Earnings Call: Q1 2017

Apr 27, 2017

Thank you, Saskia. Hi, everyone, and welcome to this earnings call for the Q1 2017. I am Henrik Eskesson and with me is also our Interim CFO, Thomas Schildstrand. Thomas has been with us for a few weeks now and will serve as interim CFO until Johan Wilsberg comes on board as our new permanent CFO in June. So with that, let's start the presentation. If we flip to the next slide, We continue to pursue ambitious strategies for all three of our divisions, Tobii Dynavox, Tobii Pro and Tobii Tech. We have a high pace of investments in product development in all business units and are also gradually expanding each of the sales and marketing organizations. Overall, we have grown the company significantly in the past year and continue to grow also in the Q1, particularly in Torbitec accounting and employees. Compared to a year ago, we've added nearly 100 new colleagues to our team and are now over 7 50 employees worldwide. Sales in the Q1 were below expectations in Tobii Dynavox and also a bit slow in Tobii Pro. On the positive side, we had a strong revenue increase in Tobii Tec compared to the Q1 last year. Let's go through the developments in each division in a bit more detail, starting with Tobii Dynavox. Next slide. Tobii Dynavox accounts for roughly 70% of the group sales. This business unit is clearly positioned as the global leader in the field of assistive technology for communication with a market share close to 50% globally. Moving to the next slide. Over the course of the past 2 years, we have made significant investments in product development within Tobii Dynavox and even more so now in the Q1. As a result of this, we already introduced several products in the past year and we plan to introduce a number of important new products during 2017. First out, just a few weeks ago was the launch of our new speech tablet called Indi and our brand new communication software, Snap. Both of these are strategically very important products for the business unit. So let's flip to next slide on Inde. Inde is a product that is the first of its kind in the world. We have here designed a tablet device specifically for the purpose of effective speech communication. It's sleek and user friendly like an iPad, but it comes with very powerful speakers that makes your voice heard in a classroom or in a restaurant. It is semi rugged to withstand around the clock everyday usage and it has exactly the right ergonomics, accessories and service options to be truly fit for purpose as a communications device. And it comes at a very attractive price point starting at US999 dollars including industry leading software ready to go out of the box. So with Dynavox has also launched, e commerce sites to make indie, Snap and other products available for direct online purchase in select markets, thus not only lowering the cost barrier, but also making it easy to get a hold of these products. We believe that this is a truly disruptive product offering in this market and our goal is to take significant market share from solutions based on regular consumer tablets that frankly really aren't fully appropriate as communication solutions. With this, we aim to increase our sales into schools and directly to end users in what we call the private pay segment. We also believe that this type of product long term opens up for new opportunities in many geographical markets where access to reimbursement is still limited or non existing. Bringing out an offering like this rhymes very well with our mission in Tobii Dynavox to bring the power of a voice to many more people. There are so many individuals with communication impairments who really need this and whose lives we can help to fundamentally improve with this type of device. Worth mentioning is that Indi addresses the touch device sub segment within Tobii Dynavox. This in turn makes up around a quarter of current sales of the business units. EyeControl devices make up the bulk of the other three quarters. Let's move to the next slide with some more information on the Snap product. So Snap is our brand new software for symbol communication. Snap makes it possible for users who are illiterate to express themselves in very effective ways. Typical user groups for Snap and also Indi are nonverbal autism, cerebral palsy, Down syndrome, just to mention a few. The software, together with the so called core first language system that it contains, is based on decades of leading clinical research in language expression and language acquisition. Compared to Tobii Dynavox previous symbol communication software, this product is much easier to use, much more responsive, much more capable. An important new addition also is that the software comes with a companion app called Pathways, which is a very comprehensive instructional and training solution that enable end users, their parents, teachers, therapists to obtain a robust and interactive guidance in how to learn to communicate using this solution. Our intent is to make Snap our flagship software across a broad part of Tobii Dynavox portfolio of solutions. It is the default software on the new Inde device and it's also available on our iControl I Series communication devices. It will soon be available as a pure iPad app as well. Our long term goal is to make Snap the gold standard and most widely used symbol communication the gold standard and most widely used symbol communication software in the assistive technology industry, which is a very important strategic position to take and to hold. Let's move to the next slide and talk a bit about how this all fits together. So these new products, Indian SNAP, they form key pillars in our long term product strategy for TorbiDynavox. Again, as I