Earnings Release • Apr 17, 2019
Earnings Release
Open in ViewerOpens in native device viewer
Full year outlook reiterated; expected Group revenue of €675 million, of which Location Technology revenue of €430 million, and around 10% FCF as a percentage of Group revenue.
"We had a good start of the year, winning the first two available HD map deals, which gives us an early position in this growth market. Additionally, a number of driver navigation deals were announced. Revenue in our core activities was up 29% year on year.
We will continue to invest in further improving the efficiency of our map-making platform and launch innovative products to enable driver navigation, automated driving and Maps APIs."
| (€ in millions, unless stated otherwise) | Q1 '19 | Q1 '18 | y.o.y. change |
|---|---|---|---|
| Location Technology | 102.9 | 79.8 | 29 % |
| Consumer | 66.6 | 69.2 | -4 % |
| Revenue | 169.5 | 148.9 | 14% |
| Gross result | 121.3 | 100.6 | 21% |
| Gross margin | 72% | 68% | |
| EBITDA | 18.8 | 25.7 | -27% |
| EBITDA margin | 11% | 17% | |
| Free cash flow (FCF)* | -20.2 | -7.5 | |
| FCF as a % of revenue | -12% | -5% | |
| Adjusted EPS, € fully diluted | 0.00 | 0.08 |
* Q1 '18 FCF from continuing operations is an estimate
This report includes the following non-GAAP measures: Automotive operational revenue; gross margin; EBIT (margin); EBITDA (margin); adjusted net result; adjusted EPS; free cash flow and net cash, which are further explained on page 9 of this report.
We are reiterating our full year guidance for our continuing operations.
| (€ in millions, unless stated otherwise) | Outlook 2019 | Actuals 2018 |
|---|---|---|
| Revenue | 675 | 687 |
| Of which Location Technology | 430 | 372 |
| Adjusted EPS, € fully diluted | 0.15 | 0.32 |
| FCF as % of revenue | 10% | 13% |
Location Technology revenue continues to grow by around 15% year on year, due to ramp-up of existing Automotive contracts and the extension of a partnership in Enterprise. Consumer is expected to continue its declining trend. We expect a gross margin of at least 70% in the year.
In order to advance our competitive positioning and further improve the efficiency of our mapmaking platform, OPEX and CAPEX will accelerate by around 10% year on year.
We reiterate our FCF guidance as a percentage of revenue of around 10%. The year started with an expected cash outflow and due to seasonality of customer payments, cash inflow materializes in the remainder of the year.
Revenue for the first quarter amounted to €170 million, a 14% increase compared with the same quarter last year (Q1 '18: €149 million). Both Automotive and Enterprise showed strong year on year revenue increase, while Consumer showed a limited year on year decline.
| (€ in millions) | Q1 '19 | Q1 '18 | y.o.y. change |
|---|---|---|---|
| Automotive | 65.1 | 49.7 | 31 % |
| Enterprise | 37.8 | 30.1 | 26 % |
| Location Technology revenue | 102.9 | 79.8 | 29% |
Location Technology revenue in the quarter was €103 million (Q1 '18: €80 million). Automotive generated revenue of €65 million in the quarter, representing a 31% increase year on year. The strong growth was the result of contracts that started at the end of 2018 and higher volumes from existing customers. Automotive operational revenue increased by 12% year on year (Q1 '19 €87 million vs Q1 '18 €78 million). Automotive operational revenue is impacted by the timing of invoicing.
Enterprise revenue in Q1 '19 was €38 million, 26% higher than the same quarter last year (Q1 '18: €30 million), mainly due to the expansion of our partnership with Microsoft.
Automotive business announced a series of new deals with OEMs during the quarter. At the Geneva Motor show, we disclosed that Nissan chose TomTom to provide Maps, Traffic, Online Search and EV Service for its Nissan LEAF. We were also awarded a multi-year global deal to provide traffic service to Volkswagen Group car brands, including Volkswagen, Audi, Porsche, Skoda, Lamborghini and Bentley. In addition, we will supply connected navigation solutions to Fiat Chrysler Automobiles' Jeep Renegade and Compass Plug-in Hybrid Electric Vehicles.
We made headways and secured market leadership in HD mapping with the announcement that we have closed two deals with top 10 car makers for HD maps. Furthermore, in collaboration with Elektrobit, we released an industry-first HD map horizon using our AutoStream technology, for automated driving. An HD map horizon helps vehicles to build a highly accurate virtual picture of the road ahead, enhancing driver safety and comfort.
After quarter-end, we announced that our full stack of navigation components was chosen by MG Motor to power its first ever car in India, the connected car MG Hector. The launch also marks our ground-breaking new service, TomTom IQ Maps.
