Financial summary Q1 ´15
- Group revenue of €205 million (Q1 ´14: €205 million)
- Gross margin of 54% (Q1 ´14: 57%)
- EBITDA of €21 million (Q1 ´14: €30 million)
- Adjusted EPS1 of €0.01 (Q1 ´14: €0.08, of which €0.04 related to a one-off tax gain)
- Net cash position of €77 million (Q1 ´14: €44 million)
Operational summary Q1 ´15
- Consumer launched the new TomTom RIDER for motorcyclists
- Volkswagen selects TomTom Maps in North America and TomTom Traffic in Europe
- TomTom to deliver LIVE Services to Hyundai and Kia in Europe
- Global partnership with Fiat extended to deliver maps and navigation in the Uconnect™ infotainment system in Latin America
- Telematics increased its installed base by 39% and recurring subscription revenue by 32% year on year
Outlook 2015
- Full year outlook re-iterated; Revenue expected of around €1 billion and adjusted EPS1 expected of around €0.20.
Key figures
| (€ in millions) | Q1 ´15 | Q1 ´14 | y.o.y. change | ||||||
| Consumer | 121.6 | 125.1 | -3% | ||||||
| Automotive | 23.6 | 29.2 | -19% | ||||||
| Licensing | 29.0 | 26.0 | 12% | ||||||
| Telematics | 31.1 | 25.1 | 24% | ||||||
| REVENUE | 205.3 | 205.4 | 0% | ||||||
| GROSS RESULT | 109.9 | 117.3 | -6% | ||||||
| Gross margin | 54% | 57% | |||||||
| EBITDA | 21.4 | 29.7 | -28% | ||||||
| EBITDA margin | 10% | 14% | |||||||
| OPERATING RESULT (EBIT) | -5.1 | 1.5 | |||||||
| EBIT margin | -2% | 1% | |||||||
| NET RESULT | -6.9 | 7.6 | |||||||
| ADJUSTED NET RESULT | 2.4 | 17.4 | -86% | ||||||
| EPS, € fully diluted | -0.03 | 0.03 | |||||||
| Adjusted EPS1, € fully diluted | 0.01 | 0.08 | -87% | ||||||
|
Change percentages are based on non-rounded figures |
TomTom´s Chief Executive Officer, Harold Goddijn
“We have started the year in line with our expectations. Our Consumer activities held up well in the first quarter, through a combination of a resilient PND market and growth in sports products. Our Automotive business contracted as anticipated and newly booked business continued at levels which will support a growing business. We saw continued strong growth in our Telematics recurring subscription revenue and Licensing delivered double-digit revenue growth in the quarter.”
Outlook 2015
Despite the currency headwinds caused by the weakening of the euro, we are re-iterating our guidance for the year. We expect revenue to grow to around €1 billion, we are maintaining the level of investment (both CAPEX and OPEX) in our core technologies at similar levels to last year and adjusted EPS1 is expected of around €0.20.
Financial and business review
We generated revenue of €205 million in the first quarter, flat compared to the same quarter last year (Q1 ´14: €205 million). Our Telematics, Licensing and sport businesses grew strongly to broadly counterbalance the reduction in PND and Automotive revenue. We reported a gross margin of 54% in the first quarter (Q1 ´14: 57%). The weakening of the euro caused the year on year decline of 3 percentage points. The net result for the quarter was a loss of €6.9 million, which translates to adjusted earnings per share of €0.01.
