Earnings Call: Q2 2020

Aug 19, 2020

I'd like to hand to your first speaker today, Henrik Eskelsen. Please go ahead, sir. Thank you, Somer, and welcome, everyone, to Tobey's earnings call for the Q2. I hope that many of you have had a chance to enjoy a great summer vacation and that you and your close ones are all well and healthy in these unusual times. Next slide, please. Tobi's overall revenue in Q2 held up well, Tobey's overall revenue in Q2 held up well despite severe effects from the pandemic. COVID-nineteen had large negative impact on a majority of our business. However, this was also to a large extent countered by strong underlying momentum in several parts of the business. As a result, overall revenue only declined by 6% organically. We have executed on a firm cost reduction program in Q2 containing both short- and long term cost reductions. We reached our target of reducing costs by 20% compared to Q2 of last year. Thanks to the modest revenue decline and the cost reduction, EBIT improved to minus SEK 45,000,000. And adjusted also for R and D capitalizations and amortizations, the profitability improvement was actually close to SEK30 1,000,000 year on year. And this leaves us with a solid financial position of over SEK300 1,000,000 of cash. Next slide, please. So let's talk a little bit more about the COVID-nineteen impact and Tobey's response to this. In the short term, the pandemic has impacted Tobey negatively in many different ways. Toby was fast in responding to the crisis, and we early on took strong measures to protect the health of our employees and to secure our supply chains and to prepare for new ways of working. Obviously, most of our staff globally have been working from home during the Q2. This has worked out much better than anticipated, and our teams have really stepped up to the challenge and put in a lot of effort and innovated new creative ways to go about things, to collaborate with each other, to sell, to service and to train our customers. And I'm really impressed and I'm deeply grateful for the passion that Tobians have shown to accomplish this. This has allowed us to continue to deliver on our mission. We have avoided any major negative operational impact. We have upheld our supply chains well and have experienced only some delays in product development projects. We have continued to sell and service our customers well under the circumstances. As one positive example, our customer rating scores in Dolby DynaVox are actually at an all time high. However, from a business perspective, COVID-nineteen has still significantly pressured sales pretty much across the board, mainly because shutdowns and other restrictions in society have made it much more difficult to effectively sell and service our customers. When schools, therapist practices, health care facilities are closed, it's very difficult to reach our potential end users in TobiDynamox who need assisted technology. When universities are closed, it's very difficult for Tobii Pro to sell eye tracking solutions to them. And it's very difficult to do field consumer research projects for eye tracking when people are essentially locked up at home. We've also seen enterprise customers, mainly in TobiPro, reduce their investments in eye tracking equipment. In TobiTech, some of our integration customers have seen lower sales volumes and delayed projects. For the most part, we expect that these effects are reasonably short term. As soon as societal functions start working again, Tobii Dynavox sales are likely to regain good growth. As soon as universities open up, that part of Tobii Pro is likely to rebound quickly. The negative effects of COVID-nineteen on sales have largely have been largely countered by strong underlying momentum in our business. For instance, the new I series in TOBI DYNAMOXX continues to be a great success and was a major sales driver in TOBI DYNAMOXX in Q2. And TOBI Tech showed continued strong sales growth to external customers. Had we not had the pandemic, then I am certain that Tobii Group would have shown a strong growth in the quarter. But the impact of COVID-nineteen was expected. And to counter this, we launched a cost reduction program early in Q2. This program contained both short- and long term cost reduction actions and included large cuts in discretionary spending, hiring freezes across the board, a temporary work reduction program globally, a temporary reduction in pay for executive management as well as a reduction of some consultants and staff, specifically in the Tobitec division. With all of this, we reached the goal that we expressed in our last earnings call of reducing costs in Q2 by 20%. And thanks to these actions, we are upholding good fiscal discipline. And together with a good underlying business momentum, we consider ourselves to have a sufficiently strong financial position for the plan that we are executing on, both short- and long term. Going forward, we continue for now to have a majority of our staff working from home, but with careful gradually increasing flexibility. It varies across geographies where, for