's also interesting to see that we don't see a big shift in the splits of, you know, market shares, et cetera, over the past five years or so. It's a fairly consistent market. Now I would like to talk a little bit about this other audience I mentioned. This is the audience of special education.
Give you a little bit on special education, what this is. Well, this is the infrastructure, the system, the model, where the world basically captures children who are diagnosed at an early age with some sort of impairment, rendering them unable to participate in the educational system the same way as other children. It is typically somewhat market dependent. There is some consistency between markets, but some of them, some of the markets, this is inclusive education. You basically have the classroom, and then you include children with special needs in the classroom, but they have specific adaptations. You have some sort of the other way around, where you have a specific setting, a specific school, a specific class just focusing on children with special needs, and then you have some sort of hybrid approach.
I would say it varies a little bit between markets. I think this picture here is a good example of what it may look like in a special education classroom. Here we have the symbols. These symbols are fundamental to either just start your communication journey, to go from utters and sounds and maybe some signs into actually expressing something I want, I need, I like. Eventually, those symbols hopefully transition over to understanding letters and numbers, and eventually leading you into some sort of literacy. We own these symbols. They're called PCS symbols, and it's an integral part of our offering, not just in the special education classroom, but obviously also in our communication aids.
As you can see also by these symbols, they have to be up to date, and we have to work on them every time. We definitely have a symbol for Donald Trump or wearing a mask or Brexit or COVID, et cetera, in addition to basic communication. The special education market is much more scattered and much more difficult to put into a frame and define. However, if we think about the offering that you have into this market, it's either the software that enables the teacher to print these symbols, to put things out in the classroom, or maybe, as you can see on the picture here, to write a book.
Rather than having text about the animals of the forest or the history of the country, et cetera, you use symbols and alternative measures to make that curriculum. We also make the curriculum, so we make readymades so that the teacher don't have to wake up every morning and make a new class and start from scratch. There are web-based support materials. Either you consume the material not on paper, but on a digital screen or online. The decision-makers, the ones that chooses, okay, I need something in this sense, is can be a parent, a parent who does homeschooling or part homeschooling. It's obviously the special education teacher, but the entire school systems may also be the decision-makers. The users, however, are typically always the same.
It's either the child or the student herself, it's the teacher, or it could be the therapist that work in the school environment. They used it, these types of solutions. Again, stressing the fact that this is a market which is much more tricky to define. It's much, much smaller, both from a Tobii Dynavox perspective and from a market as a whole, but it has some quite interesting potential. We believe, again, if the entire current school systems in special education would adopt this is about a billion-dollar market already today. Currently, we estimate that the total revenue in this space is around $40 million. Here again, we see growth. We see obviously that there are more students in classes, the demographics, there's a growth.
Overall, this is a market that is estimated as a whole to grow by roughly 20% per year in the coming 10-year period. Similar here, awareness. Have you heard it before? The awareness of that these types of solutions is also super efficient in the special education classroom. You also see trends on things such as higher spend in general on special education, that the educational systems developed. We see interesting decisions also in markets such as China, where in the latest 5-year plan, inclusion of children and adults with disabilities is an important part of education, eventually the financial system of the country.
There's one interesting little thing as well in addition to kind of growing the market, and that is that this, as well as with every software industry, basically current on the market, and for those of you who attend a lot of capital markets days in the special, in the software space, the business model transition, going from perpetual, this is our product that has been sold, you know, on USB sticks and CDs, et cetera, or download and going out to some sort of recurring model, maybe not drastically, but over time, will in itself actually help to grow then the totality and the size of this market. Again, the estimate is that the coming 10-year period, this market as such, will grow by roughly 20% per year, but from relatively small numbers.
We also see that the U.S. currently, interestingly enough, is by far the biggest market already today when it comes to these types of solutions. It will continue to be the dominant market also 10 years from now. You will have a much faster pace when it comes to the developed world or the Western countries in OECD, where the implementation and use of these types of solutions also in the special education environment will grow quite significantly. Again, this space, who's Tobii Dynavox and our offering? Our offering is estimated to have roughly 25% market share, and we are second to another U.S. player called News-2-You, who has a similar offering. After that, the list becomes very long of typically local language or very simplistic types of solutions to make print material, et cetera.
It's a much more nascent market. The interesting part here is, I mean, you just have to look at the pictures in my previous slides. The overlap and the synergies with having a well-functioning communication aid that uses the same symbols as the teacher is using when explaining about the animals or the forest or the human body or whatever it can be, and that there is also a technical integration so that you can consume the classroom material in your communication aid while also on the screen, makes this highly relevant for us to be, have one foot in each little pond here simultaneously, because it's sometimes very difficult to judge where the overlap starts and ends. Okay, these are the markets.
We talked a little bit about the users, where they are, who they are, et cetera, and the different settings on where we where we eventually sell and distribute these products. Leading up until we have the break, we will go a little bit into our solutions and the products that Tobii Dynavox provides to these to these segments and these users. First of all, it's very, very important that the solution that Tobii Dynavox provide has profound, fundamental, life-changing effects on the user. It makes him or her, it gives him or her the ability to basically be themselves, enhanced independence. It could be as simple as I'm able to call for help myself, or I'm able to say, "Go away, I wanna be alone." It's also the ability to have a career, get a job.
You will soon meet one of our colleagues who also is a user of ours in a video. There is obviously a quite fundamental part of what this does to you mentally. The fact that you are independent, you can control your own destiny should not be underestimated. The levels of depression and issues when it comes to your cognitive and social interaction is quite high among our users and the people around them. In fact, the lady up to the right, her name is Gina. She was once together with her son, James, on one of our big company kickoffs. Over a beer at...
little bit later in the evening, Gina told me not only what a change this has meant to her son, and James only got his first communication aid at the age of 19. Gina said to me, "This communication aid is of course great for James, but it's the biggest antidepressant pill I have ever received in my entire life." I think we can all sympathize with that to some degree. Tobii Dynavox being there with our solutions, that has to include the caregiver, the caretaker. They are the ones that basically live with the user and the communication aid 24/7, is a super important stakeholder. Similarly, we talked about the educational setting.
The educational setting, of course, has to embrace the communication aid and the user and has to have a communication educational setting that adapts to people with communication disabilities. The speech language pathologist, very important part of our ecosystem, logoped in Swedish, could also be an occupational therapist. In rare cases, it's a neurologist, and in certain cases it could also actually be someone working in the education environment, the teacher, for example. A super important segment that we need to service so that they are successful basically in their jobs. Then last but not least, the payers. The products that Tobii Dynavox provide are not typically bought over the counter. As Linda showed in the beginning, 90% of our revenue comes from some sort of public or private insurance system.
They could be Medicare in the U.S. or they could be a private provider such as UnitedHealthcare. It could, of course, be the NHS in the U.K. or NAV in Norway, et cetera. We need to be adapting our solutions on our part actually to all these stakeholders. If we forget about one or if we don't service one, our product could actually be rendered more or less useless. That means, and now we'll go in a little bit into more detail, that these five different buckets in which we build up our portfolio are as important, each one of them. You may think about Tobii Dynavox as, you know, the device and the product, but this is just, this is just the kind of the enabler in the middle.
I'm gonna walk us through each of these, different parts so that you get a better understanding on why this is important and why this makes a difference and why this makes Tobii Dynavox different. I'm gonna start with content. I briefly talked before about the symbols, the picture communication symbols. This is an asset that is owned, developed, and maintained by Tobii Dynavox. This is the world-leading communication symbol platform in the world. It has the widest spread. It's obviously used in our own communication aids. These are the symbols that you use typically for the children or the ones that are diagnosed at an early age. They're also used by our industry peers, so we license our communication symbols also to the other AAC players and other communication aid players in this space, but doesn't end there.
Anybody here that may be using Microsoft Office, if you click on Accessibility and the assistive reader. No, it's called some-
Immersive Reader.
