Tobii AB

STO:TOBII

Earnings Call Transcript 2022-Q2

[Anand Srivatsa, executive]

Okay. Welcome, everyone, to the Tobii Q2 '22 Quarterly Earnings Call. Joining me today is the CFO of Tobii, Magdalena Andersson; as well as the Head of our Investor Relations team, Henrik Mawby.

Now we will be taking questions right after this presentation. So if you have any questions, please feel free to start posting them already right now. As with the other quarterly earnings calls, we're going to start first by giving you some context about Tobii before we jump in to the overall presentation.

If I can just get the clicker working. There we go. Perfect. So let me first start by giving you a little bit of context on Tobii. Tobii was formed over 20 years ago with the mission to bring eye-tracking technology to the masses. Over the last 2 decades, we have established ourselves as the world's leader in eye tracking, and we continue to drive towards our mission of delivering technology that will improve the world by understanding human attention and intent.

Now over the past 20 years, we have, of course, gone beyond just eye tracking alone. And what you see on the slide behind me is the technology that we need to deliver in order to create value from the solutions that we develop. We started first with the signal for eye tracking, what we call gaze, one of our core signals that you see pictured on the slide behind us.

But in the last 2 decades, we have gone beyond that -- beyond just that signal alone. We have added other core signals that we can deliver by analyzing images of people's eyes. We also, of course, deliver, in some cases, the hardware needed to go and capture those images. In addition to hardware and core signals, we create attention signals, which are signals that create value from the underlying biometric signals. And finally, deliver user value to our end customers.

If you take a look at the picture on the slide behind us, you can see that what Tobii is delivering today is far more than just eye tracking alone, and we are in a new field of technology that we call attention computing. The opportunity for attention computing is incredibly broad. But what we see in the marketplace today is 6 specific market areas where we see accelerated adoption of our technologies, and these are: behavioral studies in consumer research; gaming; education and training; virtual and augmented reality; health care; and automotive.

We address these 6 market areas through 2 reporting segments. One of them is a vertical segment we call Products & Solutions, and this segment represents a combination of hardware, software and services that Tobii is delivering directly to our end users. The second approach we have is through our Integrations business where Tobii solutions are integrated into other people solutions, solutions like sensors or compute platforms, but also algorithms and software. And these type of technologies are directly integrated into a customer's offering like a virtual reality headset, a PC or a medical diagnostic device.

These 2 reporting segments have different business dynamics. On the Products & Solutions side, we expect to see strong top line growth and, in general, gross margin improvement. But in general, the Products & Solutions business sees more stable changes in both of these metrics. The Products & Solutions segment has many customers that it services, but is more susceptible in general to macroeconomic trends.

On the Integration business, we also expect solid revenue growth over the long-term horizon. But we expect that both revenue as well as margin trends will see more lumpy dynamics as our customers introduce ramp or end-of-life products. This segment is, of course, dependent on the success of our customers, and we are dependent on the adoption of these new innovative devices in the marketplace.

[ For context ], I'd like to switch now and talk a little bit about our results in Q2. In the second quarter of 2022, we hit an all-time high in revenue for the quarter with 21% organic revenue growth. This is our sixth consecutive quarter of year-on-year organic growth. Now if we look at the overall numbers, they are quite positive. But a step below that, we see different dynamics in our 2 separate reporting segments.

The Integration business delivered a very impressive 99% organic growth, and this was propelled largely by our design win with Sony on the PlayStation VR2. This win is immensely important to us not just from the financial contribution that it makes to Tobii, but also the fact that this will ensure that eye-tracking technology will be in the hands of millions of gamers in the near future. And it creates awareness both for eye tracking in the broad marketplace and for Tobii as a company that is creating innovative solutions that are delivered in mass scale.

In addition to the Sony PlayStation VR2 design win, we received 5 other design wins in the quarter. One was for the integration of the IS5 platform, our base eye-tracking technology in medical displays. We also had an additional 4 design wins for our software solutions in the PC marketplace for both work-oriented computing as well as educational laptops.

Now on the other hand, our Products & Solutions business for this quarter did not reach our expectations, and we saw a decline organically of revenue of 8%. Our view is that this is primarily driven by macroeconomic events. We saw some of this materialize even in the first quarter with shutdowns of major cities in China. That trend continued for a substantial portion of Q2.

The additional change that we've seen in the macro environment, of course, is that in the second quarter, the specter of inflation and recession has started to become much, much stronger, causing our customers to consider tightening their spending envelope. This is a concern that has manifested itself both in Q2 and the results we see, but something that we will have to watch for the second half of the year as well.