instance, in China and in Japan, our teams are already back working from the office pretty much as normal. From this week, we are also removing the temporary work reduction program, which means that our teams are now back again working at 100% capacity. Next slide, please. So let's go into some more detail on our divisions, starting with Tobii Dynavox. As you know, Tobii Dynavox is our largest division, making up roughly 60% of our revenue. It commands a very strong position as the clear market leader in the long term growth market of assistive technology for communication. Next slide. In the Q2, revenue in Tobii Dynavox decreased by 4% organically. Looking under the hood of this number, there is a large minus bucket and a large plus bucket. On the minus side, and as already mentioned, sales was severely hampered by lockdowns and other restrictions in society, which made it difficult for us to reach and service our customers and end users. Many of the users we serve are in risk groups for COVID-nineteen and require extra precautions to meet physically. And schools, speech therapist practices, centers of hospitals, etcetera, have, to a large extent, been closed or unavailable. And despite heroic efforts and a lot of creativity by our teams, these restrictions have had a large negative impact on our sales. Although difficult to quantify exactly, the negative impact of COVID-nineteen was, of course, much larger than the 4% organic decline. But on the plus side, we also saw strong positive effects in the Q2. Most importantly, our new I series continues to perform extremely well in the market. Customer response is fantastic, and with this, we can both reach new users and drive a healthy replacement cycle of older devices. Also, other investments that we have made in our product portfolio, in large scale trainings and in building awareness continue to drive a solid underlying momentum in the business. These effects helped to counter a lot, but not all of the negative impact of COVID-nineteen. We continued to develop products at good pace in the quarter. For instance, we brought out a very wished for capability, which is to enable the eye tracking in the new eye series to function outdoors. It's very difficult to get eye tracking to perform well, in particular, in full sunshine, which means that historically, our users have, for the most part, only been able to communicate effectively while indoors. With this new capability, social media and our user communities are overflowing with happy Tobii Dynavox users on beaches, attending barbecues, playing outdoors with friends and so forth. We also brought to market new accessibility capabilities for some of the world's most popular apps, which make it much easier for our users to access services such as Facebook, Instagram, Spotify and Netflix. Timing of this was, of course, good as we are all now forced to live the large part of our lives virtually in this pandemic. And of course, our users are no exception to this. Tobii Dynavox has, over the past years, done a lot of work to digitalize key parts of its business. For instance, we have invested in making the complex and labor intensive reimbursement process in the U. S. More digital and less paper dependent. This has really paid off during the pandemic as both our internal teams and prescribers have been able to manage these processes well while working from home using tools that we have developed. Also, our customers, such as insurance companies, have been forced to very quickly digitalize large parts of their processes. We've also invested for some time in creating a considerably more comprehensive infrastructure and content for digital trainings. Thanks to this, we've been able to maintain our high level of training for professionals during the pandemic, but with a much higher proportion digitally. A large part of the process for a user to gain access to a communication device under reimbursement is to do what is called an assessment. This is typically done in person together with a professional speech therapist, and the outcome is a recommended solution for the particular user in need. Most reimbursement systems have had as a rule that these assessments must be done in person. Some countries, for instance, Germany, were very quick to change these rules in the pandemic and is now allowed to do virtual assessments there, which is considerably more efficient in many ways. We expect that many other countries will make similar changes, and we're also currently working with others in the industry to lobby for such changes in our largest market, the U. S. As you can see from some of these examples, the pandemic has dramatically accelerated the digitalization of this industry. And I think that this effect will remain long term, leading to significantly improved efficiencies and also to make assisted technology for communication much easier and faster to obtain for more users. On another note, even if this pandemic may turn out to result in a more long term economic downturn, we believe that Tobii Dynavox is likely to be unaffected by that. Reimbursement for