Earnings Release • Apr 14, 2021
Earnings Release
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"We had a positive start to the year, showing solid progress in product development and attracting new customers.
The release of TomTom Navigation for Automotive, our cloud-native hybrid solution, further strengthens our leading position as a Location Technology specialist. It is the most comprehensive navigation system available to automakers today.
In Enterprise we expanded our customer base in the fleet and logistics and on-demand markets."
| (€ in millions, unless stated otherwise) | Q1 '21 | Q1 '20 | y.o.y. change |
|---|---|---|---|
| Location Technology | 104.8 | 91.3 | 15 % |
| Consumer | 26.4 | 39.9 | -34 % |
| Revenue | 131.2 | 131.2 | 0 % |
| Gross result | 106.5 | 102.6 | 4 % |
| Gross margin | 81% | 78% | |
| EBITDA | 7.3 | -5.4 | |
| EBITDA margin | 6 % | -4 % | |
| Operating result (EBIT) | -14.2 | -77.7 | |
| Operating margin | -11 % | -59 % | |
| Net result | -11.5 | -62.8 | |
| Free cash flow (FCF) | -3.9 | 13.7 | |
| FCF as a % of revenue | -3% | 10% |
This report includes the following non-GAAP measures which are further explained on page 8: operational revenue; gross margin; EBITDA (margin); EBIT (margin); free cash flow and net cash.
"Growth in both Automotive and Enterprise contributed to a year-on-year increase of 15% in Location Technology revenue.
Our operating result improved compared with last year as a result of higher gross margin and lower operating expenses. The latter is mainly explained by lower acquisition-related amortization and cautious cost management.
During the quarter, we resumed our share buyback, purchasing over 2 million shares for €17 million.
We are reiterating our full-year guidance with the expectation that revenue will be more weighted to the second half of the year given the supply chain constraints within the automotive industry."
| (€ in millions, unless stated otherwise) | Outlook 2021 | Actual 2020 |
|---|---|---|
| Group revenue | 520 - 570 | 528 |
| Of which Location Technology | 420 - 450 | 392 |
| FCF as % of Group revenue | Around 6% | -5% |
Revenue for the first quarter amounted to €131 million flat compared with the same quarter last year (Q1 '20: €131 million).
| (€ in millions) | Q1 '21 | Q1 '20 | y.o.y. change |
|---|---|---|---|
| Automotive | 62.7 | 49.8 | 26 % |
| Enterprise | 42.1 | 41.5 | 2 % |
| Location Technology revenue | 104.8 | 91.3 | 15 % |
Automotive operational revenue is calculated as follows:
| (€ in millions) | Q1 '21 | Q1 '20 | y.o.y. change |
|---|---|---|---|
| Reported revenue | 62.7 | 49.8 | 26 % |
| Movement of deferred revenue | 11.7 | 30.9 | -62 % |
| Operational revenue | 74.4 | 80.7 | -8 % |
Location Technology revenue in the quarter increased by 15% to €105 million (Q1 '20: €91 million) resulting from a strong increase in Automotive and a marginal increase in Enterprise.
Automotive revenue in the quarter was €63 million representing a 26% increase from last year as Q1 '20 included adjustments to the estimated total contract value of some contracts to account for the impact of COVID-19. Automotive operational revenue decreased by 8% to €74 million (Q1 '20: €81 million) as production volumes decreased year on year.
Enterprise revenue in Q1 '21 was €42 million, 2% higher compared with the same quarter last year (Q1 '20: €41 million), reflecting increased revenue from existing customers.
We launched TomTom Navigation for Automotive, our new-generation cloud-native and full hybrid navigation solution. It includes a brand-new user interface that can be implemented across brands and configured for both internal combustion engines and electric powertrains, functioning in both online and offline situations.
The solution can be integrated with vehicle sensors, enabling it to display vital information linked to advanced driver assistance systems and refueling or recharging needs. It can be offered as one preintegrated stack and delivered through easy-to-use SDKs and APIs that can be easily integrated in any in-vehicle infotainment system.
