TOMTOM NV 
Amsterdam
13 October 2023 | TOM2
THIRD QUARTER 2023 RESULTS
TomTom launches new maps
TOMTOM'S CHIEF EXECUTIVE OFFICER, HAROLD GODDIJN
"Last quarter marked a pivotal moment with the launch of our new maps in core markets.
Our vision is clear. We are pioneering a unified map standard, empowering both companies and developers to harness consistent specifications for location data. It's exciting to see so many technology firms adopt this standard so quickly.
The new maps are built on this standard and leverage all relevant data sources including open data, making them stand out in terms of coverage, richness, and freshness.
We can now tap deeper into the ever-expanding location technology market, and we are encouraged by the initial feedback from our customers and prospects."
OPERATIONAL SUMMARY
- We launched ournew mapsof North America and Europe
- We signed a new Traffic deal in the US withStreetLight, powering their cloud-based analytics products
- We reached a new milestone in our longstanding relationship with Stellantis, with our full stack of connected services integrated in the newPeugeotE-3008
- We launched aChatGPT plugin for location technology, so developers can use AI to build navigation apps
FINANCIAL SUMMARY THIRD QUARTER 2023
- Group revenue increased by 6% to €144 million (Q3 '22: €136 million)
- Location Technology revenue increased by 10% to €119 million (Q3 '22: €108 million)
- Automotive operational revenue increased by 13% to €85 million (Q3 '22: €75 million)
- Free cash flow1 is an inflow of €13 million (Q3 '22: inflow of €8 million)
- Net cash of €325 million (Q2 '23: €316 million)
KEY FIGURES
y.o.y. | y.o.y. | |||||
(€ in millions, unless stated otherwise) | Q3 '23 | Q3 '22 | change | YTD '23 | YTD '22 | change |
Location Technology | 119.2 | 108.3 | 10% | 365.5 | 318.9 | 15% |
Automotive | 82.5 | 62.4 | 32% | 254.5 | 182.9 | 39% |
Enterprise | 36.8 | 45.9 | -20% | 111.0 | 136.0 | -18% |
Consumer | 24.9 | 28.0 | -11% | 75.9 | 78.5 | -3% |
Revenue | 144.1 | 136.3 | 6% | 441.4 | 397.3 | 11% |
Gross result | 118.9 | 109.9 | 8% | 368.9 | 328.8 | 12% |
Gross margin | 83% | 81% | 84% | 83% | ||
Operating expenses | 127.7 | 127.7 | 0% | 378.5 | 421.9 | -10% |
Operating result (EBIT) | -8.7 | -17.8 | -9.6 | -93.1 | ||
Operating margin | -6% | -13% | -2% | -23% | ||
Net result | -7.9 | -17.5 | -9.4 | -94.0 | ||
Free cash flow1 (FCF) | 12.9 | 8.5 | 26.5 | -14.6 | ||
FCF1 as a % of revenue | 9% | 6% | 6% | -4% |
- 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; free cash flow; net cash and gross deferred revenue.
Investor Relations
Phone | | | +31 20 757 5194 | |
| | ir@tomtom.com | 1/9 |
TOMTOM'S CHIEF FINANCIAL OFFICER, TACO TITULAER
"We performed well in the third quarter, with our Location Technology business recording sustained year-on-year growth. Enterprise revenue was in line with our expectations and our Automotive business showed healthy underlying performance. For yet another successive quarter, year-on-year Automotive operational revenue growth outperformed car production trends in our core markets.
Continued revenue growth and a stable cost base enabled us to achieve operating leverage, increasing our free cash flow1 in the third quarter.
For full year 2023, we reiterate our guidance and expect Group revenue to grow to between €570 million and €600 million, with Location Technology revenue between €480 million and €505 million. Free cash flow1 is expected to be around +5% of Group revenue."
OUTLOOK 2023
Outlook | Actual | |
(€ in millions, unless stated otherwise) | 2023 | 2022 |
Revenue | 570 - 600 | 536 |
Of which Location Technology | 480 - 505 | 436 |
FCF1 as % of Group revenue | Around +5% | -5% |
Automotive revenue is positively impacted due to a change in 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 FOR THE PERIOD
Revenue for the third quarter amounted to €144 million, a year-on-year increase of 6% (Q3 '22: €136 million).
LOCATION TECHNOLOGY
Location Technology revenue was €119 million, a year-on-year increase of 10% (Q3 '22: €108 million).