assisted technology for communication is generally in a long term positive trend with more and more countries gradually improving funding for this, and we believe this is likely to continue. Over to Johan and financials for Tobii Dynavox. All right. Thanks, and hi, everyone. Tobii Dynavox revenue declined 4 Sales were severely hampered by lockdowns and other restrictions in Sales were severely hampered by lockdowns and other restrictions in societies, which made it difficult for us to reach and service our customers and end users. However, underlying this, we saw a strong performance of our new I Series. Gross margin came in at 63%, which is 4 points down versus last year. Our margin was negatively affected by nonrecurring inventory write down due to product life cycles of some SEK 7,000,000 or 3 points on margin. We controlled our operating expenses well in the quarter, which decreased by more than 10%. And on top of this, we received a sizable government grant related to the pandemic. Despite the external circumstances during the quarter, we managed to improve the EBIT margin to 13%, which was up 2 points versus last year. In the 1st 6 months of 2020, Tobii Dynawatt revenues have increased 5% or 2% organically. The operating margin was 14%, up 4 points, which is really strong. This profitability level is in line with the long term financial targets, which we have strived for in the past few years. Over to you, Henrik. Thanks, Johan. Our second division, Solvipro, is the global leader in eye tracking solutions for understanding human behavior. Also, this division is the leader in its field in a market that also has strong long term growth opportunities. Next slide, please. The pandemic has had a very strong negative impact on Solvipro, and sales in the 2nd quarter decreased by 33% organically. COVID-nineteen has impacted this business in several ways. First of all, universities have been closed almost worldwide. Roughly half of TogoPro sales is to academic research institutions. And when these are closed, sales have shrunk dramatically. 2nd, doing studies and research with eye tracking often involves meeting people physically, either by having people come to a lab to conduct eye tracking tests or to have eye trackers in public environments, such as retail stores, etcetera, and do the testing there. The pandemic has made it very difficult, both for our own research services business as well as for customers who do the research themselves to feel this research on a practical level. And third, many enterprise customers have significantly reduced near term investments, including investments in eye tracking systems. We have seen this decrease pretty much across the board in all customer segments for all product categories and in most geographies. China is a clear positive exception. China came out of the pandemic early, and many, but not all, universities reopened already during Q2. Many enterprises have also resumed normal activity. And in China, COVID-nineteen sales in the quarter actually grew by around 25% compared to Q2 of last year, marked as an effect of pent up demand. We expect that the negative impact of the pandemic on Tobipro's revenue will continue in the near term, in particular in the U. S. Where the COVID-nineteen situation continues to be very challenging. Next slide. In the quarter, Tobii Pro launched a very important new product, the Tobii Pro Glasses 3. The predecessor of this, Glasses 2, is Tobii Pro's most important product and including related hardware, software and services sales, this is made up roughly half of Tobii Pro's business. This new product is a result of several years of large R and D investment and is the first major redesign of the product in 6 years. It's built on a brand new and very innovative proprietary optical solution to eye tracking with extremely small cameras and illuminators that are molded inside the glass itself. And this has enabled us to design eye tracking glasses that look and feel like a normal pair of sunglasses, while at the same time providing improved and absolutely market leading eye tracking performance. Because the glasses are so much slimmer and more unobtrusive, it enables research in many more situations where people need to feel, look and behave like instance, enable eye tracking in a broader range of environments. For instance, they perform better outdoors. They can record a much wider field of view of the test person and also has options for ruggedization, which is critical, for instance, for our customers in heavy industry sports and many other areas. Altogether, this is a significant step forward that enables us to penetrate deeper into our different segments as well as reach new types of customers, And we expect this will drive both wider adoption of eye tracking and a solid replacement cycle and hence drive growth for Tobii Pro over several years to come. Flashys 3 has started shipping to customers now in the Q3, so there is no revenue from this product in the Q2 numbers. Johan, you'll turn on the financials. All right. CopiPro's performance in the Q2 was heavily impacted by the