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TomTom Reports First Quarter 2018 Results

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TomTom Reports First Quarter 2018 Results - on DefenceBriefing.net

TomTom (AEX: TOM2):



Financial summary Q1 '18

  • Revenue of €192 million (Q1 '17: €213 million)
  • Gross margin of 70% (Q1 '17: 63%)
  • EBITDA of €44 million (Q1 '17: €34 million)
  • Adjusted EPS1 of €0.10 (Q1 '17: -€0.03)
  • Net cash position of €129 million (Q1 '17: €79 million)
  • Deferred revenue position of €275 million (Q1 '17: €232 million)

Operational summary Q1 '18

  • Automotive operational revenue increased by 42% in the quarter
  • Additional TomTom Connected Car Services provided to Hyundai and Kia
  • TomTom On-Street Parking reaches coverage in 100 European cities
  • Telematics installed base increased by 14% year on year, reaching more than 826,000 subscriptions

Outlook 2018

Full year outlook re-iterated; expected revenue of around €800 million and adjusted EPS1 of around €0.25.

Key figures

(€ in millions, unless stated otherwise)   Q1 '18   Q1 '17  

y.o.y.<br/>change

             
Automotive & Enterprise   79.8   77.5   3%
Telematics 42.8 39.9 7%
Consumer   69.2   95.6   -28%
REVENUE   191.8   213.0   -10%
             
GROSS RESULT 133.5 133.5
Gross margin   70%   63%    
             
EBITDA 44.2 34.0 30%
EBITDA margin   23%   16%    
             
OPERATING RESULT (EBIT) 6.9 -1.5
EBIT margin   4%   -1%    
             
NET RESULT 6.4 -2.2
ADJUSTED NET RESULT   22.6   -6.8    
             
EPS, € fully diluted 0.03 -0.01
Adjusted EPS1, € fully diluted   0.10   -0.03    

Change percentages and totals calculated before rounding.

 

This report includes the following non-GAAP measures: Automotive operational revenue, gross margin, EBIT (margin), EBITDA (margin), adjusted net result, adjusted EPS and net cash, which are further explained on page 10 of this report.

2017 figures are restated under the new IFRS 15 and IFRS 16 accounting standards.

_______________<br/>1 Earnings per fully diluted share count adjusted for movement of deferred revenue, unbilled revenue, deferred cost of sales, impairments and material restructuring and disposal costs on a post-tax basis.

TomTom's Chief Executive Officer, Harold Goddijn

“TomTom started the year with a solid set of results. Nearly 70% of our revenues is now derived from data, software & services, boosting our gross margin. Automotive operational revenue in the quarter amounted to 78 million, an increase of 42% compared with the same quarter last year.”

Outlook 2018

We are re-iterating our guidance for the year.

Revenue   ~ €800 million
Gross margin   close to 70%
Adjusted EPS   ~ €0.25
OPEX & CAPEX (excl. acquisitions)   ~ €700 million
 

For the period between 2016 and 2020, we expect the combined reported revenue of the Automotive, Enterprise and Telematics businesses to grow at a CAGR of around 12.5%, taking into account new IFRS accounting standards and current exchange rates.2

Financial and business review

Revenue for the first quarter amounted to €192 million, 10% lower compared with the same quarter last year (Q1 '17: €213 million). Automotive, Enterprise and Telematics jointly grew by 4% year on year, which was offset by lower Consumer revenue. Gross margin for the quarter equalled 70% (Q1 '17: 63%). The net result adjusted for movement of deferred revenue, unbilled revenue and deferred cost of sales on a post-tax basis was a gain of €22.6 million, which translates to an adjusted EPS of €0.10 (Q1 '17: -€0.03).

Automotive & Enterprise

(€ in millions, unless stated otherwise)   Q1 '18   Q1 '17  

y.o.y.<br/>change

             
Automotive   49.7   44.7   11%
Enterprise   30.1   32.8   -8%
Total Automotive & Enterprise revenue   79.8   77.5   3%

Change percentages and totals calculated before rounding.

 

Automotive & Enterprise combined revenue in the quarter was €80 million (Q1 '17: €78 million). Automotive generated revenue of €50 million in the quarter, representing an 11% increase year on year. This increase mainly came from the ramp-up of existing contracts.