Immersive Reader. Sorry, I missed that. Thank you for experts. The Immersive Reader function in Word, PowerPoint, Teams, et cetera, and you turn it on and you have your mouse hover over a word. There might be a symbol that pops up. You will probably recognize them as PCS symbols. So we also license these symbols to large companies, including Google and Microsoft to use. But you can also find them at playgrounds, et cetera. PCS symbols, a fundamental part of our portfolio, which is the content. They come in various shapes and forms, including for users who have some sort of vision impairment, so in certain high contrast symbols, et cetera. It comes to the next thing, and this one is a little bit tricky to explain. This is about the language system.
Okay, you have the word, and you have what you wanna say, but you can't have every word on your first screen. You need to start, and you need to basically put communication into some sort of communication system. We work predominantly with something called Core First, which is around a core vocabulary. That's the most commonly used words. Once you have clicked or chosen your first word, you can then expand, "I want pancakes. I want mommy. I want no more." This is a quite complex organization of words to form language. It's obviously different depending on the actual language. It's different in English than it is in German than it is in Swedish. This is a very, very important way on how you develop communication if you can't develop in the same way as our children have.
This is also something, once you got accustomed to it, that you don't wanna walk away from. Obviously, again, like I said, if we play our cards right, provided we provide the services and solutions and technology for our users, we have a very, very high loyalty and low, low ambition to change away from that, if ever. Lastly, and this is maybe the most recent addition to the Tobii Dynavox family, you have the synthetic voice. If you don't have a voice of your own, the synthetic voice is you. That's your personality. We have a lot of third-party synthetic voices implemented into our solutions. The company that we have been working with the most when it comes to synthetic voice is a Belgian company called Acapela Group.
Acapela Group, we agreed to acquire just a couple of weeks ago, looking to conclude the deal in the beginning of next year. This enables us not only to, of course, understand and work with the voices, the way we do today, but more importantly to innovate. To innovate around things such as integration with our software, personalization. There are a lot of classrooms out there where it's the same voice being used by five different children, and that's just weird. We believe that the personality and that we can give by that user by having a voice of their own, having a unique voice, maybe store your voice because you've just been diagnosed with ALS, and you know you will eventually lose your voice. We now have the capabilities to store your voice and make a synthetic copy of your voice.
Similarly, two siblings, one has cerebral palsy and one has not. The older sister can donate a sample of her voice to the younger sister. You make some tweaks, and most likely this sister will sound just like the sisters they were, even if there was no communication aid in between. This is where it starts. This is the content. The content needs to be put into software. The content could actually be printed on a piece of paper or on board. This is what special ed classrooms look like. Again, if you want to include an entire language in every word, that paper becomes quite big. That's when we start to build software. The software has the symbols, the language system, and of course, navigation.
In this case, TD Snap is our leading software when it comes to the typically congenital or the users that were born with the condition. This is a software that you obviously have in our specifically made communication aids. Maybe you can pull that one up, the I-110. This is a communication aid that is built around Windows, but it has the Snap software on it. You can also buy it on App Store for your iPad. It can be controlled using your fingers, joysticks, switch buttons, but also using eye gaze. Another example of a software that we have is software called Communicator 5. This is more towards the users who have acquired something later in life. You can almost think about this as the operating system in your phone.
This is where you gather all your apps and your abilities. Of course, you have literate text communication. Hello, hello. As you can see examples on this picture, you also have important things such as social media, entertainment, controlling your home and your environment, and much, much more. Again, typically focused towards the users who want to do what they once did. We have towards the special education audience, the software that we center our offering around is called Boardmaker, and Boardmaker has actually been around for decades. It's the leading software for producing content and solutions for the special education classroom. In fact, Boardmaker is about printing symbols, putting them up on the board. This is what assistive education has looked like for quite a number of years.
Here instead, we have. This is the tool for the teacher, or sometimes the parent, to create symbols, symbol content, and classroom material. Here we have millions of students that have or are currently using these types of products. We have hundreds of thousands of teachers who not only use the product, but they also have a big community where they share, "Hey, I have this great activity to pick between different colors or the animals of the wild, the wild animals of the forest," et cetera. The symbols, they're the same symbols. You start to recognize them now. Over 50,000 symbols translated into some 14 languages, coming in various shapes and forms. If you look at the devices, the communication aids, this is the third step on this journey.
We have the content, we put the content into a software, but now we also build specifically designed and made, hardware for this, for this software. The majority of Tobii Dynavox's revenue comes from the medical-grade high technology types of solutions. This is where you have not only a very well-functioning device, it typically has features that are specific to our users. It can be mounted on a wheelchair. It has enormous speakers so that you can shout and be heard also on the schoolyard. It has batteries that last throughout the day. In certain cases, it has fundamental things such as, eye-tracking enablement, so you can control it with your eyes, sometimes not. There's also other types of, technologies that are typically used in the assistive space. In addition to that, these devices and these products, they are sturdy.
They don't break because they will last throughout the day in the schoolyard. They're mounted to your wheelchair. Three times a day, you go into, you know, a wheelchair taxi, et cetera. They cannot break because what happens if they break? You're silent. They also have to meet certain medical standards. They have to be medically certified, which means, first of all, it's a lot about documentation, but it's also about durability. They have to be cleaned with alcohol, et cetera, to make sure that they are eligible to be used and sold into a hospital setting, but also that they're eligible to be funded through the medical insurance systems of the world. So this is not just a piece of hardware. It's not just a thing.
It's actually a quite complex animal in itself. Again, this is where the majority of our products come from. They're typically then MD-MDR certified for Europe or FDA certified for U.S. medical standards, et cetera. But we also have a hybrid portfolio where maybe you don't have access to a generous funding system or your funding system doesn't exist and you have to rely on some sort of charity, et cetera. Maybe you already have a PC computer. Well, then we have a peripheral that you attach to your normal Windows PC, and it enables it to be used with eye tracking. There are examples of this out in the foyer for those of you who wanna test it.
Similarly, if you have access to products such as an iPad, we have a specific case that not only makes the iPad super rugged, it can be mounted on a wheelchair, it has specific handles for grip ability, it has bigger speakers. Again, the iPad speakers aren't that loud, and if you need to be heard on the schoolyard or in a restaurant or in a cafe, that may actually be quite fundamental. But this is roughly what the hardware portfolio from the communication aids looks like. Here, the intent is, and maybe a little bit of a background story here because this is fun.
We knew that about this setting. We knew that this will also be a hybrid meeting where some of you would be fortunate enough to be physically here to try out the products yourselves and some of you are as important, but you're not physically here. We asked our marketing team and two of our colleagues, Victor and Kenta, both working in our support team, to explain to everyone how eye tracking actually works. Meet Victor and Kenta.
Hi, I'm Victor. I work at Tobii Dynavox. I communicate with my eyes using an I-Series. Today, I will be showing Kenta, my new colleague, how to get started with eye tracking. Ready?
Yep.
First thing is to make sure you are in the right position so you can see the dots in the green zone. Next is calibrating the device. All you do is look at the dots until they pop.
Wow, I'm doing it.
Test it out, and then you are good to go. Pretty cool, right?
Yeah, that's really cool.
Okay, Kenta, open TD Talk. Look at each letter for a second to spell out what you want to say. Now, select Speak. Hello.
Ah.
Pretty easy, right?
Yeah. Thanks for showing me.
It's great. That's it. Kenta and Victor. Kenta is actually Victor's boss. Important to say. Maybe one day they will both be actors, and we will see them on bigger TV screens or cinemas out there. Two weeks ago, we made an announcement to the world that we have made what is probably not as much of a technical advancement, but a very important part in reducing the stigma and the accessibility and user-friendliness of these types of products, and that was when we launched a new product, TD Pilot in collaboration with Apple.