COVID-nineteen pandemic. Revenues declined 33% organically, and Henrik summarized the driving factors behind this performance. Gross margin came in at 70%, which was down year over year and sequentially. The reason for the lower gross margin was less scalability on fixed COGS given lower revenues, some production related startup costs and a nonrecurring write off of inventory. A higher share of software sales contributed positively to the gross margin. Operating expenses came down materially as a result of the communicated cost reduction program, where we managed an 18% organic decline in this division. We continue to have strong focus on cost management in the near term. Despite that, our EBIT margin was materially down compared to last year due to the decline in gross profit. In addition, lower capitalization and higher amortization in R and D during the quarter contributed to an even lower operating margin. In the first half of this year, Tobipro's revenues decreased 23% or 26% organically, and the operating margin was a negative 15%, which is the material decline in these difficult external circumstances. With that, over to Toby Tech, Henrik. Thanks, everyone. Tobitek is the world's leading supplier of eye tracking technology for integration into consumer electronics and other volume products. Next slide, please. Revenue in TobiTek continued to grow at strong pace in the quarter. External revenue was up 60% organically. Growth in Q2 was driven by customer development project related revenue in the VR segment and strong growth in the PC segment. We continue to work in close collaboration with several major customers in the VR segment. In the quarter, we made very good progress in these and reached important milestones. These projects tend to be long development projects stretching up to 2 to 4 years from engagement to product launch and in several cases involve significant investments from our side during that time. In many cases, we are also not able to communicate specific information about such developments until we are at or close to market launch of our partner's products. PICO, who announced their latest Doctor headset with Tobii eye tracking at CES in January this year started to ship its headset in the Q2 after some delays due to COVID-nineteen. We do continue to believe that eye tracking will rapidly be adopted in both VR and AR devices and hence reach high volumes in millions of units over the coming few years. In this context, it was also good to see that eye tracking was added to the OpenXR standard now in July. OpenXR is a new standard for VR and AR devices. The work of adding eye tracking to OpenXR has been driven by Tobii in close collaboration with Microsoft and supported by other major players in the industry. Standardization of eye tracking makes it easier to develop applications and make use of eye tracking across different hardware devices and thus help accelerate adoption of the technology. In the PC segment, we signed a new agreement with Lenovo. We launched 2 new PC models with our Tobii Aware software integrated. Even though Tobii Aware is still at an early stage in terms of sales, we continue to see strong interest for this solution and are in well advanced engagements with several of the large PC manufacturers around this. We launched our new gaming peripheral, the Tobii Eye Tracker 5. Initial reviews from gaming influencers have been very positive. The key use cases that drive sales of our gaming peripheral are improved gaming experiences, for instance, in simulator games, improved ability to engage your audience in game streaming and new tools that have just come to market for esports training. Also TobeyTech was impacted by COVID-nineteen. Some customers, in particular in our niche application segment, have seen lower sales volumes in the quarter. Also, several product development projects of our customers have been delayed, which, of course, impacts Odetech sales in turn. As communicated in the last earnings call, we took additional steps to adapt the cost structure in FOBITEC in Q2. Specifically, we made a reduction of around 60 consultants and employees. With this, we balanced the negative effects of COVID-nineteen with continued expectations on good sales growth and fiscal discipline. We continue to see very large potential in Tobitec's business and still have a high level of investments to keep our world leading position. With continued rapid revenue growth, we plan for this position to reach profitability in the coming few years. Over to you, John. All right. Thanks, Henrik. Tobitec's external revenue growth continued with a 60% organic growth in the quarter, where project revenues in the VR segment contributed strongly. However, this quarter, we saw declining internal sales, mostly due to the COVID-nineteen impact in the other two divisions. Overall, sales were up 35% or 31% organically. Gross margin was up 6 points to 53% versus last year, and this is primarily due to changes in the product mix. Our focus on efficiency and actions from the cost reduction program showed results, and the operating expenses