Enterprise revenue in Q1 '18 was €30 million compared with €33 million in the same quarter last year. This decline was mainly caused by a weaker US dollar.

In the quarter, Automotive business announced that both Hyundai and Kia expanded their connected car services to include TomTom On-Street and Off-Street Parking, TomTom EV Service, and TomTom Fuel Price Service. It will be available on all new Hyundai cars produced for Europe, starting from November 2018. For Kia drivers, it will be available starting with the next generation of Kia Ceed, and gradually applied to the whole model range by 2019.

At the Mobile World Congress in Barcelona, we announced a collaboration with Elektrobit, focused on demonstrating electronic horizon-based ADAS and autonomous driving functions, including features such as curve-speed warnings, fuel-efficient driving and range determination. The joint project will combine TomTom AutoStream and Elektrobit’s EB robinos Predictor to establish an easy-to-use demonstrator, evaluation and development platform for the automotive market.

_______________<br/>2 Our previous expectation, and based on IAS 18 accounting standards, was a CAGR of 15% between 2016 and 2020. 2016 revenue has not materially changed under new IFRS accounting standards.

We expanded several of our connected car services during the quarter. TomTom EV Service was launched in North America. The live service designed to assist drivers in making informed decisions about when and where to charge their vehicles, now includes more than 45,000 global charging stations with real-time availability information.

TomTom On-Street Parking service was expanded to 100 European cities. The service provides drivers with the probability of finding a parking space on the street, as well as the average search-time. We also launched TomTom Audio Traffic, where personalised traffic reports relevant to the specific route are delivered over voice to drivers.

Telematics

(€ in millions, unless stated otherwise)   Q1 '18   Q1 '17  

y.o.y.<br/>change

             
Subscriptions   33.2   30.7   8%
Hardware and other services1   9.6   9.3   3%
Total Telematics revenue   42.8   39.9   7%
             
Monthly revenue per subscription (€) 13.4 14.3 -6%
Subscriber installed base (# in thousands)   826   723   14%

Change percentages and totals calculated before rounding.<br/>1Other services revenue comprises installation services and separately purchased traffic service and/or map content.

Telematics revenue for the quarter was €43 million, 7% higher compared with the same quarter last year. The recurring subscription revenue for the quarter increased by 8% year on year to €33 million (Q1 '17: €31 million). Monthly revenue per subscription decreased by 6% year on year, mainly due to a mix effect caused by growing aftermarket connected car volumes, which are priced at lower levels compared with the traditional fleet management services.

At the end of Q1 '18, Telematics reached 826,000 fleet management and connected car subscriptions. This represents a 14% year on year increase, from 723,000 subscriptions at the end of Q1 '17.

Consumer

(€ in millions, unless stated otherwise)   Q1 '18   Q1 '17  

y.o.y.<br/>change

             
Consumer products   57.0   82.9   -31%
Automotive hardware   12.2   12.7   -4%
Total Consumer revenue   69.2   95.6   -28%

Change percentages and totals calculated before rounding.

 

Total Consumer revenue for the quarter was €69 million, a decline of 28% compared with the same quarter last year (Q1 '17: €96 million), reflecting a decrease in Consumer products and to a lesser extent in Automotive hardware revenue.

Data, software & services and Hardware revenue split

(€ in millions)   Q1 '18   Q1 '17  

y.o.y.<br/>change

             
Data, software & services   130.4   130.3   0%
Hardware   61.3   82.7   -26%
Total revenue   191.8   213.0   -10%

Change percentages and totals calculated before rounding.

 

Data, software & services revenue in the quarter was €130 million, flat compared with the same quarter prior year. As a percentage of total revenue, data, software & services increased to 68% in Q1 '18 from 61% in Q1 '17. Hardware revenue for the quarter was €61 million, 26% lower compared with €83 million in Q1 '17.

Gross margin

The gross margin for the quarter was 70%, seven percentage points higher compared with 63% in Q1 '17, reflecting the shift of revenue mix towards higher margin data, software & services revenue.

At constant currency rates for the US dollar and GB pound, Q1 '18 gross margin would have been 67% and the operating result would have been €3.7 million lower.

Operating expenses

Total operating expenses for the quarter were €127 million, which is €8 million lower compared with the same quarter last year (Q1 '17: €135 million). The decrease in R&D, SG&A and marketing expenses is driven by our decreasing Consumer segment. The decrease is partly offset by increased investments in research and development in our navigation technology.