Consumer
| (€ in millions, unless stated otherwise) | Q1 ´15 | Q1 ´14 | y.o.y. change | ||||||
| Consumer products | 100.7 | 104.7 | -4% | ||||||
| Automotive hardware | 20.9 | 20.4 | 2% | ||||||
| Total Consumer revenue | 121.6 | 125.1 | -3% | ||||||
| Key PND market data | |||||||||
| Europe2 | |||||||||
| Market size (# units sold in millions) | 1.4 | 1.6 | -8% | ||||||
| TomTom market share | 51% | 52% | |||||||
| North America | |||||||||
| Market size (# units sold in millions) | 0.7 | 0.8 | -17% | ||||||
| TomTom market share | 16% | 19% | |||||||
Change percentages are based on non-rounded figures
Total Consumer revenue for the quarter was €122 million, a decline of 3% compared to the same quarter last year (Q1 ´14: €125 million). The year on year decline was mainly driven by lower PND and related content & services revenue, partly offset by strong growth in sport revenue. Automotive hardware revenue was €21 million in the quarter (Q1 ´14: €20 million). The slight year on year increase was driven by changes in the product mix.
In the quarter we saw a unit decline of 8% in the European PND market, whilst the North American market declined by 17%. Our market share in Europe remained broadly flat whilst we continued to strengthen our ASP. We saw market share improvements towards the end of the quarter in both regions.
Within our drive business, we launched our new TomTom RIDER specifically developed for motorcyclists. We continued to see strong growth in our sport business. We added Nike+ to the list of platforms available to TomTom GPS sport watch users, enabling them to track their progress, and share their performance with the Nike+ community. We also continued to expand the number of retail doors across the world.
Automotive
Our Automotive business generated revenue of €24 million in the quarter, compared to €29 million in Q1 ´14. This decline is mainly due to the phasing out of certain contracts.
In the quarter, we announced an agreement to deliver maps to Volkswagen in North America. Volkswagen will launch in-dash navigation systems with TomTom maps in its new multimedia system, which will be introduced across multiple car lines, including the Jetta, Passat and Beetle. We also continued to expand our position as a premium connected traffic service provider in the automotive market. In the quarter, we announced that we will deliver our real-time traffic service to Volkswagen, Hyundai, and Kia in Europe.
We extended our global partnership with Fiat to deliver maps and navigation in the Uconnect™ infotainment systems in Latin America. We also announced a new deal with South Korea´s SsangYong Motor Company. Our maps and navigation software will be included in the all-new Tivoli model throughout Europe beginning in May 2015.
Licensing
Our Licensing revenue was €29 million in Q1 ´15, 12% higher compared to the same quarter last year (Q1 ´14: €26 million). The year on year increase was mainly caused by higher traffic revenue and to a lesser extent by FX.
Telematics
| (€ in millions, unless stated otherwise) | Q1 ´15 | Q1 ´14 | y.o.y. change | ||||||
| Hardware and other services revenue1 | 8.5 | 8.0 | 6% | ||||||
| Subscription revenue | 22.6 | 17.1 | 32% | ||||||
| Total Telematics revenue | 31.1 | 25.1 | 24% | ||||||
| Monthly subscription ARPU (€) | 15.8 | 16.7 | -5% | ||||||
| Subscriber installed base (‘000s) | 482 | 348 | 39% | ||||||
| Change percentages are based on non-rounded figures |
1Other services revenue comprises installation services and separately purchased traffic service and/or map content.
Telematics revenue for the quarter was €31 million, a 24% increase compared to €25 million in Q1 ´14. The recurring subscription revenue for the quarter increased by 32% year on year to €23 million (Q1 ´14: €17 million). Our monthly subscription ARPU decreased slightly year on year, owing to the impact of acquisitions, product mix changes, and regional mix changes.
In the quarter, Telematics launched its next generation of WEBFLEET OptiDrive, incorporating predictive real-time driving advice to empower drivers to drive green and safe. OptiDrive 360 uses vehicle data and map data on the road ahead to advise business drivers when to release the gas or shift gear and what their optimum speed should be. This allows professional drivers and businesses’ management to create a full improvement programme for learning, coaching while driving, post-trip evaluation and in-company comparison.