Probably one of the most common questions we have received, everybody working here and for me for the past eight years, "Does it work with an iPad?" No, it doesn't work with an iPad because Apple is basically taking care of their ecosystem, both when it comes to software and hardware. However, for about five, six years, we have collaborated with Apple, and right now this product is available. Also, similarly, you will everybody that is here will be able to use it. In essence, what it does, it turns
TD Snap.
Turn an iPad into a communication aid with exactly the types of technologies and features that we have in our previous communication aid, but it's all built around iPadOS, and it's integrated directly into the operating system, making it very, very smooth. Maybe the next video is with another user of ours. Her name is Lainey. She's a high school girl from Kentucky, and she's been part of testing and beta testing this product. Also, you will have some more information about the actual features and functionalities. Again, for those of you who are here, please try it out, and for the rest of you, visit one of our offices or so and try it out yourselves. Meet Lainey.
Let's go.
Normalcy. Do you feel it? This is normalcy. This doesn't make Lainey any different from her classmates or anyone. The fact that she's communicating with an iPad, that's not that very much different from any of her classmates or any other person of her same age. I think also the way we design, market and communicate around our product has to be, you know, not cut and dry, not medically certified. It has to be normalcy. Two last points before we go to the break is then, again, fundamental in order for these products to be successful out there, assessment and funding. Most of our users have one common denominator, they cannot communicate. But apart from that, well, some of them have cognitive impairment, some of them have a physical impairment, some of them don't.
Some of them have issues with social interaction and behavior. We have a fairly large team in the markets where we sell directly of what we refer to as solutions consultants. They are typically former therapists themselves, but are now working for us to assess how does this work, what's the solution for this specific user and individual. We also have a training organization. The training organization focuses a lot on educating the prescriber, but also sometimes the caregiver and the family members. We have a series of tools, et cetera, to make this easy, fast, and doable. This is obviously super important, and especially since most of the therapists are quite shaky, or maybe they don't understand all the details and the technologies that we have.
The fact that we can be there and provide them with support, at least for the first one to five assessments, until they eventually feel at ease with doing this themselves. A very, very important part of what we do and how we do things.
Another step is the funding overview. Today, we have about 400 contracts with different, both private and public funding bodies. This is really a good thing for us because it helps and goes much faster for the user to get the device, and we have already come to an agreement on a lot of the terms. Together with the contracts, we have a team of over 50 people that are experts in this field. We call them the funding experts, and they really help both the SLP but also the user on their way to get their voice. You can take the next. This process is super complex. It's nothing that is standardized, and I would say that on a daily basis, we get between 200-300 faxes into this team.
Could you repeat that?
Yeah, fax. It's something they used in the eighties.
Okay.
It's still live, unfortunately. This is really, really complex, and you can imagine then getting all of these faxes. What we have done is that both having this team, but we also have built a system, we call it eFunding, and this system helps then, the funding experts to make sure that we have all the documentation that needs to be in place. Of course, all these contracts have different documentation that they want. It's really, as you said, nothing is automatic, that perspective. I think with both the team and the system, we have really a significant, what do you say, significant advantage compared to a lot of other companies. When the documentation are in place, the user will then be able to get their device and the voice.
The SLP will then help them getting started, and we, of course, are part of that road. Remember, this is a significant entry barrier for anyone that wants to sell into this market, even for a large tech company. Of course, they have money to go there, but this is really a niche, and they won't go into this part.
Yeah. That's the assessment and funding part. Last but not least in the offering of what Tobii Dynavox does is implementation and support. I mentioned briefly the training organization. The training organization is of course there on fairly large scale, both, with our own staff and sometimes with our partner staff, to educate the people who are supposed to be knowledgeable about this. How am I successful in my own job? How will I be successful with this particular user? We do live trainings. They were probably more common before COVID. They have been transitioning more into digital versions, lately, and I think maybe the future will be some sort of combination. We have on-demand training, where you basically can go into tools, you can watch classroom material, et cetera.
Even in some markets, this is something you earn credits to keep your credibility or your license as a therapist. We have types of digital tools that you can log in and constantly refer to when working with these types of solutions. We have a big support team that speaks many languages, that are in many time zones. Again, Kenta and Victor, you already know, two examples of our excellent support staff. But we also of course have a lot of support and knowledge base, et cetera, when you need to troubleshoot or understand and come further with your products. Also, our users are fantastic support assistants.
We have big communities on social media, which I will cover on my next slide, where they actually help each other, and we're just there to seed and help and maybe sometimes rectify. Lastly, we also of course take care. Since we have a part of our portfolio is physical hardware, we're there to support, repair, change a broken screen. If something is you know, something has happened to your device, we're there to either change it and repair it to make sure that, again, our users are never left silent. I think the community is quite interesting here. Again, if you would like to get somewhat of the feel for what Tobii Dynavox is all about, do check out, for example, our own, our own community on Facebook or on Instagram, where there is a...
It's a big pot cooking 24/7 of users having, you know, tricky questions or simple questions or how to, or they just wanna shout out with excitement and say maybe sometimes they wanna shout out in with something that they are unsuccessful with. On Facebook alone, 65,000 members collaborating. We have staff in our team that are there again to seed, help, and support. Similarly on Instagram and on YouTube, but of course you have videos like the one you saw today, and some of them are even more instructional. Specifically in the education, special education space, these teachers and school staff, they have a big community, typically on our platforms, where they help collaborate and share classroom material.
This is a very, very important part of what we do because we may think that we are the world leader, but we're a big fish, but in a small pond, and there's never gonna be a way or a day when we can tell everyone everything. Collaborating with the people that are users and are around us is a very, very important and powerful way to get the message out there. It's time for a break. All right. Welcome back. I hope you have re-caffeinated, blood sugar is on a reasonably okay level, and maybe you got to try some of our products also during the break to get a better understanding what this black magic actually is in reality. We'll shift focus a little bit now and look at this.
We know the market, we know us as a company, we know the products, we know our users, et cetera. How are we planning to go about and expand both the business but also the strategy for profitable growth, which is an important element in how we plan to run this business? I think it's important to start by saying that Tobii Dynavox, we are inclusive by design. When it comes to what we do in the world, this obviously is well in line with the times, whether you call it the UN sustainability goals or simply being a decent member of society, this is what we do by the sheer fact of what our product does, not just to the users, but also to the people around them.
I'm sure that everybody can sign under the fact that there is a positive impact on individuals, the well-being of individuals, again, not just our users, but to some degree, the people around them. The quality of education for everyone, not just the lucky few, and also the inequality in society at large, making sure that despite whatever disability or hindrance you may have been born with or acquired in life, you are there on equal terms. As an employer, we also need to play this right. It has to be a great place to work. We have to take care and be a fantastic employer and build this creative yet mission-driven team.
We need to minimize the way that the climate is impacted when our products are produced, shipped, recycled, and the way we travel and the carbon footprint that we have as a company. Again, a diverse work environment, almost no matter how you choose to calculate diversity, is of course very, very close to our heart. If I just take some snapshots of the team, again, some 500 people in the fantastic Tobii Dynavox team, it's interesting that even though I think it's fair to say that we're a high tech and technology company, we're almost equally split in the middle when it comes to gender, both when it comes to the staff overall, but also when it comes to management layers, and in fact, board of directors. We have a diverse set of age groups within the company.
A metric that is more tricky to actually measure is the number of ethnicities or nationalities, but it's safe to say that well above 40 or maybe 50 nationalities or ethnicities in our company alone, which makes it a very, very dynamic place to work at. People tend to stay within our company. We have obviously newcomers as we grow with the company, but we have people to choose to make this a place where they wanna stay as an employer. A very, very dynamic team, which I'm super proud to be part of, to be perfectly honest. Coming back to taking this team, these products, and what we do, how do we
If we have to put into buckets, what are the different initiatives that we can influence, that I can do by not just riding the wave of the industry or the market or demographics, but actually, what can we do actively to grow this even further for the coming decade or so? I sound like a broken record when I say awareness. This is and knowledge is definitely one of the hindrances that we are experiencing almost on a daily basis. We wanna grow our own team and the representation we have on the field. We want to expand into new markets and also within the fairly well-defined market that we're addressing. There are new user groups and groups of users that we can still address better or really start to address.