mentioned previously, we have 2 main sub segments within the business unit, eye control devices and touch based devices. In the presentation today, I'm going deeper in describing our strategy specifically for the touch based devices. And within this sub segment for touch based devices, we see 3 price categories. At the top are medical grade devices that are sold as complete solutions with purpose built hardware, comprehensive software, extensive services and warranties typically sold through medical reimbursement systems. Here, Tobii Dynavox is already established as a market leader. We believe that this market will remain and we're investing to come out with even better and stronger products to long term grow our market share even further in this area. In the middle, we see consumer grade solutions. These are lower cost options that have until now been built and offered by some of our competitors using off the shelf consumer tablets that they wrap in a casing, add some speakers, add software, etcetera and sell it primarily to schools and in some regions also via reimbursement. Here, Dolby Dynabots has not previously had any offering. With Indian fab, we are directly targeting this price segment, but with a much more capable product offering. We believe there is significant opportunity here already today and that this sub segment also has plenty of opportunity to grow going forward. At the bottom are the lowest cost solution, software sold as pure apps that run on consumer tablets such as iPad, typically bought directly by end users. These apps are important as an entry level solution and to spread awareness and acceptance of communication software, but also serves as a base for upselling to solutions that are more fit for purpose. SobiDynavox has a legacy leadership position in the medical grade solutions stemming from the acquisition of Dynavox that we did in 2014. For the past few years, we've executed on a strong ambition and strategy to become the market leader across all of these three price levels. I believe that if successful, this will drive growth long term, both by increasing our overall market share and by increasing the penetration in the market overall and thus further reinforce a very strong market position for TURBERDynamox. Let's move to the next slide with financials for the business unit. In the Q1, revenue decreased by 3% compared to Q1 2016. Adjusted currency effects, the decrease was 7%. Adjusted also for a positive one time effect from the Gleeson Act that we had in the comparison quarter Q1 2016, the decrease was 5%. Sales in Europe outside of the U. K. Grew at a strong healthy pace. However, sales were lower in the U. S. And in the U. K. Sales were negatively affected by the same main factors as we have described in the previous couple of quarters. One effect was the price reductions that we implemented in April 2016, which has meant that ASPs were lower than in the comparison period. We also continued to see slower sales of our older touch based products, which largely stemmed from Dynavox prior to the acquisition and that have been in strong need of a refresh. And we saw significantly lower sales in the U. K. Driven by the switch to direct sales that we implemented last year. We are, of course, disappointed with the sales in the Q1 in SobiDynavox. Our long term target is to grow top line in this business unit by at least 10% per year. Once Indian SNAP as well as additional upcoming products have been firmly established in the market, we believe that these will contribute to driving healthy growth going forward. The lower EBIT margin was a natural consequence of slightly lower sales in combination with a slightly increased operating expense. With that, let's move on to the Tobii Pro business unit. Tobii Pro makes up about 20% of the group sales. This business unit is the global leader in eye tracking research solutions used for understanding human behavior with a global market share close to 50%. Let's turn to the quarter highlights slide for Tobipro. In the Q1, we saw continued strong sales of our flagship product Glass 2. Examples of areas where we see increasing interest is in large studies of how people interact with a broad variety of media in their everyday lives as well as human performance, training and skill transfer applications in industry, transportation, sports, etcetera. On the right here on the slide is an interesting video snippet showcasing differences between experts and novices playing piano as an interesting example. As you may remember, we launched a new top of the line research eye tracker, the Tobii Pro spectrum, at the end of last year. We also announced a new research software platform, Tobii Pro Lab. Both of these products have been received well in the market, but the new Spectrum eye tracker will not start shipping to customers until now in Q2. This means that we have a fair amount of orders taken in the Q1 that we will not ship an invoice until now in Q2. We continue to invest to broaden our product range and offerings also in Tobii Pro, both to address the high end research segment as well as targeting customers that need more cost efficient, high volume and scalable solutions. We are also gradually expanding our global sales and marketing organization. Let's move to the financials for Tobipro. When we look at the financial numbers for Tobipro, it is important to remember that we have historically always seen a strong seasonal pattern with a revenue spike specifically in the Q4 each year and comparatively lower sales in the other three quarters of calendar year. In the Q1, sales of Tobii glasses and Tobii Insight grew nicely. Sales of screen based eye tracking solutions were slower in part due to the fact that we took