Earnings Call: Q4 2018

Feb 6, 2019

I must advise you that this conference is being recorded today on Wednesday, February 6, 2019. I'd now like to hand the conference over to your speaker today, Henrik Eskelson. Please go ahead. Thank you, Jenny, and hi, everyone, and welcome to our earnings call for the Q4. As usual, it will be me and Johan Wilsby, our CFO, who will do the presentation, and we will have some time for questions at the end. So if we flip to the next slide on the high level summary. It was a good Q4 for Tobi with sales records for all of our three business units. All in all, the group sales grew by 18% adjusted for currency effects. And one especially positive thing was the continued strong sales growth and the improved profitability in Tobii Pro. We also had great sales development in Tobii Dynavox, partly related to the acquisition of SmartBox, but I'm also pleased to see a solid organic sales growth in the quarter. For ToveTech, the most significant event was the breakthrough order with HTC within VR and the launch of our new IS5 platform, which is key to drive increased volumes in PC. We also have Dell, who was first out to launch their new flagship gaming PC integrating the new IS5 platform. I'm also very proud that TOBI has been designated the 4th best employer in Sweden, all categories, in Universo's annual survey. We have a fantastic team, and it's vital for us to be able to attract and retain top talents to stay in the lead. As usual, let's go through each of the three business units, starting with TOBI DYNAVOX. So next slide, please. Tobii Dynavox is the global leader in assistive technology for communication. We develop and sell communication devices and software used by people with disabilities to communicate and access computers. Next slide. So the Dynavox market is fundamentally driven by the large and strong trend in society of increasing inclusion and accessibility. We see that individuals with disabilities are increasingly able to participate fully in society on similar terms as all of us. We see this concretely with TV and movies increasingly featuring individuals with special needs. We see large enterprises putting increasing emphasis on ensuring that their products and solutions are accessible and available to everyone. We see gradual improvements of reimbursement systems in numerous countries worldwide. And we see this trend not only in Western countries, but increasingly so on a global basis. The market for assistive technology for communication is deeply underpenetrated. Globally, 1% to 2% of all people have such a severe speech impairment that they need assistive technology to communicate effectively. This corresponds to about 50,000,000 people worldwide. We estimate that only roughly 1% or 2% of these have access to suitable solutions today. So that leaves 98% to 99% of people in need without the copper solution. In 2018, we saw continued growth in established markets, such as the U. S. And Germany and large growth in emerging markets. And emerging markets in this area includes, for instance, France and Eastern Europe. Next slide, please. In the Q4, we delivered an all time sales high for Tobii Dynavox. Revenue was up 28% over the Q4 in the previous year or 9% adjusted for both acquisition and currency effects. And the number of end users we address with our products, including everything from our low cost apps to our high end medical grade devices, increased by 45% over Q4 in the previous year. As you may remember, during 2017, we launched a new totally revamped portfolio of touch products. And during 2018, we completed the new touch portfolio with the launch of additional devices and localizations of our new software and language system into now 8 major languages. These new solutions have been extremely positively received by the market, which has been a key driver for large increase in sales of TOBI DYNAVX Touch solutions during 2018. Our new strategy with leading offerings at all the different price points in the market, from the low cost apps all the way up to the high end medical devices, also works really, really well and helps drive sales. Another key strategy to drive and increased penetration in the market is to implement large scale programs to train therapists, doctors, teachers and other professionals on assisted technology for communication and on TOBI DYNAVUX solutions. During 2018, we more than tripled the size of this program and trained well over 30,000 professionals. The acquisition of SmartBox was closed on October 1, so the SmartBox numbers are now also included in Q4 and contribute to the strong sales growth. SmartBox adds important products and sales presence in key geographic markets. We also see clear synergies with the acquisition, both in sales, R and D and operations. With our combined teams and expertise, we will have the capacity to increase innovation and develop even better solutions that will help even more people with disabilities to communicate effectively. However, we are