Earnings Call: Q4 2020

Feb 4, 2021

Hi, everyone, and welcome to Tobi's Year End Report. New Year and new possibilities, and I think we are all looking forward to a year that is better for the world than what 2020 was. But today, we will look back at the Q4 of last year for Toby, and also summarize some points of the year as a whole. But before we dig into that, I would like to introduce a new member to our team, Magdalena Rodell Andersson, our new Tobey Group CFO, who started just a couple of days ago. So Magdalena, I'll let you introduce yourself. Thank you, Henrik, and hi all. I'm very happy to be here. My background is that I've been working within companies selling consumer goods For the most part, like for instance, food and clothes and also plants, which was my last, but one assignment being the CFO and Deputy CEO of Plantation Group. And then my last assignment was being the CFO of Okay. QA Scandinavia. But now I'm here at Tobi, this very interesting company and Which I feel has a great potential. And again, I'm very happy to be here. Great. Again, welcome so much, Magdalena, to the team. Thank you. So we also have Linda Thiebring with us today. And Linda is, as you probably know, she's CFO of the Tobii Dynavox division, but has also been interim CFO for the Tobii Group during the fall. So therefore, Linda will also present the financial parts of the report today. After the presentations, we will also be happy to take questions, of course. So any questions you may have, feel free to post them in the chat as we go. So with that, let's get started. As a group, we continue to face pandemic related headwinds also in the Q4 of last year, but the impact was less severe than earlier in the year and the underlying strong momentum in our businesses pushed us back into organic growth for the group as a whole, which was great to see. Currency adjusted, we actually delivered and new all time high revenue, both for the group as well as for Tobii Dynavox and also the Tobii Pro division. We also continued to improve the operating results. The improvement was significant, in particular, if you take into account currency translation effects. Actually, had we not had those currency effects, the operating result would even have been positive in the quarter. With a strong finish to the year, we are confident in the strength of our business and our ability to continue to show good revenue growth and improving profitability. And we therefore introduced a clear target of positive operating result for the full year of this year. Let us dig a little bit deeper and let's start with And as you know, Tobii Dynavox has a rock solid position as a global leader in assistive technology for communication. As we have discussed before, Tobii DynaMox has been significantly impacted by the pandemic since restrictions in society have made it difficult for us to interact end users, with therapists, with healthcare facilities in effective ways. And this has been emphasized by the fact that Many of Tobii Dynavox end users are also in risk groups for COVID-nineteen. Schools are also an important part of the market and many schools have continued to be fully or partially closed, in particular in the U. S, which a majority of Tobii Dynavox revenue comes from. Despite this, Tobii Dynavox continued to deliver organic growth in the Q4. It was at the point where it was even an all time high FX adjusted for the division. So with Dynavox made several product announcements in the quarter, we have started the rollout of a new generation of Boardmaker, which is the world's leading software for creating curriculum content for special education. We launched the new speech case, which transforming a regular iPad into a competent communication device and we've integrated a language system called Pod into our products, which has been requested by some of our user groups. Looking at the full year of 2020, we delivered a small organic revenue growth despite the severe negative effects of the pandemic. I am really proud of this achievement and this is testament both to the very strong efforts by our team as well as by the underlying strength of the business and the market that we operate in. And during 2020, we saw a positive continued trend in reimbursements, specifically in assistive technology for communication. Several countries, both in Eastern Europe and in Latin America, introduced improved funding schemes for our types of solutions. Awareness and knowledge are still low in this field, also among professionals. And Tobii Dynavox is investing in large scale trainings to help overcome this gap and drive long term growth. During 2020 alone, we trained over 100,000 people in the field, which was almost double that of the previous year. And we conduct these trainings all over the world, including Europe, in the Americas and China. A key to success in this business is a strong portfolio of solutions that really help our users to become successful communicators and realize all of their dreams and full potential. And great solutions grow both the market and our market share. In 2020, we continue to launch a number of great products and product improvements, both hardware devices, software and language systems. In the past year and despite Being in this full scale pandemic, we provided over 30,000 new users with the power of the voice and this is something that we are all incredibly proud of. So Linda, over to you and Torbjorn Deinamort's financials. Thank you, Henrik, and hi, everyone. Thanks to a really strong underlining momentum, we managed to deliver Another quarter with a decent 2% organic growth, and this is despite the strong headwinds from the pandemic. We are back into growth also in North