Market Overview

TomTom Reports Third Quarter 2012 Results


Financial headlines

  • Group revenue of €274 million, down 19% year on year
  • Gross margin of 55%, up 4 percentage points year on year
  • Total operating expenses of €118 million, down 10% year on year
  • EBIT margin 12%, flat year on year
  • Adjusted EPS1 of €0.14 compared to €0.18 in the prior year
  • Net cash flow from operating activities of €50 million; €70 million in the prior year
  • Net debt reduced to €153 million compared to €194 million at the start of the year

Operational headlines

  • Global content, software and services agreement with PSA Peugeot Citroën
  • Mazda and Fiat relationships expanded with Mazda6 and Abarth models
  • Navigation app for Android smartphones launched
  • Growth of WEBFLEET subscriber base to 223,000, up 39% year on year

Outlook full year 2012

  • Revised revenue guidance of around €1.05 billion reflecting the impact of the macro-economic conditions in Europe on the automotive industry; guidance for adjusted EPS of around €0.35 maintained

Key figures

(in € millions)   Q3 '12  

Q3 ‘112

  y.o.y. change   Q2 ‘12   q.o.q. change
Revenue   274   336   -19%   262   5%
Gross result 150 173 -13% 136 10%
Gross margin   55%   51%       52%    
EBITDA 58 68 -15% 41 42%
EBITDA margin   21%   20%       16%    
EBIT 32 41 -22% 14 128%
EBIT margin   12%   12%       5%    
Net result attributable to the group   22   29   -23%   9   151%
EPS, € diluted 0.10 0.13 -23% 0.04 151%
Adjusted EPS, € diluted   0.14   0.18   -22%   0.09   65%

Change percentages are based on non-rounded figures

TomTom's Chief Executive Officer, Harold Goddijn

“The PND market developments have become more predictable. The year over year decline of our core markets combined has been in line with previously communicated expectations and sales prices are stabilising. The European economic situation is having a significant impact on the automotive industry. We expect our Automotive revenue to remain under pressure in the coming quarters. As a result we lower our group revenue guidance for the year from around €1.10 billion to around €1.05 billion. We continue to deliver a strong gross margin and the reduction of our cost base is ahead of schedule. We therefore maintain our adjusted EPS guidance for the year of around €0.35.”

1 Earnings per share adjusted for impairment, acquisition-related amortisation and restructuring charges on a post-tax basis.

2 Operating expenses in Q3 2011 include restructuring charges of €0.4 million.

Business review

Consumer introduced a navigation app for Android smartphones to add to our well established smartphone app offering for the iPhone. In the quarter we also launched two new TomTom Hands Free Car Kits for smartphones, which support the iPhone and micro USB compatible smartphones, such as Android phones. We introduced the PRO 5150 TRUCK LIVE for truck drivers in Europe which offers truck-friendly routes, and takes into account dimensional, weight and hazardous materials restrictions. BMW will fit our TomTom GO LIVE PND onto the dashboards of selected models with a specially-designed mount.

Automotive extended its partnerships with Fiat and Mazda with the addition of the Abarth models 500 and Punto, and the new Mazda6. Earlier we announced that PSA Peugeot Citroën had chosen TomTom as the global provider of location and navigation content and services for its infotainment system. Starting early 2015, Peugeot and Citroën models will be equipped with TomTom's maps, HD Traffic and navigation software. In the quarter TomTom introduced a new delivery format for traffic information (TPEG) which makes it easier for third parties to integrate HD Traffic in their products.

Licensing signed a number of traffic information agreements in the quarter. Traffic management expert DUEL will use our maps, historical and real-time traffic information for forecasting traffic in the Lazio region of Italy. VMZ Berlin, the operator of Berlin's Traffic Information Centre, will use our real-time traffic information to react faster to traffic congestion and improve traffic information for Berlin and for selected parts of the State of Brandenburg.

Business Solutions introduced a comprehensive expansion of WEBFLEET's reporting capabilities. A set of more than 40 different reports provide businesses with increased insights into fleet operations and help them reduce costs, increase productivity and comply with legal obligations. WEBFLEET's installed base grew by 39% year on year to 223 thousand.

