Dynavox Group Interim Report third quarter 2024

Dynavox Group AB (publ) today announced its results for the third quarter 2024. 

Comment from the Dynavox Group CEO Fredrik Ruben:
Revenue and earnings continue to show solid growth in line with our expectations. Short term, we had a negative impact on September revenues as a successful product launch allowed customers to change already placed orders to the new products. Adjusting for this the underlying growth in Q3 would have been over 20% in local currencies. We remain clearly on track with our long-term goals, helping more people communicate while seeing robust growth and steadily improving EBIT margin. The low penetration of communication aids represents significant potential for us to continue our long-term growth while having a meaningful impact on even more lives. A key driver for this is to continue our efforts to increase awareness of these solutions.

QUARTER JULY – SEPTEMBER 2024

• Revenue grew 14% to SEK 483 million (424). The currency adjusted growth was 18%. 
• Gross margin was 69% (68). 
• Operating profit totaled SEK 61 million (48), corresponding to an operating margin of 12.6% (11.4). 
• Cash flow after continuous investments was SEK 7 million (35).
• Basic and diluted earnings per share were SEK 0.43 (0.33).

PERIOD JANUARY – SEPTEMBER 2024

• Revenue grew 22% to SEK 1,387 million (1,141). The currency adjusted growth was 23%. 
• Gross margin was 68% (68). 
• Operating profit totaled SEK 146 million (99), corresponding to an operating margin of 10.5% (8.6). 
• Cash flow after continuous investments was SEK 60 million (82).
• Basic earnings per share totaled SEK 0.88 (0.56) before dilution and SEK 0.87 (0.55) after dilution.

SIGNIFICANT EVENTS DURING THE QUARTER 

• On September 5, Tobii Dynavox launched TD Navio - a new iPadOS-based assistive communication solution aimed primarily at people with autism.

SIGNIFICANT EVENTS AFTER THE QUARTER

• Dynavox Group AB has October 1st completed the previously announced acquisition of the Australian reselling partners Link Assistive Pty Ltd and Link Assistive New Zealand (together Link Assistive).

COMMENTS FROM THE CEO:
Revenue and earnings continue to show solid growth in line with our expectations. Short term, we had a negative impact on September revenues as a successful product launch allowed customers to change already placed orders to the new products. Adjusting for this the underlying growth in Q3 would have been over 20% in local currencies. We remain clearly on track with our long-term goals, helping more people communicate while seeing robust growth and steadily improving EBIT margin. The low penetration of communication aids represents significant potential for us to continue our long-term growth while having a meaningful impact on even more lives. A key driver for this is to continue our efforts to increase awareness of these solutions.

Revenue growth denominated in local currencies was 18% for the quarter, despite the fact that it was negatively impacted by product launches on September 5. Underlying growth is assessed to have been over 20%. The new products were well received, leading to many existing orders and prescriptions being replaced by the newly launched products. This is a typical and well-known pattern for us. Consequently, these will be delivered and recognized as revenue in the coming quarters. Consolidated revenue is up by 23% in local currency since the start of the year. We keep investing in systems and sales capacity to boost the scalability of our business, which gradually strengthens our EBIT margin. 

The successful product launch of the iPadOS-based assistive communication solution TD Navio took our market-leading offering to the next level in the rapidly growing segment of touchscreen-based assistive communication products. We also launched a new and im-proved version of TD I-110, our Windows-based counterpart. Cash flow was held back slightly during the quarter by the product launches, as inventory temporarily increases in the run-up to large-scale shipments. This too follows the typical pattern associated with major launches. 

We are experiencing strong growth across all regions in our largest user group, autism, who in many cases benefit greatly from and has a life-long need for assistive communication solutions. These users, often children or younger people, need symbol-based communication without eye control using our software, TD Snap. In general, the influx of new prescriptions is also showing solid growth. 

One of our top priorities is to further enhance the scalability of our business by investing in sales capacity and internal systems. Continued growth combined with economies of scale will gradually strengthen the EBIT margin towards our long-term target of achieving and surpassing 15 percent annually. This is reflected by the increase in EBIT of more than 25 percent compared to the same period last year. 

Acquisitions are an integral and important part of our strategy, in particular forward integration in local markets. Transactions that include acquiring existing distributors have been a winning formula for taking already successful markets to an even higher level of performance. In early October, we finalized the acquisition of Link Assistive, our distributor partner in Australia and New Zealand. As a result, we will be able to better support individuals with disabilities and help them communicate more effectively. Australia is also one of the countries with the most efficient reimbursement systems for our assistive communication solutions rendering good long term growth potential.

All in all, I continue to be optimistic about what the future holds. Only a small percentage of people who need assistive communication are aware of, or have access to, information about the solutions we and our industry peers offer. The low level of awareness is, of course, unsatisfactory. However, it represents significant potential for us to continue our long-term growth and thereby, have a meaningful impact on many more lives. Our dedicated employees and consistently refined product offering are further essential components in achieving our goals.
Fredrik Ruben, CEO
 
Webcast:
Today at 9:00 a.m. CEST, Dynavox Group will host a webcast presentation for media, analysts and investors. If you want to attend the webcast click the following link. The year-end report and a recording of the webcast will be available here after the webcast.

This information is inside information that Dynavox Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out below, at 07.30 CEST on October 23, 2024.