were down with more than 20% versus last year. On top of what is visible in Q2, the division has also executed a more long term restructuring program where effects will be seen in the coming quarters. The operating loss in Q2 came down materially versus last year despite that we capitalized less R and D costs and had higher amortization. In the first half of twenty twenty, revenues increased by 27% or 23% organically. Tobitec's operating result was a negative SEK 110,000,000 which still meant a strong SEK SEK 40,000,000 improvement versus last half. Next slide, please. So moving over to the group. The revenues at group level in Q2 held up well despite negative pandemic effects. COVID-nineteen had a large negative impact on the majority of our businesses, as we have discussed. However, this was, to a large extent countered by strong momentum in several parts of the Tobii product. Gross margin for the quarter came in at 65%, negatively affected from mix shift between the divisions and the nonrecurring write down of SEK8 1,000,000 related to old products and inventory. We executed well on the announced cost reduction program during the quarter. This contained both short- and long term cost reductions and included support from COVID-nineteen government programs in some geographies. In summary, we reached our target of reducing costs by 20% compared to last year. Tobey's EBIT for Q2 was a negative $45,000,000 which was an improvement versus last year, which is good considering the circumstances and FX trends, which drove negative revaluation effects in the P and L. Adjusted for R and D capitalization and amortization, the profitability improvement was around $30,000,000 In the 1st 6 months of 2020, revenues were flat versus last year and decreased 3% organically. Our operating loss was 68 minuteus, which was an improvement versus SEK 19. And if you adjust for the R and D accounting net I just mentioned, the improvement was around SEK 70,000,000, which is a material positive movement. Next slide, please. So let me wrap up the Q2 financials with our cash flow, which this quarter was a positive $19,000,000 and improved materially versus last year. This change was driven by improved profitability and a very large release of net working capital. Our cash position was $324,000,000 including SmartBox, so we have a sufficient financial position for the plan we're executing on. And lastly, the divestiture process of SmartBox moves on according to plan. With this, over to you, Henrik. Thanks. So to sum up the quarter, again, revenue in Q2 held up well despite severe effects from the pandemic. COVID-nineteen had large negative impact on the majority of the business, which was largely countered by strong underlying momentum in many parts of the business. Overall, revenue declined by 6% organically. We've executed on firm cost reduction program in Q2 with a cost reduction of 20%, and we improved EBIT to minus 45%. As mentioned already, adjusted for R and D capitalization and amortization, it was a profitability improvement of around SEK 30,000,000 Looking ahead, we do expect to see continued significant near term negative impact on the business from the pandemic, in particular, in the Tobey Pro business and in the U. S. Market. Once restrictions in society are lifted, we expect our businesses to rebound. And majority of Tobey's business has historically been resilient to general downturns in the economy. We are managing our financials well and we have sufficient funding for our current business plan. So with that, we are happy to take any questions that you may have. Thank And your first question comes from Daniel Thorson from ABG. Please go ahead. Yes. Thank you very much. I start with a question on the outlook. You expect significantly negative pressure on sales near term. Can you relate that to what we saw in Q2? Because I think that you had lots of negative pressures already in Q2. Do you see an acceleration of those? Daniel, No, we do not see an acceleration of those in Q3. We see positive tendencies in some of our markets, already now in Q3. I think where we expect Q3 to in particular to continue to be challenging is in the U. S. Market. Where the COVID-nineteen situation continues to be challenging and also relatively speaking to a larger extent in the Tobii Pro division. But we also expect sequentially to see improvement from Q2 overall. Okay. Okay. Very good. Very good. And then a question on Dynavox related to your comment on U. S. Could it be the fact that deliveries and revenue recognition in Q2 held up reasonably well because of previous orders and that we may see a weaker development in Q3 because you may have not won that many orders or could plan for more deliveries in Q3? Or do you think that we have the low point behind us? I think that specifically in our Torbjorn Dynavox business, we have a little bit of what we internally sometimes refer to as the supertanker effect, which is that in particular in the U. S. Market due to long funding cycles, effects of different things happening take longer time than in many other businesses. For