Release Date: July 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dynavox Group AB (TDVXF, Financial) reported a 24% year-on-year revenue growth for the second quarter of 2024, continuing a positive trend over the past eight quarters.
- The company achieved an 80% increase in operating profits and more than doubled its earnings per share compared to the same quarter in 2023.
- The acquisition of Link Assistive in Australia and New Zealand is expected to enhance market presence and facilitate faster organic growth.
- A health economic study confirmed that assistive technology for communication significantly improves the quality of life for users and offers economic benefits to society.
- The company maintains a strong global presence, with products sold in about 65 countries and a solid customer base primarily funded by public or private insurance providers.
Negative Points
- Operating expenses increased by 11% organically, mainly due to staff increases and investments in systems and tools.
- The acquisition strategy, while beneficial for growth, also brings additional costs as the company assumes the expenses previously covered by resellers.
- Increased freight costs negatively impacted the gross margin, despite overall improvements.
- The cost of the long-term incentive program rose due to an increase in Tobii Dynavox's share price.
- The company faces challenges in raising awareness among professionals and prescribers, which limits the reach of their solutions to only 2% of the potential market.
Q & A Highlights
Q: Can you discuss the potential negatives of your strategy of acquiring local resellers, such as the recent acquisition in Australia and New Zealand? Also, what is the outlook for this strategy?
A: The main negative is the additional cost, as acquiring local resellers means taking on their expenses. However, this is outweighed by the benefits of controlling the narrative and improving product development with direct market feedback. The strategy allows for organic growth post-acquisition. We view acquisitions as supplementary to our growth strategy and will pursue them when they make sense. There are opportunities with over 100 reseller partners and other potential targets.
Q: Could you elaborate on the Australian market and the opportunities you foresee there?
A: Australia has a federal health insurance system, NDIS, which is advanced and recognizes the value of assistive technology. The market has a high competence level among prescribers, but there is still room for improvement. We believe Australia will remain an important market for the foreseeable future.
Q: How do you view Apple's announcement regarding eye tracking and its potential impact on your business?
A: We do not see it as a risk. Apple's announcement raises awareness, which is beneficial. Our products do not compete directly with Apple's; they are prescribed communication aids, often incorporating iPads, but with additional technical and software enhancements. Our market is insurance-based, unlike Apple's consumer market.
Q: What are the financial highlights from the second quarter of 2024?
A: We achieved a 24% year-on-year revenue growth, with 17% organic growth. Our operating profits increased by over 80%, and earnings per share more than doubled compared to the same quarter in 2023. We continue to see strong growth across all regions and product segments.
Q: Can you provide more details on the health economic study published in May?
A: The study confirmed that assistive communication technology significantly improves the quality of life for users and their families, doubling it compared to life without such aids. Economically, these aids pay for themselves three times over, which is a rare positive outcome in such studies. We plan to commission more studies to raise awareness and influence policy.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