In Enterprise, we announced a collaboration with Moovit and Microsoft for the first comprehensive multi-modal trip planner, a solution to reduce congestion in cities around the world that will enable
developers to build richer apps for consumers to get around their cities. The solution identifies all of the driving, parking, and public transit options, and surfaces them in a single package for map users.
Enterprise also launched Geo-fencing APIs during Developer Week 2019 in Silicon Valley, as well as continuing to make strides in the process of building our developer community by launching a dedicated blog and a Twitter handle, both valuable developer engagement tools.
| (€ in millions) | Q1 '19 | Q1 '18 | y.o.y. change |
|---|---|---|---|
| Consumer products | 53.0 | 57.0 | -7 % |
| Automotive hardware | 13.6 | 12.2 | 12 % |
| Total Consumer revenue | 66.6 | 69.2 | -4% |
Total Consumer revenue for the quarter was €67 million, 4% lower compared with the same quarter last year (Q1 '18: €69 million).
The gross margin for the quarter was 72%, compared with 68% in Q1 '18, reflecting increasing proportion of high margin recurring data, software and services revenue in our product mix.
Operating result (EBIT) in the quarter was a loss of €13 million (Q1 '18: loss of €5 million).
Total operating expenses from continuing operations in the quarter was €134 million, an increase of €29 million compared with the same quarter last year (Q1 '18: €105 million), mainly as the result of higher R&D employee expenses in combination with lower capitalization as our map making platform reached its intended use.
Total financial result from continuing operations for the quarter was a loss of €2.3 million (Q1 '18: gain of €0.6 million), which consisted primarily of foreign exchange loss from the revaluation of monetary balance sheet items.
The net income tax gain for the quarter was €0.1 million compared with an €1.9 million expense in Q1 '18.
| (€ in millions, unless stated otherwise) | Q1 '19 | Q1 '18 |
|---|---|---|
| Net result from continuing operations | -15.3 | -6.0 |
| Movement of deferred and unbilled revenue | 6.6 | 21.6 |
| Acquisition related amortization | 11.6 | 11.6 |
| Tax impact | -3.8 | -7.7 |
| Adjusted net result | -0.9 | 19.5 |
| Adjusted EPS, € fully diluted | 0.00 | 0.08 |
The net result from continuing operations for the quarter was a loss of €15 million compared with a loss of €6 million in Q1 '18. Adjusted net result for the quarter was a loss of €0.9 million, which translates to a fully diluted adjusted EPS of €0.00 (Q1 '18: €0.08).
| (€ in millions) | Q1 '19 | Q1 '18 |
|---|---|---|
| Automotive | 21.6 | 28.0 |
| Enterprise | -7.9 | -0.7 |
| Consumer | -7.1 | -5.7 |
| Total | 6.6 | 21.6 |
The net movement in Enterprise for the quarter is explained by the timing of invoicing of certain customers.
Trade receivables were €100 million in Q1 '19 compared with €93 million at the end of 2018. The inventory level at the end of the quarter was €26 million, which is in line with the end of last year.
Current liabilities excluding both deferred revenue and assets held for sale were €182 million compared with €216 million at the end of 2018. The decrease is mainly due to a decrease in 'accruals and other liabilities' reflecting personnel bonus payments in Q1 '19.
| (€ in millions) | 31 Mar 2019 | 31 Dec 2018 |
|---|---|---|
| Automotive | 195.0 | 172.1 |
| Enterprise | 10.7 | 17.4 |
| Consumer | 85.5 | 91.4 |
| Total | 291.1 | 280.9 |
Total deferred revenue was €291 million at the end of Q1 '19, compared with €281 million at the end of 2018. The sequential increase is driven by increase of Automotive deferred revenue, offset by releases of deferred revenue in Consumer and Enterprise.
In Q1'19, the free cash flow (FCF) from continuing operations was an outflow of €20 million versus an outflow of €7 million in the same quarter last year. The year on year decrease was mainly driven by higher personnel costs, including higher bonus payments, the settlement of accounts payable and the timing of invoicing resulting in a higher unbilled receivables balance.
Total cash flow from operating activities, including discontinued operations, totaled €1 million for the quarter, compared to €32 million in the same quarter last year.