instance, when we launch new products, it often takes longer time to see the full effect of launch of new products. There is an element of such an effect also in Q2 where some revenue have held up, particularly in the due to the supertanker effect. So basically, reimbursement processes that were initiated before the pandemic really hit, but still have been able to materialize in the second as revenue in the second quarter. And that's also, I think, why we are a little bit careful with sort of being too optimistic about Q3 because there will be a little bit of a supertanker effect of difficulties to engage new reimbursement processes in Q2 that spills over into revenue in Q3. On the other hand, we've already seen improvements in the inflow in the reimbursement in the U. S. Market. So that's why on a total net effect, we still believe that we have passed the low point. Okay. Very good explanation. And then I have a final two questions. First one on tech. In terms of the competitive landscape for integrated eye tracking in VR and AR, who for integrated eye tracking in VR and AR, who do you see as your main competitors here? Are there other third party suppliers? Or is it in house development as the main threat? And has this competitive situation changed anything recently? It's a good question. There are a number of independent competitors that are working to supply eye tracking technology to different device manufacturers. And Tobii was actually not sort of 1st in the game of supplying eye tracking technology for VR, but we have invested a lot of resources and money to build up our world leading technology for eye tracking, specifically in the field of VR, over the past few years. And we really see that, that has gradually, not just sort of short term, but over the past few years, gradually really strengthened our competitive position. And we are very clearly positioned as the world leader today as an independent vendor of eye tracking technology, which also means that today, I would say that our main competitive force is not the other independent suppliers, but rather that we sometimes find ourselves competing with potential in house initiatives from some of these players. And for obvious reasons, that's but sometimes have slightly different competitive dynamics, But that's where we see the real competition. In terms of the independent lenders, we consider ourselves to be very strong and actually have improved our position quite strongly over the past 1 to 2 years. Okay. And in terms of the in house competition you see from some of your potential clients, has that increased recently? Meaning that they have maybe have seen what you have done and they realize that, okay, this is something that we could actually develop ourselves and then they have started to do it so that it becomes a higher threat than we saw half year ago, for example. Is that a risk? I would say that what we've seen is that it has decreased because some of them have put some effort into it and realized that this is really, really difficult. So if anything, we'd rather see a swing in the other direction. Okay, interesting. And then my final question, can you split out the governmental support of SEK 22,000,000 per business unit, please? I can roughly do that for you. I mean the big chunk sits in Tobii Dynavox, and that is probably up to closer to 15 million of the EUR 22,000,000 and the rest is split fairly evenly between the other 2. Excellent. Thank you very much. And your next question comes from Daniel Gerberg from Handelsbanken. Please go ahead. Thank you very much for taking my question. I have a question on the milestones you mentioned in the VR, AR headsets driving external revenue growth for Tobitek. Can you comment if these are with existing customers that you have publicly announced before? Or do you also have any new customer among these milestones that we can perhaps be aware of later? Yes. No, thanks for that. That's a good question as well. The majority of the development efforts that are ongoing with customers in the VR segment are with customers that are not publicly announced. Perfect. And another question, if I may. In your report, you write about projects, milestone projects on VR and AR headsets. But in the presentation, as I saw, it was only about the VR headsets. What is correct? Is it the only VR headset or also some milestones regarding AR headset? It is both projects relating to VR and AR headsets. And we but we actually lump AR into our VR segment when we talk about subsegments within Tobitec. Okay. Thanks for clarifying that. And another question, if I may, on Tobii Pro and the Glasses 3 that shipment materially started Q3. Do you think that had also a negative impact on sales of the Glasses 2 in Q2? Or is that too insignificant effect to be mentioned? Or is it can it be so that people are waiting for glasses free? That's very, very difficult to know and quantify. If I were to guess, I think in the scheme of big things, I think that the effect was probably small. So I really think that's yes, I think it is the COVID-nineteen that constitutes that decline in