Financial summary Q2 ´16
- Group revenue of €265 million (Q2 ´15: €265 million)
- Gross margin of 55% (Q2 ´15: 51%)
- EBITDA of €44 million (Q2 ´15: €28 million)
- Net result of €12 million (Q2 ´15: €3 million)
- Adjusted EPS1 of €0.10 (Q2 ´15: €0.05)
- Net cash position of €58 million (Q1 ´16: €50 million)
Operational summary Q2 ´16
- Consumer reached over 1 million users on the MySports platform
- Volvo Cars selected TomTom maps, traffic and software for its new infotainment platform
- HD Map and RoadDNA coverage launched in 17 states across the United States
- Collaboration with PSA Group announced making the TomTom WEBFLEET fleet management solution available for all connected Peugeot, Citroën and DS fleet vehicles
Outlook 2016
Full year outlook reiterated; Revenue expected of around €1,050 million and adjusted EPS1 expected of around €0.23
Key figures
| (€ in millions, unless stated | Q2 ´16 | Q2 ´15 | y.o.y. | H1 ´16 | H1 ´15 | y.o.y. | |||||||
| Consumer | 157.2 | 164.9 | -5% | 273.9 | 286.6 | -4% | |||||||
| Automotive | 34.9 | 26.0 | 34% | 64.6 | 49.6 | 30% | |||||||
| Licensing | 33.2 | 38.6 | -14% | 66.9 | 67.6 | -1% | |||||||
| Telematics | 39.9 | 35.1 | 14% | 77.0 | 66.1 | 16% | |||||||
| REVENUE | 265.2 | 264.6 | 0% | 482.4 | 469.9 | 3% | |||||||
| GROSS RESULT | 145.3 | 134.6 | 8% | 268.6 | 244.5 | 10% | |||||||
| Gross margin | 55% | 51% | 56% | 52% | |||||||||
| EBITDA | 43.7 | 27.8 | 57% | 69.3 | 49.3 | 41% | |||||||
| EBITDA margin | 16% | 11% | 14% | 10% | |||||||||
| OPERATING RESULT (EBIT) | 12.8 | 0.6 | 8.4 | -4.5 | |||||||||
| EBIT margin | 5% | 0% | 2% | -1% | |||||||||
| NET RESULT | 12.2 | 2.5 | 17.0 | -4.4 | |||||||||
| ADJUSTED NET RESULT | 23.2 | 12.4 | 87% | 30.7 | 14.9 | 106% | |||||||
| EPS, € fully diluted | 0.05 | 0.01 | 0.07 | -0.02 | |||||||||
| Adjusted EPS1, € fully diluted | 0.10 | 0.05 | 87% | 0.13 | 0.06 | 102% | |||||||
| Change percentages and totals calculated before rounding | |||||||||||||
TomTom’s Chief Executive Officer, Harold Goddijn
“Overall, we reported a solid set of results in the second quarter. Our gross margin continued to strengthen, as we are reducing our dependency on hardware products by growing recurring content and services business.
Our Automotive order intake is on track, and we are especially pleased that Volvo Cars selected us as global provider of maps, navigation and traffic.
In this quarter, Telematics added a record number of 27,000 vehicles to its installed base and signed an important agreement with PSA Group to offer value-added fleet management services.”
Outlook 2016
We are reiterating our guidance for the year. We expect to grow our revenue to around €1,050 million and adjusted EPS1 to around €0.23.
We expect the level of investment (both CAPEX and OPEX) in our core technologies to be higher than in 20152. In particular, we are investing in advanced content and software for the automotive industry and in our new map-making platform.
Financial and business review
We generated revenue of €265 million in the second quarter, flat compared with the same quarter last year (Q2 ´15: €265 million). The decline in Consumer and Licensing revenue (Licensing included a one-off catch-up of €5 million in Q2 ´15) was offset by growth in Automotive and Telematics.
We reported a strong gross margin of 55% in the second quarter (Q2 ´15: 51%) mainly driven by a higher share of content and services revenue.
The net result for the quarter was a gain of €12 million (Q2 ´15: €2.5 million), which translates to an adjusted earnings per share of €0.10 (Q2 ´15: €0.05).
Consumer
| (€ in millions, unless stated otherwise) | Q2 ´16 | Q2 ´15 | y.o.y. | H1 ´16 | H1 ´15 | y.o.y. | |||||||
| Consumer products | 138.2 | 147.8 | -7% | 235.3 | 248.6 | -5% | |||||||
| Automotive hardware | 19.0 | 17.1 | 11% | 38.6 | 38.0 | 2% | |||||||
| Total Consumer revenue | 157.2 | 164.9 | -5% | 273.9 | 286.6 | -4% | |||||||
| Key PND market data | |||||||||||||
| Europe3 | |||||||||||||
| Market size (# units sold in millions) | 1.3 | 1.6 | -18% | 2.4 | 2.9 | -16% | |||||||
| TomTom market share | 54% | 52% | 53% | 52% | |||||||||
| North America | |||||||||||||
| Market size (# units sold in millions) | 0.6 | 0.8 | -22% | 1.1 | 1.5 | -22% | |||||||
| TomTom market share | 21% | 18% | 19% | 17% | |||||||||
| Change percentages and totals calculated before rounding | |||||||||||||
Total Consumer revenue for the quarter was €157 million, a decline of 5% compared with the same quarter last year (Q2 ´15: €165 million). Consumer products revenue in Q2 ´16 was down by 7% year on year, driven by a decline in the PND market, which was only partly compensated by strong growth in sports revenue. The Automotive hardware revenue in the first half of this year was strengthened by stronger sales on a legacy platform, which will go end of life at the start of the next quarter.
