TomTom's Chief Executive Officer, Harold Goddijn
“We reported a solid set of results in the third quarter and generated strong cash from operations.
We launched a number of new products across our businesses, such as our first sport watch for golfers, a line of fully customisable driver terminals and an online turn-by-turn navigation product.
We also achieved a very important milestone with the commercial release of the MultiNet-R map format in September. This map format is the first product fully built from our new map-making platform. With incremental updating at the core of its design, MultiNet-R will serve as a key component in delivering short cycle times between detecting changes in the real world and updating the map on the end-user’s devices.
In Automotive, we continue to make good progress in delivering our connected navigation system components. Our bookings for this year so far are above €170 million, which together with orders secured earlier will support growth in our Automotive business from 2016 onwards.”
Financial and business review3
Group revenue for the quarter was €235 million, a 4% decrease compared to €244 million in the same quarter last year. The year on year decrease in revenue came from a decline in Consumer revenue partly offset by strong growth in Telematics revenue, whilst Automotive and Licensing revenue were relatively flat year on year.
Consumer revenue for the quarter was €154 million compared to €170 million in Q3 '13. The year on year decline was mainly driven by lower PND and Automotive hardware revenue, partly offset by growth in sport revenue. Automotive hardware revenue was €15 million in Q3 '14 (Q3 '13: €19 million).
The rate of decline of the PND market slowed down, particularly in Europe. The PND market size in Europe4 was 2.1 million units in the third quarter, 6% lower compared to Q3 '13. Our European market share for the quarter is estimated at around 51%, in line with the same quarter last year. The PND market size in North America in Q3 '14 was 0.9 million units, 16% lower compared to Q3 '13. We estimate our North American market share for the third quarter at around 15%. In the quarter, we introduced the new TomTom START PND range, which makes our latest technology accessible to more drivers by providing them with access to lifetime maps and smarter routing at an entry-level price.
We made good progress with our sport business. We continued to strengthen the awareness of our Cardio GPS watch and are on track with the expansion of our sports distribution network. Our investment in this category is increasing as we are building a multiproduct consumer business. We extended our sport product range with the launch of TomTom Golfer. The watch uses GPS technology to automatically recognise the golf course and to find the next hole. It also includes relevant data, such as distances to hazards and layups, from over 34,000 golf courses across the globe.
Automotive revenue for the quarter was €26 million, flat compared to the same quarter last year (Q3 '13: €26 million).
In the third quarter, we extended our partnerships with Renault, Fiat Chrysler and Toyota Motor Europe. Renault introduced a new Renault Twingo at the Paris Motor Show with the latest version of the R-Link infotainment system made by TomTom. In addition, TomTom will provide turn-by-turn navigation and maps into the Uconnect™ 5" Radio Nav infotainment system for the new Jeep Renegade line for Europe. We also extended our agreement with Toyota to supply TomTom Traffic and Places services5 in Europe for the period between 2016 and 2018.
In the quarter, we announced a partnership with Volkswagen Group Research to join forces to develop HAD systems. The goal of this co-operation is to jointly specify the digital map that is essential for automated driving. Both parties bundle their competencies by combining TomTom's expertise in map content and map-making with Volkswagen's know-how about the car as well as automated driving. TomTom and Volkswagen Research are working on a concept based on the Navigation Data Standard (NDS) to deliver scalable and cost effective automated driving systems.
We also announced a partnership with Bosch SoftTec to integrate our navigation technology and maps into Bosch's Advanced Driver Assistance Systems (ADAS), providing drivers with a more detailed view of the road ahead. This partnership will enable Bosch to develop more advanced applications with near real-time information including intelligent cruise control, upcoming curve alerts, and jam tail warnings.
In parallel, we extended our map content with traffic sign data covering Europe and North America to encompass a wide range of signage that is relevant to drivers for warning and informational purposes in navigation systems. Newly added traffic signs include animal crossing locations, stop signs, curve warnings, and speed limit signs.
Licensing generated revenue of €27 million in the third quarter, flat
compared to Q3 '13.