Annual Report • Feb 4, 2021
Annual Report
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"The past year has been a turbulent one. COVID-19 continues to impact people's lives and disrupt the global economy. While we have also been affected, our Enterprise business showed resilience by increasing year on year. Our Automotive operational revenue improved since the lows experienced in the second quarter.
We maintained an Automotive backlog of €1.8 billion. Our 2020 order intake was strong, but our customers' lower near-term car production forecasts impacted our backlog.
During the last year, we managed our costs by cutting discretionary spend but kept investment levels up for our mapping and application platforms.
In 2021, we plan for revenue growth of around 10% in Location Technology and a positive free cash flow for the Group."
| (€ in millions) | Q4 '20 | Q4 '19 | y.o.y. change |
FY '20 | FY '19 | y.o.y. change |
|---|---|---|---|---|---|---|
| Location Technology | 101.5 | 110.4 | -8 % | 392.2 | 426.0 | -8 % |
| Consumer | 23.9 | 45.9 | -48 % | 136.0 | 274.8 | -51 % |
| Revenue | 125.4 | 156.2 | -20 % | 528.2 | 700.8 | -25 % |
| Gross profit | 103.1 | 124.0 | -17 % | 423.4 | 515.2 | -18 % |
| Gross margin | 82% | 79% | 80% | 74% | ||
| EBITDA | -7.8 | -4.6 | -2.1 | 61.0 | ||
| EBITDA margin | -6% | -3% | 0% | 9% | ||
| Net result1 | -65.9 | -69.0 | -257.6 | 632.9 | ||
| Free cash flow (FCF) | 33.8 | 47.7 | -26.5 | 65.8 | ||
| FCF as a % of revenue | 27% | 31% | -5% | 9% |
1All figures presented in the table above relate to continuing operations, except for the FY '19 Net result.
This report includes the following non-GAAP measures: Automotive backlog, operational revenue; gross margin; EBITDA (margin); free cash flow and net cash, which are further explained at the end of this report.
"We delivered on our guidance from last quarter, returning to positive free cash flow in the fourth quarter. Location Technology revenue outperformed our expectations, but this was offset by weaker Consumer revenue as retail stores continued to face headwinds following widespread lockdowns across Europe.
In the coming year, we expect Location Technology revenue of €420 to €450 million. This is based on car production not returning to 2019 levels in 2021. In the mid-term, we expect Location Technology revenue to continue to grow to around €550 million in 2023.
Our R&D cash spend will increase compared with 2020 and we expect to generate positive free cash flow, both in the coming year and in the mid-term. We are pleased to announce that we will resume our share buyback program during Q1 2021."
| (€ in millions) | Outlook 2021 | Actual 2020 |
|---|---|---|
| Revenue | 520 - 570 | 528 |
| Of which Location Technology | 420 - 450 | 392 |
| FCF as % of group revenue | Around 6% | -5% |
We have based our 2021 outlook on a USD FX rate of 1.201 and the expectation that car production in 2021 will not reach 2019 volumes. We expect free cash flow (FCF) to be around 6% of group revenue.
Our mid-term outlook for Location Technology is continued growth to around €550 million revenue and a FCF of around 10% of Group revenue in 2023.
Our outlook is supported by an Automotive backlog2 of around €1.8 billion at the end of 2020. This is equal to the backlog reported at the end of 2019. The order intake offset revenue recognized during the year and the impact of our customers' lower near-term car production forecasts.
Given the current uncertainty resulting from cyclical and structural market developments, we are not providing a longer-term view at this time.
1 In 2020 around 80% of Enterprise and 20% of Automotive revenue was based in US Dollar.
2Automotive backlog is the cumulative expected IFRS revenue from all awarded Automotive deals.
In Q1 2021 we will resume our share buyback program which we previously suspended on 31 March 2020 as a precautionary measure in light of the COVID-19 pandemic.
The repurchase will be executed within the limits of relevant laws and regulations and the existing authority granted by the Annual General Meeting on 15 June 2020. We will inform the market of the actual start and the progress made in executing the share buyback through press releases and our corporate website. The share buyback will be fully used to cover commitments arising from longterm employee incentive plans.
The program was to repurchase up to €50 million of TomTom ordinary shares on Euronext Amsterdam. Until the program's suspension, the total number of shares repurchased was 2,354,433 for an aggregate consideration of €16.6 million. Based on the closing share of TomTom on Euronext Amsterdam on 3 February 2021, the remaining repurchase amount represents approximately 3% of TomTom's issued share capital.