America, which is a great achievement. Gross margin improved by 3% points to 67%. This was driven by a mix of many factors, also had some minor currency translation headwinds. We are very satisfied by this. But Bear in mind that last year, the gross margin was actually 2% down. So I recommend you to view this more as a normalization Than to get overly excited about the strong positive trend. We continue to have a good control over operating expenses, which decreased by 2% organically. Part of this decrease relates to less travel, customer meetings and events, and we also received a government Grant of 4% related to or SEK 4,000,000, sorry, related to pandemic. As Dynavox has a growth oriented strategy With plenty of attractive opportunities to invest in, we may return to expanding OpEx pretty soon. I must say that if we add all of this above together, I can both be proud and impressed by the fact that EBIT improved a fantastic 24 With the EBIT margin increasing 4 percentage points to 15%, And this was despite negative currency translation effects and less capitalization of R and D. To sum up 2020 for TORMBI Dynamite, it has been a very challenging year. However, we are proud to say that we managed to deliver organic growth And on a currency adjusted basis, deliver a new all time high, as Henrik said. Gross margin was flat versus last year. It was hit hard by the pandemic in Q2 and Q3, so we believe there should be some potential improvement in the coming years. During the year, we met the challenges really well, and we showed a strong ability to quickly adopt OpEx, leading to operating expenses just decreasing by 6% organically. Thanks to both a strong underlying momentum in the business And a solid cost control. I'm very pleased to say that operating margin increased by 3 percentage points to 14%. We did receive some government grants, but this was largely counterfactored by significantly negative currency translation effect. Our profitability is now close to the long term financial target, which we strive for in the past few years. Back to you, Henrik. Thank you, Lina. So given that this is a year end report, I wanted to take the opportunity to expand a little bit further on the long term trend that we have seen in Dolby Dynavox over the past couple of years and how this relates also to our strategy going forward. And 1st and foremost, the overall market for assisted technology for communication is in a long term growth trend as inclusion of individuals with special needs becomes widely accepted as a human right. The global penetration of assistive technology for communication is still very low, around only 2%. As healthcare systems are improving globally. Reimbursement is also improving in numerous countries step by step. And as I already mentioned, we saw several improvement in reimbursement in 2020. But if we look over a slightly longer period of time, we have an even broader range of countries, including, for instance, Italy, Spain, Belgium, the UK, Australia, China and numerous countries, both in Latin America and Eastern Europe that have all introduced various improvements to their funding systems, specifically for assisted technology for communication over the past, say, 3 to 5 years. And we expect that this positive trend will continue as inclusion becomes increasingly mainstream. We acquired Dynavox back in 2014 and with that, we doubled the size of Tobey's assistive technology division. This was a fantastic acquisition, which tripled our sales force and our access to funding sources in the U. S. It also added a wealth of clinical expertise in this field. However, it also came with a range of products that were outdated and had not been sort of seen solid innovation for some time. And this triggered several years of intense product investments for us, which has resulted in a complete revamp now of TobiDynavox's product portfolio over the past 3 years with numerous innovative new devices, new communication software and new language system. We're now at the end of this intense investment cycle and our portfolio is overall in a very good shape. Of course, we need to continue to both innovate, refine and maintain our products going forward, but we don't believe that we need to increase the absolute amount of R and D investments to accomplish this. The underlying market growth and these improvements to the product portfolio drove an 8% organic sales CAGR in the 2 years before the pandemic hit. And this number includes some accounting aspects that impacted revenue in the period. So if we instead look at the underlying order intake, that actually grew organically by around 11% per year during that 2 year period. And in terms of investment focus, we expect to now shift this more towards sales and marketing going forward. In the past few years, we have started to invest in large scale training initiatives. We plan to continue with this initiative as we find it to be an efficient way to drive awareness, knowledge and hence drive increased sales. And since the EBIT margin has now come up to a solid level, We see significant opportunity to now be more forward leaning to invest in expanding our sales organization, both in established and in less established geographies to drive with us additional sales of all the great products we now have in the portfolio. On top of this, we also see several appealing acquisition opportunities, mainly to help expand our sales reach, but also potentially in areas of complementary products. And all in all, this means that Tobii Dynavox has an excellent to drive continued top line growth and solid margins as we gradually come out of the negative pressure from the pandemic. So with that, let's move on to Tobii Pro. And I'm happy to