still waiting for approval from the local competition authority in the UK, CMA, before the actual integration work can start. EMA has recently announced its intent to continue its investigation in a so called Phase II. It is, of course, unfortunate, but we're convinced that this is an acquisition that will be prosperous and good both for us and for the markets and the customers. Johan, over to you and the financial overview on Torben Dynaox. Thanks, Henrik, and hi, everyone. As Henrik stated, Tobii Dynavox delivered all time high sales in the 4th quarter with a sales growth of 28%. Adjusted for acquisition and currency effects, the growth was a solid 9%. Gross margin was down 2 points in the quarter and down sequentially, primarily driven by product mix change arising from an extended product portfolio, some nonrecurring costs related to the current acquisition phase and the related effect from different revenue recognition under IFRS 15. The last one is affected from the Material Services component, which is part of our sales offer in the Medical Grade segment. Our operating expenses were up in Q4, which is natural when you include an acquisition, but there were several onetime costs in Q4 that affected our EBIT in the quarter, around SEK 10,000,000 primarily M and A related and a large internal project where Tobey has incorporated each of the 3 business units as separate legal entities. The purpose is to increase transparency in each business unit, but this will not impact our existing financial reporting by segment. Organic growth was around 7% over last year. And in addition, we had increased R and D efforts and increasing costs for the training exercise that Henrik mentioned earlier. The Q4 EBIT margin was down materially versus last year, mostly affected by the nonrecurring items just mentioned. EBIT adjusted for nonrecurring is above 10%, but still not where we aspire to be in a successful quarter. However, the investments we're making in training and R and D are strategically right for the long term growth of both the AEC market as well as for Tobii Dynavox. Next slide, please. In the full year 2018, we grew sales in Tobii Dynavox by 16% or 9% adjusted for acquisitions and currency effects. Summarizing 2018 from a sales perspective would involve 2 material factors. Tobii Dynavox is back in real growth mode with the new product and localization efforts starting to impact the wider market. Revenue growth adjusted for currencies and acquisition was 9%, and this is in line with our long term financial targets, average yearly revenue growth of 10%. On top of this, we have the recent acquisition of SmartBox, which is contributing to sales from Q4 of 2018. Gross margins were down 2 points versus 17 as we have seen in some of the earlier quarters, primarily driven by product mix and the related effect from different revenue recognition. Moreover, we saw some nonrecurring effects in Q4 of 2018 due to extended product portfolio. Our operating expenses were up during 2018, obviously partly increased by the acquisition and also including several of the onetime costs that I just mentioned. Our EBIT margin was down versus 2017, but adjusted for nonrecurring items, we would have had a 10% EBIT margin, in line with last year. And we now have the focus to make real efforts to get back on a path towards our long term EBIT target of 15% profitability. Over to you, Henrik. All right. Let's move to Tobii Pro. Tobii Pro provides comprehensive eye tracking solutions and services that enable thousands of companies and academic research institutions to gain deep insights into human behavior, consumer experiences and professional performance. Tobipro is the undisputed market leader in this space with a global market share of 60%. Next slide. Tobipro's overall market is driven by a strong increase in demand for objective methods to understand human behavior. Both academic researchers and commercial enterprises are increasingly recognizing and demanding the type of insights and data that eye tracking delivers. Understanding behavior of consumers to optimize your product, your e commerce or your marketing or to optimize performance of your employees are all critical in today's hypercompetitive markets. The total market for eye tracking solutions for research has grown at rapid pace over the past 15 years. And we've actually seen market growth accelerating in the past 2 years as eye tracking is rapidly transitioning from almost science fiction to more much more into the mainstream. And you can see this acceleration also in the graph in the market development on this slide. We also feel this change in the market. Customers today are much less asking what is eye tracking or why should I use eye tracking and instead asking how can I apply eye tracking to my business? And this, of course, changes the dynamics of the sales process. We've also seen eye tracking making strong segues into new segments, for instance, into the segments we call professional performance, where eye