Group revenue for the fourth quarter amounted to €125 million, a decrease of 20% year on year (Q4 '19: €156 million).
| (€ in millions) | Q4 '20 | Q4 '19 | y.o.y. change |
FY '20 | FY '19 | y.o.y. change |
|---|---|---|---|---|---|---|
| Automotive | 59.8 | 69.2 | -14 % | 227.2 | 265.7 | -14 % |
| Enterprise | 41.7 | 41.2 | 1 % | 165.0 | 160.3 | 3 % |
| Location Technology revenue | 101.5 | 110.4 | -8 % | 392.2 | 426.0 | -8 % |
| Segment EBITDA | -15.0 | -3.4 | ||||
| EBITDA margin (%) | -4% | -1% | ||||
| Segment EBIT | -299.4 | -293.6 | ||||
| EBIT margin (%) | -76% | -69% |
Automotive operational revenue is calculated as follows:
| (€ in millions) | Q4 '20 | Q4 '19 | y.o.y. change |
FY '20 | FY '19 | y.o.y. change |
|---|---|---|---|---|---|---|
| Reported revenue | 59.8 | 69.2 | -14 % | 227.2 | 265.7 | -14 % |
| Movement of deferred and unbilled | 30.0 | 46.8 | 55.2 | 115.0 | ||
| Operational revenue | 89.9 | 116.0 | -23 % | 282.4 | 380.6 | -26 % |
Location Technology revenue was €101 million, a decrease of 8% year on year (Q4 '19: €110 million), resulting from a decrease in Automotive revenue.
Automotive revenue for the quarter was €60 million, a decrease of 14% compared with the same quarter last year (Q4 '19: €69 million). Automotive operational revenue was €90 million in the quarter, a year-on-year decrease of 23% (Q4 '19: €116 million). Sequentially, we achieved operational revenue growth of 51% (Q3 '20 €59 million). This reflects the continued recovery of car production volumes during 2020, which are still below the levels in the same quarter last year.
Enterprise revenue increased by 1% to €42 million in Q4 '20, compared with the same quarter last year (Q4 '19: €41 million) resulting mainly from new contracts offset by unfavorable foreign exchange movements.
Full year segment EBITDA for Location Technology was a loss of €15 million (FY '19: loss of €3.4 million), a year on year decline reflecting the decrease in revenue, partly offset by lower discretionary spend.
Within our Automotive business, we recently announced that our maps, connected navigation, and real-time traffic services have been chosen by Mitsubishi Motors to power the new Eclipse Cross' infotainment system.
We have been recognized as one of the North America Innovation Suppliers of the Year by Fiat Chrysler Automobiles (FCA). This recognition stems from the supply of our full-stack of maps, navigation and connected services to in their Uconnect 5 in-vehicle infotainment system.
We recently launched a new product, TomTom Hazard Warnings, which uses real-time information to notify both drivers and automated vehicles about potentially dangerous upcoming traffic, road, and weather conditions. Using a first-of-its-kind, low latency push service, hazards can be detected and reported to a vehicle in under five seconds.
Our Enterprise business recently announced an extension to our long-standing relationship with Precisely (formerly Pitney Bowes and Syncsort). We will provide Precisely with our map and traffic data, helping Precisely enrich its location intelligence products. Precisely will also provide feedback on changes to map data, which can be processed in real-time, benefiting all TomTom customers.
We also announced a new multiyear agreement within Enterprise to supply Maps APIs to Targa Telematics, enabling them to enhance the vehicle management and smart mobility solutions offered to their customers.
Huawei has also selected TomTom to fuel its new map application, Petal Maps. The app comes with the new HUAWEI Mate 40 Series and is available for download on the HUAWEI AppGallery in over 140 countries and regions.
TomTom's traffic data is such an accurate indicator of people movement, trade, and economic activity that since March, our traffic insights have been used by analysts, corporations, and the media to explain a world in flux due to the pandemic. We recently launched the tenth edition of the TomTom Traffic Index, detailing the traffic situation during 2020 in over 400 cities in 57 countries.
| (€ in millions) | Q4 '20 | Q4 '19 | y.o.y. change |
FY '20 | FY '19 | y.o.y. change |
|---|---|---|---|---|---|---|
| Consumer products | 20.5 | 39.4 | -48 % | 122.0 | 238.8 | -49 % |
| Automotive hardware | 3.4 | 6.5 | -48 % | 14.0 | 36.0 | -61 % |
| Consumer revenue | 23.9 | 45.9 | -48 % | 136.0 | 274.8 | -51 % |
| Segment EBITDA | 19.1 | 72.1 | -74% | |||
| EBITDA margin (%) | 14% | 26% | ||||
| Segment EBIT | 17.9 | 70.3 | -75% | |||
| EBIT margin (%) | 13% | 26% |
Consumer reported revenue of €24 million for the quarter, a decrease of 48% compared with the same quarter last year (Q4 '19: €46 million). Retail store closures and restricted travel from widespread lockdowns across Europe impacted revenue.
