TOMTOM NV 
Amsterdam
17 July 2023 | TOM2
SECOND QUARTER AND HALF YEAR 2023 RESULTS
TomTom continues growth and increases 2023 outlook
TOMTOM'S CHIEF EXECUTIVE OFFICER, HAROLD GODDIJN
"Our Location Technology business performed well in the second quarter, showing continuing momentum and good growth. After a strong first half of the year, we are increasing our outlook for 2023 revenue and free cash flow.
The roll-out of our new maps is progressing according to schedule. We delivered the new maps to selected partners in key verticals, including ride-hailing and automotive, for testing and validation.
The market has welcomed our new product offering with excitement. It provides customers with the future-proof location technology required to power new, advanced applications across map visualization, search, traffic, and routing. As our phased roll-out progresses, we will unlock increasingly sophisticated features, faster update cycles, and broader geographical coverage."
OPERATIONAL SUMMARY
- TomTom's maps and APIs now powerAlteryx's new cloud-based analytics solution, providing location insights through an easy-to-usemap-based interface
- We further expanded our Automotive ADAS portfolio withLive Speed Restrictions, supporting safer driving and helping OEMs deliver on safety requirements and regulations
- The TomTom co-founded Overture Maps Foundation announced the core technical part of its map data offering by releasing specifications for a structured data modeland data interoperability
FINANCIAL SUMMARY SECOND QUARTER 2023
- Group revenue increased by 18% to €157 million (Q2 '22: €133 million)
- Location Technology revenue increased by 22% to €128 million (Q2 '22: €105 million)
- Automotive operational revenue increased by 28% to €90 million (Q2 '22: €71 million)
- Free cash flow1 is an inflow of €3 million (Q2 '22: inflow of €0 million)
- Net cash of €316 million (Q4 '22: €304 million)
KEY FIGURES
y.o.y. | y.o.y. | |||||
(€ in millions, unless stated otherwise) | Q2 '23 | Q2 '22 | change | H1 '23 | H1 '22 | change |
Location Technology | 128.2 | 105.3 | 22% | 246.2 | 210.5 | 17% |
Automotive | 90.9 | 60.0 | 52% | 172.0 | 120.5 | 43% |
Enterprise | 37.3 | 45.3 | -18% | 74.2 | 90.1 | -18% |
Consumer | 28.4 | 27.3 | 4% | 51.0 | 50.5 | 1% |
Revenue | 156.5 | 132.6 | 18% | 297.3 | 261.0 | 14% |
Gross result | 129.3 | 109.8 | 18% | 250.0 | 218.9 | 14% |
Gross margin | 83% | 83% | 84% | 84% | ||
Operating expenses | 132.8 | 165.2 | -20% | 250.9 | 294.2 | -15% |
Operating result (EBIT) | -3.6 | -55.5 | -0.9 | -75.3 | ||
Operating margin | -2% | -42% | 0% | -29% | ||
Net result | -4.5 | -55.0 | -1.5 | -76.5 | ||
Free cash flow1 (FCF) | 3.1 | 0.2 | 13.6 | -23.1 | ||
FCF1 as a % of revenue | 2% | 0% | 5% | -9% |
- Free cash flow excludes restructuring payments related to the Maps realignment announced in June 2022.
This report includes the following non-GAAP measures which are further explained at the end of this report: operational revenue; gross margin; EBIT (margin); EBITDA (margin); free cash flow; net cash and gross deferred revenue.
Investor Relations
Phone | | +31 20 757 5194 | |
| ir@tomtom.com | 1/20 |
TOMTOM'S CHIEF FINANCIAL OFFICER, TACO TITULAER
"We saw continued growth in Location Technology revenue in the second quarter. The Automotive business demonstrated robust underlying performance. Automotive operational revenue increased strongly, outperforming car production trends in our core markets. Enterprise revenue was in line with our expectations.
Operating expenses declined year on year, as the restructuring charge related to the realignment of our Maps organization affected our expenses last year. Underlying operating expenses were roughly flat, as efficiency gains were offset by inflationary pressures. The effective management of expenses, combined with a significant increase in revenue, resulted in positive free cash flow.1
Our performance in the first half of the year exceeded our initial expectations. As such, we are increasing our guidance. We now expect Group revenue to be between €570 million and €600 million, while Location Technology revenue is expected to grow to between €480 million and €505 million. On top of that, we are upgrading our free cash flow1 guidance to around +5% of group revenue."
OUTLOOK 2023
Updated outlook | Previous outlook | Actual | |
(€ in millions, unless stated otherwise) | 2023 | 2023 | 2022 |
Revenue | 570 - 600 | 540 - 580 | 536 |
Of which Location Technology | 480 - 505 | 455 - 485 | 436 |
FCF1 as % of Group revenue | Around +5% | 0% - +5% | -5% |
Automotive revenue is positively impacted as a result of a change in the timing of IFRS revenue recognition for new map subscription contracts, which started in Q4 2022. We expect the 2023 full-year impact to be around €40 million.