Automotive revenue in the quarter was €82 million, an increase of 32% compared with the same quarter last year (Q3 '22: €62 million). Automotive operational revenue in the quarter was €85 million, a year-on-year increase of 13% (Q3 '22: €75 million). This increase marks an outperformance as compared to the growth in car production volumes across our core markets, as a consequence of increasing take rates and market share gains.
Automotive operational revenue is calculated as follows:
y.o.y. | y.o.y. | |||||
(€ in millions, unless stated otherwise) | Q3 '23 | Q3 '22 | change | YTD '23 | YTD '22 | change |
Automotive revenue | 82.5 | 62.4 | 32% | 254.5 | 182.9 | 39% |
Movement of Automotive deferred revenue | 3.0 | 12.9 | 5.1 | 31.3 | ||
Automotive operational revenue | 85.4 | 75.3 | 13% | 259.6 | 214.2 | 21% |
Enterprise revenue decreased, in line with our expectations, to €37 million in Q3 '23, 20% lower than the same quarter last year (Q3 '22: €46 million). Some contract renewals reflect decreased usage and therefore lower contract values.
We launched our new maps across our core markets of North America and Europe during the quarter. The maps are being tested and validated with prospects and partners and they are seeing meaningful results, such as increased support for new use cases, enhanced operational efficiency, and an improved ability to focus engineering resources on differentiation. Over the coming period, we will use the input from our partners to further improve the product, reduce cycle times, and improve platform scalability and efficiency. We expect to significantly expand the coverage of the maps before the end of the year.
In Enterprise, we secured a Traffic deal in the US, with StreetLight now integrating TomTom historical and real-time traffic data. Streetlight executes thousands of monthly analyses for transportation professionals and will integrate our global data into its growing line of cloud-based products. The partnership clearly exhibits the value our data and technologies can bring to location intelligence use cases, supporting reliable and scalable global mobility measurements that deliver insights and solutions to complex transportation problems.
2/9
In Automotive, the introduction of the new Peugeot E-3008 marks a new highlight in our long-standing relationship with Stellantis. The all-new electric fastback SUV is built on Stellantis' next-generation platform and features TomTom's full stack of products. Our latest connected services include over-the-air map updates, real-time traffic, and live speed camera information, as well as online search and routing, street parking information, and live weather updates.
On the back of recent advances in generative artificial intelligence (AI), and large language models (LLM) in particular, we are working on conversational interfaces that make driving safer and easier to customize. During the quarter, we launched the TomTom plugin for ChatGPT. This first-of-its-kind LLM plugin for location technology enables subscribers of ChatGPT Plus to use AI to plan trips and discover and explore new places.
CONSUMER
Consumer reported revenue of €25 million for the quarter, compared with €28 million in the same quarter last year.
RESULT FOR THE PERIOD
GROSS MARGIN
The gross margin for the quarter was 83% compared with 81% in Q3 '22. The year-on-year improvement in gross margin resulted from a higher proportion of higher-margin content and software revenue in our revenue mix.
OPERATING RESULT
Operating result (EBIT) in the quarter was a loss of €9 million (Q3 '22: loss of €18 million). Total operating expenses
in the quarter were €128 million, flat compared with the same quarter last year (Q3 '22: €128 million). Excluding depreciation and amortization and restructuring effects related to the Maps realignment, underlying operating expenses decreased year on year by €1.4 million. Specifically in the third quarter of 2023, an exceptionally high subsidy contribution lowered our operating expenses.
FINANCIAL INCOME, EXPENSES AND INCOME TAX
Total financial result for the quarter was an income of €3.4 million, mainly resulting from interest income on our fixed-term deposits (Q3 '22: income of €1.8 million).
The income tax expense for the quarter was €2.5 million compared with an expense of €1.5 million in Q3 '22.
CASH FLOW, LIQUIDITY, AND WORKING CAPITAL
In Q3 '23, free cash flow was an inflow of €12 million versus an inflow of €3 million in the same quarter last year. Excluding the impact of restructuring charges related to the Maps realignment, free cash flow for the quarter was an inflow of €13 million (Q3 '22: inflow of €8 million).