Consumer segment EBITDA showed a sharp year on year decrease as a result of lower revenue which was only partly offset by lower operating expenses.
The gross margin for the quarter was 82% compared with 79% in Q4 '19 reflecting higher proportions of data, software and services in our sales mix.
Operating result (EBIT) in the quarter was a loss of €78 million (Q4 '19: loss of €78 million). Total operating expenses in the quarter were €181 million, a decrease of €20 million compared with the same quarter last year (Q4 '19: €202 million). The year on year decrease shows the effect of discretionary cost control measures and Q4 '19 included €7 million one-off restructuring expenses in R&D.
Total financial result, for the quarter was an expense of €6 million (Q4 '19: expense of €2 million), which consisted primarily of foreign exchange losses from the revaluation of monetary balance sheet items.
The income tax gain for the quarter was €18 million compared with a gain of €11 million in Q4 '19. The year on year movement is impacted by a provision release relating to prior years.
Other intangible assets decreased to €117 million from €380 million at the end of 2019 mainly due to amortization of map database. Cash balances, including fixed-term deposits were €372 million at the end of the quarter (Q4 '19: €437 million). The decrease during the year is from a combination of lower operational revenue, working capital movements and the share buyback in Q1 '20.
At the end of the quarter, inventory was €26 million, slightly higher than the end of last year. Trade receivables were €80 million in Q4 '20 compared with €100 million at the end of 2019 as a result of lower revenue this year.
Current liabilities, excluding deferred revenue, were €116 million, compared with €177 million at the end of 2019. The decrease reflects decreases in revenue related liabilities, personnel-related accruals and trade payables. These decreases were in line with lower revenue and (operating) expenses.
Deferred revenue represents upfront payments received from customers for content and service deliveries over multiple years (such as map updates and traffic services), while unbilled revenue is revenue earned but not yet invoiced. Combining reported revenue with the movement of deferred and unbilled revenue provides operational revenue, giving insight into operational performance.
Further detail of deferred revenue and the net movement of deferred and unbilled revenue is provided below.
| (€ in millions) | 31 Dec 2020 |
31 Dec 2019 |
|---|---|---|
| Automotive | 335.6 | 278.3 |
| Enterprise | 28.4 | 23.3 |
| Consumer | 39.7 | 67.7 |
| Deferred revenue | 403.7 | 369.3 |
Total deferred revenue was €404 million at the end of Q4 '20. The increase compared with 31 December 2019 is driven by an increase of deferred revenue in Location Technology offset by releases in Consumer.
| Net movement of deferred and unbilled revenue | 4.8 | 20.1 | 10.5 | 76.5 |
|---|---|---|---|---|
| Consumer | -6.2 | -7.9 | -27.9 | -23.7 |
| Enterprise | -19.0 | -18.9 | -16.8 | -14.7 |
| Automotive | 30.0 | 46.8 | 55.2 | 115.0 |
| (€ in millions) | Q4 '20 | Q4 '19 | FY '20 | FY '19 |
The net movement for the quarter compared with the same quarter last year, is mainly explained by lower operational revenue for Automotive.
In Q4 '20, free cash flow (FCF) was an inflow of €34 million versus an inflow of €48 million in the same quarter last year. The year on year FCF development is mainly the result of lower revenue in Automotive and Consumer.
Our cash flow from investing activities includes an inflow of fixed-term deposits that matured during the quarter. Excluding this, cash flows from investing activities shows a year on year decline due to less capitalized research and development expenditures and lower investments in property, plant and equipment.
The cash flow from financing activities for the quarter was an outflow of €4 million and mainly relates to the payment of lease liabilities. During the quarter 36 thousand options relating to our long-term employee incentive programs were exercised (Q4 '19: 379 thousand).
On 31 December 2020, the Group had no outstanding bank borrowings and reported a net cash position of €372 million (Q4 '19: net cash of €437 million). The year on year decrease in net cash is explained by lower free cash flows and the share buyback in the first quarter.