say that Tobipro delivered a really strong comeback in the 4th quarter. During 2020 as a whole, Tobii Pro was severely negatively impacted by the pandemic. Roughly half of Tobii Pro's business is with academic research institutions and many universities has simply been closed globally. Also Tobii Pro's enterprise Customers have been heavily impacted by the pandemic as it's been difficult to conduct research with eye trackers in labs, in store and other physical in person situations. As you can see in the graph to the right on this slide, we saw negative impact already in the Q1 as China and Japan had lockdowns early in the year. The worst point was in early summer, where we saw a decline exceeding 40%. During the fall, we have seen a strong gradual recovery. In the Q4, we again delivered organic growth and Tobipro set the new all time high sales record, again adjusted for FX. The Asia Pacific region as a whole delivered a solid growth of almost 20%. Europe delivered a small growth despite a continued difficult pandemic situation. The U. S. Market, however, is still lagging in the recovery from the pandemic, where sales is still trailing clearly behind the Q4 of 2019. Of course, once we are past the pandemic, we expect all regions to get back into growth mode. But overall, I'm very happy with the Q4 performance given that the business is still fighting dynamic headwinds. Looking at the full year, the revenue impact, as I said before, from the pandemic Sascha, and the total revenue in Tobipro was 16% lower organically. During the year, we have continued despite this to innovate and bring to market a broad range of both new and improved products. Tobii Pro's flagship product, The Pro Glasses was launched in a new 3rd generation in June of 2020 and the launch of Glasses 3 has been very so despite the added challenge of bringing a major new product to market in the middle of this pandemic, we see a lot of expansion opportunity for this product and the broad range of research that it enables. Hence, we believe that the glasses will continue to be an important growth driver over the coming several years. We've also made significant improvements to other important products in the portfolio, including the research software, FroLab, our SaaS platform for in home research called Sticky and several of our other research eye tracker hardware. We announced new partnerships with several players in the field of EEG and other biometric measurement systems. Many of our customers see benefits from complementing eye tracking with other biometric signals to obtain an even deeper insight into human behavior. And by working closely with such vendors, we are able to offer a more seamless and efficient way to aggregate data from multiple sources. We can also collaborate in productive ways with these partners in sales and marketing activities. So we progress made a significant shift in sales and marketing if it is to embrace online channels over the past years. And this was further accelerated due to the special environment in this past here. And we see a lot of positive effect with this shift, which we will benefit also after the pandemic is over. So Linda, financials on Tobii Pro. Yes. As Henrik talked about Tobii Pro return to organic growth, which reached 2% in the quarter. This is a great achievement given continued significant impact by COVID-nineteen. Gross margin was down 3 percentage Point mainly related to the translation effect of SEK4 1,000,000. Note that this is noncash and nonrecurring in the nature. As we continue to have good cost control, our operating expenses decreased with 6% organically, to some extent also helped us not being able to travel and new customers. Compared to earlier quarters of 2020, we are super happy to see strong and improved operating results for Tobipro of 9%. It's down 6 percentage points from last year, but this is entirely related to negative currency translation effect. To see the underlying trend, we need to adjust for this, which means October Pro delivered an operating profitability in line with the prior year. Looking at the full year, it has not been easy for TobiPro. Revenue decreased 16% organically, Severely impacted by COVID-nineteen. Gross margin decreased by 2 percentage points as a result of the negative scale effects that you have of the lower revenue over the year. The division made some tough choices during the spring summer And implemented a significant saving program in a really good way. As a result, we managed to decrease operating 10% organically for the full year. As an effect of all of this, we managed to avoid large losses with Elbit ending up at minus 3%. The majority of the decline is related to revenue decline and negative scale effects. But I would, however, like to highlight that on top of the underlying business impact, we have had large currency effects from dollar decline, Both as a result of translation effect and also because we have a higher cost in SEK And the larger part of our income is actually in U. S. Dollar. In addition to which, we have also had SEK22 1,000,000 negative impact from Higher amortization and lower capitalization. So on an underlying cash profitability basis, our profitability held up much better Then what the reported numbers might indicate? Henrik, tell us a little bit more. I know you have some more stuff about Solvipro. Of Of course, we do. So I would like to kind of back up a little bit and reflect on the Tobii Pro business as well. And if we look at the multiyear trend, we come from several years of rapid revenue growth for this division. For the 5 year period of 2014 to 2019, the organic revenue CAGR was 15%. And this growth has been driven by 4 main factors. 