TomToms Chief Executive Officer, Harold Goddijn
We have started the year strongly with results which are ahead of expectations and we launched important new products for all of our business units.
In particular, the Cardio GPS sports watch, with its built in heart rate monitor, has received encouraging early order levels from customers.
I am especially pleased to see the progress made in Telematics where we saw an accelerating growth in our WEBFLEET subscriber base and in recurring revenue in the first quarter.
Given our first quarter results and because of the one-off tax settlement, which contributed 0.04 of earnings per share, we are updating our full year outlook for 2014. We now expect revenue of at least 900 million and adjusted1 earnings per share of around 0.25, which includes the one-off tax settlement of 0.04 in Q1 '14.
We also re-iterate that we expect our gross margin to stay strong, we will maintain tight control on operating costs, and we expect capital investments of more than 100 million. We expect to increase our net cash position for the year as a whole.
Financial and business review3
Group revenue for the quarter was 205 million, a 2% increase compared to revenue of 202 million in Q1 '13. The year on year growth in revenue came from the strong increase in Telematics revenue partly offset by a decline in Licensing revenue.
Consumer revenue for the quarter was 125 million, an increase of 1% compared to 124 million in the same quarter last year. Revenue increased year on year due to higher PND revenue in EMEA and higher sports revenue. Automotive hardware revenue (now included in Consumer) was 20 million in Q1 '14 (Q1 '13: 22 million).
The PND market size in Europe4 was 1.6 million units in the first quarter, 12% lower compared to Q1 '13. Our European market share for the quarter was estimated at around 52%, up by two percentage points compared to Q1 '13. The PND market size in North America during Q1 '14 was 0.8 million units, 24% lower compared to Q1 '13. We estimate our North American market share for the first quarter at around 19%. Following a successful rollout in Europe in 2013, our latest generation of PNDs was introduced in North America at the end of the quarter.
We continued our commitment to innovate in the sports watch product category in Q1 '14. We launched the TomTom Runner and Multi-Sport Cardio GPS sport watches. These models have a built-in heart rate monitor, which eliminates the need for a separate chest strap and provides easy use of heart rate training during workouts. We also introduced the TomTom MySports mobile app, which wirelessly connects with our sports watches for the upload of key workout performance information. The mobile app also automatically downloads the latest QuickGPSFix satellite data, enabling users of our sports watches to start a run faster.
We expanded our product offering for the B2B market with the launch of TomTom BRIDGE. TomTom BRIDGE is a programmable driver terminal, which enables seamless integration of TomTom technology with customised business applications to help businesses, who manage a fleet of vehicles, to move and work their fleets more efficiently. TomTom BRIDGE offers the flexibility to create own applications for specific business needs and is available with different models that also include our WEBFLEET solution in Telematics.
Automotive revenue for the quarter was 29 million (Q1 '13: 29 million).
We extended our long-standing partnership with Fiat Chrysler Automotive to provide a fully integrated navigation system for the Alfa Romeo MiTo MY 2014 model and the entire family of FIAT 500L models. TomTom is delivering advanced navigation software for the Uconnect 5 Radio NAV featuring TomToms IQ routes and digital maps.
We expanded our real-time traffic service to China, Taiwan and Singapore. Our traffic service is now available in 36 countries in North and South America, Europe, South Africa, Asia, Australia and New Zealand.
Licensing revenue for the quarter was 26 million, which is 3.6 million lower than in Q1 '13. The year on year decrease mainly resulted from the phasing out of a major contract in the first half of last year.
In the first quarter, TomTom entered into a strategic partnership with worldwide indoor mapping leader, Micello Inc. adding indoor venues to our current range of mapping products. With this partnership, TomTom customers are now able to develop apps and location-based services, which help users to navigate with ease both in and out of the car.
TomTom renamed its Business Solutions business unit to Telematics in
March 2014. The new name reflects our focus on Telematics
Software-as-a-Service (SaaS) solutions.