The new Mitsubishi Outlander showcases the new MI-PILOT Assist which incorporates TomTom ADAS Map data, such as road curvature and speed limits. With this data, the ADAS function can proactively adapt speed based on accurate and up-to-date information about the road at hand and ahead, helping increase drivers' safety and comfort.
Our geographic database expanded to include around 450 thousand charging points of interest (POIs) enhancing our offering for the fast-growing EV market. TomTom routing technology optimizes routes to save energy and guides EV drivers to compatible, available charging stations within reachable EV range, reducing driver range anxiety.
New deals within Enterprise expanded our reach in the fleet and logistics and on-demand markets, broadening our client base and increasing the use of our Maps APIs.
| (€ in millions) | Q1 '21 | Q1 '20 | y.o.y. change |
|---|---|---|---|
| Consumer products | 23.5 | 35.1 | -33 % |
| Automotive hardware | 2.9 | 4.8 | -40 % |
| Total Consumer revenue | 26.4 | 39.9 | -34 % |
Consumer revenue decreased year-on-year by 34% to €26 million (Q1 '20: €40 million). The Consumer revenue is negatively impacted by governmental COVID-19 measures such as travel limitations and retail closures. During the quarter Consumer launched the TomTom GO Discover, our most powerful navigation device to date.
The gross margin increased to 81% compared with 78% in Q1 '20 as it continues to benefit from higher proportions of software and content revenue.
Operating result in the quarter improved year-on-year to a loss of €14 million compared with a loss of €78 million in Q1 '20. This is mainly the result of improved gross margin combined with a decrease in operating expenses of €60 million.
Operating expenses (Q1 '21 €121 million; Q1 '20: €180 million) decreased mainly because of lower acquisition-related amortization as the Tele Atlas databases, acquired in 2008, were fully amortized in 2020. Excluding the impact of depreciation and amortization (D&A), cautious cost management resulted in a year-on-year decrease in underlying operating expenses.
Presented below is an overview of operating expenses excluding D&A:
| (€ in millions) | Q1 '21 | Q1 '20 | y.o.y. change |
|---|---|---|---|
| Research and development expenses - Geographic data | 41.4 | 46.3 | -11 % |
| Research and development expenses - Application layer | 32.3 | 28.4 | 14 % |
| Sales and marketing expenses | 10.2 | 15.0 | -32 % |
| General and administrative expenses | 15.3 | 18.3 | -16 % |
| Operating expenses excluding D&A | 99.2 | 108.0 | -8 % |
| Depreciation and amortization | 21.5 | 72.3 | -70 % |
| Operating expenses | 120.7 | 180.3 | -33 % |
Total financial result for the quarter was an income of €4.4 million (Q1 '20: income of €5.1 million) mainly from the revaluation of cash balances.
The net income tax expense for the quarter was €1.6 million compared with a gain of €9.9 million in Q1 '20. The tax gain in Q1 '20 is mainly the result of a release of deferred tax liability in line with the amortization of acquisition-related intangible assets which were fully amortized at the end of 2020.
Other intangible assets decreased to €104 million from €117 million at the end of 2020 due to amortization. Cash balances, including fixed-term deposits, decreased by €20 million due to a combination of a negative cash flow from operating activities and the repurchase of shares under the share buyback program.
Trade receivables were €61 million in Q1 '21 compared with €80 million at the end of 2020, resulting from lower operational revenue in the quarter. The inventory level at the end of the quarter was €24 million, a €3 million decrease from the end of last year.
Current liabilities excluding deferred revenue, were €114 million, compared with €116 million at the end of 2020. The decrease is mainly due to decreases in trade payables as well as personnel-related accruals included in 'Accruals and other liabilities'.
Deferred revenue is €398 million at the end of Q1 '21, built up of a gross deferral of €421 million and an unbilled netting adjustment of €23 million. The decrease in deferred revenue from Q4 '20 is driven by the release of deferred revenue in Enterprise and Consumer, partly offset by increasing deferrals in Automotive.