1st, a strong underlying growth in the demand for eye tracking to understand human behavior. 2nd, an improved product range that enabled Tobii Pro to both drive market growth and increase market share. And the most important product for driving revenue growth in this period was the 2nd generation of the glasses. 3rd, the entry into new application areas, in particular what we call the professional performance field with training applications has driven significant additional sales. And as a 4th factor, we also have the fact that Apple acquired Tobii Pro's former main competitor, an event that made most of their former customers switch to Tobii Pro instead. Of course, The pandemic in 2020 has been a big monkey wrench in Tobii Pro's wheel. But as we gradually come out of this, we expect solid revenue growth to resume. If we look at the historical growth factors, these four factors, the effect from the acquisition of our competitor is more of a one time step up in market share. But The other three factors, so the growing underlying demand for eye tracking, the improved product range and the new application areas, those are all that we expect will continue to be an important drivers of growth for years to come. The gross margin in Tobii Pro continues to be very high, which means that this business enjoys a very favorable profitability leverage on each additional revenue dollar. So this growth opportunity, the margin leverage and together also with a rock solid 60% plus global market share, together mean that we consider Tobu Pro to be a very attractive business. Hence, we, of course, intend to continue to invest at a good pace of product innovation and refinement as well as in gradual sales and marketing expansion to reach and serve an increasing number of customers globally. That's on Tobii Pro. Let's take a look at Tobii Tech, the 3rd division. And Also, Tobitek has experienced negative effects from the pandemic. Due to this, it has become more difficult to conduct complex business development when we've not been able to travel and to meet customers in person. At the same time, we have also made good progress on multiple fronts during the year. We have made significant progress in several customer engagements, which involve advanced integrations of eye tracking in upcoming major products. In the Q4 specifically, We saw a higher business activity than earlier in the year. Year on year, the quarter revenue was still down 8% organically, but sequentially revenue was up substantially from Q3. We landed 5 new design wins in the 4th quarter in a variety of product categories and application areas such as computer integration, reading assessments, evaluation of brain injuries, assisted technology for communication and improved user interfaces when using business applications. And I think this is really encouraging to see, that More and more applications leverage the power of eye tracking to realize a plethora of innovative use cases. Several of these integrations are in products that themselves are at an early stage of adoption, which means that our short term revenue Expectation on some of these is modest. However, over a longer period of time, several of them have potential to grow into large business opportunities for Solvitel. As an example, reading assessments using eye tracking is an emerging trend where we work with multiple partners worldwide and where eventually this something that almost every school child may potentially benefit from. Similarly, many of the innovative medical use cases we have customers in our areas where we believe there is large long term opportunity. 1 of these 5 design wins in the quarter was for integration of TobioWare in a mainstream PC device. During 2020, the VR market overall has picked up pace. Volumes of hardware are increasing and the ecosystem for applications generally is growing at a good pace. For the first time, several major AAA games have been launched for VR during 2020. Another indication of this traction is a commentary in Facebook's latest earnings call, where they comment that they're seeing real consumer sales traction for its latest VR headset. At TOBI, we have made significant progress with both our technology as well as our market position for eye tracking in the ER during the year. For instance, Pico, which is China's leading headset manufacturer, launched a headset with Dolby Eye Tracking integrated in the summer after some delays due to the pandemic. HP announced their new headset with our technology built in during the fall and will start shipping this spring. And earlier today, actually, we announced that we are collaborating with Valve and OpenBCI around eye tracking in VR for immersive gaming. As some of you may know, Valve is, I would say, a real powerhouse and innovator in both gaming in the field of virtual reality. So we continue to work in integration projects with numerous, both existing as well as new VR OEM customers. 