orders but did not ship and invoice the new Tobii Pro spectrum, but also due to weaker sales of mid end priced eye tracking systems. This resulted in a total revenue growth of 3% or a 1% decrease adjusted for currency effect. Adjusted also for order backlog effects, sales grew by around 5% compared to the Q1 in 2016. Gross margin was strong at 75%. Operating profit came in at around 0. The lower EBIT compared to the Q1 2016 was mainly explained by the already mentioned order backlog effects, but also somewhat from increased spend in sales and marketing. Let's move on to the Tobitek business unit. In Tobitek, our ambition is to introduce eye tracking in large scale into volume markets such as gaming PCs, mainstream computers, virtual reality, smartphones and beyond. At the very end of 2016, we closed our financing round, which contributed approximately SEK 450,000,000 to Tobey. This enables us to continue with our ambitious plans to bring eye tracking into the PC gaming market and beyond that to mainstream computers and tablets and to, in parallel with this, increase our investments in the new verticals, virtual reality and smartphones, which also have large long term potential. We are breaking new ground here and are introducing new technology, new user experiences. The opportunity is large, but the work required to succeed is also significant. This will take a lot of resources as well as calendar time to accomplish. Through the share issue, Tobi has a strong financial position, which gives us the muscle and the stamina that we believe will be required to succeed with this. Let's turn to the next slide where the quarter highlights for Tobitake. We continue to see good traction in the PC gaming segment in the Q1. A number of new games were released in the past few months that support Tobii eye tracking, including several very large titles such as Dying Light, Rise of the Tomb Raider, Ghost Wrecking: Wildlands and now in April also Soma and WARHAMMER: VERMINTIDE. All in all, we can now provide additional experiences in some 60 games using eye tracking. In the quarter, Acer officially announced the V Nitro, which is the 1st laptop we built in eye tracking that goes beyond gaming to target users also in mainstream computer usage. We are collecting feedback from our early adopter users on the launched gaming devices. From those users who have actively tried eye tracking received positive feedback on the user experience, which of course is very encouraging. In the Q1, we also publicly showcased some of the work that we've been doing in virtual reality over the past several quarters At both the GDC and SVBR conferences, and these are 2 of the leading conferences for developers as well as for the VR community. We showcased a modified HTC Vive headset with integrated Tobii eye tracking and a number of user experiences in VR games. And this is in part a result of an R and D collaboration between Tobii and Valve. Valve is a major player in the gaming space, who is also behind a lot of the core technology in the HTC Vive VR headset. And these Tobii VR prototypes received a lot of positive interest and have, of course, further increased the interest in Tobey's eye tracking solutions for VR. We are entertaining multiple dialogues with potential partners and customers with the aim to integrate our eye tracking technology into several future VR headsets. In the smartphone segment, we have continued to develop our technology and new interaction concepts. These are still early steps on a long term journey. Let's move to the Q1 financials for Togutec. Revenue increased by 80 2% year over year or 76% adjusted for currency effects. The external sales almost quadrupled, albeit from low levels. Despite this, sales were somewhat lower than in the Q4 last year. But as you may recall, we mentioned already in our last earnings call that we had significant one time effects in Q4 2016 due to customer projects of onetime nature and stock buildup effects with some of our major integration customers. Gross margin in the Q1 was intact at 41%. We have grown the organization significantly in Covitec in the past quarters in order to pursue multiple sub segments in parallel and enable us to work in tight integration projects with multiple parallel customers. The largest growth was in R and D, but we've also increased our resources in sales and marketing. This, of course, drives increased OpEx, which means increased level of negative EBIT in the business unit. Compared to Q1 2016, the operating loss increased from SEK 49,000,000 to SEK76 1,000,000. With that, I hand over to Thoras. Thanks, Henrik. So let me lead you through the summary for the group financials. Please turn to next page, Q1 revenue. In the first quarter, revenue increased to 261 or by 4% compared to the same period last year and was more or less flat adjusted for currency effects. As Henrik mentioned, Tobipro was in line with last year, while Tobii Dynavox, in spite of good development in many markets, decreased due to the development in U. K. And U. S. This was, however, more or less compensated by the strong external revenue growth in Torbitech. As you can see, gross margin for the quarter was 71% or same as the previous quarter Q4 2016. Compared to Q1 2016, gross margin was, however, somewhat lower and this due to changes in product mix, the price reduction on certain products within Torbjornynavox during the Q2 of 2016 and the increased sales by Torbjornetech. So let's move on to the Q1 results. So please turn to next page. The group's EBIT for Q1 this year was minus SEK 56,000,000. EBIT for our 2 profitable business unit, Torbjorn Dynavox and Torbj Pro, was lower than last year due to reasons mentioned earlier by Henrik. Regarding