I would like to now hand it over to Magdalena to share more details on the results for the quarter. Magdalena?

[Magdalena Andersson, executive]

Thank you, Anand. And yes, as Anand already mentioned, we are happy to present our sixth consecutive quarter of organic growth, now being 21% in the second quarter. Both revenue and gross margin continued to improve, which is consistent with our expectation based on the shift towards a more software-oriented product mix.

The OpEx levels are higher than last year since we are back to a more normal sales and marketing levels compared to of -- from after the pandemic, and also the G&A costs are higher than last year due to the split. We are also investing more in R&D compared to last year. But since the capitalization rate right now is slightly higher than the amortization rate, it does not affect the operating result for this quarter.

The second quarter during the year normally stands out as our weakest. This second quarter generated an operating result of minus SEK 50 million, which was an improvement with SEK 26 million compared to last year.

And then looking into our segments. Products & Solutions then had an organic growth in this quarter, minus 8%. During the spring, we have experienced a more challenging market environment for this segment. It is not only the lingering effects of the pandemic, but also the general market development with inflation and interest rates increasing and companies being extra careful in what to invest in. This inertia has impacted us negatively this quarter.

Gross margin show a small decline from 68% to 67% by increased cost for components and freight. And then as I do believe you have all understood by now, it was our Integration segment that was the driver for the whole company in this quarter with an organic growth of 99%. And the gross margin increased from 58% to 96%.

We closed our design win with Sony, and we received upfront revenue in this quarter. I recollect me stating after the first quarter that the Integration business can be lumpy. And in the quarter 1, it was in the negative direction. And now the lumpiness still applies, only this quarter, it is in the positive direction. We have communicated that we expect that the revenue from the Sony deal will represent more than 10% of our total revenue in 2022. With this estimate, we expect material revenue contribution also in Q3 and in Q4.

And then looking into our balance sheet and cash flow. We have now an equity of SEK 775 million and an equity ratio of 69%. Our free cash flow during this quarter was minus SEK 68 million compared to last year's minus SEK 93 million where the difference mainly is related to the result improvement. And with that, we ended the quarter with SEK 333 million in cash and cash equivalents.

And with that, back to you, Anand.

[Anand Srivatsa, executive]

Thank you so much, Magdalena.

I think it's quite important, of course, to put the context of our Q2 results in terms of our long-term ambition. We've talked for the last year that we believe that our company is entering a new era of sustained faster-than-historical growth. This is based on 3 major aspects that we see manifesting ourselves, many of these being long-term investments that we have made towards creating Products & Solutions and Integration products, of course, to go and address these segments.

One of the key aspects of this, of course, is our focus on the virtual reality market. This is something that we expected to scale in the 1- to 3-year horizon. And I'm super happy to see a very tangible example of this show up already in the second quarter of this year, something that will lay the foundation for us to continue to drive success in our business over the long-term horizon.

I wanted to spend a few minutes now talking about the virtual reality market in a little bit more detail and the opportunity that we see as Tobii to go and capture the strong momentum we've already built. We can break up the virtual reality opportunity into 3 separate pieces, the first being where is eye tracking today and Tobii's position in the marketplace.

As you can see on the left-hand side of this slide, the Sony PlayStation VR2 design win is a signal moment for us as a company. It is incredibly important to see a company with the scale and stature of Sony picking up our technology and bringing this technology into the mass market. This means that our solutions will be in front of millions of gamers over the next several years. But it also means that the technology will be available for the rich ecosystem and developer community that Sony supports.

Tobii, of course, is in a great position to take advantage of the adoption of eye-tracking technology as a proven player that can deliver technology into mass market scale. So we're in a very good position in terms of making sure that we can take advantage of growth in this marketplace.

So where is the market overall? And this, of course, has been a question on the virtual reality side. What we've continued to see over the course of the past year is that momentum around the metaverse and virtual reality continues to increase. We see strong growth in the overall sales of VR headsets, 242% growth year-on-year for Q1 '22 versus the year prior, and expectations of strong growth for the full year with 27% increases in total VR headsets expected for this year alone.

But even more interesting is that as this growth has started to become more clear, we see a strong push towards standardization in the community. In the early part of this year, we've seen the initiation of The Metaverse Standards Forum. This is a new organization that is bringing together the world leaders in the broad technology space. Companies like Google, Microsoft, et cetera, we're all coming together to drive common standards to propel the metaverse forward. And I think that's a really good development to ensure that this marketplace has broad support and this initiative has broad support from a technology industry perspective.