tracking is used in industry and simulators, sports, etcetera, for training and performance optimization. Next slide, please. Tobipro delivered a record high revenue in the 4th quarter with revenue up 15% over Q4 in previous year, adjusted for currency effects. The order entry growth was even higher, but some large orders will not be recognized as revenue until later in 2019. For the full year, revenue grew by 26% adjusted for currency. Solvipro is investing a lot in broadening and refining its product portfolio. And during 2018, we've launched a large number of new products, including Tobii Pro Sprint, Tobii Pro Video Analytics and Tobii Pro Lab VR. And now in the Q4, we added a new research eye tracker device, the Pro Nano. During the year, Tobii Pro has also grown its global sales and service organization substantially. We have expanded our teams both in the U. S. And Europe and in Asia. We also acquired Acuity to greatly increase our presence in the U. K. Market. Next slide and over to you, Johan. Thanks. As Henrik mentioned, Q4 was a great sales quarter for Tobey Pro from all perspectives, with a 15% FX adjusted growth and great order intake. The effect of taking over a large portion of our former competitor, SMI's customer base, is now behind us. So this is apples to apples growth in the quarter and in line with our long term financial targets. Gross margin came in at 76%, up 3 points year over year and flat sequentially. Product versus services mix in the quarter was behind some of the increased margin. Operating expenses showed continued growth due to investments in sales coverage and product development. The acquisition of Acuity earlier in the year also contributed to discrete increases in operating expenses. The EBIT margin of 20% was up 1 point compared to last year. As you know, we tend to have a strong seasonal pattern where Q4 is the strongest from a profitability view. Next slide, please. We have seen some exceptional sales growth in Tobey Pro during 2018, partly boosted by the exit of our former competitor, SMI. This effect ended in June 2018. FX adjusted revenue growth of 26% is well above our long term financial targets of growing 15% to 20% per year. Gross margin came in at 75%, up 1 point compared to previous year. Operating expenses grew materially due to investments both in sales coverage, the Acuity acquisition and product development. The key driver behind the operating expense growth is to capture long term growth opportunities we see for the business unit. However, we expect the OpEx growth to be lower during 2019. EBIT margin compared to last year was up 3 points. This is evidence of scalable elements in the Tobey Pro business model, and we are on a good profitability trend from 6% in 2016 to 11% this year. And our goal is our long term financial target of 50% EBIT by 2020. Back to you, Henrik. Moving on to ToveTech. ToveTech is the world's leading supplier of core eye tracking technology and solutions for integration. Povatek sells and licenses eye tracking technology in the form of system designs, algorithms, platforms, ASIC chips, sensors and cameras, applications, software and IP. Next slide. Soboatec is impacted positively by several large trends. One such trend is the proliferation of ever more intelligent or smart sensors. In recent years, we've seen adoption of, for instance, advanced face ID sensors in smartphones. We've seen rapid adoption of intelligent assistance in our homes with Alexa and Google Assistants, etcetera. Recently, Intel and Microsoft have, for instance, launched their large new effort for next generation ultrabook laptops that they call Project Athena, which embraces smart sensors as a key component for PCs over the coming several years. Another important trend related to Fobitec is the continued growth of PC gaming and in particular, esports. There are over 1,000,000,000 people who play games on PC worldwide. 400,000,000 people watch esports and half of them practice esports themselves, and these numbers are growing by 20% per year. VR in itself is a new market, but is now showing solid growth. Viport is one of the large app stores in VR, and Viport tripled the downloads and revenue in 2018 compared to the previous year. Steam, which is the largest gaming app store in the world, doubled the share of its users with a VR headset connected in 2018. Enterprise VR applications have found many solid use cases and is growing rapidly. IDC estimates that VR and AR together will more than tenfold from about 4,000,000 units in 2018 to some 50,000,000 units by 2022. And the VR industry views eye tracking as a key technology for next generations of headsets. Next slide, please. At CES, which is the world's largest consumer electronics show, one of the absolute leaders in the VR space, HTC, announced their new flagship product, the HTC Vive Pro Eye. The main feature of this new product is, as the name indicates, integrated Tobii eye tracking. And with eye tracking, this headset is capable of much improved graphics