1 of Tobitec's Key products is the eye tracker 5 gaming peripheral. This product is important for promoting the use of eye tracking in games and represents a significant business Itracket5 sales are driven by the availability of relevant gaming applications. And during the quarter, Itracket integration was launched in 3 major games. And as a result of that, sales of i-thirty five surge and December sales were more than twice as high as the previous record month. Linda, your turn, financials. Yes. Provitex revenue declined the quarter with 8% organically. The pandemic has had a negative impact on sales since it has been more difficult to pursue business as Henrik was talking about. Some customers have postponed projects and several established customers have lower sales volumes. NREs, Non recurring engineering revenue is still a meaningful part of Tobitek's revenue, and this is dependent on milestone, which means that it can be a little bit of lumpiness. In this quarter and our results significantly lower than last year. However, as Henrik mentioned, we did see significant sequential organic increase in the revenue Q3 2020. Gross margin came in at 52%, which is the marginally up from last year. So Bitext cost reduction program, together with temporary lower cost as a result of COVID-nineteen, led a reduction of more than 25% in operating cost compared to Q4 2019. You should expect that the current OpEx level to be close to sustainable level coming quarters. The operating loss continues in the right direction with a SEK15 1,000,000 improvement versus Q4 2019. It is worth noting that also this that we have capitalized less R and D costs, higher amortization and negative currency effects. So if we summarize Hogitek's 2020 numbers, revenue increased 7% organically despite significant impact effect. Revenue were, in general, hit later in the year, but you could see that business activity actually improved significantly in the end of the year. Our gross margin was 51%. Improvement is driven by a change in the product mix. Operating expenses came down with 26%, which is partly a structural reduction together with a temporary lower caused as a result of COVID-nineteen. We continue to show strong progress toward profitability with a SEK73 1,000,000 A SEK improvement compared to 2019. And that is despite accounting related headwinds such as less capitalized R and D cost, Higher amortization and negative currency effect. So also to be fair here for Tobitec, we should reflect a little bit on the higher level picture. And if we kind of really back up a couple of levels up, If we look at Tobii Dynavox and Tobii Pro, these are vertically integrated businesses, meaning that they provide the full solution to their customers. Tobitek, on the other hand, is horizontally focused in the value chain. And Tobitek is striving to maintain and to grow its position as the world's leading supplier of core eye tracking technology. This hyper focus in the value chain enables Tobitek to provide core technology to numerous different application and product areas in an effective way. Over time, we see a very large opportunity for Torbitec as eye tracking scales and becomes ubiquitous across a wide range of different areas, devices and industries. Virtual and augmented reality are 2 areas where eye tracking provides very strong benefits and we expect eye tracking to become de facto standard in such devices over the next several years. These markets are themselves early stage, but are evolving and maturing rapidly. The VR market may pass 10,000,000 units sold this here and VR and AR together will likely reach some 50,000,000 units per year in the coming 3 to 5 years. Tobitek sees clear momentum in this area and has a strong market leader position for supplying core eye tracking technology in this field. Even though our revenue is still modest here, the upside opportunity over the coming years is large. If we look at gaming, the use case for eye tracking is growing steadily. Just in the past Year, the number of people who use eye tracking for gaming on a regular basis roughly tripled and sales of our gaming peripheral is growing rapidly. Adoption of eye tracking is in gaming is still clearly at an early stage and this is a market opportunity with large potential, but also a journey that will require time to grow big. In for instance, healthcare and education, There is a broad range of applications where eye tracking adds critical value, both for assessments, for diagnostics, for training, for interaction. And we work with several dozen partners who are bringing innovative products to market integrating Toba's eye tracking in these areas. Many of these offer high margin opportunities and several have large long term potential for Tobitec. Some may even evolve into mass market opportunities. In 2020, we have reduced our pace of investments in Togitec slightly in part to adopt to the impact of the pandemic to the group as a whole. That said, our investment into this business unit remains significant as we have strong belief in our opportunity to continue to drive rapid revenue growth and build a large business over the coming several years. A business like TobiTek has a very strong leverage as pretty much full scale investment in both technology and market channels need to be made upfront, but the sales volume can scale massively with only a minor incremental cost. Tobitek grew its revenue on average by almost 40% per year organically over the 5 years prior to the pandemic. We have on this slide, we've also chosen to highlight the growth in gross profits. And we think that this is a better metric actually for measuring sales performance in a business like Togitake than revenue. The percentage gross margin varies a lot between different deals depending on the specific business model in each deal. Hence, it's not the revenue dollar that is most significant indicator of business value, but rather the gross profit dollar. We do expect to continue on a rapid growth trajectory for both revenue and gross profit once the pandemic is behind us. So yes, let's conclude the Tobe Group Q4 financials. Tobe Group was back in growth mode And we reached all time high FX adjusted revenue with 2% growth. We saw impressive recovery both in Tobii Pro, And you could see strong sequential improvement in all 3 business units versus Q3. Gross margin improved slightly to 70%. We continue to have a good cost control. In total, we lowered our operating expenses with 12% organically versus Q4 'nineteen. Tobit