Tobii has also joined The Metaverse Standards Forum. But in general, I think this development is something that really should give us confidence that there is staying power for the metaverse and the concepts that are being brought into the marketplace today.

And we already start to see some examples of what will happen as the metaverse becomes more mainstream. We see more diversity of players. You can see on the right-hand side that multiple new players are starting to announce their intentions of how they will participate in this space. Companies like Tencent from China; Google, who's looking at how they can bring their services into the metaverse; and even traditional technology providers like Lenovo are looking once again into how they can participate into this new area.

What that means for Tobii, of course, is that the more diverse our customer base potentially is, the more opportunity we have for success. I think this overall gives us a lot of optimism going into the next couple of years that our investment choices, these long-term investment bets we've made in places like virtual reality are coming to fruition. This is a strong part of what the message for this quarter is, that we've had a very strong financial quarter, but the business dynamics underneath is really what's driving our optimism for our growth outlook for the future.

Let me summarize where we see Q2. From a Q2 perspective, of course, we see a strong financial result for the year. This is our all-time high Q2 revenue, our sixth consecutive quarter of year-on-year organic growth as well as 21% organic revenue growth in total. We feel that we're starting to put the right steps in place for us to enter this new era of faster-than-historical growth. The real driver, of course, of that is the underlying business dynamic.

The Sony PlayStation VR2 design win is a very tangible example and proof that our investment philosophy of betting on long-term trends is starting to work out. In addition to VR, of course, we also see other positive momentum in other parts of our investment portfolio, including areas like automotive that we've talked about in Q1. And we look forward to continuing to build this foundation of growth that we think is the right approach for us to really maximize the potential that we have as Tobii and to achieve our mission of delivering technology that will improve the world by understanding human attention and intent.

With that, I would like to open it up for questions. And Henrik Mawby, over to you.

[Henrik Mawby, executive]

Thank you, Anand. And let me remind you all that there is a little bit of a time lag here, so please post your questions sooner rather than later. Analysts, you will be able to ask questions verbally, so please indicate this through the chat or an e-mail or in any other way or form.

For all other attendees, there is a Q&A function, should be in the top-right corner, I believe, of your Teams' window. So please feel free to post questions there, and we will address them in due time.

[Henrik Mawby, executive]

We actually have a few questions already. So let me start with [ Robin ] who posted a question, what's your view of component -- or cost of components during the second half and into next year?

[Anand Srivatsa, executive]

So I mean I could start with that and maybe, Magdalena, you can jump in as well. So I think as Magdalena indicated that we have seen, over the course of the year, a dynamic with supply chain challenges both in 2021 and, to a certain extent, here impacting components as well as things like freight cost. Those have shown up in terms of gross margin impacts in our Products & Solutions business and, to a slightly smaller extent, on the Integrations side.

One thing to keep in mind is we have highlighted the trend we see that on the Integrations side as well as on the Products & Solutions side, we continue to see a product mix shift from hardware over to software, which has some mitigating effect on that. I don't know if you had some comments on that one.

[Magdalena Andersson, executive]

No, as you say, we see the development, and we see that it will continue, but we don't see that it is a major effect on us.

[Henrik Mawby, executive]

Thank you. And then from Daniel Thorsson, was -- that's an analyst with ABG. Was Products & Solutions seeing worsening sales development during the quarter or relatively stable? And can you say something about the start of Q3?

[Anand Srivatsa, executive]

Yes, I think it's actually a little bit of a complicated picture. As we said that in the Products & Solutions side, even at the end of Q1, we saw some macro effects. These were really pandemic-related and a little bit more focused on the China region, where we saw cities like Shanghai seen multi-week lockdowns. What we saw going into Q2 was those lockdowns that it started in Q1 affected us in that market in the early parts of Q2.

But then as Q2 progressed, we started to see other effects start to show up in other regions, namely concerns around recession, inflation, buying behavior that is changing. I would say that, again, as we look forward through the second half of the year, this is absolutely a watch item overall. But because these effects have certain geographical implications, I think it's a little bit of a mixed bag in terms of how it actually manifests itself in the quarter.

[Henrik Mawby, executive]

Thank you. And once we start to see volume-driven sales from Sony likely in 2023, should we expect similar profitability with close to 100% gross margin on those revenues as you now show in the upfront payment?

[Anand Srivatsa, executive]

Yes, that is the expectation. So that is -- the nature of the deal that we have with Sony is around this kind of business, and the gross margin should be in line with those expectations.