Financial review

Revenue split

(€ millions)   Q3 '12   Q3 '11  


  Q2 '12  


Group   274   336   -19%   262   5%
Consumer 172 225 -24% 155 11%
Automotive 49 59 -16% 60 -17%
Licensing 33 36 -7% 29 13%
Business Solutions   19   17   14%   18   8%
Hardware 169 229 -26% 163 4%
Content & Services   105   107   -2%   99   6%

Change percentages are based on non-rounded figures


Group revenue for the quarter was €274 million, a 19% decrease compared to the same quarter last year (Q3 2011: €336 million) and a 4.5% increase sequentially (Q2 2012: €262 million). Year on year, revenue for Consumer, Automotive and Licensing declined, while Business Solutions continued to grow strongly.

Consumer revenue over the past quarter amounted to €172 million, which is a €53 million decrease year on year (Q3 2011: €225 million) and an increase of €17 million sequentially (Q2 2012: €155 million). The year on year decrease was driven by lower PND sales reflecting the decline of the size of the PND markets in our core geographies.

The market size in Europe for PNDs was 2.6 million units compared to 3.0 million units in the same quarter of last year. The North American market size was 1.5 million units compared to 1.9 million units last year; combined, our core PND markets declined by 17%. Our market share in Europe increased sequentially by 1 percentage point to 46%. In North America our market share increased sequentially from 19% to 22%.

Automotive revenue declined by 16% year on year to €49 million (Q3 2011: €59 million). The decline was mainly driven by lower hardware sales as the automotive industry was significantly impacted by the European economic situation. Sequentially revenue declined by 17% (Q2 2012: €60 million).

Licensing revenue decreased by €2.7 million or 7.4% year on year to €33 million and increased by €3.9 million sequentially (Q3 2011: €36 million, Q2 2012: €29 million). The year on year decline was mainly due to decline in the PND and internet segments, which was not fully offset by other segments.

Business Solutions revenue for the quarter increased by €2.4 million or 14% year on year to €19 million (Q3 2011: €17 million) mainly driven by a net increase of 62 thousand subscribers to the WEBFLEET subscriber base. Sequentially revenue increased by €1.5 million or 8.3% (Q2 2012: €18 million).

Hardware revenue for the quarter was €169 million across the group, a decrease of 26% year on year (Q3 2011: €229 million) and an increase of 3.7% sequentially (Q2 2012: €163 million). Hardware revenue accounted for 62% of total revenue.

Content & Services revenue for the quarter was €105 million, a slight decline of 2.2% year on year (Q3 2011: €107 million). Sequentially Content & Services revenue increased by 6.0%. Content & Services revenue accounted for 38% of total revenue (Q3 2011: 32%; Q2 2012: 38%).

Gross margin

The gross margin for the quarter was 55%. The gross margin increased by 4 percentage points compared to the same quarter last year due to a change in revenue mix towards higher margin Content & Services and because of some one-off releases relating to the reduction of provisions which positively impacted the gross margin. Excluding the one-off releases (-3 percentage points) and based on constant currencies (+2 percentage points) the gross margin would have been 54%. Sequentially the gross margin increased by 3 percentage points.

Operating expenses

Total operating expenses for the quarter amounted to €118 million, a decrease of €14 million or 10% year on year. Sequentially operating expenses decreased by €3.6 million or 3%. We are ahead of schedule with our cost savings programme and now expect to report total operating expenses for the full year of around €485 million compared to the earlier guidance of €500 million.

The year on year decrease in operating expenses reflects the implementation of the cost savings programmes across all functions and the adjusted level of marketing spend. R&D expenses decreased by 8% year on year to €40 million, marketing expenses decreased by 13% year on year to €15 million and SG&A expenses amounted to €42 million, a 15% year on year decrease.

The sequential decrease in operating expenses was mainly driven by a decline of €2.4 million in R&D expenses to €40 million (Q2 2012: €43 million).

As a percentage of revenue, operating expenses for the quarter were 43% compared to 39% in Q3 2011 and 47% in Q2 2012.

Financial results

The total interest charge for the quarter was €3.2 million (Q3 2011: €5.9 million, Q2 2012: €3.0 million). The interest expense on the loan facilities for the quarter amounted to €1.5 million. The amortisation of the transaction costs related to the facility amounted to €1.1 million. Other net interest expense for the quarter amounted to €0.6 million.

The other financial result for the quarter of €0.2 million comprised primarily of foreign exchange revaluations and hedging results.


The effective tax rate in the quarter was 22.7%. This compares to 22.4% in the same quarter last year. The effective tax rate of the previous quarter was low at 14.8%, fully utilising the impact of tax benefits in the first half of the year which we could not reflect in the first quarter.