A reconciliation from operating result to free cash flow, to net cash movement is presented below:
(€ in millions) | Q3 '23 | Q3 '22 | YTD '23 | YTD '22 |
Operating result | -8.7 | -17.8 | -9.6 | -93.1 |
Depreciation and amortization | 9.8 | 13.7 | 33.5 | 43.3 |
Equity-settled stock compensation expenses | 2.6 | 3.1 | 9.2 | 7.6 |
Other non-cash items | 1.4 | -22.3 | -1.1 | 12.7 |
Movements in working capital (excl. deferred revenue) | 9.1 | 18.4 | -5.9 | 17.3 |
Movements in deferred revenue | 2.0 | 10.4 | 1.3 | 3.9 |
Interest and tax payments | 0.1 | -1.6 | -3.0 | -3.7 |
Investments in property, plant and equipment, and intangible assets | -4.3 | -1.3 | -8.6 | -8.6 |
Free cash flow | 12.0 | 2.6 | 15.8 | -20.5 |
Lease payments | -2.9 | -3.6 | -9.5 | -10.8 |
Cash flow from other investing and financing activities | 0.0 | 0.9 | 15.3 | 4.3 |
Exchange rate differences on cash and fixed-term deposits | 0.3 | 0.5 | 0.1 | 1.0 |
Net cash movement | 9.4 | 0.4 | 21.7 | -26.0 |
3/9
Free cash flow saw a year-on-year increase of €9.4 million. Excluding the impact of restructuring charges related to the Maps realignment, the year-on-year increase was €4.5 million. The increase in free cash flow mainly reflects higher operating results corrected for amortization and depreciation.
Working capital movement was significantly impacted by restructuring-related effects in Q3 '22. Excluding these effects, the movement in working capital was more favorable than last year, due to higher cash collection from customers.
Our deferred revenue position has stayed relatively flat throughout the year. During the third quarter, the deferred revenue position increased by €2.0 million, from €438 million to €440 million, driven by both Automotive and Consumer. Year to date, deferred revenue showed an increase of €1.3 million (Q4 2022: €439 million).
The following table presents the deferred revenue including the effect of netting:
(€ in millions) | 30 September 2023 | 30 June 2023 | 31 December 2022 |
Automotive | 436.3 | 433.4 | 431.2 |
Enterprise | 12.3 | 13.6 | 11.6 |
Consumer | 20.7 | 19.2 | 20.7 |
Gross deferred revenue | 469.3 | 466.2 | 463.6 |
Less: Netting adjustment to unbilled revenue | 29.4 | 28.2 | 24.9 |
Deferred revenue | 439.9 | 438.0 | 438.7 |
Investments in property, plant and equipment in the quarter increased compared with the same quarter last year mainly due to higher investments in leasehold improvements.
Cash flow from other investing and financing activities was nil in the quarter, as no stock options relating to our long-term employee incentive programs were exercised (Q3 '22: 120 thousand).
On 30 September 2023, the Group had no outstanding bank borrowings and reported a net cash position of €325 million (Q2 '23: €316 million).
- END -
4/9
CONSOLIDATED CONDENSED STATEMENT OF INCOME
Q3 '23 | Q3 '22 | YTD '23 | YTD '22 | |
(€ in thousands) | Unaudited | Unaudited | Unaudited | Unaudited |
Revenue | 144,114 | 136,303 | 441,381 | 397,330 |
Cost of sales | 25,175 | 26,381 | 72,481 | 68,519 |
Gross profit | 118,939 | 109,922 | 368,900 | 328,811 |
Research and development expenses - Geographic data | 43,661 | 50,548 | 131,639 | 162,024 |
Research and development expenses - Application layer | 47,263 | 45,768 | 139,134 | 128,791 |
Sales and marketing expenses | 14,180 | 13,568 | 41,320 | 36,151 |
General and administrative expenses1 | 22,573 | 17,823 | 66,455 | 94,929 |
Total operating expenses | 127,677 | 127,707 | 378,548 | 421,895 |
Operating result | -8,738 | -17,785 | -9,648 | -93,084 |
Financial result | 3,371 | 1,826 | 5,668 | 3,707 |
Result before tax | -5,367 | -15,959 | -3,980 | -89,377 |
Income tax expense | -2,523 | -1,525 | -5,392 | -4,573 |
Net result2 | -7,890 | -17,484 | -9,372 | -93,950 |
Earnings per share (in €): | ||||
Basic | -0.06 | -0.14 | -0.07 | -0.74 |
Diluted3 | -0.06 | -0.14 | -0.07 | -0.74 |
- Includes a €5 million gain in restructuring for Q3 '22 and a total restructuring charge of €26 million for YTD '22.
- Fully attributable to the equity holders of the parent.
- When the net result is a loss, no additional shares from assumed conversion are taken into account as the effect would be anti-dilutive.
5/9
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TomTom NV published this content on 12 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 October 2023 05:43:27 UTC.