Depreciation and amortisation

(€ in millions)   Q1 '18   Q1 '17  

y.o.y.<br/>change

             
Cost of sales   1.4   2.6   -46%
Research and development 2.0 3.0 -33%
Amortisation of technology & databases   24.1   22.4   7%
Marketing   0.1   0.1   0%
Selling, general and administrative   9.8   7.4   32%
Total   37.4   35.5   5%
Of which acquisition-related amortisation   13.1   13.9   -6%

Change percentages and totals calculated before rounding.

 

Total depreciation and amortisation expenses amounted to €37 million in the quarter, 5% higher compared with last year (Q1 '17: €36 million). This increase is caused by higher amortisation of technology and databases, which is a result of increased capital expenditures in the past years.

FX sensitivity

(€ in millions, unless stated otherwise)   Q1 '18<br/>actual  

Q1 '18<br/>recalculated at<br/>Q1 '17

FX rates1

         
Revenue   191.8   196.2
 
Gross result 133.5 132.4
Gross margin 70% 67%
 
EBIT 6.9 3.2
EBIT margin 4% 2%
 
FX RATES IN € Q1 '18 Q1 '17
US dollar 1.22 1.06
GB pound   0.88   0.86

¹The Q1 '18 income and expense in US dollar and GB pound have been converted<br/>to euro using Q1 '17 average exchange rates. All other foreign currencies have not<br/>been converted.

 

Financial income and expenses

The net interest charge for the quarter was €0.4 million (Q1 '17: €0.4 million). The other financial result for the quarter was a gain of €1.7 million (Q1 '17: €0.4 million), which consisted primarily of foreign exchange gains from the revaluation of monetary balance sheet items.

Income tax

The net income tax for the quarter was a charge of €2.0 million versus a net income tax charge of €0.8 million in Q1 '17.

Net result and adjusted EPS

(€ in millions, unless stated otherwise)   Q1 '18   Q1 '17  

y.o.y.<br/>change

             
Net result   6.4   -2.2   8.6
Net result attributed to equity holders   6.4   -2.2   8.6
Movement of deferred revenue, unbilled revenue and deferred CoS 21.1 -5.8 26.9
Tax effect on movement of deferred revenue, unbilled revenue and deferred CoS   -4.9   1.2   -6.1
Adjusted net result   22.6   -6.8   29.4
             
Adjusted EPS, € fully diluted   0.10   -0.03   0.13

Change amounts and totals calculated before rounding.

 

The net result for the quarter was a gain of €6.4 million compared with a loss of €2.2 million in Q1 '17. The net result adjusted for movement of deferred revenue, unbilled revenue and deferred cost of sales on a post-tax basis was a gain of €22.6 million compared with a loss of €6.8 million in Q1 '17.

Adjusted EPS for the quarter was a gain of €0.10, versus a loss of €0.03 in the same quarter last year.

Net movement of deferred and unbilled revenues and deferred cost of sales per segment

(€ in millions)   Q1 ’18   Q1 ’17
         
Automotive   28.0   10.0
Enterprise -0.7 -10.9
Telematics -0.5 0.5
Consumer   -5.6   -5.3
Total   21.1   -5.8

Totals calculated before rounding.

 

Balance sheet

Trade receivables plus other receivables totalled €162 million in Q1 '18 compared with €188 million at the end of Q1 '17. The inventory level at the end of the quarter was €34 million, compared with €63 million at the end of the same quarter last year. Cash and cash equivalents at the end of the quarter were €129 million versus €84 million at the end of Q1 '17.

Current liabilities excluding deferred revenue were €227 million compared with €251 million at the end of 2017. The sequential decrease is mainly due to a decrease in accruals and other liabilities.

Deferred revenue was €275 million at the end of Q1 '18, compared with €232 million at the end of the same quarter last year and €261 million at the end of last year. The year on year increase reflects the increased deferred revenue position related to Automotive contracts with upfront payments for multi-year service offerings.

Deferred revenue balance by segment


(€ in millions)   31 Mar 2018   31 Dec 2017
         
Automotive   128.3   98.0
Enterprise 5.9 15.7
Telematics 30.5

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