Tobipro, it's worth remembering that the profitability from quarter to quarter can show quite big variations and mainly due to seasonal variations in sales. Within ToveTech, we continue to invest in accordance with our strategy, which is also the main reason for lower EBIT in total for the group when comparing with Q1 2016. Let's move then to the next page and the balance sheet and cash flow. Cash flow after continuous investments for the group was minus $45,000,000 in Q1 2017. The change versus last year was related to the EBIT development and the increased investments within R and D. As you can see, we continue to have a strong cash position of SEK730,000,000 at the end of March as well as a strong balance sheet with an equity ratio of 81%. In other words, well prepared to meet future investments. And that concludes my part of the presentation. So back to Henrik. Thanks, Thomas. So in summary, the Q1 was another intense quarter. We continue to grow the organization. Tobii Dynavox worked intensely on important new product launches and in Tobii Tec we saw continued momentum in PC gaming and increasing investments and interest in VR. Sales was slow in Tobii Dynavox and somewhat also in Tobii Pro, but a strong increase in Tobii Tech over Q1 last year. With that, we're handing over back to you, Saskia, and to questions from the teleconference. We take our first question today from Mikael Larsen from Carnegie. Please go ahead. Yes, hello. Thank you. A few questions here. First of all, when it comes to Torbjornavox, can you say something about the main reasons for the U. S. Sales decline? You talked about the tough side, but if you can comment on the overall market situation and reimbursement that you have right now would be great. Hi, Mikael. Yes, happy to do so. So the main reason that we saw slow sales in the U. S. Is that we generally see slow sales in the touch device sub segment within Tobii Dynavox. Again, products are old and they stem from prior to the acquisition of Dynavox and they've had for some time a clear need of refresh. The touch device sales have been very much concentrated to the U. S. So we've had very little historical sales of touch devices in Europe, but it's been a reasonably important part of the sales in the U. S. Market. So when we have a decline in that part of the portfolio, that hits the U. S. Side of the business. If we look specifically at the other effects in the U. S, we have not seen any specific changes in the market climate or in reimbursement regulations, etcetera. So there's been no significant changes there. We have had some indications of tougher implementation of certain rules and regulations on case by case basis, Whether that is part of a longer term trend or just a few case by case situations is probably too early to tell. I hope that answered the question, Mikael. Okay. So no changes really in the way that prescribers and so on are working at all? Or is that on a case by case basis? That's correct, right? Yes. No specific changes in rules relating to reimbursement. But we've seen some cases of tougher application than normal. And of course, this is something where we have a continuous dialogue with different types of funding bodies. So it's a bit of a mutual dialogue between us and under leading vendors in the industry and some of these leading funding bodies. Okay. And when it comes to the touch side, do you see that the competitors continue to market view on touch devices in general? We do believe that there is a significant opportunity for us to grow market share in the touch side with a revamped and more powerful product portfolio in that segment. So it's difficult for us to know the overall market trend necessarily, but we do believe that there is future opportunity to grow the touch segment overall. Okay. Do you know roughly the 3 segments in the touch side, the medical grade, the new product category that you have launched, the size of them shortly? I would say that still today the medical grade solutions if you measure in dollars is clearly the largest dollar wise part of the market. However, if you count the actual number of units and users, then the pure apps and also the middle level are significant in terms of volume. So even though the medical grade is the largest, there is still significant opportunity in the other two price brackets of the market. Okay. Can you say something about the price that you will have on the Snap software and separate app separately, I mean? Yes. So the Indy device, it starts at a price point of $9.99 and that includes the Snap software. Selling the Snap software on a standalone basis is slightly north of US100 dollars between US100 dollars and US200 dollars Thank you. Let me move on to our next question, which comes from Morten Larsen of ABG. Please go ahead. Thank you very much. Hey guys, a couple of questions from my side here. First of all, going to turbidynamox and going into Europe, you talk about a strong growth in Europe non UK sales. Can now that you say it's a strong growth and specifically highlighted, do you want to maybe talk about the size of this market? And also how you address it? Is it own organization or is it through distributors sales? That's one of them. The second is also coming back to the SNAP device, SNAP and ENDY. I guess looking back into history of the Tobii Dynavox, there have been somewhat troubled in the past with a lack of differentiation between some of the price points you had out there. Could you talk about, Henrik, how you will create that differentiation between the different price points or different segments of the market so you get sufficient bang for the buck on this one? And third point is on the Tobitek and the €18,000,000 in external sales. Could