[Henrik Mawby, executive]

Good. Thank you. And the last one from Daniel, there are no comments on driver monitoring systems in the quarter. How is that proceeding currently? And should we expect any kind of news flow in the second half?

[Anand Srivatsa, executive]

As I said, I think this quarter has been very much about VR because of the significant news event that the Sony PlayStation design win represents. But we are quite happy on the investments we've made in other areas as well. We talked about the automotive momentum we've had into Q1. We've actually continued to make progress on that.

Q2 has been a time where we've been able to take our solutions on the road more with effectively the end of the pandemic from a travel perspective. So we've been able to get our solutions out in front of more customers. We're actively participating in tenders. And we continue to drive towards getting that first design win that we've been targeting with a targeted start of production 2025 time frame.

[Henrik Mawby, executive]

Thank you, Anand. And with that, Erik Larsson, you have requested verbal Q&A.

[Erik Larsson, analyst]

So I have a couple of questions, and you touched upon this. But the shift from hardware to software, is this primarily in Integrations with things like Aware and, obviously, the Sony deal? Or is this shift also ongoing in Products & Solutions even though that segment, of course, is more naturally a mix of both, I guess?

[Anand Srivatsa, executive]

Yes. My -- what I would say to that question is it's actually in both sides. Again, I think what we see in the Integrations side, because of the lumpiness of the business, we see sudden changes from a product mix perspective more likely to happen as customers introduce, for example, a Aware-based design to the marketplace or the kind of deal that we have with Sony.

But even on the Products & Solutions side, you should expect that we have a trend from what was predominantly a hardware business towards more software. But I would say that you'll see that more apparent on the Integrations side just because of the dynamics of the segment there.

[Erik Larsson, analyst]

Okay, great. Crystal clear. And just a final one. I know you can't really say much, but can you quantify anything in terms of the revenue received from Sony in Q2, i.e., what you reported now, is that a majority of what you will receive in total upfront? Or is it not a majority? Could you say that?

[Anand Srivatsa, executive]

So again, I think we're not going to characterize specific customer revenue. What I would reiterate is our guidance that we provided when we talked about the Sony deal in our announcement. We expect that Sony will be 10% of our revenue for the year approximately. And again, as Magdalena pointed out, we do expect a material contribution from the Sony deal in the second half of the year as well.

[Henrik Mawby, executive]

Good. Thank you. And we have another question from the chat from Daniel Kröger. Latency is the most important point in the metaverse that a decrease of 10 milliseconds of latency in online games increases the weekly playing time by 6%. How can Tobii help reduce latency technologically over the coming years?

[Anand Srivatsa, executive]

Yes, let me answer that in maybe 2 separate ways. So again, if you think about latency, it is related to 2 types of aspects. One part of latency is the amount of time that it takes to process a scene. And this is something that Sony, for example, is taking advantage of with the solutions we have in their headset, and they use a technique called foveated rendering.

What that means is that the only parts of the scene that are rendered in high visual fidelity is what you're looking at, at that point in time. And with the VR headset, in particular, you have a very wide field of view. So the savings that you can have there is pretty significant. So you can reduce the amount of processing time to go and deliver a particular image in high visual fidelity. So that's one aspect that we can already deliver today.

The second aspect, of course, is that there is a strong desire for customers to have a metaverse or VR experience untethered, which means that there's no physical wire connecting you to a computer or a console. There, of course, then comes with that a trade-off in terms of how much performance you can pack into the headset. And there are concepts that we are seeing the industry think about like CloudXR or boundless XR, where the processing for the images are actually going to happen outside of the headset that you wear.

And here, Tobii can help in 2 ways. One is we can, of course, continue to use foveated rendering to only render that part of the screen you're looking at. But you can also help network latency with foveated transport to only transport in high fidelity those parts of the screen that you're looking at. So both of those aspects can help with the latency.

[Henrik Mawby, executive]

Okay. Thank you, Anand. And then we have another question, anonymous question here. It goes, can you discuss how Sony PS VR2 will generate revenue to you longer term, per unit, fixed fee, et cetera? And secondly, is the Q2 2022 PS VR revenue unusually high due to a milestone? Or can this level of revenue be sustained in Q3?

[Anand Srivatsa, executive]

So again, I think we're not going to specifically talk about the level of revenue that we have in Q2 versus Q3. Again, I would reiterate our expectation for the year and that we think that we're going to have material contributions in the second half of the year as well.