Hardware and Content & Services revenue split
Content & Services revenue for the quarter was €99 million or 48% of total revenue. This revenue mix is comparable with the same quarter last year.
| (€ in millions) | Q1 ´15 | Q1 ´14 | y.o.y. change | ||||||
| Hardware revenue | 106.0 | 106.0 | 0.1% | ||||||
| Content & Services revenue | 99.3 | 99.4 | -0.2% | ||||||
| Total revenue | 205.3 | 205.4 | -0.1% | ||||||
| Change percentages are based on non-rounded figures |
Gross margin
The gross margin for the quarter was 54%, which is 3 percentage points lower compared to 57% in Q1 ´14. The year on year decrease was mainly due to weakening of the euro against the US dollar.
At constant currency rates for the US dollar and GB pound, our gross margin and operating result were relatively flat year on year whilst revenue was slightly down.
| Actual key Q1 ´15 financials recalculated based on last year (Q1 ´14) FX rates (€ in millions, unless stated otherwise) | Q1 ´15 actual | Q1 ´15 recalculated at Q1 ´14 FX rates1 | ||||
| Revenue | 205 | 199 | ||||
| Gross result | 110 | 113 | ||||
| Gross margin | 53.5% | 57.0% | ||||
| EBIT | -5 | 2 | ||||
| EBIT margin | -2.5% | 0.9% | ||||
| P&L RATES IN € | Q1 ´15 | Q1 ´14 | ||||
| US dollar | 1.15 | 1.37 | ||||
| GP pound | 0.75 | 0.83 |
1The Q1 ´15 income and expenses in US dollar and GB pound have been reconverted to euro using Q1 ’14 average exchange rates. All other foreign currencies have not been reconverted.
Operating expenses
Total operating expenses for the quarter were €115 million, which is €1 million lower compared to €116 million in the same quarter last year. The lower operating expenses were mainly driven by lower Amortisation of technology and databases partially offset by slightly higher SG&A expenses. The increase in SG&A costs partially reflects amortisation of acquired customer contracts following our recent acquisitions. Marketing expenses were relatively flat year on year.
Depreciation and amortisation
| (€ in millions) | Q1 ´15 | Q1 ´14 | y.o.y. change | ||||||
| Depreciation | 3.1 | 3.8 | -20% | ||||||
| Amortisation | 23.4 | 24.4 | -4% | ||||||
| Total | 26.5 | 28.2 | -6% | ||||||
| Of which acquisition-related amortisation | 12.7 | 13.2 | -4% | ||||||
| Change percentages are based on non-rounded figures |
Total depreciation and amortisation costs amounted to €26 million in the quarter, 6% lower compared to last year (Q1 ´14: €28 million). Acquisition-related amortisation amounted to €12.7 million in the quarter compared to €13.2 million in Q1 ´14. This year on year decline relates to certain map-making tools that have been fully amortised in 2014, partly offset by increased amortisation charges relating to acquisitions in Telematics.
Financial income and expenses
The interest charge for the quarter was €0.2 million versus an interest charge of €1.0 million in Q1 ´14. The lower interest charge is due to the lower interest rate applied against lower outstanding borrowings this year. The other financial result for the quarter was a loss of €2.6 million (Q1 ´14: loss of €1.2 million), mainly reflecting the impact of losses resulting from the revaluation of foreign currency denominated monetary balance sheet items which were not fully offset by the positive hedging results.
Income tax
The net income tax for the quarter was a gain of €0.8 million versus a net income tax gain of €8.1 million in Q1 ´14. Our Q1 ´14 tax result was driven by a one-off release of a tax provision following the finalisation of an overseas tax audit. The effective tax rate (ETR) for the quarter was 10.9%.