The cash flow used in investing activities for continuing operations in the quarter was €9 million, a €12 million decrease compared with the same quarter last year. The decrease reflects lower capitalization as our map-making platform reached its intended use and most of the investments benefit our existing product and service offerings.
| (€ in millions) | Q1 '19 | Q1 '18 |
|---|---|---|
| Map content and map-making platform | 6.2 | 15.9 |
| Other | 2.7 | 4.8 |
| Total continuing operations | 8.9 | 20.7 |
| Telematics | 1.0 | 1.7 |
| Total | 9.9 | 22.4 |
The cash flow from financing activities for the quarter was an outflow of €2.9 million (Q1 '18: outflow of €2.1 million). In the quarter, 124 thousand options were exercised (Q1 '18: 185 thousand options), related to our long-term employee incentive programs, resulting in a €0.5 million cash inflow (Q1 '18: €0.7 million).
On 31 March 2019, the group had no outstanding bank borrowings and reported a net cash position of €241 million (Q1 '18: net cash of €129 million). Included in the net cash position is an amount of €34 million which is presented as held for sale of which €30 million is generated by Telematics during the locked box period which commenced on 1 July 2018.
The sale of Telematics to Bridgestone was completed on the 1st of April.
| (€ in millions) | Q1 '19 | Q1 '18 | y.o.y. change |
|---|---|---|---|
| Telematics revenue | 44.6 | 42.8 | 4 % |
| Gross profit | 35.6 | 32.9 | 8 % |
| Operating expenses | 16.6 | 21.2 | -22 % |
| Operating profit | 19.0 | 11.7 | 62 % |
| EBITDA | 19.0 | 18.6 | 2 % |
| Net result discontinued operations | 18.6 | 12.4 | 50% |
| Q1 '19 | Q1 '18 | |
|---|---|---|
| (€ in thousands) | Unaudited | Unaudited |
| Revenue | 169,527 | 148,943 |
| Cost of sales | 48,273 | 48,320 |
| Gross profit | 121,254 | 100,623 |
| Research and development expenses | 72,498 | 45,853 |
| Amortization of technology and databases | 24,474 | 23,769 |
| Marketing expenses | 6,945 | 5,934 |
| Selling, general and administrative expenses | 30,529 | 29,848 |
| Total operating expenses | 134,446 | 105,404 |
| Operating result | -13,192 | -4,781 |
| Financial (expense)/income | -2,253 | 620 |
| Result before tax | -15,445 | -4,161 |
| Income tax gain/(expense) | 120 | -1,868 |
| Net result from continuing operations | -15,325 | -6,029 |
| Net result from discontinued operations | 18,615 | 12,416 |
| Net result | 3,290 | 6,387 |
| Attributable to: | ||
| Equity holders of the parent | 3,290 | 6,399 |
| Non-controlling interests | 0 | -12 |
| Net result | 3,290 | 6,387 |
| Earnings per share (in €): | ||
| Basic | 0.01 | 0.03 |
| Diluted | 0.01 | 0.03 |
| Earnings per share from continuing operations (in €): | ||
| Basic | -0.07 | -0.03 |
| Diluted | -0.07 | -0.03 |
| 31 March 2019 | 31 December 2018 | |
|---|---|---|
| (€ in thousands) | Unaudited | Audited |
| Goodwill | 192,294 | 192,294 |
| Other intangible assets | 613,978 | 634,728 |
| Property, plant and equipment | 29,263 | 26,380 |
| Lease assets | 36,401 | 35,393 |
| Other contract related assets | 12,162 | 10,426 |
| Investments in associates | 4,167 | 3,899 |
| Deferred tax assets | 5,450 | 5,296 |
| Total non-current assets | 893,715 | 908,416 |
| Inventories | 25,571 | 26,400 |
| Trade receivables | 99,631 | 92,530 |
| Unbilled receivables | 26,169 | 22,512 |
| Other contract related assets | 15,553 | 14,071 |
| Other receivables and prepayments | 45,522 | 54,998 |
| Cash and cash equivalents | 206,593 | 247,675 |
| 419,039 | 458,186 | |
| Assets held for sale | 155,325 | 128,323 |
| Total current assets | 574,364 | 586,509 |
| Total assets | 1,468,079 | 1,494,925 |
| Equity attributable to equity holders of the parent | 780,425 | 774,109 |
| Lease liabilities | 26,640 | 25,558 |
| Deferred tax liability | 78,827 | 80,436 |
| Provisions | 60,337 | 62,085 |
| Deferred revenue | 159,576 | 155,875 |
| Total non-current liabilities | 325,380 | 323,954 |
| Trade payables | 46,383 | 51,076 |
| Lease liabilities | 12,298 | 13,172 |
| Provisions | 26,977 | 28,990 |
| Deferred revenue | 131,569 | 125,035 |
| Other contract related liabilities | 36,376 | 38,665 |
| Income taxes | 1,615 | 946 |
| Accruals and other liabilities | 58,055 | 83,571 |
| 313,273 | 341,455 | |
| Liabilities associated with assets held for sale | 49,001 | 55,407 |
| Total current liabilities | 362,274 | 396,862 |
| Total equity and liabilities | 1,468,079 | 1,494,925 |
| Q1 '19 | Q1 '18 | |
|---|---|---|
| (€ in thousands) | Unaudited | Unaudited |
| Operating result from continuing operations | -13,192 | -4,781 |
| Operating result from discontinued operations | 19,016 | 11,667 |
| Operating result | 5,824 | 6,886 |
| Financial losses | -437 | -253 |
| Depreciation, amortization and impairment | 31,971 | 37,353 |