performance, thanks to so called foveated rendering. New more intuitive interactions based on eye tracking and powerful eye tracking analytics for enterprise applications. HTC won numerous awards at CES for this new product. HTC won numerous awards at CES for this new product. This is the 1st major VR headset that incorporates eye tracking and thus this announcement is a major milestone in the evolution of eye tracking in VR. We've already seen significant positive effects of this announcement on our relationships with other players in the ecosystem. When a leading tail like HTC integrates the technology, it validates eye tracking in the eyes of content developers, graphics processing partners, game engine partners and of course puts pressure on other headset manufacturers as well. Tobey is working in close collaboration with numerous customers and partners in Doctor and in several product development projects that target products in market later in 2019 or 2020. During 2018, Tobii has also deepened our partnership and collaboration with Dell in gaming and esports. Also at CES, Dell launched their new flagship gaming laptop, the Alienware Area 51m, and this device won numerous awards as best gaming laptop ever and, of course, integrates Tobii eye tracking. This is the first product that integrates our new Tobii IS5 platform. The IS5 is much smaller, features fully invisible projection system and is more power efficient than previous platforms. We expect the IS5 to drive significantly increased volumes for eye tracking in our PC segment. In the past year, we have collaborated with Dell around esports broadcasting, which has exposed millions of viewers to eye tracking as a concept. And now in January, Dell and Tobey together launched Alienware Academy, which is a first of its kind esports training and coaching system, which leverages eye tracking to enable deeper forms of insights and training targeting a wide audience of esports players. Next slide, and your turn, Johan, on the financials. Right. Tobitec revenues in the quarter were up 29% year over year or adjusted for FX 20%. This quarter, sales of eye tracking technology to niche market customers and project related revenues in the VR segment contributed to the growth. Gross margin was up 3 points to 46 percent, primarily due to product mix driving a higher gross margin than last year. The operating expenses were in line with Q2 and Q3 of 2018, but we saw a material year over year growth in Q4 since we have grown the organization in Tovitec in the past few quarters in line with our business plan. The growth in OpEx was in part increased by negative onetime costs in both 2017 2018, which explains more than 50% of the delta in EBIT compared to last year. One of the projects that was that has led to these onetime costs is the redesign of the legal structure leading to an incorporation of our business units that I mentioned before. Next slide, please. For the full year 2018, Tobitec revenues were up 24% or adjusted for FX 21%. We have seen project revenues from customers in the VR segment and revenues from niche market customers contributing increasingly to this growth. Gross margin was up 4 points to 47%, again primarily due to product mix with higher gross margin compared to 2017. The operating expenses in the segment were up some 12% when you adjust for FX and one timers, driven by the growth in the organization in Tobitec. Going forward, we anticipate the expansion rate to level off since we now have the size of the organization we need to execute on our strategy. EBIT for the full year was negative $305,000,000 which is almost in line with $17,000,000 if you adjust for nonrecurring items. Next slide. Let's move to the group. The group revenues showed strong growth in Q4 and increased by 18% adjusted for currency effects. All business units set new sales records and contributed to the growth. Gross margin for the quarter was 69% on par with last year despite the drop in gross margin for TOBI Dynamos. TOBI's EBIT for Q4 was a negative $35,000,000 which was slightly lower than last year due to the increased mentioned. The loss factor explains more than $15,000,000 of the delta between the quarters. Next slide. Full year TOBI Group revenues grew by 70% adjusted for currency effects. Again, all three business units contributed to the growth. Gross margin for the year was 70%, down 1 point compared to last year. Tobii Pro and Tobii Tech contributed positively to the gross margin. Tobii's EBIT was a negative SEK 190,000,000, which was on par with last year. Key drivers in the operating expense side were the increased resources in the business unit as well as the nonrecurring items mentioned. Next slide. Let's wrap up this financial section with a look at our cash flow, where cash flow from continuous investments improved in Q4 over Q4 2017, partly driven by a decrease in the net working capital. The acquisition of SmartBox was paid out our cash position and obviously impacting the cash flow from