EBIT was negative SEK8 1,000,000, a solid improvement from a SEK21 1,000,000 loss last year. The cost reduction measure announced in April as well as the SEK4 1,000,000 in government support related to COVID-nineteen Had a positive impact on the earnings. The operating result was, however, negatively impacted by SEK22 1,000,000 in currency translation effects. With that in mind, we feel very satisfied with our profitability in the quarter considering the circumstances. We also during the period had lower R and And we have increased amortization and depreciation versus same time last year. So on a cash basis, Our profitability is trending very well, so good that I actually want to highlight this on the next slide. Internally, we'll use a measured EBITDA adjusted for capitalization of R and D as an important KPI. This measure better describes the underlying profitability trend of the business. It's closer to cash flow than EBIT And it's independent of the ratio of R and D capitalization and amortization. Basically, it's equivalent Observing our R and D cost as an ongoing operating expenditure rather than a CapEx investment. This matrix shows a strong and clear positive So if we conclude the full year 2020, revenue decreased 3% organically, Significant impacted by COVID. Gross margin slightly below last year of 68%. Our operating loss Improved SEK35 1,000,000 to SEK103 1,000,000, a solid improvement in the middle of a pandemic. Also remember, same comment as on the quarter. This improvement includes impact of lowered R and D capitalization And increased amortization, which was an SEK80 1,000,000 difference compared to last year and SEK22 1,000,000 in negative currency translation effect, But to a smaller part, matched with some positive effect on government grants that we received during the year. So let's conclude Q4 financial by reviewing our cash flow after continuous investment, which gave us a positive contribution of SEK25 1,000,000 and improved substantially versus last year. The large improvement in cash flow is mainly explained by better results from operations and improved working capital. Cash at hand ended up at SEK410 1,000,000. Net debt was SEK143 1,000,000. And if we exclude IFRS or leases, this was SEK54 1,000,000. We closed the SmartBox Divestment in the quarter. Cash flow after continued investment for the full year improved significantly versus 2019. This is explained partly related to lower investment, but mainly driven by improved working capital. And this is large It's to a large extent due to the postponed taxes as a part of Swedish authorities' response to COVID-nineteen of around SEK55 1,000,000. Therefore, we actually expect that working capital will spring back in the coming quarter. Great. Thank you, Linda. So in summary, in the Q4, we delivered FX adjusted record sales despite continued pressure from the pandemic. We continue to make good progress in all our businesses and launched important new products and landed new great customers. Our operating result continued to improve and we have a solid financial position with over SEK400 1,000,000 cash in the bank and a low net debt. During the year, Our team has made fantastic contributions and put in a lot of heart and a lot of passion in finding creative ways to drive our business forward and deliver on our mission despite difficult circumstances. We've also taken tough decisions and managed our costs with tight discipline in an uncertain environment, and all of this has enabled us to deliver a really strong Q4. This means that we are ending the year in a position of strength. And even though we must remain humble to the fact The pandemic is not over yet. We are definitely optimistic about the future. And hence, the Board has set a clear target for the group to deliver positive operating results for the full year 2021. And that, ladies and gentlemen, ends our presentation for today, and we are happy to take any questions you may have. We're waiting to hear if any of the analysts wants to ask a Question that maybe while we wait for that, we have a few questions from the other parts of the audience. Let's start with one related to Toby Dinavox from Kane. Can one extrapolate Dinavox quarterly growth of 2% in Q4 for the full financial year ahead, so For full year 2021 or how should one think about that? So thank you for that question. I think that, again, we need to be somewhat humble to the fact that we are still in the middle of a pandemic and that makes it more difficult than usual to project with a high degree of certainty how sales are going to go, etcetera. At the same time, we have seen a gradual recovery from the effects from the pandemic during the year. If we look at the longer term trend as we talked about previously, Revenue CAGR for Tubular Dynavox has been 8% in the years prior to the pandemic and order entry grew even above 10% per year. So I think that is the type of growth rate that you should expect for at least for Tobii Dynavox as a business over a longer period of time. And then exactly what we are going to do in 2021, I think, is still a little too early to have reliable guesses around. Thank you. And one question from Brad, on Tobii Pro, what do you consider to be Tobii Pro's total addressable market? That is a tricky one. Specifically, Tobii Pro is actually quite difficult to really make a solid statement around what the addressable market is. In some ways, you could argue that any enterprise that either wants to improve communication with its customers, improve the understanding of how its consumers uses its products or responds to its messages or any company that wants to improve the performance of its training or the quality and safety of its operators benefit