The following table presents the deferred revenue including the effect of netting:
| (€ in millions) | 31 March 2021 | 31 December 2020 |
|---|---|---|
| Automotive | 363.5 | 351.7 |
| Enterprise | 23.6 | 34.9 |
| Consumer | 34.2 | 39.7 |
| Gross deferred revenue | 421.3 | 426.3 |
| Less: Netting adjustment to unbilled revenue | 23.3 | 22.6 |
| Deferred revenue1 | 397.9 | 403.7 |
1 Deferred revenue reflects amounts not yet recognized as revenue as services still need to be delivered. Unbilled revenue represents amounts accrued for when a contractual right to invoice exists. When a single contract has both an accrual, based on contractual invoicing terms, and a deferral, because the underlying services are not yet fully delivered, the unbilled and the deferred positions are netted for presentation on the balance sheet.
In Q1 '21, the free cash flow from was an outflow of €4 million versus an inflow of €14 million in the same quarter last year. The opening trade receivables balance was lower when compared with the opening balance in Q1 '20, resulting in lower cash collection during the quarter. This, combined with lower operational revenue partly offset by lower variable personnel expenses explains the year-onyear decrease in free cash flow.
The cash flow from financing activities for the quarter was an outflow of €21 million (Q1 '20: outflow of €19 million). The outflow reflects payments for shares purchased under the share buyback program and payments of lease liabilities offset by cash received from the exercise of 108 thousand options relating to our long-term employee incentive programs (Q1 '20: 392 thousand options).
On 31 March 2021, the Group had no outstanding bank borrowings and reported a net cash position of €352 million (Q4 '20: €372 million).
Free cash flow is reconciled to the cash flow statement as follows:
| (€ in millions) | Q1 '21 | Q1 '20 |
|---|---|---|
| Cash flow from operating activities | -0.8 | 15.8 |
| Investments in property, plant and equipment | -3.1 | -2.1 |
| Free cash flow | -3.9 | 13.7 |
We resumed our share buyback program on 15 February 2021. During the quarter we repurchased 2,215,398 shares for an aggregate consideration of €17.3 million.
Since the start of the program in 2020, we have repurchased 4,569,831 shares for an aggregate consideration of €33.9 million. This leaves a remaining repurchase amount of €16.1 million.
- END -
| Q1 '21 | Q1 '20 | |
|---|---|---|
| (€ in thousands) | Unaudited | Unaudited |
| Revenue | 131,191 | 131,197 |
| Cost of sales | 24,681 | 28,631 |
| Gross profit | 106,510 | 102,566 |
| Research and development expenses - Geographic data | 53,268 | 108,788 |
| Research and development expenses - Application layer | 34,831 | 32,147 |
| Sales and marketing expenses | 10,230 | 16,161 |
| General and administrative expenses | 22,421 | 23,217 |
| Total operating expenses | 120,750 | 180,313 |
| Operating result | -14,240 | -77,747 |
| Financial result | 4,400 | 5,079 |
| Result before tax | -9,840 | -72,668 |
| Income tax (expense)/gain | -1,641 | 9,915 |
| Net result1 | -11,481 | -62,753 |
| Earnings per share (in €): | ||
| Basic | -0.09 | -0.48 |
| Diluted | -0.09 | -0.48 |
1 The net result is fully attributed to the equity holders of the parent
| 31 March 2021 | 31 December 2020 | |
|---|---|---|
| (€ in thousands) | Unaudited | Audited |
| Goodwill | 192,294 | 192,294 |
| Other intangible assets | 104,403 | 117,475 |
| Property, plant and equipment | 22,938 | 22,220 |
| Lease assets | 38,909 | 43,609 |
| Other contract-related assets | 18,296 | 19,130 |
| Other investments | 10,917 | 8,733 |
| Deferred tax assets | 4,299 | 4,273 |
| Total non-current assets | 392,056 | 407,734 |
| Inventories | 23,500 | 26,146 |
| Trade receivables | 60,706 | 79,661 |
| Unbilled receivables | 73,541 | 58,313 |
| Other contract-related assets | 8,003 | 6,950 |
| Other receivables and prepayments | 33,617 | 26,765 |
| Fixed-term deposits | 121,313 | 140,930 |
| Cash and cash equivalents | 230,657 | 231,520 |
| Total current assets | 551,337 | 570,285 |
| Total assets | 943,393 | 978,019 |
| Total equity | 364,950 | 387,616 |
| Lease liabilities | 25,116 | 28,801 |
| Deferred tax liability | 1,293 | 1,344 |
| Provisions | 39,821 | 41,014 |