you talk about how you how happy you are with that number in Q1 versus where you were at the start of the quarter? And whether we should sort of when we do our modeling, how we should look at this number going forward, I. E, is it a step change upwards that we're seeing from here during the main quarters of the year? That's my 3. All right. Thanks, Morten. So the first question you had was on a little bit on the size of the European market versus the U. S. Market and a little bit on where we see the sales growth, is it direct or indirect. Generally, we have within the Tobii Dynavox business unit, roughly 75% of the sales is in the U. S. Market and approximately 25% is outside of the U. S, predominantly Europe. So that's the split. So it means we do see a good sales growth outside of the U. S, if we also exclude the U. K, but it is in a smaller part of the total sales portfolio. In Europe, we have a mixed model, where in some countries we sell direct and in some countries we sell through a strong network of resellers. And we do see good sales development in many of our European markets, both in those where we sell direct as well as in many markets where we sell through resellers as well. So both of those models are working well for us. And just to check, there have been no changes to European reimbursement systems in any of the major markets in Europe here lately? No. There has no significant changes in reimbursement. We've had just recently some positive decisions in Canada. And there is potential positive dialogues going on in a few other countries as well, but no significant changes specifically now in the Q1. And how do you handle Canada? Is that out of the U. S. Organization? Do you have separate business? Yes. Okay. Yes. So Canada is, I would say, fully integrated into our U. S. Sales organization. Your second question was relating to the differentiation across sort of the 3 price brackets from the medical grade to the middle level and then the pure apps. And I think that this is a very key part of our strategy. This price differentiation is very important, where we genuinely believe in a strategy where we take a leading position across all of the price brackets. But exactly as point out, the differentiation is, of course, key here, so that we can offer good value for money on all of the three price levels. On the top level for medical grade devices that are typically sold through reimbursement, Some of the key differentiators are the medical grading in itself, which many reimbursement systems require and demand. But it's also important here to offer hardware and software solutions that are extremely fit for the purpose, that show an extraordinarily high degree of ruggedized design, very good speaker quality, very good ability to deal with actually a very tough usage environment 20 fourseven by our users. But also to combine this with a fairly comprehensive service offering where the reimbursement system or the insurance system, it doesn't really only pay for a device. It actually pays us to solve the need of a user for an extended period of time for numerous years and that we support the user through their entire needs for a number of years. And that includes on-site installation and training. It includes multiyear technical support. It includes very specific warranty solutions, etcetera. And that in total becomes an attractive solution for insurance entities. However, when we talk about selling directly to private individuals or selling into schools that have very constrained budgets often, then we scale down on some of these service components and we offer products that are still with the new Indy and Snap, we can offer products that are still very fit for purpose and considerably more appropriate than a pure consumer tablet, but there's still a lower cost solution also for us to provide to these type of buyers and customers. And of course, we've been working very carefully here on the differentiation. And it also is a reason why we did implement some of the price reductions that we did last year to make sure that the top line medical grade products actually sort of rhyme and harmonize well with the lower priced solutions. So that's a couple of comments on that. I hope that helps a little bit more. It does, it does. I think your last question was on the Tobitec sales number. And I would say that the Tobitec sales in the Q1 came in well in line with our expectations. We did not have any particular one time effect in the Q1 sales in Tobitec as we did in the Q4. But I would say that what we saw in the Q1 was sort of the real actual sales level that we had in the Q1, mainly together with our integration partners. So it's also a good indication of sort of where we stand right now in terms of the sales revenue in this business unit. Just to follow-up on that. Those $18,000,000 external sales, how centered are they around maybe one customer like ACE or Acer versus or the wireless split or a number of different products. Could we see as maybe the Acer product begins to wind down in a couple of quarters that sales would drop significantly in this. How should we model this going forward between the quarters? So the revenue in the Q1 is a mix from multiple customers. So it's Dell, it's Acer, it's a few smaller integration customers and it's also our own sales of our Tobii eye tracker peripheral directly to end consumers. So it is a mix. Our ambition is, of course, to during 2017 obtain additional design wins and gradually increase the sales revenue in ToveTech. Okay. Maybe a final question, if I may, just on design wins. Can you talk about how you gauge the aggressiveness amongst some of your potential clients for signing deals in the near term or perhaps later in 2017? It's