- Free cash flow excludes restructuring payments related to the Maps realignment announced in June 2022.
REVENUE AND SEGMENT PERFORMANCE FOR THE PERIOD
Revenue for the second quarter amounted to €157 million, a significant increase of 18% compared with the same quarter last year (Q2 '22: €133 million).
LOCATION TECHNOLOGY
Location Technology revenue in the quarter increased by 22% to €128 million (Q2 '22: €105 million). Location Technology segment EBIT for the first half of 2023 showed a year-on-year increase, benefiting from a significant increase in revenue in combination with lower operating expenses resulting from the Maps realignment executed last year.
y.o.y. | y.o.y. | |||||
(€ in millions, unless stated otherwise) | Q2 '23 | Q2 '22 | change | H1 '23 | H1 '22 | change |
Automotive | 90.9 | 60.0 | 52% | 172.0 | 120.5 | 43% |
Enterprise | 37.3 | 45.3 | -18% | 74.2 | 90.1 | -18% |
Location Technology revenue | 128.2 | 105.3 | 22% | 246.2 | 210.5 | 17% |
Segment EBITDA | 20.3 | -16.9 | ||||
EBITDA margin (%) | 8% | -8% | ||||
Segment EBIT | -2.6 | -46.0 | ||||
EBIT margin (%) | -1% | -22% |
2/20
Automotive generated €91 million revenue in the quarter, representing a 52% increase year on year. Automotive operational revenue increased by 28% to €90 million (Q2 '22: €71 million). This strong year-on-year growth in Automotive operational revenue mainly resulted from a combination of overall volume increases and market share gains, further supported by a one-off increase from royalties related to previous periods.
Automotive operational revenue is calculated as follows:
y.o.y. | y.o.y. | |||||
(€ in millions, unless stated otherwise) | Q2 '23 | Q2 '22 | change | H1 '23 | H1 '22 | change |
Automotive revenue | 90.9 | 60.0 | 52% | 172.0 | 120.5 | 43% |
Movement of Automotive deferred revenue | -0.4 | 10.6 | 2.1 | 18.4 | ||
Automotive operational revenue | 90.5 | 70.5 | 28% | 174.1 | 138.9 | 25% |
Enterprise revenue decreased by 18% year on year, to €37 million (Q2 '22: €45 million). This decrease is in line with our expectations and reflects the renewal of certain contracts at lower contract values.
In Enterprise, we expanded our relationship with analytics provider Alteryx. The company now integrates TomTom location data and Maps APIs into its new cloud-based analysis tools, enabling users to apply more advanced analytical techniques and easily visualize their analyses. By delivering these capabilities through a new cloud- connected platform, Alteryx will help an even broader user base benefit from TomTom-powered location intelligence.
Our Automotive business introduced new Live Speed Restrictions as an addition to its Advanced Driver Assistance Systems (ADAS) portfolio. The solution captures dynamic and temporary speed limit information along a driver's route to increase speed limit accuracy and improve road safety. By enabling safer driving, it also helps OEMs deliver on Intelligent Speed Assistance (ISA) and European New Car Assessment Program (Euro NCAP) safety requirements. The addition of Live Speed Restrictions further supports our strong position in the ADAS market, particularly in the Driver Warnings segment.
The TomTom co-founded Overture Maps Foundation released its Data Schema and Global Entity Reference System during the quarter. This is an important step in reaching our goal of developing interoperable open map data, together with co-founders AWS, Meta and Microsoft, as well as with the other organizations that have joined since the foundation's inception. The Data Schema and the Global Entity Reference System encompass the specifications that explain how geospatial data will be structured and how additional data can be added to the base map in an easy way. With this, we are creating the conditions needed to connect Overture's open map data with the proprietary geospatial data from organizations that are joining and using Overture.
CONSUMER
Consumer reported revenue of €28 million for the quarter, 4% higher compared with the same quarter last year (Q2 '22: €27 million. Consumer segment EBIT declined in the first half of 2023 compared with the same period last year.
y.o.y. | y.o.y. | |||||
(€ in millions, unless stated otherwise) | Q2 '23 | Q2 '22 | change | H1 '23 | H1 '22 | change |
Consumer revenue | 28.4 | 27.3 | 4% | 51.0 | 50.5 | 1% |
Segment EBITDA | 3.8 | 5.3 | ||||
EBITDA margin (%) | 7% | 10% | ||||
Segment EBIT | 3.4 | 4.9 | ||||
EBIT margin (%) | 7% | 10% |
3/20
RESULT FOR THE PERIOD
GROSS MARGIN
The gross margin for the quarter was 83% equal to the same quarter last year (Q2 '22: 83%). The positive effect of a relatively higher proportion of high-margin Location Technology revenue was offset by some one-off cost of sales.