In Q2 ´16, we saw a unit decline of 18% in the European PND market, whilst the North American market declined by 22%. The decline of the European PND market was above our expectation, partly explained by the European Football Championship. Our market share in both Europe and North America improved YoY.
In the quarter, we launched three new TomTom PNDs within the TomTom START range. We introduced TomTom Traffic Checker on the MyDrive App, targeting ‘commuters’. Additionally, we introduced TomTom Jam Ahead Warnings on the Speed Cameras App, alerting drivers to rapidly slowing, or stationary, traffic on the highway ahead. Finally, we announced the availability of truck trip planning, enabling professional drivers to save on driving time by conveniently planning a route anytime, and anywhere, with TomTom MyDrive.
Automotive
Our Automotive business generated revenue of €35 million in the quarter, compared with €26 million in Q2 ´15. This increase is the result of higher volumes on our existing contracts and partially by the go-live of new contracts.
In the quarter, we announced that Volvo Cars selected TomTom as global provider for maps, traffic and navigation for its new infotainment platform. From 2019, Volvo Cars’ customers across the globe, across all carlines, will be able to enjoy an exceptional navigation experience powered by TomTom’s complete suite of location technology components, both embedded and cloud based.
We also announced coverage expansion of our High Definition (HD) Map and RoadDNA products to 17 new states across the United States delivering more than 54,000 kilometres of new coverage for interstates.
Licensing
Our Licensing revenue was €33 million in Q2 ´16, 14% lower compared with the same quarter last year (Q2 ´15: €39 million). The year on year decrease is explained by a catch-up of €5 million we recorded in Q2 ´15. Excluding this catch-up, the year on year revenue was flat.
In the quarter, we announced a partnership with sensewhere, a provider of indoor positioning technology. The combination of TomTom’s maps – both indoor and traditional navigation maps - and sensewhere’s accurate indoor positioning will enable a seamless navigation experience indoors and outdoors.
Telematics
| (€ in millions, unless stated otherwise) | Q2 ´16 | Q2 ´15 | y.o.y. | H1 ´16 | H1 ´15 | y.o.y. | |||||||
| Hardware and other services revenue1 | 10.7 | 11.0 | -3% | 18.9 | 19.5 | -3% | |||||||
| Subscription revenue | 29.2 | 24.1 | 21% | 58.1 | 46.7 | 25% | |||||||
| Total Telematics revenue | 39.9 | 35.1 | 14% | 77.0 | 66.1 | 16% | |||||||
| Monthly subscription ARPU (€) | 15.0 | 16.2 | -7% | ||||||||||
| Subscriber installed base (# in thousands) | 652 | 507 | 29% | ||||||||||
| Change percentages and totals calculated before rounding | |||||||||||||
| 1Other services revenue comprises installation services and separately purchased traffic service and/or map content. | |||||||||||||
Telematics revenue for the quarter was €40 million, a 14% increase compared with €35 million in Q2 ´15. The recurring subscription revenue for the quarter increased by 21% year on year to €29 million (Q2 ´15: €24 million). The subscriber installed base increased to 652 thousand at the end of the quarter, a record quarterly increase of 27 thousand (Q1 ´16: 625 thousand). Monthly subscription ARPU decreased year on year, owing to the impact of the Finder acquisition in Poland.
In the quarter, we announced a partnership with PSA Group, our first telematics deal with an Automotive OEM, to accelerate telematics penetration by connecting customers to a service platform by using factory-installed telematics boxes. Our WEBFLEET fleet management product will be available for all connected Peugeot, Citroën, and DS fleet vehicles. As of this quarter, the service will become accessible in France, Spain, Belgium and the Netherlands.
We also launched WEBFLEET for Sales Cloud on the Salesforce AppExchange. The app integrates TomTom’s telematics platform with Salesforce, making it easier for sales staff to use Salesforce on the road. It also enables companies to manage their sales forces more efficiently.
Hardware and Content & Services revenue split
| (€ in millions, unless stated otherwise) | Q2 ´16 | Q2 ´15 | y.o.y. | H1 ´16 | H1 ´15 | y.o.y. | |||||||
| Hardware revenue | 143.2 | 149.4 | -4% | 244.8 | 255.4 | -4% | |||||||
| Content & Services revenue | 122.0 | 115.2 | 6% | 237.6 | 214.5 | 11% | |||||||
| Total revenue | 265.2 | 264.6 | 0% | 482.4 | 469.9 | 3% | |||||||
| Change percentages and totals calculated before rounding | |||||||||||||
Content & Services revenue for the quarter was €122 million or 46% of total revenue (Q2 ´15: 44%).