| Change in provisions | -1,107 | -4,558 |
| Equity-settled stock compensation expenses | 911 | 1,586 |
| Changes in working capital: | ||
| Change in inventories | 433 | 720 |
| Change in receivables and prepayments | -4,537 | 3,291 |
| Change in liabilities (excluding provisions) | -30,082 | -9,038 |
| Cash generated from operations | 2,976 | 35,987 |
| Interest received | 277 | 110 |
| Interest paid | -437 | -444 |
| Corporate income taxes paid | -1,887 | -3,295 |
| Cash generated from operating activities | 929 | 32,358 |
| Investments in intangible assets | -4,851 | -18,815 |
| Investments in property, plant and equipment | -5,062 | -3,539 |
| Dividends received | 0 | 75 |
| Cash used by investing activities | -9,913 | -22,279 |
| Change in lease liabilities | -3,434 | -2,786 |
| Proceeds on issue of ordinary shares | 532 | 699 |
| Cash used by financing activities | -2,902 | -2,087 |
| Net (decrease)/increase in cash and cash equivalents | -11,886 | 7,992 |
| Cash and cash equivalents at the beginning of period | 252,112 | 120,850 |
| Exchange rate changes on cash balances held in foreign currencies | 325 | -305 |
| Total cash and cash equivalents at the end of the period | 240,551 | 128,537 |
| Of which: | ||
| Cash and cash equivalents classified as held for sale | 33,958 | 0 |
| Cash and cash equivalents at the end of the period | 206,593 | 128,537 |
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 2019 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 2018.
Unless otherwise indicated, the quarterly condensed consolidated information in this press release is unaudited 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.
Automotive operational revenue is IFRS Automotive revenue adjusted for the movement of deferred and unbilled revenue
Gross margin is calculated as gross profit divided by revenue
EBIT is equal to our operating result
EBIT margin is calculated as operating result divided by 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 revenue
Adjusted net result is calculated as net result of continuing operations attributed to equity holders adjusted for movement of deferred/unbilled revenue, impairments and acquisition related amortization on a post-tax basis
Adjusted EPS is calculated as adjusted net result divided by the weighted average number of diluted shares over the period
Net cash is defined as our cash and cash equivalents including cash classified as held-for-sale (IFRS 5) minus the nominal value of our outstanding bank borrowings
Free cash flow is cash flow before financing from continuing operations
TomTom Investor Relations
Email: [email protected]
+31 20 757 5194
The information for our audio webcast is as follows:
Date and time: 17 April 2019 at 14:00 CET
corporate.tomtom.com/presentations.cfm
TomTom is listed at NYSE Euronext Amsterdam in the Netherlands
ISIN: NL0000387058 / 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.
This document contains certain forward-looking statements with respect to the financial position and results of TomTom's activities. We have based these forward-looking statements on our current expectations and projections about future events, including numerous assumptions regarding our present and future business strategies, operations and the environment in which we will operate in the future. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, and you should not place undue reliance on them. Many of these risks and uncertainties relate to factors that are beyond TomTom's ability to control or estimate precisely, such as levels of customer spending in major economies, changes in consumer preferences, the performance of the financial markets, the levels of marketing and promotional expenditures by TomTom and its competitors, costs of raw materials, employee costs, exchange-rate and interest-rate fluctuations, changes in tax rates, changes in law, acquisitions or disposals, the rate of technological changes, political developments in countries where the company operates and the risk of a downturn in the market. Statements regarding market share, including the company's competitive position, contained in this document are based on outside sources such as specialised research institutes, industry and dealer panels in combination with management estimates.
The forward-looking statements contained herein speak only as of the date they are made. We do not assume any obligation to update any public information or forward-looking statement in this document to reflect events or circumstances after the date of this document, except as may be required by applicable laws.
This document contains inside information as meant in clause 7 of the Market Abuse Regulation.
Have a question? We'll get back to you promptly.