| Deferred revenue | 232,433 | 238,793 |
| Total non-current liabilities | 298,663 | 309,952 |
| Trade payables | 15,337 | 21,998 |
| Lease liabilities | 15,823 | 14,872 |
| Provisions | 7,481 | 7,918 |
| Deferred revenue | 165,497 | 164,913 |
| Other contract-related liabilities | 18,790 | 19,084 |
| Income taxes | 2,622 | 1,893 |
| Accruals and other liabilities | 54,230 | 49,773 |
| Total current liabilities | 279,780 | 280,451 |
| Q1 '21 | Q1 '20 | |
|---|---|---|
| (€ in thousands) | Unaudited | Unaudited |
| Operating result | -14,240 | -77,747 |
| Financial gains | 3,084 | 145 |
| Depreciation and amortization | 21,520 | 72,305 |
| Change in provisions | 759 | -413 |
| Equity-settled stock compensation expenses | 1,596 | 1,213 |
| Changes in working capital: | ||
| Change in inventories | 3,217 | 1,525 |
| Change in receivables and prepayments | -3,447 | 21,384 |
| Change in liabilities (excluding provisions)1 | -11,135 | -313 |
| Cash flow from operations | 1,354 | 18,099 |
| Interest received | 39 | 95 |
| Interest paid | -437 | -386 |
| Corporate income taxes paid | -1,736 | -2,004 |
| Cash flow from operating activities | -780 | 15,804 |
| Investments in property, plant and equipment | -3,117 | -2,111 |
| Dividends received | 0 | 162 |
| Decrease in fixed-term deposits | 21,465 | 0 |
| Cash flow from investing activities | 18,348 | -1,949 |
| Payment of lease liabilities | -3,814 | -3,612 |
| Proceeds on issue of ordinary shares | 577 | 1,548 |
| Purchase of treasury shares | -17,294 | -16,569 |
| Cash flow from financing activities | -20,531 | -18,633 |
| Net decrease in cash and cash equivalents | -2,963 | -4,778 |
| Cash and cash equivalents beginning at the of the period | 231,520 | 213,941 |
| Exchange rate changes on foreign cash balances | 2,100 | -123 |
| Cash and cash equivalents at the end of the period | 230,657 | 209,040 |
| Cash held in short term fixed deposits | 121,313 | 222,523 |
| Net cash at the end of the period | 351,970 | 431,563 |
1Includes movements in the non-current portion of deferred revenue presented under non-current liabilities.
The condensed consolidated financial information for the three-month period ended 31 March 2021 and the related comparative information has been prepared using accounting policies and methods of computation which are based on International Financial Reporting Standards (IFRS) as disclosed in the Financial Statements for the year ended 31 December 2020.
Unless otherwise indicated, the quarterly condensed consolidated information in this press release is neither audited nor reviewed. Due to rounding, amounts may not add up precisely to totals. All change percentages are calculated before rounding.
The financial information in this report includes measures which are not defined by generally accepted accounting principles (GAAP) such as IFRS. We believe this information, along with comparable GAAP measurements, gives insight to investors as it provides a basis for evaluating our operational performance. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP. Wherever appropriate and practical, we provide reconciliations to relevant GAAP measures.
Operational revenue is IFRS revenue adjusted for the movement of gross deferred revenue
Gross margin is calculated as gross profit divided by revenue
EBIT is equal to our operating result
EBITDA is equal to our operating result plus depreciation and amortization charges
EBITDA margin is calculated as operating result plus depreciation and amortization charges divided by revenue
Free cash flow is cash from operating activities minus capital expenditure (investments in intangible assets and property, plant and equipment)
Net cash is cash and cash equivalents, plus cash held in fixed term deposits minus the nominal value of our outstanding bank borrowings
Gross deferred revenue is deferred revenue before the netting of unbilled receivables
TomTom Investor Relations
Email: [email protected]
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Date and time: April 14, 2021 at 14:00 CET
https://corporate.tomtom.com/investors/financial-publications/quarterly-results
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ISIN: NL0013332471 / Symbol: TOM2
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