Debt financing

On 30 September 2012, the carrying value of our borrowings had decreased to €289 million, compared to €338 million at the end of the previous quarter. This is the result of an early repayment of €50 million during the quarter (€98 million has been repaid year to date). Excluding transaction costs, which are netted against the borrowings, our outstanding borrowings amounted to €290 million (Q2 2012: €340 million).

Net debt on 30 September 2012 was €153 million compared to €191 million at the end of the previous quarter. Net debt is the sum of the borrowings (€290 million), minus cash and cash equivalents at the end of the period (€137 million).

Balance sheet

At the end of Q3 2012 our accounts receivable plus other receivables amounted to €218 million (Q3 2011: €267 million; Q2 2012: €207 million). The year on year decrease of €49 million in the receivables balance is mainly reflecting the year on year decline in revenue. The inventory level was €59 million, a decrease of €14 million year on year and a decrease of €5.0 million compared to the previous quarter. Cash and cash equivalents at the end of the quarter were €137 million.

Current liabilities were €717 million compared to €543 million at the end of the same quarter last year and €741 million in the previous quarter. The year on year increase is mainly caused by the presentation of the remaining outstanding bank loan as short term. A forward start facility, which will replace the existing borrowings as of 31 December 2012, is in place. The sequential decrease in current liabilities was mainly caused by the early debt repayment of €50 million.

Cash flow

Cash flow from operations for the quarter amounted to €53 million compared to €75 million in Q3 2011. The decrease in cash flow was mainly driven by the lower operating result and movements in working capital. Year to date we have consumed €39 million in working capital compared to €102 million in the same period last year.

The cash flow used in investing activities during the quarter decreased to €13 million from €20 million in the same quarter last year and increased sequentially by €2.2 million compared to €10 million in Q2 2012.

Consolidated income statements

(in € thousands)   Q3'12   Q3'11   YTD '12   YTD '11
Revenue   273,561   336,445   768,124   915,815
Cost of sales   123,286   163,625   367,721   442,119
Gross result   150,275   172,820   400,403   473,696
Research and development expenses 40,154 43,573 121,058 126,077
Amortisation of technology & databases 19,900 19,787 62,234 57,612
Impairment charge 0 0 0 511,936
Marketing expenses 14,933 17,159 43,066 57,555
Selling, general and administrative expenses 41,723 49,241 123,017 148,406
Stock compensation expense   1,742   2,324   5,417   7,196
Total operating expenses   118,452   132,084   354,792   908,782
Operating result   31,823   40,736   45,611   -435,086
Interest result -3,187 -5,943 -9,711 -18,036
Other finance result -169 1,529 1,932 5,379
Result associates   356   -65   590   -337
Result before tax   28,823   36,257   38,422   -448,080
Income tax   -6,554   -8,130   -8,743   -2,664
Net result   22,269   28,127   29,679   -450,744
Non-controlling interests   -14   -811   67   -1,013
Net result attributed to the group   22,283   28,938   29,612   -449,731
Basic number of shares (in thousands) 221,895 221,895 221,895 221,869
Diluted number of shares (in thousands)   222,023   221,940   221,983   221,886
EPS, € basic 0.10 0.13 0.13 -2.03
EPS, € diluted   0.10   0.13   0.13   -2.03

Consolidated balance sheet

(in € thousands)   30 September 2012   31 December 2011
Goodwill   381,569   381,569
Other intangible assets 835,757 871,528
Property, plant and equipment 27,122 32,555
Deferred tax assets 9,709 10,493
Investments in associates   3,695   4,450
Total non-current assets   1,257,852   1,300,595
Inventories 59,108 65,502
Trade receivables 171,101 184,939
Other receivables and prepayments 47,073 51,242
Other financial assets 489 2,784
Cash and cash equivalents   136,528   193,579
Total current assets   414,299   498,046
Total assets   1,672,151   1,798,641
Share capital 44,379 44,379
Share Premium 975,260 975,260
Other reserves 121,999 131,213
Accumulated deficit   -402,187   -444,852
Equity attributable to equity of the parent   739,451   706,000
Non-controlling interests   2,343   2,451
Total equity   741,794   708,451
Provisions 40,221 50,114
Deferred tax liability   173,015   182,273
Total non-current liabilities   213,236   232,387
Trade payables 95,178 116,616
Borrowings¹ 289,214 383,810
Tax and social security 29,285 20,942
Provisions 47,239 51,213
Other liabilities and accruals   256,205   285,222
Total current liabilities   717,121   857,803
Total equity and liabilities   1,672,151   1,798,641

¹ The borrowings are fully due in 2012; a forward start facility, which will replace the existing borrowings as from 31 December 2012, is in place.