Q2 for TobiPrA, so almost all. Yes. And then my final question, this may have been asked already because I was talking with the operator in my family name, spelling. Longer term, you talked about or do you want to spoke about longer term structural effects coming in later quarters from some of the adjustments made. Would it be possible to does this relate to the 60 consultants and fees you mentioned? Or is it new measures? And is it possible to comment anything on the relative impact on Q3 versus second half? And possible also if Q2 had any nonrecurring costs that you could mention for the downsizing of TobyTech? All right. Let me see if I remember all new answers here. So I'll start off in Q2. Minimal nonrecurring items in Q2 related to the program. In terms of the more structural piece of the program, which is long term, there will be gradual effects of lowering the cost base in Q3 and in Q4 as some of these notified people are leaving Tobey. So it will be gradual effect. I'm not going to give any numbers today on that and set in expectations, rather that's going to be a gradual process where we see at the end of Q4, we will see the full effect of this program. Perfect. Thank you so much and good luck in the Q3. Okay. Thank you. And we've had no more questions come through on the phone at the moment. Okay. Henrik Mawby here from Tobey. So we have a number of questions from the online participants. Starting off with could you please tell us how Tobey's eye tracking differs from Mirametrix eye tracking eye tracking in Lenovo? It seems like miraMetrix is deeply involved in their laptops. So, also good question. Tobii Aware is our sort of entry level solution for eye tracking in the PC segment. And there are several competitors that are competing in the space and providing these type of solutions that enable PCs to perceive the user in a better way. This is a new area and a trend that we think will grow quite rapidly in the PC market. NeuroMetrix is one of these competitors and they have a solution that is reasonably similar to what we're offering in Tobia Ware. Merometrics has been quite deeply ingrained in a relationship with Lenovo for quite a large number of years. And we have recently won a number of design wins with Lenovo. So that's obviously a customer where we're competing with them, and we may also see them in competition on other customers. Obviously, we believe that we have a much better solution than products. But competition is a good and healthy sign that there is a demand in the industry. And on the note of competition, how would you estimate the competition now compared to before? It seems like new competitors are emerging in the market. And I don't know if this is segment specific or a group. It's a very general question on competition. Yes. No, I think we continue to see a high level of activity also with competitors. I think if we look at a little bit of a longer time line perspective, we see sort of a new eye tracking competitor pop up roughly once a quarter, and that's the way it's been for the past few years. And on a high level, that's great because it means there's a lot of opportunity, there's a lot of innovation, there's a lot of interest and activity around eye tracking. Overall, I think that TOBI is maintaining a very strong world leading position in a really good way. But obviously, we're watching these competitors very closely. We're keeping a close eye on them. We get inspired by them. We get pushed and pressured by them, stressed by them sometimes, but that's exactly why it is good to have competition as well. Okay. You have previously stated that the demand for IS5 is higher than for IS4. So we will see more OEMs besides Dell incorporate IS5 in the near future? Yes. I think we have communicated already in our last earnings call that we see the most obvious near term opportunities in the Pizza segment are actually more around, for instance, the Tobia Ware solution as well as in our peripheral business. The price point of the high fidelity fully integrated eye tracking platforms like the IS see large adoption of that. So I think it's wise to put sort of near term expectations more on the lower cost options, specifically in the PC segment. Earlier you mentioned when you had a design win without revealing who the OEM was, How come you changed the approach or have a different approach? Are there no new design wins to communicate or design wins ahead? So generally, in consumer electronics, in particular, it's very difficult to communicate design wins any significant time ahead of product launches. And it is for a couple of reasons. One reason is that compared to some other more traditional industries that have longer cycles, in those industries, you often have design wins years ahead of product launch, and it's also very clear with very specific milestones, contracts, etcetera, when you have a design win. In consumer electronics, and in particular, in types of products where you're on sort of cutting edge innovation, it's a much more fluid state of when do you actually have a design win. We had actually several examples