Now in terms of the longer-term expectation of this deal, we do expect the contribution from Sony to not only show up in 2022, but for multiple years along the way. And the model that we have is very similar to what you would expect for other parts of our technology, which is a per unit type of revenue deal, in this case, for a piece of software that we deliver into that Sony headset.

[Henrik Mawby, executive]

Good. Thank you. And then we have some questions from the analyst with Handelsbanken, Daniel Djurberg. So we have component price, interest rates uptick, up-hike inflation, macro uncertainty. Have you seen any major delays among OEM or VR or AR with regards to this uncertainty?

[Anand Srivatsa, executive]

I think that it's hard to specifically call. Again, when we look at time lines for launches for new devices like the PlayStation VR2, there are many factors that go drive through that, including potentially things like supply chain. We're not going to specifically comment about what goes into Sony's decision-making from that perspective.

But if you look at the market as a whole, of course, you do see a trend here where there has been impacts in the past year very clearly on semiconductor shortages that has impacted the ability of people to ship. I think there's a lot of public news about Sony's capability to ship their PS5 console and shortness in being able to go deliver that. We're seeing some of the now after effects of some of the semiconductor shortage in the PC market where the PC market is expected to decline for the first time in a couple of years.

So I think there is some dynamics here on the macro side. I think they are different depending on the specific case. In some cases, of course, you have a very hungry audience looking for parts that they haven't been able to get. In some other parts of the market where maybe the shortages have started to ease, maybe there is some dynamics of oversupply already present in the market.

[Henrik Mawby, executive]

Thank you. Can you remind us about the revenue model on Sony? I guess the SEK 56 million royalties in the quarter, to a large extent, come from Sony. Is this -- and we may have to ask for a clarification here, Daniel. But is this in full pre-recognized royalty i.e., hampering contribution from Sony in the second half of PS VR2? I'm not -- maybe you understand it. I'm not sure I understand that last part there.

[Anand Srivatsa, executive]

Yes. Again, the way that I would interpret the question is maybe back to the other one of what's the dynamics of how the early stages of this are. What I would say is the dynamics of this kind of new product introduction are pretty similar. If you look at how most products are sort of built, there is sort of a buildup phase early on where people are getting ready to go in and deploy products into the marketplace. They typically fill their channels, get ready for launch to ensure that early customers have access. This is the case for almost any type of consumer electronics device, of which the PS VR2 is an example.

And so I would say the dynamics are very normal. Of course, sustained success, sustained revenue for us in this deal is dependent on Sony being successful in the marketplace. And this is why from a guidance perspective, we've talked about the 2022 expectations for the deal. But going forward into 2023, we're really dependent on how the adoption of the solution goes into the marketplace. And there are, of course, other macro effects as well. And so again, at this point in time, we're not guiding what that would look like beyond, but we do expect the contribution of this deal to really impact us over the course of many years.

[Henrik Mawby, executive]

And cash flow from the royalties in Q2, are they fully recognized already? Or are they to be paid later?

[Magdalena Andersson, executive]

They are not recognized in Q2, so they will be recognized in Q3.

[Henrik Mawby, executive]

Thank you. Products & Solutions, soft organic growth. Can you comment on pipeline and give us some flavor on how to think about organic growth for the second half and if there are any watch items?

[Anand Srivatsa, executive]

Yes. Again, I think as we look at Products & Solutions, this is a watch item for us in the second half. We do see macro trends have worsened in Q2 and Q3. There's still strong question marks here. Again, the macro picture is a little bit complicated. On the one hand, we've seen after effects of the pandemic that showed up in Q1 and Q2 in China. Some of that is easing in Q3, still with some uncertainty. But again, that's balanced by seeing increased risks from inflation and recession that are showing up as spending tightness on our customer side.

So I would say that this is definitely a watch item and something that, again, we've called out now. And it's something we will continue to monitor for the second half of the year.

[Henrik Mawby, executive]

Thank you. And then if we compare VR to AR, will your technology be small and energy efficient enough and cost efficient enough to take a substantial part of AR when that takes off?

[Anand Srivatsa, executive]

One of the big things that we started -- we have started to see with VR, of course, is that the form factors on VR are already starting to morph. If you look at the first generation of VR headsets, they used the technology called folded optics, which was relatively large and sort of a large thing in front of your head. This is typically the kinds of systems you see with the Quest 2, for example.

But already, the new generations of VR headsets are starting to go to a new type of design we call pancake optics. Having eye tracking in those kinds of systems looks a lot like what the mechanical design would look like for augmented reality systems. And so what we see from our perspective is that the investment we make in VR is highly leverageable towards solutions that are going to be needed for augmented reality.