Net result
| (€ in millions, unless stated otherwise) | Q1 ´15 | Q1 ´14 | y.o.y. change | ||||||
| Net result | -6.9 | 7.6 | |||||||
| Net result attributed to equity holders | -7.1 | 7.5 | |||||||
| Amortisation of acquired intangibles | 12.7 | 13.2 | -4% | ||||||
| Tax effect of adjustments | -3.2 | -3.3 | -4% | ||||||
| Adjusted net result | 2.4 | 17.4 | -86% | ||||||
| Adjusted EPS, € fully diluted | 0.01 | 0.08 | -87% | ||||||
| Change percentages are based on non-rounded figures | |||||||||
The result for the quarter was a loss of €6.9 million compared to a gain of €7.6 million in Q1 ´14. The adjusted net result on a post-tax basis was €2.4 million compared to €17.4 million in Q1 ´14.
Adjusted EPS for the quarter was €0.01 versus €0.08 in Q1 ´14. Q1 ´14 included a one-off tax settlement of €0.04.
Balance sheet
Trade receivables at the end of the quarter equalled €117 million compared to €133 million at the end of Q4 ´14 mainly due to seasonally lower revenue in the first quarter of the year. Inventory was €47 million which is at the same level as at the end of Q4 ´14. Cash and cash equivalents amounted to €117 million at the end of Q1 ´15 (Q4 ´14: €153 million).
Current liabilities excluding deferred revenue amounted to €243 million compared to €291 million at the end of Q4 ´14. The quarter on quarter decrease was mainly driven by lower personnel-related accruals and lower trade payables balances.
Deferred revenue for the quarter amounted €143 million (Q4 ´14: €146 million).
The carrying value of outstanding borrowings at the end of Q1 ´15 was €39 million compared to €49 million at the end of 2014. The net cash position at the end of the quarter was €77 million (Q4 ´14: €103 million).
Cash flow
The net cash used in operating activities during the quarter was €13 million compared to €15 million in Q1 ´14.
The cash flow used in investing activities during the quarter was stable at €24 million compared to the same quarter of last year. The majority of the investments related to our new transactional map-making platform, our navigation engine NavKit and customer specific investments in Automotive.
In the first quarter, 2 million options, related to our long-term employee incentive programmes, were exercised resulting in an €11 million cash inflow.
- END -
Consolidated condensed statement of income
| (€ in thousands) | Q1 ´15 | Q1 ´14 | ||||
| Revenue | 205,275 | 205,378 | ||||
| Cost of sales | 95,403 | 88,089 | ||||
| Gross result | 109,872 | 117,289 | ||||
| Research and development expenses | 43,290 | 43,178 | ||||
| Amortisation of technology and databases | 18,522 | 21,182 | ||||
| Marketing expenses | 9,748 | 9,298 | ||||
| Selling, general and administrative expenses | 43,381 | 42,120 | ||||
| Total operating expenses | 114,941 | 115,778 | ||||
| Operating result | -5,069 | 1,511 | ||||
| Interest result | -204 | -1,020 | ||||
| Other financial result | -2,574 | -1,176 | ||||
| Result of associates | 97 | 136 | ||||
| Result before tax | -7,750 | -549 | ||||
| Income tax gain | 845 | 8,103 | ||||
| Net result | -6,905 | 7,554 | ||||
| Net result attributable to: | ||||||
| Equity holders of the parent | -7,145 | 7,492 | ||||
| Non-controlling interests | 240 | 62 | ||||
| Net result | -6,905 | 7,554 | ||||
| Basic number of shares (in thousands) | 224,429 | 222,191 | ||||
| Diluted number of shares (in thousands) | 228,661 | 224,431 | ||||
| EPS, € basic | -0.03 | 0.03 | ||||
| EPS, € diluted | -0.03 | 0.03 |
Consolidated condensed balance sheet
| (€ in thousands) | 31 March 2015 Unaudited | 31 December 2014 Audited | ||||
| Goodwill | 381,569 | 381,569 | ||||
| Other intangible assets | 797,524 | 800,583 | ||||
| Property, plant and equipment | 33,440 | 30,294 | ||||
| Deferred tax assets | 22,453 | 18,438 | ||||
| Investments in associates | 3,612 | 3,289 | ||||
| Total non-current assets | 1,238,598 |
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