We want to continue, and this is an obvious thing if you're, if you have a Tobii as a part of your name, that innovation and continue to build fantastic products and solutions. We would like to continue to take an active role in the reimbursement process. Last but not least, we believe that M&A is a good icing on the cake that we can make sure that we both grow more organically, but maybe add completely new revenues that we didn't have before. I will in a semi thorough fashion try to go through so that at least you understand roughly what's behind these headlines, and me and Linda will do that. We start with the increasing awareness.
Very interestingly, during the coffee break, this is the most common question I get, "You know, but why don't they know it?" I share your frustration. I think this is exactly what we need to come around. We have a painfully low percentage of people that are in need of communication aids that currently has access to these communication aids. The knowledge among the people who are supposed to know about this is painfully low. We are going about and training. In fact, I will come back to that, training is the new selling, what we minted just three years ago as the main strategy. We don't believe in the box pushing strategy where we actively sell one more device.
If we can increase the awareness and competence around this field, as the market leader, hopefully most of that business will also land on our table. In 2020 alone, Tobii Dynavox trained over 100,000 professionals and engaged people around our users. Massive scale for a relatively small company like ours, and that we believe is one of the most important levers we can pull in order to create the awareness. We're, of course, engaged a lot in big programs with user groups, with prescriber groups and industry associations, also in order to influence professionals. We're also engaging in all these grassroots initiatives that happen. How many here did the Ice Bucket Challenge? A few. How many know about the Ice Bucket Challenge? It created awareness around a very rare condition called ALS.
In this case, it's our own team using our own communication aid doing the Ice Bucket Challenge. The Ice Bucket Challenge was actually started by two Tobii Dynavox users in Boston, close friends of Tara, who's in the audience here. Unfortunately, none of them are still around. How can we be part of feeding into these grassroots moments? Because maybe we'll have a new Ice Bucket Challenge, and exactly what this happens is that it creates awareness around the condition, and if the condition is a user of communication aids, it creates awareness among the condition. This is something we actively engage in addition to, of course, the hands-on training. That's number one, increase awareness. The second initiative, which is actually closely associated with the awareness, is that we don't have enough people on the ground.
By just deploying more people on the ground who walk the walk, who carry these products, who talk about this, who assess a new user, who educates a new professional, we're of course creating awareness, but we're also simply increasing the size of our business. Our solutions are typically sold with a fair amount of physical hand-holding. You visit the user, you assess the user, but more importantly, you probably have a Gerber or a toolbox next to you to mount the device on that person's wheelchair or bed or the environment. It is a fairly high touch type of business. By simply having more people on the ground who helps more users and more people, that's a very simple, mathematically very simple way of actually growing our business.
We have two examples here of how this can be done differently. The first three scenarios is what we call territory splitting. So we have a solutions consultant. He or she is responsible for a specific territorial area, Ohio, in the first case. Okay, it turns out that Ohio has more potential users than this individual, this single individual can serve. There is a eval center in the north of the region, and there's an eval center in the south of the region. Okay, what happens if we simply cut the territory in two? The person who used to be there now focus on the north part of the region, and the new individual focus on the south part of the region. The business doubled. We have numerous examples how we'd simply do that, and we realize, okay, how far can we go?
We're not really sure. Geographical distances and actually boots on the ground is a very simple way for us to grow the business. Hiring more people, more salespeople is a very straightforward strategy. It's also how they work. Do I really have, as a consultant, to travel to help one patient and then help another prescriber, et cetera? Well, maybe there is a smarter way of doing it. That's where the training is the new selling. That's where if I instead focus my time on educating the prescribers, the professionals in how to do this themselves, I will of course travel less, and I will be more of a second-line support or account manager, et cetera. This is an example from what we did in Norway.
In the Norwegian market, like I said, is an important and strong market for us. We shifted the way of working for the Norwegian team to rather than going out and doing one-on-ones and then rather focusing on training, they have their own podcast on Spotify. The only thing we did different was to add another full-time trainer, a person who's a professional in the actual concept of training. In this case, she educated her peers, the same people that worked here before, in how do we train rather than doing transactional sales. What happens with the same people, 50% growth. Again, putting more people on the ground and having them working, maybe one of my favorite sayings is, "Work smarter, not harder," is exactly what we wanna do.
We believe that simply putting more people on the ground will linearly grow our sales at the maintained margin. We talk markets. As we may understand, each market is different. First of all, in many markets, you speak a different language. You are likely not that successful in Norway if your product is in Greek. But also each market has its own dynamics. The funding bodies are different. The education system may be different, for example. Currently, Tobii Dynavox operates in a direct fashion in four different countries. It's the U.S., it's the U.K., Norway, and Sweden. In these four markets, we have our own specialists on the ground. They work directly with the prescriber and the user. That's the dark blue markets here.
In the green markets, we work through a network of almost 100 partners. They are resellers. They, in essence, do what we do, but they are, it's a different company. They sometimes are exclusively selling our products, and sometimes they are, you know, a jack of all trades. They may sell home automation products or home adaptation products or low vision blind products, for example. We notice that also in the markets where we have a partner, if we put a person physically in that market who speaks the local language, probably comes from the local network, we are much more efficient in both doing the training that we talked about before, that trains the professionals in the field or our own partner. They're also there in a much faster way to gain market understanding.
Maybe we should do something slightly different in the market. If we have our own colleague physically, geographically present in that market, we believe the market basically grows faster. Expanding our footprint of our own staff and the markets where we operate is a very clear growth strategy for us beyond the four markets where we do basically everything ourselves. I will actually come back to this topic also on my last bullet. If you have anything Tobii in your DNA or in your history, innovation comes quite close to our hearts. I'm an engineer. I have to say I love the fact that we also do quite cool stuff. Sometimes innovation for us doesn't necessarily mean groundbreaking technology that does something that wasn't possible before.
I think it's safe to say that with the current portfolio of products, hardware, software, content, we have a very solid foundation to stand on. There is no cold fusion thing that I need to still to invent in order for us to be more successful. We could also be a little bit critical, our own critics in saying that maybe some of our past, we made products that are a little bit too engineer-y, products that are a little bit too complicated to get started with. That maybe if you decided early in life that you wanted to become a speech-language pathologist, you probably also with that choice decided, I wanna work with people, not computers.
All of a sudden, me or Linda or one of our colleagues come in and, "Here we have this great product, and you can control it with your eyes." That could be almost intimidating. By making products that are simpler to use, where you basically lower the barrier to get started, to get your first success, to understand it, and hopefully over time grow, that is an innovation we're focusing a lot on. I think it's safe to say, which I told some of you during the break, that maybe the biggest novelty with the product that we're doing with Apple, it's not that it fundamentally changes everything. This product does exactly what our Windows-based product does. It costs as much as our Windows-based product. There is no fundamental change in the way how we go to market with this product.
Of course, the familiarity with Apple's operating system, that it's integrated directly into the operating system, that there are no seven steps to get started, et cetera, that is the type of innovation we're focusing a lot on. Usability in addition to technology. With that said, yes, there are some cool innovations we're still working on, and some of them are very difficult. Some of them may materialize in a decade from now. Yes, there's definitely some cool things that is in our laboratories and being worked on. I wouldn't say that is the number one priority for us to disrupt it from a tech perspective. It's usability which is important. We have a very strong team here. We have Al in the room, for example, who's responsible for engineering team.
This is a team that works a lot around how we develop artificial intelligence, how the acquisition of Acapela centers a lot around deep neural technologies. How can we make this smarter? This is the type of competence we have in-house, software, hardware, and technology. Linda.
