Tobii AB ((SE:TOBII)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Tobii AB Earnings Call Reveals Cautious Optimism Amidst Mixed Results
Tobii AB’s recent earnings call painted a picture of cautious optimism, with the company reporting strong financial metrics despite facing some challenges. The sentiment was largely positive, buoyed by record EBIT and improvements in gross margins, thanks to effective cost reductions and growth in the Autosense business. However, concerns lingered regarding organic sales decline and operating losses in the Autosense segment, hinting at a dependence on acquisition-based growth.
Record EBIT
In a notable achievement, Tobii recorded its highest-ever EBIT of SEK 50 million in Q4 2024. When adjusted for one-off costs, the underlying EBIT was an impressive SEK 74 million, signaling a solid stride towards profitability.
Net Sales Growth
Tobii saw its total net sales increase by 11% in the quarter, supported predominantly by the Integration segment, culminating in a 13% growth on a year-to-date basis. This growth underscores the company’s sales expansion efforts despite some organic declines.
Gross Margin Improvement
The company achieved a significant improvement in gross margins, which rose to 84% in Q4 2024, compared to 74% the previous year. Year-to-date margins also improved to 80%, up from 75% in 2023, reflecting enhanced operational efficiencies.
Cost Reduction Program
Tobii successfully implemented a cost reduction program, cutting cash-related operational expenses by SEK 73 million during the latter half of 2024. This initiative has been pivotal in achieving the improved financial metrics.
Autosense Business Growth
The Autosense business demonstrated substantial revenue growth both quarter-on-quarter and year-on-year, contributing 8% to the total revenue in Q4 2024. New design wins have also been announced, which should bolster future production plans.
Organic Sales Decline
Despite the positives, Tobii faced an organic sales decline of 22% in the quarter, with a year-to-date decline of 16%. This highlights a reliance on acquisition-based growth strategies.
Integration Business Challenges
The Integration segment is expected to experience a decline in net sales as contributions from acquired businesses are projected to reduce in 2025, posing future challenges.
Autosense Operating Loss
While the Autosense segment is in a promising investment phase, it reported an EBIT loss of SEK 54 million in Q4 and a year-to-date loss of SEK 197 million, reflecting ongoing investment needs.
Free Cash Flow Challenges
Tobii faced free cash flow challenges, with a negative flow of SEK 14 million in Q4, primarily due to earlier acquisition-related cash outflows.
Guidance
Tobii’s guidance highlights significant progress towards profitability, with a record EBIT of SEK 50 million in Q4 2024 and an underlying EBIT of SEK 74 million when adjusted for one-off costs. While net sales grew by 11%, the company acknowledged a 22% decline in organic growth. The Autosense segment showed potential for future growth despite current investment phase losses. Tobii’s cost reduction program has been successful, with further savings anticipated in 2025. The company also plans potential divestments to strengthen its cash position, aiming for positive free cash flow by 2026.
Overall, Tobii AB’s earnings call reflects a cautiously optimistic outlook, balancing significant achievements with ongoing challenges. The company is making strides toward profitability, driven by record EBIT and improved margins, yet remains aware of the hurdles posed by organic sales declines and segment-specific losses.