investments. At year end, we had a cash position of $192,000,000 after having paid the acquisition of SmartBooks, And we have agreed bank facilities of $250,000,000 which were not drawn at year end. So this concludes the walk through of the numbers. Next slide, please. As we have communicated repeatedly, acquisitions are an integral part of Tobey's strategic agenda and enables us to broaden our portfolio and reach new markets in an efficient way. In line with earlier communication, this will require separate financing, and we believe that the bond loan is a flexible and attractive way to create a readiness for future potential acquisitions. The purpose of this bond loan is twofold. It will refinance completed acquisitions, and it will be used to finance potential future acquisitions. Hence, it will replace the current debt financing related to acquisitions. The bond process has been initiated, but the terms have not been finalized. We will already next week meet a number of bond investors, and we will, of course, communicate progress regarding the bond loan according to regulation. Over to you, Henrik. Thanks, Johan. Overall, I'm very happy that all three business units delivered sales records in the 4th quarter. Looking at 2018 as a whole, 2018 was a good year for Tobi from many different aspects. We have strengthened our market leading position by major contracts with customers and partners and by growing sales, both organically and through the acquisitions of SmartBox and Acuity. We have launched innovative products and broadened and strengthened our product offerings in both TobiDynavox, TobiPro and TobiTeq. All three business units are clear market leaders in their respective segments, and both Tobii Dynavox and Pro are growing profitably. We've had several years of rapid organizational growth, but at large, we have now reached the size we need to be able to reap the benefits of economiescale and deliver on our business plan and on our financial targets. Looking ahead, I see an increased focus on profitability, not the least to ensure that we meet our financial targets for the group of profitability in 2020. With that, we're handing over to you, Jenny, and to questions from the teleconference. Sure. Thank you very much. You. We have a couple of questions coming in already. And we'll go straight ahead to the first one. It comes from the line of Sebastian Olsson. Please go ahead. Hi, Henrik and Joanne, and congratulations on an impressive quarter. So my first question is regarding Dynavox margins. Will you just please give us some indication on how much of the Q4 margin decrease is due to the product mix and how much is due to SmartBox integration? And my second one is about Tobitec. It just shows 2 strong margins 2 strong quarters of 20% organic growth. And what do you expect will ramp up the sales growth to reach your profitability targets? And when can we expect the real projects revenues turning to actual product sales going forward? Thank you. All right. Thanks, Sebastian. I know there were a lot of questions in there. Let me take a stab at a couple of the first ones and then let's see if Henrik follows on. So you asked about the sort of nonrecurring items and the split between SmartBox and others. I'm not able to go into details due to the current sort of investigation. But the SEK 10,000,000 of nonrecurring costs that we have called out in the report, that relates to the complete cost side, so from gross margin down to EBIT. And you were asking about gross margin and how big effect that is in there. And I would say of nonrecurring nature, we're talking about 2 to 3 points of gross margin. Thank you. And the one on Tobeytech. Thank you. Yes. Hi, Sebastian. I can try and take a stab at that one. So you asked a little bit about what will drive sales going forward in Tobitek. And also specifically, you asked a little bit about when will we see VR design wins translating into revenue. And on the first part of that question, we definitely expect sales to grow at very strong pace in Tobitek going forward in 2019, 2020, 2021 in order to reach our financial targets. The growth specifically in 2019 will be driven largely by design wins and deals that we have made in the past 6 to 12 months with key customers. And we have several design wins across both PC, Doctor and niche markets that will all contribute and help drive sales growth in 2019. And then obviously, we need to continue to be successful with landing numerous additional design wins in all of these segments to drive rapid growth in 2020 2021. In terms of VR specifically, HTC has announced their intent to launch or start sales of the HTC Vive Pro I in Q2 of this year. So that will be the starting point for starting to tick on per unit revenues on that device specifically. But then we should expect to see VR revenues growing gradually in 2019 and kicking into bigger gears in 2020. Okay. Thank you very much. Thank you very much. And the next question comes from the line of Mikael Larsen. Please go