TomTom Reports Third Quarter 2011 Results

Change percentages are based on non-rounded figures

The market size in Europe for PNDs was 3.0 million units compared to 3.4 million units in the same quarter of last year. The North American market size was 2.1 million units compared to 2.9 million units last year. The European and North American markets combined declined in line with our guidance by 19% year over year.

Our PND market share in Europe was 45%, which is the same as in the prior quarter. Our North American market share grew sequentially from 21% to 25%.

Consumer announced the introduction of the VIA range of PNDs for the nascent Indian market. The VIA range was also introduced in Mexico and Argentina. A new GO LIVE range was launched with travel-specific apps which include Expedia, TripAdvisor and Twitter. The take up rate of our LIVE Services increased in the quarter to 28% compared to 21% last year.

Our latest map release covers 35 million kilometres of navigable roads in over 100 countries. Licensing announced a number of traffic information related contracts, amongst others with the Flemish government and Mappy. As a group we showed our commitment to reducing congestion by launching our Traffic Foundation which is dedicated to fostering collaboration and nurturing talent in the field of traffic management. TomTom Places was launched on the iPhone and made available in 5 countries in Europe.

Automotive announced the expansion of existing relationships with Renault, Fiat and Mazda. We will be supplying Renault’s electric vehicle Fluence with our factory fitted navigation product, including a real time charging station reservation feature. We will supply the new Mazda 3 and CRX-5 series with our solutions, of which the latter will be factory fitted. Fiat has announced that it will offer our integrated solution as an option on the new Panda. All solutions are connected and offer LIVE Services, including HD Traffic.

Business Solutions expanded geographically into Australia. In the quarter, the number of WEBFLEET subscriptions grew by 9,000 to 161,000, a year over year increase of 39,000 or 32%. With over 13,000 individual customers, Business Solutions now has the largest customer base of any telematics service provider in Europe.

Financial review


Group revenue for the quarter amounted to €336 million, a decline of 10% compared to last year (Q3 2010: €375 million). The decline results from lower Consumer revenue which was partially offset by increased revenue in each of the other three business units. Sequentially revenue increased by 7% (Q2 2011: €314 million).

Consumer revenue was €225 million, which is a 23% decrease year on year (Q3 2010: €293 million). The decrease was driven by lower PND sales, slightly offset by higher content and services revenue. Sequentially Consumer revenue increased by 8% (Q2 2011: €209 million).

Automotive revenue was €59 million, a 43% increase compared to the same quarter last year (Q3 2010: €41 million). The growth came from systems, maps and other content sales to existing customers. Sequentially Automotive revenue was nearly flat (Q2 2011: €60 million).

Licensing revenue was €36 million, which is a 27% increase compared to last year (Q3 2010: €28 million). The increase was mainly driven by increased revenue from the internet and wireless segment. Sequentially Licensing revenue increased by 14% (Q2 2011: €32 million).

Business Solutions revenue for the quarter was €17 million, a 33% increase year on year (Q3 2010: €13 million). The increase results from higher hardware and WEBFLEET subscription sales. Sequentially revenue increased by 19% (Q2 2011: €14 million).

Hardware revenue for the quarter was €229 million, a 19% decrease year on year (Q3 2010: €284 million) and a 5% increase sequentially (Q2 2011: €218 million). The sequential growth was due to the increased hardware sales in Consumer.

Content & Services revenue for the quarter was €107 million, a 19% increase year on year (Q3 2010: €90 million). All business units contributed to the year on year increase. Sequentially, Content & Services revenue increased by 12% (Q2 2011: €96 million). Content & Services revenue represented 32% of total revenue (Q3 2010: 24%; Q2 2011: 31%).

Gross margin

The gross margin for the group was 51% compared to 48% in the same quarter last year and was stable compared with the previous quarter (Q2 2011: 51%). The year on year margin increase results from the euro on average being stronger compared to the US dollar as well as a change in revenue mix from hardware revenue towards higher margin Content and Services revenue.

Operating expenses (excluding impairment charge for Q2 2011)

Total operating expenses for the quarter amounted to €132 million, a 7% increase compared to the same quarter last year (Q3 2010: €123 million). The year on year increase was mainly the result of higher R&D expenses. Sequentially operating expenses decreased by 7% (Q2 2011: €142 million). The decrease was mainly caused by a decrease in marketing expenses partly offset by an increase in R&D expenses. As a percentage of revenue, operating expenses for the quarter were 39% compared to 33% in Q3 2010 and 45% in Q2 2011.

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