OPERATING RESULT
Operating result (EBIT) in the quarter was a loss of €4 million (Q2 '22: loss of €55 million). Total operating expenses
in the quarter were €133 million, a decrease of €32 million compared with the same quarter last year (Q2 '22: €165 million) which included a restructuring charge of €31 million. Excluding the impact of the restructuring charges related to the Maps realignment, our operating expenses decreased by €2 million. This decrease reflects lower depreciation and amortization expenses, as well as realized efficiency gains resulting from last year's Maps realignment being offset by inflationary pressures.
FINANCIAL INCOME, EXPENSES AND INCOME TAX
The financial result for the quarter was an income of €0.7 million (Q2 '22: income of €2.2 million), as interest income was partially offset by foreign exchange losses resulting from the revaluation of balance sheet items.
The income tax expense for the quarter was €1.6 million, comparable with the same quarter last year (Q2 '22: income tax expense of €1.7 million).
CASH FLOW, LIQUIDITY, AND WORKING CAPITAL
A reconciliation from operating result to free cash flow, to net cash movement is presented below:
(€ in millions) | Q2 '23 | Q2 '22 | H1 '23 | H1 '22 |
Operating result (EBIT) | -3.6 | -55.5 | -0.9 | -75.3 |
Depreciation and amortization | 11.2 | 14.4 | 23.7 | 29.6 |
Equity-settled stock compensation expenses | 3.9 | 2.7 | 6.6 | 4.5 |
Other non-cash items | -1.9 | 34.3 | -2.5 | 35.1 |
Movements in working capital (excl. deferred revenue) | -4.0 | 11.5 | -15.0 | -1.6 |
Movements in deferred revenue | -3.9 | -5.6 | -0.7 | -6.0 |
Interest and tax payments | -1.6 | -0.6 | -3.1 | -2.1 |
Investments in property, plant and equipment, and intangible assets | -2.9 | -1.0 | -4.2 | -7.3 |
Free cash flow | -2.7 | 0.2 | 3.8 | -23.1 |
Lease payments | -3.1 | -3.6 | -6.6 | -7.2 |
Cash flow from other investing and financing activities | 0.4 | 1.9 | 15.3 | 3.3 |
Exchange rate differences on cash and fixed-term deposits | 0.2 | 0.3 | -0.2 | 0.5 |
Net cash movement | -5.2 | -1.3 | 12.3 | -26.5 |
In Q2 '23, free cash flow was an outflow of €3 million versus an inflow of €0.2 million in the same quarter last year. The free cash flow includes payments related to the Maps realignment, which amounted to €6 million for the quarter and €10 million for H1 '23. Excluding these restructuring-related payments, free cash flow for the quarter was an inflow of €3 million (Q2 '22: €0.2 million). This year-on-year increase in free cash flow mainly reflects a higher operating result in our Location Technology business.
Working capital utilization was higher compared with the same quarter last year. The higher utilization of working capital during the quarter is explained by an increase in our unbilled and trade receivable position and by the aforementioned cash out related to the Maps realignment.
4/20
The movement in deferred revenue in the cash flow statement is equal to the change in the deferred revenue position in the period. During the second quarter, the deferred revenue position decreased by €3.9 million, from €442 million to €438 million. The movement in deferred revenue in H1 '23 was a marginal decrease of €0.7 million, from €439 million at the end of 2022.
The following table presents the deferred revenue including the effect of netting:
(€ in millions) | 30 June 2023 | 31 March 2023 | 31 December 2022 |
Automotive | 433.4 | 433.8 | 431.2 |
Enterprise | 13.6 | 17.5 | 11.6 |
Consumer | 19.2 | 19.0 | 20.7 |
Gross deferred revenue | 466.2 | 470.3 | 463.6 |
Less: Netting adjustment to unbilled revenue | 28.2 | 28.5 | 24.9 |
Deferred revenue | 438.0 | 441.8 | 438.6 |
Investments in property, plant and equipment in the quarter increased compared with the same quarter last year, due to capital expenditures on office refurbishments.
Cash flow from other investing and financing activities for the quarter mainly comprised of cash inflows from the exercise of employee stock options. In the quarter, 49 thousand stock options relating to our long-term employee incentive plan were exercised (Q2 '22: 212 thousand).
On 30 June 2023, the Group had no outstanding bank borrowings and reported a net cash position of €316 million (Q4 '22: net cash of €304 million).
- END -
5/20
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TomTom NV published this content on 28 July 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 July 2023 19:22:29 UTC.