from using eye tracking to understand behavior. That leads to very large addressable market theoretically. So I think it's From that perspective, it's a little bit like an ocean of opportunity and it's more a quest, I think, rather the relevant question is how quickly can we and others in the industry and the ecosystem actually drive the increase of the usage of eye tracking to understand behavior in all of these different domains and different kinds of enterprises. So, yes, tricky question, no firm answer. I think growth rate rather than sort of visible finite end to how big this can become. And coming back to Tobii Dynavox, Jane asked, you have in the past stated a long term revenue growth target of around 10% per annum for Nanox And for margins that span 15% to 20%, do these targets still apply? As you some of you know, we have had financial targets that we express externally, both for Tobey Group as a whole as well as for each of the divisions. But early in 2020, due to the pandemic, we said that for now they are on hold because of all the uncertainty created by the pandemic. As mentioned, today we are reinstating a clear financial target for the group of reaching group level profitability for the full year of 2021, but we are still holding off on expressing external financial targets for the divisions. And This is again due to the fact that the pandemic is not over and we think it is prudent to hold off a little bit on expressing that. That said though, we certainly expect to see growth rates of at least that type of level over extended period of time going forward once we are through the pandemic and also approximately on that level of profitability as well. Thank you. And moving on to some questions from Joby Tech. Daniel asked, In your view, will eye tracking find its way into consumer based AR glasses at some point? And if so, Will it be to help decide where to show the augmented information, I. E, where you gaze or where you don't gaze? Or will eye tracking be used as a control mechanism on top of voice and finger gesture? First part of the question is a very strong yes. We absolutely believe that eye tracking will be a standard in future consumer AR glasses. And in terms of what it will be used for, probably the most fundamental aspect is actually as a prerequisite for the display technology to actually create the optimal display experience for the consumer using the AR glasses. So to be able to create graphics that focuses the graphics content in a way that is seen as natural by a human being and even to drive certain aspects of how you wear in your field of view, you render graphics and so forth. Eye tracking provides very substantial benefits that enables AR glasses to actually provide a good natural graphics experience with low power consumption. So that's really the foundational point. But you're also correct that there are, of course, additional very good benefits with eye tracking in AR. For instance, the fact that You can in a very seamless way combine eye tracking with other forms of inputs to create the user interface that is very intuitive and natural. For instance, if you have If you select items with a hand gesture or a voice command, there is no way for you to effectively point when you're wearing a pair of AR glasses. Eye tracking, of course, solves that. So you can, of course, point at objects or people or whatever using your eyes and then use a voice command or some sort of physical activation or hand gesture to actually issue a command. Another very clear example is social interaction. Both VR and AR have important use cases with putting people virtually in the same room and environment as other human beings to interact in social chat room or social virtual bar or a professional conference room or what that might be. And in those environments, things like eye contact become very fundamental to create the natural environment to interact with other people in and in order to actually facilitate a real and natural eye contact, you need to have eye tracking. On top of that, there are additional use cases as well, but that's a couple of the most important examples. Thank you. And a question from Richard. Can you comment a bit on the solidity of your patent portfolio? And given your market leading position, if you see potential of Substantial revenue or profit streams generated from licensing of technology and patents outside of Tobi's current core business moving ahead. For example, illumination technology that can be used for eye tracking as well as identification and other or etcetera. Another good question. So we have a significant and clearly one of the leading both one of the largest, but also in our opinion high quality portfolios of patents specifically relating to eye tracking. One very important part of the patent portfolio like this is to ensure our to help ensure our freedom to operate. With a strong patent portfolio, we have sort of defensive capabilities that can help us ensure that we have freedom to operate to do eye tracking and work together with different integration partners and other big customers to actually implement eye tracking technology into their products without sort of stumbling into other types of problems. So that's one really important use for this type of patent portfolio. But then, of course, there is also opportunity to use a patent portfolio like this to help create more sustainable margin over time, both by having an IP value together with the value of our core technology when we sell this to our integration customers. And as you say, also potentially as a way to extract additional license revenue. So we do see such opportunities in the past and also in the going into the future. We have some