ahead. Okay. Hi. Yes, a couple of questions. First of all, if you can provide us with the FX impact for Tobii Dynavox and how much the acquisition can ship is it with in terms of sales? So I'm not going to be able to speak specifically around the SmartBox numbers in respect of the ongoing investigation by the CMA. The FX impact is fairly large in the quarter since you know that we are we have big sales in the U. S. The dollar to Swedish currency had a fairly big deviation in this quarter. So that's roughly 8 to 9 points in terms of change when it comes to the U. S. Dollar. Okay. I arrived at, I think, 7% FX contribution. Is that in the right ballpark? That's in the right ballpark when you blend with other currencies, right? Okay. And can you talk about the Tobii DynaMox development per product and country or market, how that developed in Q4? Yes, I can take that one. We had a good development overall. So we saw good growth both in North America and across our main European markets. And we saw growth both in our eye tracking segment as well as in our touch devices segment. Throughout 2018, the we've seen really strong growth in the touch segment, which is where we have launched all of these new revamped products. It's actually the slightly smaller part of the portfolio. The eye tracking part of the portfolio makes up a larger portion of the revenue. And we are already now also looking at development of next generations of some of our eye tracking products that we expect to come to market later in hopefully this year. Okay. Would that be the high end side, I assume? Yes. Okay. And in the rest of the world, how are you developing there? I want to DYNOGS. Yes. So a very large portion of the revenue for TOBI DINAVox comes from either the U. S. Or North America or Europe. Relatively small portion is outside of that. We do see rapid growth, but from low levels in several of these more emerging markets for Tobii Dynavox. But emerging markets in Tobii Dynavox perspective is a little bit different than normal definition of emerging markets. So we're still seeing that type of rapid emerging growth in countries like France or Eastern Europe. We also see positive trends outside of Europe, say in Asia, but they're from really low levels so far. Okay, great. And I was curious about ToveTech and how we should think about these new product launches and the customer wins. In particular for ICE5, if you can help us with the profile maybe in 2019, how that sort of more from a top down perspective maybe could develop? If you can maybe mention the retail market also would be great and how many potential PC or notebook manufacturers there are that you, I mean, could potentially address? So obviously, the PC market is a very large market opportunity, been as a whole, with several 100 millions of devices being shipped every year. The IS5, eye tracking platform is still a high cost component for PC. And we're still at a stage of market development where we are predominantly addressing with the IS5, the PC gaming market and the premium PC gaming market. If you look specifically at premium gaming PCs, that is a market which is roughly 20,000,000 devices per year, counting both laptops and desktop gaming PCs. So that is a more directly addressable market at this stage of market development for the IS5 platform. In that space, there are 5, 6 major PC manufacturers, Dell being one of the absolute leaders, other players being Asus, Lenovo, HP, etcetera, who have specific premium gaming PCs in their portfolios. And obviously, our ambition is to penetrate into the product lines of several of these manufacturers. We have established relationships and products in the market with Dell, of course, but also with Acer and MSI. And for instance, with Dell, we have a very strong and deep partnership. We expect that with the IS5 and the smaller size, the invisible illumination, the improved power efficiency to be able to drive significantly increased volumes in the PC market. Although we are still at the point where we are addressing this early adopter market segment. I hope that helps a little bit, Nigel. Yes. That was great. Thank you very much. And can it be sales already in Q1? Or is it more towards the second half? Thanks. We the new device that Alienware with Adele Alienware launched at CES is shipping already in Q1. But then we should expect very good growth of volumes throughout 2019 gradually throughout 2019 on the ISV platform. Okay. Thank you. Thank you. Okay. It doesn't look as if there are any further questions on the phone. So I'll hand back to yourselves at this point for questions via the web. Thank you. Okay. Thank you. My name is Ole Helmelan, and we received some questions from the webcast. So I think Henrik, we can start with a big picture here. So is the vision still that eye tracking will could actually potentially be in 1,000,000,000 devices? Yes, absolutely. I am obviously somewhat subjective, but I'm personally convinced that we will, as users of our different devices, we