Gross margin
The gross margin for the quarter was 55%, which is 4 percentage points higher compared with 51% in Q2 ´15. The year on year increase was due to an increase in content and services revenue as percentage of our total revenue.
Operating expenses
Total operating expenses for the quarter were €133 million, €1.5 million lower compared with the same quarter last year (Q2 ´15: €134 million). Both this quarter and the same quarter last year contained a one-off gain. This quarter we had a positive outcome on a pending customs case; last year we had a positive outcome on a litigation settlement. Both gains have been reported in the SG&A line. Excluding one-off effects our operating expenses showed a modest year on year increase resulting from the investments needed to support our Automotive order book.
FX sensitivity
| Actual key Q2 ´16 / H1 ´16 financials recalculated | Q2 ´16 actual | Q2 ´16 recalculated at Q2 ´15 FX rates1 | H1 ´16 actual | H1 ´16 recalculated at H1 ´15 FX rates1 | |||||
| Revenue | 265.2 | 268.3 | 482.4 | 484.4 | |||||
| Gross result | 145.3 | 145.9 | 268.6 | 271.7 | |||||
| Gross margin | 55% | 54% | 56% | 56% | |||||
| EBIT | 12.8 | 11.9 | 8.4 | 11.1 | |||||
| EBIT margin | 5% | 4% | 2% | 2% | |||||
| P&L RATES IN € | Q2 ´16 | Q2 ´15 | H1 ´16 | H1 ´15 | |||||
| US dollar | 1.13 | 1.10 | 1.11 | 1.13 | |||||
| GP pound | 0.78 | 0.72 | 0.77 | 0.74 | |||||
| ¹ The Q2 ´16 / H1 ´16 income and expense in US dollar and GB pound have been converted to euro using Q2 ´15 / H1 | |||||||||
Depreciation and amortisation
| (€ in millions) | Q2 ´16 | Q2 ´15 | y.o.y. | H1 ´16 | H1 ´15 | y.o.y. | |||||||
| Cost of sales | 2.3 | 2.5 | -6% | 4.3 | 5.0 | -14% | |||||||
| Research and development | 3.1 | 2.5 | 22% | 5.8 | 4.3 | 34% | |||||||
| Amortisation of technology & databases | 21.1 | 18.6 | 13% | 41.7 | 37.1 | 12% | |||||||
| Marketing | 0.1 | 0.0 | n.a. | 0.2 | 0.0 | n.a. | |||||||
| Selling, general and administrative | 4.3 | 3.7 | 20% | 8.8 | 7.4 | 20% | |||||||
| Total | 30.9 | 27.3 | 13% | 60.8 | 53.8 | 13% | |||||||
| Of which acquisition-related amortisation | 13.7 | 13.0 | 6% | 27.4 | 25.9 | 6% | |||||||
| Change percentages and totals calculated before rounding | |||||||||||||
Total depreciation and amortisation costs amounted to €31 million in the second quarter, 13% higher compared with last year (Q2 ´15: €27 million). The increase mainly results from an increase in amortisation of technology and databases of €2.5 million to €21.1 million. This increase results from the go-live of several technology platforms. Acquisition-related amortisation amounted €14 million (Q2 ´15: €13 million), the increase is mainly related to the acquisition of Finder in Telematics.
Financial income and expenses
The net interest charge for the quarter was €0.4 million compared with €0.2 million in Q2 ´15.
The other financial result was a loss of €1.2 million for the quarter (Q2 ´15: €0.3 million gain), which consisted primarily of a foreign exchange loss on the revaluation of monetary balance sheet items.
Income tax
In Q2 ´16, the group recorded an income tax gain of €0.9 million versus €1.8 million in the same period last year.
Net result
| (€ in millions, unless stated otherwise) | Q2 ´16 | Q2 ´15 | y.o.y. | H1 ´16 | H1 ´15 | y.o.y. | |||||||
| Net result | 12.2 | 2.5 | n.a. | 17.0 | -4.4 | n.a. | |||||||
| Net result attributed to equity holders | 12.1 | 2.6 | n.a. | 16.9 | -4.5 | n.a. | |||||||
| Remeasurement of deferred tax liability | -7.6 | ||||||||||||
| Acquisition-related amortisation | 13.7 | 13.0 | 6% | 27.4 | 25.9 | 6% | |||||||
| Tax effect of adjustments | -2.6 | -3.2 | -20% | -6.0 | -6.5 | -7% | |||||||
| Adjusted net result | 23.2 | 12.4 | 87% | 30.7 | 14.9 | 106% | |||||||
| Adjusted EPS, € fully diluted | 0.10 | 0.05 | 87% | 0.13 | 0.06 | 102% | |||||||
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