Yes. We talked about the funding system before, and we think one of our strategic initiatives going forward is really to work and improve the reimbursement process. We go direct U.S., U.K., Norway, and Sweden, as we said earlier, and we have all of these 400 contracts. We think that if we continue to get more and more contracts, we continue to work with the process and improve that. For example, I think, I mean, if we can get rid of some of the faxes, it might be a little bit more faster process. We think that if we can lower the cycle time from when you do the assessment as a user until you actually get the device, it's really gonna help us.
We know that other markets are really immature and don't have much of an infrastructure, and we think that we can take this knowledge into other markets, and that's gonna be important for the future.
Right. Because we believe that these products will continue to predominantly be a prescribed product. Again, the similarity to other types of assistive technology cements that position because what you get when you get the communication aid is not just a communication aid. It's typically an element, a part of a much bigger solution. You're probably, if you're using eye tracking, you're confined to a wheelchair. Maybe you need help breathing, maybe you need help with nutrition and food, and maybe you need adaptations to your home. The communication aid is one part of a probably more complex total solution around you. Hence, public and private insurance systems will continue to be a very important payer in this market. Hence, us focusing on the processing and the know-how around that is a key growth factor also for us.
The last growth part is about acquisitions. If you look at the history of Tobii and Tobii Dynavox, and specifically on the assistive space, we've made a fair number of acquisitions in the past, where, of course, the acquisition in 2014 was quite pivotal when we acquired DynaVox. Also before that, we acquired a U.S. company called ATI and a Norwegian software company called Viking Software back in 2007. Then cementing our most recent acquisition, again, the Acapela Group, which we made just a month and a half ago, to also make sure that we have a superb offering but maybe more opportunity for engineering and innovation with synthetic voices. When we look at our strategy for inorganic growth through acquisitions, we can simply put them into two different buckets.
The first bucket is add a solution. That is where you have the Acapela acquisition. Either it could be something that we could acquire to complement our products. It could be a solution that is specific to a specific user group, or maybe it's a solution that exists in a language that we currently don't have support for. It doesn't necessarily have to be some shining innovation per se, but definitely something that makes our products in the markets that we're currently addressing better. That is an interesting opportunity, and we have quite an interesting pipeline of potential targets here. Maybe an even bigger opportunity short term is to add presence through acquisitions.
Because if we want to start fresh in a market where we currently have no presence, signing up for a co-working space, hiring a person, hiring a second person, starting to do everything from scratch, that's probably a quite slow process. If there are players in the existing ecosystem which have geographic presence, staff, and of course, access to the local network, that is a very interesting M&A opportunity also for us. I would say that similarly here, we have a very interesting and compelling pipeline of different targets. From a business perspective, these are typically cash flow positive, quite non-complex in terms of integration, maybe some of them we already know and we're already collaborating.
Doing that and of course, integrating them successfully into our company, which we do have prior experience of, is a very important gravy on this little pie to make sure that we can grow this faster. Right. With that segue, we should now hand over the mic. Do you wanna have the clicker as well?
Yeah, I think so.
To Linda, and we will talk more about financial performance and targets.
To the fun part. We've heard Fredrik talk about the market that we are working in. We have talked about the position that we have and the under-penetration in the market. We have talked about our solution, we have talked about the offering, et cetera. Let's talk about our financials a little bit. Tobii Dynavox has been a business unit of Tobii for a very long time, and we have proven to deliver growth and that with a profit, which is really good. I think from before the pandemic, we could really show that we had an organic growth over 10%. As I mentioned earlier, 2020 might look like we were resilient to COVID, but we were not able to meet the users. Schools and rehab centers were closed. The sales process was really challenging.
You can imagine having a Zoom meeting with an autistic kid. That is not easy. Remember, the need is still out there, even during and after a pandemic. We really need to get out there. 2021, we've also been affected by the supply chain disruption. Adjusted for this, we see a strong underlying performance in the business. To give you some background about the accounting principles, since Tobii Dynavox has been part of Tobii, and as of the IPO in 2015, we've been using IFRS. In the beginning of 2019, Tobii Dynavox has been operating as a legal entity, a standalone legal entity, which means that we have had our standalone cost. Therefore, the separation is not a huge big thing for us. We think that the cost will be actually in line with history.
Tobii Dynavox is really a robust company and have a record of delivering profitable growth. First, to give you a little bit of background how our currency look like. More than 70% of our revenue comes from the U.S. and U.S. dollars. Our top line can really have some currency fluctuations, but it doesn't mean that we have a big effect on EBIT, because the major costs, actually over 80%, are in U.S. dollars. We have kind of a internal hedging. Where does the money come from? We have said a couple of times that we go direct in a couple of markets. Our direct sales stands for more than 80%. U.S. stands for over 70%. In 2020, already said that, versus 2019, we had an organic growth of 1%, but still impacted by COVID.
In the nine months of 2021, we saw an organic growth of 2%. We still have negative impact of COVID. We also have had both supply chain problems and logistic delays. The supply chain problem and the logistic delay that we had in the end of the period, we actually needed to push 34 million SEK in revenue into future quarters, most likely into Q4. Next slide. Looking at the gross margin, we have actually been pretty stable between 65%-66%. During prior year, we've been able to negotiate the production cost, which have then improved the gross margin. But during 2021, we've seen that the component shortages has really affected our gross margin negatively in the later part of the period.
The cost base, of course, has increased in 2021, the nine months, but majority of that relates to in 2020, we had all the workforce reduction, we had government grant, we didn't travel, and all of that. That means that's a big part why we have the increase. We also started to recruit to be able to gear up for the future. I will talk a little bit more about the R&D on our next slide. If we look at EBIT 9 months, we had 7% in EBIT. This still, remember, we are highly impacted by COVID. We had the supply chain problems. We also pushed then those SEK 34 million, if we convert that to EBIT, we pushed SEK 25 million into most likely Q4.
We've also, in the first nine months, have lower capitalization and higher amortization, which affect the operating margin with SEK 9 million. We've also had some costs related to spin-off, more like one-time cost. That is about SEK 4 million. If we would adjust for both the pushed revenue and the one-time cost related to the spin-off, our margin would be around 12%. Back to R&D and the investment. Fredrik has already talked about that we think that we have a product portfolio to go into the future, but of course, we have and will need to continue to invest in R&D. Historically, we've been spending about 14%-70% of our revenue in R&D. We capitalize around 60% of our R&D spend yearly, and normalize, we depreciate the capitalized R&D cost over two to four years.
With this, I think that we have a good balance both between capitalization, amortization, and the level of R&D spend we have today. Net working capital, I think we have two forces. The majority of our payers, they, of course, pay upfront for a device. 90% of that revenue we take immediately, but 10% we actually defer on our balance sheet for future commitment. That type of future commitment could be that you break the device or you need to call our support, etc. We then use that against those commitments. This is, of course, in conjunction with IFRS 15. Once again, remember, the payer pays it upfront. The other force is that we have the special education, which is a subscription model.
Normally, customers usually pay between six to18 months in advance, but then we defer it over the period of the contract. That's also really good and attractive from a cash flow perspective. Of course, we will tie up some capital related to that we are gonna grow and we have inventory, et cetera. Overall, our working capital is really attractive, I would say. Once again, remember, the customers that we have as payers are actually public or private funding bodies, which are really reliable customers. Looking at the financial position, if you look at the left side, you see how it looks at the end of September. A lot has happened post Q3, which I think is important for you to understand, and that is in relation to the separation from Tobii.
During October, we have drawn the term loan with Swedbank of SEK 550 million. We also have an undrawn facility that we will be able to use for acquisition later on a SEK 150 million. We have repaid the loan with Tobii. This is really to clear out all the transaction between each other and to make sure that we are two independent companies. As part also as the separation, we have actually purchased a perpetual license to be able to use Tobii in combination with Dynavox. For this, we paid SEK 280 million. Also in October, Tobii actually had a directed issue and what we got then, an unconditional shareholder contribution of SEK 75 million to make sure that we strengthen our balance sheet on our side.
