TomTom reports fourth quarter and full year 2010 results

* includes automotive map sales

** third party location and navigation content licensing

In the quarter, TomTom’s PND market share in Europe (largest 16) compared to the same period last year grew from 46% to 49%. The market size in Europe was 3.5 million units (Q4 2009: 4.3 million; Q3 2010: 3.5 million). In North America our market share grew from 29% in the fourth quarter last year to 32% this year. The North American market size was 6.5 million units (Q4 2009: 8.6 million; Q3 2010: 2.8 million).

The connected premium-range GO LIVE and the connected mid-range Via LIVE were launched and were well received. The PND market size in the fourth quarter holiday season was smaller than expected but revenues were supported by growth in market share, an increase in selling prices and by higher Content & Services revenue. It is part of TomTom Consumer's strategy to move into the fast-growing sports and fitness market. At the start of the new year we announced a partnership with Nike to deliver a product for runners in the second quarter of 2011.

Our Automotive business unit announced significant expansions to existing partnerships. The Blue&Me TomTom product was extended to the Fiat Doblo, Fiat 500, Qubo and Iveco ECODAILY models. We will also supply solutions for the Toyota Aygo, and together with FUJITSU TEN we will supply an embedded PND for the Subaru Forester and Impreza in the US.

We also announced a significant extension of our content licensing agreement with MiTAC to include Magellan, the third largest PND brand in the US, to add to the Mio and Navman brands. Agreement was reached with smartphone manufacturer HTC to provide our maps for their location application. This is an example of the goal of some of the handset manufacturers to retain control of their navigation user experience. A new partnership was announced with AutoNavi, China’s leading provider of map content and navigation and location based solutions with a focus on the automotive OEM market.

Business Solutions introduced a new premium model for the truck navigation market, the PRO 7100 TRUCK, which expands the coverage of access restrictions affecting large vehicles in Europe. In the quarter, the number of WEBFLEET subscriptions grew by 12,000 to 134,000.

We take our intellectual property and the protection of our innovations seriously. By the end of 2010, we had filed more than 3,450 individual patent applications worldwide.

Financial review

Revenue

Revenue for the group was €516 million for the quarter, a decrease of 3% compared to the same quarter last year (Q4 2009: €533 million) and an increase of 38% sequentially (Q3 2010: €375 million). Year on year, the decline in revenue for Consumer was partially offset by an increase in revenue in the other three business units, further broadening the company’s revenue base. Sequentially all four business units showed growth with the largest contribution coming from our Consumer business unit.

The revenue of the Consumer business unit over the past quarter amounted to €406 million which is a €42 million decrease compared to the same quarter of last year (Q4 2009: €448 million). The decrease is explained by year on year lower sales in the holiday season especially around Black Friday in the US. Sequentially Consumer revenue increased by 39% (Q3 2010: €293 million) driven by higher unit sales and increased Content & Services revenue.

Automotive revenue, which includes map and content sales to automotive companies and their suppliers, grew by €19 million or 52% to €55 million compared to the same quarter last year (Q4 2009: €36 million). Sequentially revenue increased by 33% (Q3 2010: €41 million) due to the seasonal pattern of production by our automotive partners, new products coming on line and strong content sales in the US.

Licensing revenue increased by €4 million or 11% to €39 million compared to the same quarter last year (Q4 2009: €35 million) and increased 37% sequentially (Q3 2010: €28 million). The sales increase in the fourth quarter is related to the seasonal effect in the portable navigation segment and growth in the internet and wireless segment.

Business Solutions revenue grew year on year by €2.1 million or 15% to €15.8 million (Q4 2009: €13.7 million) driven by additional hardware sales as well as increased revenue from subscriptions. Sequentially revenue increased by €3.3 million (Q3 2010: €12.5 million) on the back of the continued growth of our subscriber base.

Hardware revenue for the quarter was €418 million across the group, a decrease of 7% year on year (Q4 2009: €449 million) and an increase compared to the third quarter of 47% (Q3 2010: €284 million).

Content & Services revenue was €98 million for the quarter compared to €85 million in the fourth quarter of 2009, an increase of 16%. The main contributor to the increase came from HD traffic service subscriptions. Content & Services revenue increased by 8% to €98 million sequentially. Content & Services revenue for the quarter represented 19% of total revenue (Q4 2009: 16%; Q3 2010: 24%).

Gross margin


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