always difficult for us to be very specific commenting on potential future design wins. Gaming segment, and we also see significant interest in the virtual reality segment. And we clearly have the ambition to sign additional design wins during 2017 in these segments. Okay. Thank you very much. Thanks, Morten. Thank you. We now have a follow-up question from Mikael Lasine from Carnegie. Please go ahead. Yes. Thank you. I had a follow-up on the Tobitek side. And well, it actually is about the VR market opportunity and the technology maturity that you are on right now and what you've done with the valve. What do you need to develop further to I mean, to have a more mature offering or solution on the market? So I would say that we have taken great strides forward in developing our eye tracking technology for VR. And actually, I would say that we reached an important level now in the Q1 with some of the prototypes that we showcased on some of these trade shows that we mentioned previously, where I would say we today, we can proudly present an eye tracking technology for VR that works well and that is industry leading in terms of performance in the technology. It doesn't mean that we are done yet. We still have optimization and honing and tweaking. And VR is also a little bit particular in the sense that the technology needs to be somewhat adapted to each unique VR headset because the optics and sort of the entire system solution for each headset is slightly different from headset to headset. But I would say that we are we have now reached a position where the technology makes it possible for us to go into sort of final product development stages with potential partners. There is, however, also a need to develop the full solution. It's not around this. It's not just the core eye tracking technology, but we also need to work together with partners, both our integration customers, but also other partners in the value chain to create the sort of full solution. If you talk about functionality like social interaction with eye tracking in VR, then it needs to be implemented into games or game engines. If we talk about foveated rendering to improve the graphics performance in a VR headset using eye tracking, then it needs to be implemented into the graphics rendering engine and or into particular games and applications. So there's also an intense work ongoing with other partners in the ecosystem to create that full solution, which is important. But on the other hand, this is something that we are well positioned to do. We have already proven our ability to accomplish a lot of this with the work that we've done in the PC gaming market and many other partners are actually the same or very similar. Okay. Can you discuss the timing of eye tracking penetration in the VR market? Broadly, how you expect this to develop? Can you have products on the market or partners on can have products on the market with VR or with eye tracking integrated already this year? Is that possible? I think that this year, we can definitely offer key partners development kits, that type of solutions for actual consumer end user product that could hypothetically be possible towards the very end of the year. But it's more likely that we see VR players coming out with headsets with fully integrated eye tracking during 2018. If I'd speculate today, that would be my guess. Okay. What is the approximate price difference for you in those in these areas that you are targeting, PC gaming, high end notebooks, VR and so on? Can you help us out there a bit? So I think that if you look at the total system solution cost for a device manufacturer, so what it actually costs a gaming notebook manufacturer or a VR headset manufacturer to implement eye tracking, then the cost level is on the same order of magnitude. It's probably somewhat more expensive in a computer integration than it is in a VR integration. So it's slightly lower cost typically in VR. But also, we believe that in I mean, what we are doing at least in initial deals in the PC gaming market, we are providing the entire eye tracking system. All of the hardware components, we even put them together into a complete integration eye tracking component that is easy for a computer manufacturer to integrate as almost a standardized component. In VR, it's more of a custom implementation of different hardware components, which actually also means that Fobi's business model is more focused, and we provide some core hardware components and licenses to algorithms and the system design, which means that Hobi's part of the total cost for the device manufacturer is lower, but on the other hand with a higher gross margin. So the profitability, the actual gross profit is comparable for Tobii, but lower revenue but higher margin in the ER than in PC. That is at least our expectation. Okay. Great. Thank you. Can you also say something about the development in the market? If you look at internally vertically integrated VR players versus buying the best of breed on the market and integrating them the technologies from 3rd party suppliers. Where do you think the industry is heading? So on the PC gaming side, Kobi has a very strong competitive position. We are much ahead of competition there. If we look in the VR space, it's a more intense competitive situation and also because the market has for eye tracking in VR hasn't really happened yet. It's impossible to talk about market shares yet. We are competing with a handful of other independent eye tracking technology companies that are pitching eye tracking technology to VR headset manufacturers. And I would say that we are definitely one of the leaders in that category. But then exactly as you say, there is also initiatives ongoing