We already talked about the acquisition of Acapela that hasn't, you know, been completed yet, so no change in cash flow from that perspective. Looking at all of these transactions, we feel that we have a strong financial position to becoming a publicly listed standalone company in a couple of weeks or so. Fredrik, the important part.
Yes. In conjunction with the communication around the public listing, we issued an information brochure, and in that brochure and also in a subsequent press release, we clarified the financial targets for Tobii Dynavox. Maybe this will make sense now once you looked a little bit and you have a better understanding of our market. There are some forces that of course underpins growth of the markets. There is also some forces that unfortunately slows down the potential growth of this market. We have expressed our long-term targets that we would increase the revenue adjusted for currency of this business by more than 10% per year. Remember, if that is more than 10% per year, at least our ambition is that that is for decades.
Because even with this pace, we will not have served the majority of the people in need in quite some time. More than 10% adjusted for currency over time. We want to have profitable growth. Coming back and delivering on an EBIT margin in excess of 15% is also part of our long-term goal, so profitable growth. If there is one thing to say in conjunction with these two numbers is that we, if given the choice where we have to focus on growth versus profitability, we will still stick to these financial targets, but growth will take precedence in the priority there. Secondly, given the cash position and the cash flow profile of this company, we believe that this is a company well-fitted for a certain debt leverage.
The goal is to have a debt leverage of around 2.5x the last 12 months EBITDA, ±0.5x, so in essence between 2x and 3x last 12 months EBITDA. When it comes to paying dividends, I think this is a dear topic, especially given what we're doing now. We're gonna land being a publicly listed company. We're gonna, of course, deliver on our plan, etc. The board of directors has taken the decision as of for now that we will continue to evaluate M&A opportunities and other strategic investment opportunities before we start to pay dividends, but then we will pay dividends.
The expression is, "The board of directors shall continuously evaluate the possibility of dividends, taking into account potential acquisitions, opportunities, and other strategic initiatives." This is what we're gearing up for. We're actually starting to come to the end of the one-way part of this presentation. I am very grateful that you have stayed awake and quite attentive, at least you here in the room. Just to tie everything together on what we believe, both our company, the company we work for, the market we operate in, and also for those interested in having this as a part of your investment. Tobii Dynavox changes lives. We give people the power to be you in a very concrete, fundamental way.
What we do has a huge impact on so many millions of potential individuals out there, and we wanna do it in the right way, and we're focusing on empowering people with disabilities to do what they once did or never thought possible. We have put this into five main reasons why we believe in Tobii Dynavox and why we believe you should believe in Tobii Dynavox. First of all, what I just touched upon, the revolutionary and life-changing impact of what our products does. This is must-have, not nice to have in the most fundamental way, and not just to the user themselves, but also all the people around them. We are the clear global leader, but in a very niche market. We are the specialist. There are significant both entry barriers, but also playing our cards right, we will keep a market very close to us.
It's underpinned by the secular growth because we all believe that society is almost wherever you go, moving into this direction, inclusion. Thirdly, we have a very comprehensive offering. It's not just a device, it's not just a hardware, it's not just a software. We follow the entire journey of our users and the people around them. We take responsibility both for educating the market, having the right content in the right language and the right localization, but also we're there to support you through the funding process and the support process once you have a product. We have a clear track record of profitable growth, even when circumstances has been quite tough. We understand how to run this company. It's very, very robust. Of course, to paraphrase one of our colleagues, what will happen when we fire on all cylinders?
We believe exactly that this is a huge opportunity also from a financial perspective. There is substantial value creation, we believe, in the separation of what we do. From an internal perspective, we're standing here today and we're talking about one topic, one user group, one mission. This is no different from when we talk inside the company, when we spend time on just doing what is the right thing for our users. With that said, I am a big believer in what Tobii does too, but focus is something very, very important when you wanna run a company. The fact that we are cutting the Tobii Group in half, having 500 people on our side and roughly 500 people on the Tobii side, also makes this much more easy to run. Also from an external perspective, we're no longer mixing two quite different fundamental business.
We're creating a clear-cut investment opportunity with Tobii Dynavox being centered about exactly the types of users, the markets, and the financial profile that we have, whereas Tobii represents something else, which you will be super excited about in the session after lunch. It is one more thing that I want to add. By doing this and doing it well, we are also, regardless whether you work on the Tobii Dynavox side of this part or whether you're part of the investor community, we're doing some significant impact into the world. What we do makes a difference. Of course, if you can combine that with a super exciting business opportunity, I think this is a pretty exciting journey to be part of, which I am very much looking forward to.
With that said, we're concluding, but me and Linda are here, and I see that Henrik is almost vibrating because there are so many questions in your computer and maybe from the audience as well.
Yes. Thank you, Linda and Fredrik, for a great presentation of a truly fantastic company. It's now time for the Q&A. Once again, let me remind you that, for people joining the webcast, there is a Q&A function available. Please feel free to bombard us with question there, and I will present them to the management team. But remember, there is a time lag, so post them sooner rather than later. Let's wait for the audience to come in with some questions online and the analysts to prepare questions. Meanwhile, I have a surprise. Fredrik, you mentioned maybe we should start an Ice Bucket Challenge, so I actually arranged an ice bucket here.
How nice.
I will put that here.
Yes.
I'll let that mature in your mind for a while.
We will keep cool.
Yeah. Great. I don't know, do we have any questions from analysts here on stage? And for the production team, we will use this mic here. Okay. It sounds like it works, right?
Yes, sir.
Great. Daniel Thorsson from ABG. I start off with a product-related question. How do you think the product portfolio will look in, like, three to five years? Today, you explained the content, the software, the device. How will it look? A follow-up to Linda on that, how may that affect the gross margin longer term?
It will look largely what it looks like today. There are no fundamental changes in product composition. As I alluded to before, I still believe that this is, for the foreseeable future, a type of product that is prescribed for, which means that it's paid for by a certain type of funding body who have specific requirements on medical certification, ruggedness, et cetera. The simple answer, we will continue to innovate. It will be similar to, in composition, what it looks like today, but better, even better.
If you look at the gross margin, we think that we will continue about the same level as we have today. Of course, we are able to negotiate our production cost, but we also have some scalable parts in the gross margin.
Yeah. We don't necessarily foresee a change in the
In price, no.
average selling price for the type of product, et cetera. Similarly, like Linda alluded to, the cost for us to produce and sell a product, the variable part, yes, we will be great negotiators, and we will design products that are, of course, better and cheaper and smarter in every sense. But, don't expect a fundamental change in both in, you know, sales model, ASP or gross margin.
No. Now it doesn't.
No, not now. Maybe now.
Yeah.
Thank you very much. The second one is on TD Pilot, recently launched. Is that a consumer-paid product or a reimbursed product?
It's a reimbursed product.
Okay. The follow-up on that is that, is the emergence of consumer electronics important for you to grow longer term so that people can buy products related to what they already have at home?
I think that if you would've asked me five years ago, I would have probably expressed that I know, yeah, one worry is that there will be a disruption from consumer tech companies that will basically take over what we do. What has happened in those past five years that rather than that happening, we have come much tighter together with the big tech companies. We have, for quite many years, worked closely with Microsoft to enable Windows operating system, Microsoft Office, et cetera, to also be accessible, used towards the audience that we serve. We launched a year ago a quite close collaboration with Google to enable Google Home directly in our devices, so you can control the lights, you know, everything in your home using Google Home. Of course, the collaboration we're doing now with Apple.