Free cash flow is reconciled to the cash flow statement as follows:
| (€ in millions) | Q4 '20 | Q4 '19 | FY '20 | FY '19 |
|---|---|---|---|---|
| Cash flow from operating activities | 35.1 | 51.3 | -20.2 | 93.7 |
| Investments in intangible assets | 0.0 | -1.5 | 0.0 | -11.4 |
| Investments in property, plant and equipment | -1.3 | -2.1 | -6.3 | -12.6 |
| Free cash from flow total operations | 33.8 | 47.7 | -26.5 | 69.6 |
| Free cash flow from discontinued operations | 0.0 | 0.0 | 0.0 | -3.9 |
| Free cash flow from continuing operations | 33.8 | 47.7 | -26.5 | 65.8 |
| Q4 '20 | Q4 '19 | FY '20 | FY '19 | |
|---|---|---|---|---|
| (€ in thousands) | Unaudited | Unaudited | Unaudited | Audited |
| Revenue | 125,434 | 156,223 | 528,185 | 700,759 |
| Cost of sales | 22,381 | 32,249 | 104,794 | 185,557 |
| Gross profit | 103,053 | 123,974 | 423,391 | 515,202 |
| Research and development expenses | 79,473 | 91,175 | 310,878 | 322,785 |
| Amortization of technology and databases | 63,165 | 65,120 | 256,512 | 261,194 |
| Marketing expenses | 6,018 | 9,002 | 23,643 | 29,436 |
| Selling, general and administrative expenses | 32,552 | 36,398 | 120,068 | 132,744 |
| Total operating expenses | 181,208 | 201,695 | 711,101 | 746,159 |
| Operating result | -78,155 | -77,721 | -287,710 | -230,957 |
| Financial result and result of associate | -6,213 | -2,351 | -7,307 | -3,432 |
| Result before tax | -84,368 | -80,072 | -295,017 | -234,389 |
| Income tax gain | 18,465 | 11,114 | 37,378 | 41,424 |
| Net result from continuing operations | -65,903 | -68,958 | -257,639 | -192,965 |
| Result after tax from discontinued operations | 0 | 0 | 0 | 18,615 |
| Result on business disposal | 0 | 0 | 0 | 807,237 |
| Net result from discontinued operations | 0 | 0 | 0 | 825,852 |
| Net result1 | -65,903 | -68,958 | -257,639 | 632,887 |
| Earnings per share (in €): | ||||
| Basic | -0.51 | -0.52 | -1.97 | 3.70 |
| Diluted | -0.51 | -0.52 | -1.97 | 3.66 |
| Earnings per share from continuing operations (in €): | ||||
| Basic | -0.51 | -0.52 | -1.97 | -1.13 |
| Diluted | -0.51 | -0.52 | -1.97 | -1.13 |
1Fully attributable to the equity holders of the parent
| (€ in thousands) | 31 December 2020 Unaudited |
31 December 2019 Audited |
|---|---|---|
| Goodwill | 192,294 | 192,294 |
| Other intangible assets | 117,475 | 380,160 |
| Property, plant and equipment | 22,220 | 28,588 |
| Lease assets | 43,609 | 32,667 |
| Other contract-related assets | 19,130 | 2,489 |
| Other investments | 8,733 | 4,573 |
| Deferred tax assets | 4,273 | 5,626 |
| Total non-current assets | 407,734 | 646,397 |
| Inventories | 26,146 | 25,315 |
| Trade receivables | 79,661 | 99,776 |
| Unbilled receivables | 58,313 | 34,374 |
| Other contract-related assets | 6,950 | 21,434 |
| Other receivables and prepayments | 26,765 | 45,351 |
| Fixed-term deposits | 140,930 | 222,579 |
| Cash and cash equivalents | 231,520 | 213,941 |
| Total current assets | 570,285 | 662,770 |
| Total assets | 978,019 | 1,309,167 |
| Total equity | 387,616 | 665,932 |
| Lease liabilities | 28,801 | 22,531 |
| Deferred tax liability | 1,344 | 27,283 |
| Provisions | 41,014 | 46,746 |
| Deferred revenue | 238,793 | 216,378 |
| Total non-current liabilities | 309,952 | 312,938 |
| Trade payables | 21,998 | 47,085 |
| Lease liabilities | 14,872 | 11,737 |
| Provisions | 7,918 | 8,274 |
| Deferred revenue | 164,913 | 152,939 |
| Other contract-related liabilities | 19,084 | 26,745 |
| Income taxes | 1,893 | 14,701 |
| Accruals and other liabilities | 49,773 | 68,816 |
| Total current liabilities | ||
| 280,451 | 330,297 |
| Q4 '20 | Q4 '19 | FY '20 | FY '19 | |
|---|---|---|---|---|
| (€ in thousands) | Unaudited | Unaudited | Unaudited | Audited |
| Operating result from continuing operations | -78,155 | -77,721 | -287,710 | -230,957 |
| Operating result from discontinued operations | 0 | 0 | 0 | 19,016 |
| Operating result | -78,155 | -77,721 | -287,710 | -211,941 |
| Financial losses | -1,724 | -1,098 | -4,887 | -319 |
| Depreciation and amortization | 70,328 | 73,133 | 285,609 | 291,985 |
| Change in provisions | 498 | -10,166 | -4,336 | -28,132 |