licensees that are licensing some of our patents already today, but it's still at a very early level. And of course, most other companies that have eye tracking products in the market are still rather low volume. So that existing potential is still fairly low, but it could potentially become a significant opportunity in the future. Thank you. And one more from Brad. What is your current view of ToveTech's competitive environment? So Forbiotech is by no means alone in the field of eye tracking and eye tracking core technology and that's good. A big potential market needs to have multiple players working in the ecosystem And it wouldn't be a bigger potential market if it didn't attract a lot of interest from numerous companies. So I think that's reassuring. We continue to have a very strong market position and we consider ourselves to be significantly larger than any of our direct competitors in the space of providing core eye tracking technology. But of course, we also have respect for Several of our competitors and we watch carefully what they are doing and follow their movements in the market as well. If we look at a field like virtual reality, for instance, we have won almost all integration deals that are publicly known in the market today. Also in gaming, we have a very strong competitive position. So but yes, there are definitely several competitors out there. We've also previously discussed the fact that some of the biggest Potential customers and OEM partners, a few of them also have some form of internal technology know how around eye tracking, for instance, Apple that acquired Tobii Pro's former largest competitor is one example of that. So Sometimes we find ourselves competing not with other third party vendors, but rather competing with internal initiatives inside a few of these companies. Thank you. And we have quite a lot of questions, So we will not have time to answer them all, but let's do 3 more questions. And one of them is From the from Runner, previous years, Stobitec had several ongoing customer Doctor projects corresponding to customers that had half of the world market. How are these progressing considering, for example, the rather weak Q4 2020 sales for TobiTech? So short answer is they are progressing well. And As we talked about, we have Tobi's eye tracking so far is integrated into 3 virtual reality headsets that have been publicly announced in the market, HTC, the HTC Vive Pro I, the PICO Neo 2i and the HP Reverb G2 headset. And then also, as we mentioned earlier today, we also announced a research collaboration with Valve and OpenBCI. But we're also saying that in addition to this, we are working with numerous integration customers on integration projects for upcoming headsets that we expect to hit the market over the coming 1 to 2 years as well. So those statements still hold true. At the same time, we are still early stage in terms of the revenue. So the revenue from these headsets is still modest. The HTC Vive Pro I and the PICO headsets, They're still new in the market. They're clearly enterprise headsets that ship in lower volume. The HP headset hasn't started shipping even yet. And the real volume opportunity for Tobitec in VR comes when eye tracking makes its way into consumer headsets, which we expect will happen over the next coming years. Thank you. And let's do one last and apologies again to everyone that will not get their questions answered in this forum. We will try to answer So then directly to you at the later stage. Can you tell us how CROs revenue developed Per region or customer category or product group in Q4? So per region, I touched on this previously in the presentation, but per region, we saw Asia Pacific as a whole. So both China and Japan and other APAC markets, they developed really well. Those were markets that were actually hit by the pandemic already in the Q1, but they also recovered faster. So we actually saw from Q4 of 2019 to Q4 of 2020, we saw strong growth organically, almost 20% in APAC as a whole. So that was really strong. Europe was generally grew a bit in Q4 of 'twenty compared to Q4 'nineteen, but still also heavily impacted by sort of ongoing pandemic restrictions. And the U. S. Was still lagging significantly in the 4th quarter. So we see pretty different sort of stage of countries going into and out of the pandemic. And of course, with 2nd and third waves, this can shift over time as well. From a product perspective, we saw a pretty even lift in the Q4. So both different hardware categories, the research software and also consulting services came back in the Q4. During the year, the part of the products that was hit the hardest was our research services, where we actually instead of selling hardware and software to our customers, we can provide them directly with the research project to help them answer the research questions they have. One of the reasons this was hit even harder is that it's simply been very difficult to conduct this type of research when restrictions make it difficult to interact with people physically, which many of these eye tracking projects require. But we also saw this coming back in the Q4, which was great to see. If anything stands out, it is, of course, the new glasses, the glasses 3, which has really started to ramp sales wise in the Q4, which we expected, but we're also super happy to see with new major product investments like that, that sort of comes into fruition in the revenue as well. With that, we have to round off. So thank you, everyone. Thank you for listening and thank you for good questions. And we are looking forward to hopefully hearing and seeing from you again on our next earnings call. So have a great day, everyone, and bye bye for today.