will demand our devices to be intelligent and that they understand us as users in a way that is much closer to how humans actually understand each other. And eye tracking provides exactly that. So obviously, it's a function of cost and performance and time and applications and devices and operating systems adopting eye tracking. But I am very convinced that in the long term, we will see eye tracking proliferating across essentially all of our PCs and tablets and smartphones and Doctor and AR and cars and what might be. Okay. And what about cars specifically or automotive? What's your activity there? So we definitely see strong user benefits and a significant market opportunity for eye tracking as a part of driver monitoring in automotive. It's a great use case for eye tracking, and there is a large market opportunity there as well. Tobia has so far prioritized to not proactively invest in the automotive market, and it's mainly a because of focus. We believe very much in carefully choosing and focusing on specific segments. And for us, we have seen better opportunities for us specifically in PC and Doctor and in niche markets. But definitely, there is an exciting opportunity there. What other niche markets have you been looking at? So in niche markets, this is a cluster of quite diverse types of applications and devices that we refer to as niche markets. What joins them together is that typically eye tracking is a very central key part of the use case and the device. So it's almost a necessity for these devices to function. And therefore, it makes it quite attractive for us to supply eye tracking technology, And we're able to extract high margins and do quite profitable deals in these niche markets. And they span from medical diagnostics to surgery applications to industrial and security entertainment applications. And we have today, in total, roughly a dozen design wins across several of these different niche markets. But again, they're sort of joined by, relatively speaking, lower volumes than what we see in consumer mass markets, but with high profit margins. Okay. And here is a question from David Carlson, who is thinking about implementing eye tracking in VR and computing. He assumes that implementing into VR is a bit easier. If so, will competition be tougher in that segment? And what about competition in general? So on a high level, Sobe is not it's certainly not the only company doing eye tracking. There's about 20 companies around that have technology and products in the market for eye tracking. But we are positioned very clearly as the global leader in the field of eye tracking, and we are many times larger than our closest competitor in this space. We still, of course, have very clear respect and pay close attention to competition. Specifically in VR, we have several competitors in the VR space. Generally speaking, smaller significantly smaller companies and players that are also at least trying to sell eye tracking technology to VR headset manufacturers. Eye tracking is almost a little bit deceptive because it's not that difficult to develop an eye tracker that works okay in the lab, but it is excruciatingly difficult to develop an eye tracking system that works on pretty much everyone all of the time And that is possible to manufacture at very low cost with low power consumption, small font factor, etcetera. And in particular, in consumer electronics implementation, such as VR, eye tracking, for it to really take off, it actually has to work all the time. So we typically and this is where Tobey shines. This is what we do best is consistent, reliable eye tracking that actually works in consumer electronics. So as the industry matures and understands some of these challenges and that this is a necessity, it actually helps reinforce and strengthen Tobit's position. And we have a very strong position today in the Doctor space. So one very specific question on CES as well. There's a comment on Lenovo Yoga. Someone is David is wondering about the progress there because we have been expecting an announcement, but we haven't seen it. Any. Any comments on Lenovo? Yes. So Lenovo demoed at CES a new product, an all in one PC in their yoga product line. And in that demo, they also showcased TOBI Technology. We do not have an official design win with Lenovo at this particular point in time, but they have demonstrated a product. And obviously, as soon as we can hopefully communicate something more, we will, of course, do that as early as we can. Okay. Thank you. I think that's it for now. So over to you again, Jerni. Thank you. And there are no questions on the phone at the moment either. Okay then. Okay. So thanks everyone for listening to our earnings call today, and thank you for all of the questions, good questions. Have a great day, everyone, and bye for now. Special thanks to Wu Engvall and David Carlson. Thanks. Bye. Thank you. Ladies and gentlemen, that does conclude the conference for today. You may now disconnect. Speakers, please stand by.