where the final contract with major OEM customers wasn't even signed until after the product was launched in the market. So that creates a quite high difficulty in even stating when there is a sound design win. Often, we have worked in sort of a gradually deepening relationship and integration process with customer for a considerable period of time before market launch. So that's one thing. The other aspect is that eye tracking is typically incorporated in sort of the latest state of art products from our customers, and it makes it extremely strategic and very sensitive for our customers. And it becomes almost impossible for us to communicate any specifics around that prior to then all customers going public and doing their market launch. In a few instances, early on, we tried to communicate on a no name basis in a fluffy manner, but that in our opinion actually created maybe even more confusion and a bit of complexity in communication. So we're trying now to be quite specific and concrete. We're trying to do it as soon as we can. But in many cases, it means that we do not communicate design wins until our customers actually launch their products in the market. Yes. And I think it's fair to say that the Lenovo deal in this quarter is an example of that, where it's shipping at the same time as we announced in the same way. Yes. A very straightforward one. Have you had meetings with Samsung to discuss eye cracking? With who? Samsung. It's safe to say that we have met on numerous occasions with virtually all the major consumer electronics companies. So obviously Samsung is included in that like many others. Will the new game Microsoft Flight Simulator work with Tobii eye trackers? We are working on that currently. We don't have a final answer. So hopefully, I would say today. Can you say anything about the interest from the developer community for headsets with Tobii eye tracking currently on the market. Are there lots of games and applications being worked on? So there are a healthy number of games and experiences ready for when consumer headsets with eye tracking becomes available in the coming years. Great question. Yes, there is strong interest, and I think that there is strong recognition of the possibilities, opportunities and benefits of eye tracking for application developers to create new types of values and experiences, both in VR and AR. There's definitely more and more developers working on that. But we are exactly in that phase right now. We're exactly in the phase where the first real headsets have hit the market. And now the ecosystem is sort of embracing this capability and figuring out what to do with it and building up a robust enough set of applications to actually warrant the really high volumes, both in enterprise and consumer headsets. But we perceive that this is progressing well. In this context, as we mentioned, standardization like OpenXR is quite important. And the fact that the all the heavy hitters in the industry are behind this is also a very strong sign. Okay. Henrik, is your belief that the Tobii eye tracker will be in a majority of the 1st generation consumer eye tracking headset? I think there is a solid chance of that. Henrik, do you still think that all three tech segments have equally strong growth opportunities considering that the PC segment is a bit slower than expected? Yes. I think over the in the medium term, we see significant growth opportunities in all the three segments. Do you see any delays on the customer side for VR or AR headsets? I think Apple shifted their path to 2022. We do see delays and not just in vRNA arm, but also for instance on the PC side as well as in niche applications. We see that several of our customers have had some delays in their plans for new products and have some sort of some of their roadmaps have been pushed out a bit. So yes. When will Johan Bilt believe Tobey? And when will you announce the replacement? So Johan will be leaving us during September. And we have made really good progress in recruiting a new CFO. So you should expect an announcement around that within short. How will you see the cost reduction due to redundancies affect the business? I think maybe we've answered that. I think that was a question from Daniel. From Daniel, yes. When will new financial goals be communicated? So we've said that we temporarily moved our financial goals to the side this year due to COVID-nineteen and that we plan to define and communicate new specific financial targets both for the group and for the divisions once the situation has somewhat normalized. We don't feel that we're quite there yet. I hope that we will be able to commute new financial targets before end of the year. But of course, it also depends on how the situation evolves. Great. Thank you. And in the interest of time, I think we'll have to cut the questions there. Good. So thanks, everyone, for joining us today for our earnings call. Continue to take care out there. Remember your social distancing, and looking forward to talking to you again on our next earnings call. Thanks, everyone. Take care. Thank you.