| Equity-settled stock compensation expenses | 1,876 | 1,135 | 6,437 | 4,533 |
| Changes in working capital: | ||||
| Change in inventories | 756 | 3,003 | -2,932 | 3,461 |
| Change in receivables and prepayments | 38,061 | 47,696 | 13,741 | -5,353 |
| Change in liabilities (excluding provisions)1 | 4,455 | 17,363 | -17,215 | 52,369 |
| Cash flow from operations | 36,095 | 53,345 | -11,293 | 106,603 |
| Interest received | 136 | 357 | 1,082 | 1,186 |
| Interest paid | -419 | -409 | -1,956 | -2,311 |
| Corporate income taxes paid | -678 | -2,034 | -8,013 | -11,799 |
| Cash flow from operating activities | 35,134 | 51,259 | -20,180 | 93,679 |
| Investments in intangible assets | 0 | -1,462 | 0 | -11,416 |
| Investments in property, plant and equipment | -1,311 | -2,118 | -6,298 | -12,644 |
| Net cash inflow from business disposal | 0 | 0 | 0 | 873,439 |
| Dividends received | 0 | 113 | 162 | 287 |
| (Increase)/decrease in fixed-term deposits | 8,218 | -222,579 | 79,650 | -222,579 |
| Cash flow from investing activities | 6,907 | -226,046 | 73,514 | 627,087 |
| Payment of lease liabilities | -4,227 | -4,458 | -15,595 | -15,615 |
| Repayment of capital | 0 | 0 | 0 | -750,949 |
| Proceeds on issue of ordinary shares | 147 | 696 | 2,484 | 7,448 |
| Purchase of treasury shares | 0 | 0 | -16,569 | 0 |
| Cash flow from financing activities | -4,080 | -3,762 | -29,680 | -759,116 |
| Net increase/(decrease) in cash and cash equivalents | 37,961 | -178,549 | 23,654 | -38,350 |
| Cash and cash equivalents at the beginning of period2 | 196,463 | 392,865 | 213,941 | 252,112 |
| Exchange rate changes on foreign cash balances | -2,904 | -375 | -6,075 | 179 |
| Cash and cash equivalents at the end of the period2 | 231,520 | 213,941 | 231,520 | 213,941 |
| Cash held in short term fixed deposits | 140,930 | 222,579 | 140,930 | 222,579 |
| Net cash at the end of the period | 372,450 | 436,520 | 372,450 | 436,520 |
1Includes movements in the non-current portion of deferred revenue presented under non-current liabilities.
2 Cash and cash equivalents at the beginning of 2019 includes cash classified as held for sale of €4 million.
The condensed consolidated financial information for the three- and twelve- month period ended 31 December 2020 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.
The consolidated and company financial statements of TomTom NV for the year ended 31 December 2020 have been prepared and audited but are not yet published.
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 deferred and unbilled revenue
Gross margin is calculated as gross profit divided by IFRS revenue
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 IFRS revenue
Free cash flow is cash from operating activities minus capital expenditure (investments in intangible assets and property, plant and equipment) of continuing operations
Net cash is cash and cash equivalents, plus cash held in fixed-term deposits minus the nominal value of our outstanding bank borrowings
Automotive backlog is the cumulative expected IFRS revenue from all awarded Automotive deals.
TomTom Investor Relations
Email: [email protected]
+31 20 757 5194
The information for our audio webcast is as follows:
Date and time: 4 February 2021 at 14:00 CET
https://corporate.tomtom.com/investors/financial-publications/quarterly-results
TomTom is listed at NYSE Euronext Amsterdam in the Netherlands
ISIN: NL0013332471 / Symbol: TOM2
TomTom is the leading independent location technology specialist, shaping mobility with highly accurate maps, navigation software, real-time traffic information and services.
To achieve our vision of a safer world, free of congestion and emissions, we create innovative technologies that keep the world moving. By combining our extensive experience with leading business and technology partners, we power connected vehicles, smart mobility and, ultimately, autonomous driving.
Headquartered in Amsterdam with offices in 30 countries, TomTom's technologies are trusted by hundreds of millions of people worldwide.
For further information, please visit www.tomtom.com.
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