What this is a good example of is this is a niche market. This is a market that has some quite fundamental differences from selling things over the counter. For these companies, the accessibility space is super important, both from an ESG perspective, but also from winning big tenders with, you know, national customers or public institutions. What we provide is the enabler. We provide the tick in the box and the collaborations for those big companies. Right now we're working in tandem. The technical solution that you would solve with an iPad, fine. You could do that, but the iPad breaks, the iPad doesn't have the right speakers. There is no speech-language pathologist that comes with your iPad helping you to get successful.
Familiarity may be a good thing, but no disruption the way we see it, at least.
Okay. See if it works. Okay, now. G- Yeah, that's great. Final question on the EBIT margin target. Given that you have a 65%-66% gross margin currently in the business, many similar companies have much higher EBIT margins than your target of 15%. How should we think about that long term? Could it be 20% in a longer-term perspective, or?
Should you or me? I can start.
Yeah, you can start. Yeah.
No, I think for us, considering the market situation, we really want to make sure that we grow the market rather than getting over 20%.
Okay. Do we have any more questions in the audience? We have one at the back here.
Yep.
Okay. Testing. Hi, Erik Larsson from SEB. Just to follow up on the EBIT margin question there, 'cause you've had EBIT margin targets of 15%-20% historically, so I guess you could reach them in the future, but-
Yeah
after you sort of prioritize growth, what could the long-term margin be, say, 10, 20 years from now, I guess?
I can probably start. What you're referring to is the former financial targets for Tobii Dynavox expressed as an interval 15%-20%, and that has been rephrased to over 15%. The difference is semantics, and the difference here is the fact that it's very difficult to say a span, because if I say 15%-20%, everybody hears 20. We would like to say that when we're over 15%, then I think we've reached a level where we are pacing it right. As Linda alluded to, any excess profit there is most likely more well invested into increasing the growth. Having said that, we have delivered on +20% EBIT margin in the past, also during times when we've been, you know, investing a lot.
I'm by no means counting that out as not being possible. Again, we have a super under-penetrated market, and we are currently at least of the mindset that, once we are at the suitable profitability level, 15% or more, the majority of excess funds will be invested into growth.
Okay. Thanks. On training prescribers, you mentioned 100,000 last year, which is up significantly from earlier years. Have you been able to notice or reap any benefits already from that? Presumably, this will compound over time 'cause these can, you know-
Yeah
meet people every year and such.
In certain markets, yes. Because in certain markets, we're dealing with a prescriber community that is actually a licensed job. You cannot just go out and call yourself a speech-language pathologist. It's a licensed job. Of course, with them, we will be able to, in certain markets, know who they are, their association number, et cetera. Of course, we have metrics where we can then say, "prescriber A, B, and C attended this seminar or this training," and then we can track that prescriber over time. You know, do we see any difference in prescription levels, et cetera? It's not everywhere. It's not everywhere where we have that transparency.
What we believe, however, and one of the clear focuses for our reps in the field is to try to get the so-called one and dones, or the ones who prescribe one device every year to prescribe five or 10. Because the more accustomed they get to our products, the more familiar they get with our products, in fact, the less we have to handhold them every time. We're trying to, with the training efforts, actually try to move prescribers from doing, you know, once every year or so to actually prescribe on a more continuous basis. That in itself will serve both us, but maybe most importantly, the user.
How sort of comprehensive is this training or licensing? Does it take hours or days? What's the incentive for them to do it?
Again, there's a little bit of difference on the market, but basic scenario is you have, you know, the get used to training, and then you have level A, become an expert, and then all the way up to becoming a black belt in a certain area, et cetera. We don't believe necessarily that you're away for a week and so, kinda get the diploma, et cetera. They're typically chopped up. You're actually touching on something very important. There are only, as far as we know, two markets in the world where there is a mandate for you as a prescriber, in order to keep your license, you need to maintain your knowledge by continuing education.
Every year, you need to participate in a certain amount of trainings within your field in order to keep your accreditation as a speech-language pathologist. Those two markets are the U.S. and the Netherlands. There might be other markets, but what we're aware of. We are in most of these markets, we are an accredited trainer. If you participate in our training, you will actually receive those training credits. Hence, there's an incentive for you to participate in our training, well, to keep doing your job, basically.
Okay. Thanks.
Okay, thank you for that. We have received some questions via email from Daniel Djurberg, analyst with Handelsbanken. He asks, "Have DynaVox experimented on communication aids also including augmented reality or virtual reality headsets for customers? If so, are there any use cases you can share with us?
Yes. No, well, jokes aside, we have experimented, absolutely. I think that there are some exciting potential opportunities, but again, remember, a virtual reality headset is something you wear. The way the technology looks today, it is maybe more at this point, a part of an educational platform. Experience something that you can't experience, et cetera, but as a communication aid, we haven't really seen any breakthrough products. We're super excited. Again, we have the Tobii blood in our DNA and the engineering and innovation, so we're definitely experiencing that. I have yet to see a rational and, you know, an implementation that can be taken to scale that makes any sense at this point.
Good. Thank you.
With that said, sorry if I interrupt.
Yeah, no.
There is of course a lot of interaction that is happening with specifically eye-tracking-enabled devices. It's not a virtual reality per se, but we have a lot of sensors in our products. We know where you are, what time it is, and so forth. We can augment a lot of your communication on a contextual basis, and of course, there are some innovation here on when we can use those sensors to build even more immersive type of products. Wearables at this point is not something we have actually seen technically feasible.
Thank you. DynaVox has signed a license agreement with Tobii with regards to brand usage and also a 60-month long supply and license agreement. Can you comment on the financial impacts of these agreements?
Yeah, hardly none. As I said earlier, we have been structured as being a standalone company, historically being part of Tobii. The license agreement that we have today is actually more or less the same pricing.
Yep. Arm's length set up.
Thank you. And the license mentioned is limited to the current DynaVox products, I-13, I-16, PCEye, and the new TD Pilot. DynaVox also has the right to build further on its own software. Should we expect new licenses for new products ahead, or is there a risk that Tobii Dynavox will choose eye tracking from a Tobii competitor on the back of, you know, price versus quality ratio not being good enough?
If the last comment was true, yeah, we would definitely see and say, you know, if there's something else or something better out there, I can, with a straight face say that there isn't, that isn't the case, and I absolutely expect and assume that also new product launches, et cetera, will include Tobii's eye tracking.
Thank you. That feels good for us, by the way. The PCS symbols language, how is the competitive landscape in terms of languages from a global perspective? Let's, you know, say for example, the APAC region?
There are a handful of other symbol sets out there, if we start with the actual symbols, and I think it's a matter of taste. You know, do I believe that happy should be represented by the way we represent happy or someone else represents happy? What I can say is that once you have embarked on a journey of picking a certain symbol set, there is a fair amount of stickiness to it, because then happy may look different to someone else. You're also alluding to what I interpret at least, or the person asking the question about localization, and here it's something different. Localization is, of course, translation, but if you think about the symbol for breakfast, it may look very different in Germany, in Japan, and in Sweden, for example.
We are working actively on localizing the content, not just translating the content. Currently, we're localizing our content on the symbols into 14 different languages. As we expand into new markets, then of course, localization, including what breakfast looks like, by the way, into more geographic scenarios, et cetera. I think we have a very strong position there. Localization can also look different. Right now, what we put a lot of effort into lately is diversity, so making sure that we have all kinds of religious beliefs, skin tones, colors, and most recently, together with Acapela and other industry players, we also launched voices that are more diverse, which has, for example, in one example, a more African American sounding voice, which is super important.
This becomes a very complex area of localization and diversity at large.
Good. We have some questions on the web coming in as well. From CM, we have, "You will be very indebted after the split from Tobii. How much financial M&A capacity do you really have?"
We have an unused credit facility with Swedbank for SEK 150 million that we are able to use, and of course, our cash flow, as we were talking about, are pretty attractive.