Consolidated statements of cash flows

(in € thousands)     Q3 '12   Q3 '11   YTD'12   YTD'11
Operating result     31,823   40,736   45,611   -435,086
Financial (losses)/gains -134 -2,335 3,442 -3,231
Depreciation and amortisation 26,577 27,684 82,142 82,099
Impairment charge 0 0 0 511,936
Change in provisions -6,615 -896 -8,500 -3,579
Equity-settled stock compensation expenses 1,281 2,124 4,490 6,930
Changes in working capital:
Change in inventories 3,116 26,820 958 18,232
Change in receivables and prepayments -11,074 -17,441 14,602 82,200
Change in current liabilities (excl. provisions)     8,009   -1,621   -54,458   -202,026
Cash generated from operations     52,983   75,071   88,287   57,475
Interest received 433 450 983 1,336
Interest paid -1,715 -4,516 -6,442 -14,462
Corporate income taxes paid     -1,466   -1,265   -6,781   -4,337
Net cash flow from operating activities     50,235   69,740   76,047   40,012
Investments in intangible assets -10,843 -15,490 -31,915 -48,407
Investments in property, plant and equipment -1,779 -4,334 -5,792 -13,130
Dividend received     0   0   1,447   0
Total cash flow used in investing activities     -12,622   -19,824   -36,260   -61,537
Repayments of borrowings -50,000 -100,000 -98,000 -100,000
Acquisition of non-controlling interests¹ 0 -239 0 -239
Proceeds on issue of ordinary shares     0   0   0   724
Total cash flow from financing activities     -50,000   -100,239   -98,000   -99,515
Net increase in cash and cash equivalents -12,387 -50,323 -58,213 -121,040
Cash and cash equivalents at beginning of period 148,910 232,235 193,579 305,600
Exchange rate effect on cash balances held in foreign currencies     5   401   1,162   -2,247
Cash and cash equivalents at end of period     136,528   182,313   136,528   182,313

¹ In press release Q3'11 classified as investments in financial fixed assets

Accounting policies

Basis of accounting

The condensed consolidated financial information for the three-month and nine-month periods ended 30 September 2012 with related comparative information have been prepared using accounting policies which are based on International Financial Reporting Standards (IFRS). Accounting policies and methods of computation followed in the condensed consolidated financial information, for the period ended 30 September 2012, are the same as those followed in the Financial Statements for the year ended 31 December 2011. Further disclosures as required under IFRS for a complete set of consolidated financial statements are not included in the condensed consolidated financial information. The quarterly condensed consolidated information in this press release is unaudited.

Audio webcast third quarter 2012 results
The information for our third quarter results audio webcast is as follows:
Date and time: 30 October 2012 at 14:00 CET

TomTom is listed at NYSE Euronext Amsterdam in the Netherlands
ISIN: NL0000387058 / Symbol: TOM2

About TomTom

Founded in 1991, TomTom is a leading provider of navigation and location-based products and services.

TomTom maps, traffic information and navigation technology power automotive in-dash systems, mobile devices, web based applications and government and business solutions.

TomTom also designs and manufactures its own location-based products including portable navigation devices and fleet management solutions, as well as GPS-enabled sports watches.

Headquartered in Amsterdam, TomTom has 3,500 employees worldwide and sells its products in over 40 countries.

For further information, please visit

This document contains certain forward-looking statements relating to the business, financial performance and results of the Company and the industry in which it operates. These statements are based on the Company's current plans, estimates and projections, as well as its expectations of external conditions and events. In particular the words “expect”, “anticipate”, “estimate”, “may”, “should”, “believe” and similar expressions are intended to identify forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those suggested in the forward-looking statements. These include, but are not limited to: the level of consumer acceptance of existing and new and upgraded products and services; the growth of overall market demand for the Company's products or for personal navigation products generally; the Company's ability to sustain and effectively manage its recent rapid growth and its relations with third party suppliers, and its ability to accurately forecast the volume and timing of sales. Additional presently unknown factors could also cause future results to differ materially from those in the forward-looking statements.

TomTom Investor Relations
+31 20 757 5194

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