There will, of course, be work needed to go and lower the power and the footprint needed to deliver eye tracking both for VR and AR, but we very much see that the investment that we're making now, both in terms of the design of our system, both in terms of reducing power, those learnings will absolutely help us to get into the AR space as well. But of course, further innovation is needed. And again, this puts us in a really good position as the leader in the space that we are today.

[Henrik Mawby, executive]

Thank you. And the last question from Daniel Djurberg, eye-tracking technology, IP rights thinking, can you update us on your position and also about the potential now to license this following the Sony PS VR2 deal?

[Anand Srivatsa, executive]

So again, we believe that our IP portfolio is a significant part of the value that we bring here. We have the largest and most credible IP portfolio, we believe, in the eye-tracking realm in the use cases that we support. This is something, of course, that our customers absolutely appreciate because it gives them freedom to operate in this area, and it gives them credibility that they're working with an innovator in the space.

The Sony deal, in my view, is fairly orthogonal to this. These are 2 separate types of topics beyond the fact that, of course, Sony appreciates our IP portfolio.

[Henrik Mawby, executive]

Thank you. And then we have 2 questions, one from anonymous and one from Jens Larsson with St. Petri Capital, and they're both revolving around the VR and other OEMs.

So the first one is, any expectations on getting design wins from other OEMs due to the VR -- due to other VR headsets? Are there any ongoing discussion? And Jens is asking, the fact that you have not mentioned Apple or Meta, does this mean that they have their own technology or that they have not yet made decisions on partners?

[Anand Srivatsa, executive]

Yes. I think what we have been quite open about is that we are talking to effectively everybody in the VR space. We have, of course, announced design wins in the past with companies like Pimax; Pico, which has been acquired by ByteDance; HP, et cetera. So you should absolutely expect that we are talking to all of the major VR players in this space.

We do expect, of course, that some of these companies who have in-house capability will be looking at what they have in-house and what Tobii can bring. But the Sony design win, I think, absolutely increases the credibility of us as a supplier in general for almost all of these companies. But more important then, sort of just the position of Tobii alone is the market requirement effectively for eye tracking as a necessary component in VR headsets going forward.

In the past, eye tracking has been a feature for enterprise headsets, more premium headsets that don't have the same type of volume market that they address. Now going forward, we believe that this creates a new baseline expectation, and that means much more opportunity for us.

[Henrik Mawby, executive]

Thank you. And then Daniel Kröger is asking, 13.9 million VR headset shipments in 2022 is, in absolute terms, a relatively low number. What can be the key event for a significant increase? What can be the key driver here?"

[Anand Srivatsa, executive]

Yes, I think that the VR market, of course, has been through many iterations. There's been a huge hype cycle several years ago. There's, I think, been a big trough of disillusionment as people have realized that maybe the experiences weren't there.

One of the big things that I think is critically important here is the experience which is developed -- which is delivered by the software development ecosystem around this space. And I think what we've started to see in Q4 of last year and going forward is the kind of revenue that software developers can start seeing in the metaverse. That is what's attracting more companies to develop experiences and games and software for the metaverse. It's also, of course, spurring more hardware innovation as we see new companies start to come in and take positions on the metaverse side.

So I would definitely say the thing I would be quite focused on from an analyst perspective, et cetera, is the success of software coming out. And again, I think in this type of context, I think Sony is absolutely a market maker. They've demonstrated that with the other types of devices they bring to the marketplace. And I think that they're going to drive a very strong ecosystem of software experiences that launch with this device. Again, there are other ecosystem drivers as well. I think Apple and Meta, of course, are also ecosystem drivers in their own right. But I think the software experiences are what are going to be clear indicators of success for this space.

[Henrik Mawby, executive]

Thank you. And let's round off with the last question from [ Henrik ]. Will you, at some point, start to deliver financial outlooks?

[Anand Srivatsa, executive]

Again, we have actually shared long-term financial outlooks. Even last year, we said that we are going to reach a breakeven during 2023 and that we aim to reach SEK 1.5 billion in the year 2025. We continue to stand behind those goals. And we believe that what you see out of Q2 is that the long-term business outlook, the foundations of that are starting to perform quite nicely.

[Henrik Mawby, executive]

Good. And that was it in terms of Q&A.

[Anand Srivatsa, executive]

Perfect. Thank you very much. Magdalena, thank you. Henrik, thank you very much. And thank you all for listening in.