Yeah. Maybe what I didn't mention during the session talking about acquisition targets, the types of targets that we have on our radar aren't, you know, big, bombastic, billion-dollar deals. I would say it's more on the numbers, and they're quite small. You know, most of them are reasonably small. I think that the Acapela acquisition, again, with the total consideration of under EUR 10 million and frankly, a pretty decent cash asset as a part of that deal, is somewhat telling of a fairly large deal in our space. With SEK 150 million facility of specifically targeted towards M&A and our underlying cash generating business, that's the number one route how we're gonna finance acquisitions.
However, we will have a new currency in a Tobii Dynavox standalone share, if that is something that is more preferable, maybe not for us, but maybe by the buyer who wanna be part of the journey. If we do find that super golden nugget who will change the world, then maybe we will talk to the investor community to see how we can raise more cash. Again, the cash. The typical targets that we're looking at are within the limitations that we currently have at hand.
Can you give an update on the component shortages, input cost inflation, and the logistics situation?
Ooh.
It's complex.
Yeah. Component shortage, if you start with that, just so that we decipher what does this mean? Well, a typical component shortage could be we, during the spring, we had issues finding 13-inch LCD displays. Why was that? Well, because every institution of the world that did education needed to produce small laptops for their students so that they could do homeschooling, and all of a sudden there was a big shortage of 13-inch displays. These are the type of component shortages that are popping up, and it's very specific, a COVID-related thing, 'cause otherwise these are, you know, the components that would be quite easy to get a hold of. Our way of mitigating that is to either try to find them, pay more and, you know, fix the problem that way.
That will have impact to some degree on our bill of material. The other way is to say, "Let's no longer be so reliant on that specific display. Let's redesign our product and instead buy components which are in great supply, but we need to do a little bit of a rework." This is what happened this spring. We actually knew about an upcoming component shortage for specifically displays already January timeframe, I think. We then spent a lot of time redesigning our, in this case, 13-inch communication aid in order to accommodate for a screen that was not in short supply, and unfortunately, we couldn't deliver that product until just after the cut-off of the mid-year or after July 1. That had an impact, and it was actually a fairly big effort to fix it. That's the one fix we have.
The other types of component shortages, and maybe more importantly, logistics shortages, they are much less complex. It's basically it takes two weeks rather than three days to get a thing from A to B, but we will still get it. It still exists. It's still being produced. It's a complex material. Logistics have also become more expensive. 2021 was rough, specifically during the spring. We still managed to deliver a gross margin pretty much in line with what we did in the past. I think that's indicative of what we believe, what kind of hailstorm can hit us in the future.
Thank you. Can you discuss the historical R&D levels, and the status of your product portfolio? How should R&D grow versus revenue?
We think that we are on the level right now. That's probably how we will have it historically, since we have the product portfolio, we are, I mean, geared for that for the future. Same level as we are now is pretty good.
The slide is no longer, but we've been historically around between 15%-17%, et cetera. I think it's fair to say that we have a large portion of a product revamp, which actually happened after the acquisition of DynaVox back in 2014. We did a fairly big remake, but we believe that the current product portfolio at large is well-suited for the future. We're gonna still continue to invest a significant portion of it, but think about this on stable level as with the growth of our revenue.
Tobii Main Co seems to control most of the group's core IP assets. What IP assets do Tobii Dynavox have?
We need to go back a little bit and remind ourselves the user group that we serve, the 50 million people only, some 10% of those or most likely less, need eye tracking. Eye tracking is a super important component of our devices that needs to be controlled by people who have a paralysis or unable to use their limbs. When it comes to the IP on the core components, we continue to buy those components from Tobii, just as we did in the past, and Tobii obviously owns the intellectual property for the eye tracking component, in the same way as it has done before. Tobii Dynavox, on the other hand, if you think about where we stand on an intellectual properties perspective, that's the next level of the cake, so to speak.
It's either in the interaction method, specific interaction for people with various conditions, but it could also be in the physical design of a communication aid, how it's mounted, and so forth. That, of course, is intellectual property that we will continue to invest and build on and that we also continue to own also post-split.
Great. What are your plans about capital allocation, and where do you see Tobii Dynavox in five years from now? I think it's two-part question maybe.
Oh, good question. I think we probably I mean, we need to continue to improve our balance sheet going forward. That's part of why we also haven't done that we will continue to invest in growth and will continue to deliver profit at the same time. I think that's gonna be our main focus initially.
Again, we should be a company that has debt leverage at a certain point. I think the targets that we expressed over roughly 2.5 times last 12 months EBITDA is where we should from a debt leverage perspective be. When we're in excess of that, as we expressed in our dividend policy, we either continue to do really exciting stuff, or we will share whatever excess
Yeah
Funds we have there with our dear owners.
Great. Do we have any new questions from the audience that we should take? We have some more down here.
I'm still continue to ask questions because there's a bucket of ice here. We can just procrastinate.
Daniel from ABG again. Just a question on growth. You have a target of more than 10% a year. Can you split it out on organic and M&A driven part of that target?
No.
No.
No, but it's gonna be a mixed bag. I think there will be times when it will be, you know, more of one and less of the other and vice versa. We don't have a clear expression exactly how that is being split out.
Okay. The second one is on M&A and the M&A track record. For the ones who have followed Tobii for a couple of years, you did the acquisition of Smartbox a few years back that was not approved by the competition authority.
Yeah.
Is that the risk going forward on the M&A strategy, that you will be too big basically in some markets or product categories?
That was a very specific scenario, which was also completely unexpected by not only us, but the entire profession. Yeah, obviously ended up in a way which we didn't think was favorable, where we eventually bought the company, and we were eventually forced. Even though we sold it for the same amount that we bought the company for, it was of course an event that was not the way we wanted it to be. I think we still have to understand that this is a market which is barely penetrated. The vast majority of the market is not split up between company A, B, or C, that should be interpreted as being a competitive strain on kind of who has which part of the pie.
If the pie hasn't really been created yet, I think that those scenarios are quite unlikely. Black swans and unexpected things do happen, so I'm not gonna stand here on the stage and say, "No, that's not gonna be an issue going forward.
Okay. The last one related to M&A as well. How should we think about continuity? Will it be one or two a year, or will it be one every third year?
More the first version.
Okay, thanks.
Good. Thank you, Daniel. We have some more questions coming in here, and we have more time also. Could you please elaborate a bit more on the importance of key opinion leaders in the process of creating more awareness?
Pivotal, because the alternative is that we will be the ones who will be out on every street and every corner and tell everything, and we're proud over our fantastic team of 500 people. In the grand scheme of things, we're nobody. We really need multipliers, the ones who can carry our water, who can tell our story. Regardless if you're a shareholder, if you're a user or anything in between, it's pivotal, so we totally need them. It's proven to be important also in the past.
Good. One final question.
Which KPIs are the most important for the board? We have some board members here and for the CEO.
I want to answer this, like in one question and of course, if I have to pick one, it's revenue growth. At the end of the day, there are some KPIs which are much more fundamental, telling us the quality of what we do and how we do things, and they are KPIs such as Net Promoter Score. Net Promoter Score is we go out, anybody who's been interacting with us and asking them, "How would you rate the service or the product or your experience with Tobii Dynavox on a scale of one to 10?" We're putting that probe into a lot of things we do.
We have in certain cases, for example, the ones who have experienced our funding service in the U.S., we have from time to time over 90, which is very, very high. We also have customers who come back and says, "I was not pleased with this." Similarly, we ask our staff, "How happy are you to work for this company and, you know, be part of this team?" At the end of the day, those kinds of indicators is something I can actually monitor. I have it on my starting screen whenever I open up my computer, and they are really good indicators of what will happen to us, not next quarter, but a year out or two years out.
I say, yes, I do watch our sales numbers every morning, but I also definitely watch our, you know, the quality measures on how we operate as a company, what our customers perceive experiencing dealing with us or dealing with our products. Great. With that, I think we'll round off the morning session. It's almost afternoon now, so I think that's appropriate.
Good morning. Thank you, Henrik and Henrik.