with some VR headset manufacturers that may or may not end up trying and may or may not end up eventually developing own eye tracking technology. So with a few of those players, it may come to a make or buy decision, whereas with most of them, it's probably a discussion of who to choose as an external supplier. And I think it's frankly, it's too early to tell how that's going to play out. I'm confident that there will be a significant opportunity for independent eye tracking vendors in the Doctor space. Okay. Thank you. Can you just quickly mention the order situation for Tobii Pro? So the actual sort of order intake, which is a fairly raw form of looking at the sales performance, as we mentioned previously, it increased by approximately 5% adjusted for currency in the Q1 this year compared to last year. But in part due to the fact that we're not yet shipping the spectrum device, it means that some of those orders did not translate into revenue. And that's why we ended up with a revenue that was pretty much flat currency adjusted for the Pro business unit. It means that we do have some additional order backlog of a few SEK1 million coming into the second quarter. Okay, great. Thanks. Thank you. At this time, we have no further questions in the queue. We do have some questions from the webcast. The first question is from Bo Engvall and he is asking will Tobi Tech communicate all coming design wins in the form of press releases as they come? Hi, Bose. Significant design wins that are important for the business, we will communicate in the form of press releases. The timing for that is not entirely up to us though, because it depends on considerations with our key partners and customers. Also sometimes the concept of a design win is not sort of binary. Sometimes it's sort of a gradual process to obtain a design win, which means that a lot of work can already have happened until it's all the paperwork is actually finally signed, etcetera, and thus something that we can communicate. So the timing of communication depends on many factors. But absolutely, if it is important, then eventually we will communicate in such sign wins. Okay. The whole second question is, what is the yield requirement of ToveTech, if any, on the very large planned investments during 2017 to 2019? We do not have a specific expressed return on investment criteria. I assume that's what you're asking, Bo. So we don't have a specific minimum ROI percentage as such. But of course, we only do investments if we believe that long term these will generate significant value creation and upside for the company and for the shareholders. Okay. So the next question comes from Lukas and he is asking what is your comment on the falling stock price? Hi, Lucas. That's one that's difficult for us to comment on. I think as a company, we have an important role to play to present what is going on in the business and try to be transparent with the progress that we have in the different business units, what's going on with products and sales and so forth. But then it is up to the market to decide what price that means that the market wants to put on the share. I think it would be inappropriate for me as CEO to have specific comments on that. Okay. Next question is from Andreas Johansson. When will we see eye tracking in VR headsets sold to the market? Similar question we had before. Yes. Hi, Andreas. Yes, so a little bit to reiterate perhaps, but my hypothesis today would be that we will see VR headsets with eye tracking built in sometime during 2018 actually sold to consumers. Okay. And Bo Engvall has one last question. And that is, can you say what the software license revenue per unit sold is for the smartphones from the first design win? And the quick answer to that question, Bo, is no, unfortunately, I cannot. I think that our customers would be very unhappy with us if we told if we made that number public. Okay. Then there are no more questions from the webcast. Over to you, Saskia. Do I have more questions from the teleconference? Yes. We've just received a further question from Hamdas Lindtong, a Private Investor. Please go ahead. Hi, Henrik and Thomas. I would like to have a little bit update regarding the development of the Irish plant. Could you repeat that question? We didn't hear that quite. I'm sorry. I would like to have an update regarding the development of the IS5 platform. IS5 platform. Okay. An update on the development of the IAS 5. Yes. We are working on developing our next generation of our main eye tracking platform for computer integration. The current platform is referred to as IS4. And maybe not with too much imagination, the working name for the new platform is IS5. We'll see if that ends up being a product name or not. That development is progressing well. It's a big project that takes multiple years. I would say that we're still relatively early in the project. So we still have a long time ahead of us before that will be available in the market. We could expect the first product with the IS5 actually integrated to be in the market very late 2018. It might even be early 2019, if things go according to plan. But the development shortly is progressing well. And of course, the objective here is to create yet another step forward in terms of eye tracking performance, improving that, but also reducing form factor, power consumption, etcetera, to make it feasible to integrate eye tracking into an even broader range of devices. Thank you. Thank you. We have no further questions at this stage. Good. So with that, I guess we are done for the day. Thank you everyone for attending the call today and thank you for good questions. We hope to see you all again in our next earnings call. Have a great day everyone.