TomTom : Transcript

April 16, 2020 at 07:06 am EDT

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TOM2.AS - Q1 2020 TomTom NV Earnings Call

EVENT DATE/TIME: APRIL 15, 2020 / 12:00PM GMT

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CORPORATE PARTICIPANTS

ClaudiaJanssen TomTom N.V. -Group Controller &HeadofIR

HaroldC.A.Goddijn TomTom N.V. -Co-Founder, Chairmanofthe Management Board&CEO

TacoJ.F.Titulaer TomTom N.V.-Member ofManagement Board&CFO

CONFERENCE CALL PARTICIPANTS

Francois-XavierBouvignies UBSInvestment Bank, Research Division -TechnologyAnalyst

MarcHesselink INGGroep N.V.,Research Division -Research Analyst

WimGille ABNAMRO BankN.V.,Research Division -HeadofResearch &EquityResearch Analyst

PRESENTATION

Operator

Goodday,ladiesandgentlemen.WelcometoTomTom'sFirstQuarter2020EarningsConferenceCall.(OperatorInstructions)Wewillbefacilitating aQ&Asession towardstheendoftoday's preparedremarks. (Operator Instructions)Please note thatthis conference is beingrecorded.

Iwill nowturn the call over toyour host today --today's conference, ClaudiaJanssen, HeadofInvestor Relations. Youmaybegin.

ClaudiaJanssen -TomTomN.V.-Group Controller &HeadofIR

Thank you, operator. Good afternoon, and welcome to our conference call during which we will discuss our operational and financial highlights for thefirst quarter of2020.

WithmetodayareHaroldGoddijn,ourCEO;andTacoTitulaer,ourCFO.Wewillstarttoday'scallwithHarold,whowilldiscussthekeyoperational developments,followedbyamoredetailedlookatthefinancialresultsfromTaco.Wewillthentakeyourquestions.Asusual,Iwouldliketopoint out thatsafeharbor applies.

Andwith that, Harold, I wouldlike tohandover toyou.

HaroldC.A.Goddijn -TomTom N.V. -Co-Founder, Chairmanofthe Management Board&CEO

Thankyouverymuch,Claudia. Welcome, ladies andgentlemen,andthankyoufor joiningustoday.

The start of 2020 has brought unprecedented times to all. COVID-19 has impacted how and where we work, but it has not changed the focus of our company. Taco will provide further information on financial highlights later during this presentation, and I will now discuss our response to the pandemic andour keyoperational highlights forthe quarter.

The COVID-19 impacts our Automotive and Consumer revenue, but we do not expect a material impact on our Enterprise business. Automotive revenuearisesprincipallyfromvehiclesales,andtheyaresharplyimpactedbyfactoryclosures.Consumerrevenueisimpactedbyasteepdecline in demand, and that is caused by a combination of closed retail stores, retailers reducing inventory and people not driving. Recovery will depend on howquickly economicnormalityis restored,includingvehicleproduction andend-user demand,whichiscurrentlyuncertain.

Given the nature of our business, nearly all of our employees can perform their work from home. With health and safety of our employees and partnersasthehighestpriority,weactedfasttoenableremoteworking,andthathasenabledustosustainourengineereddevelopmentactivities

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and customer service levels. Our employees have responded well to the new situation. We are maintaining productivity, and we are fulfilling customer commitments.

The yearhasstartedwell for Automotive andEnterprise orders,includingnewbusinessexpansions of andextensions ofexistingcontracts, and webelievethatourinvestmentstoimproveourlocationtechnologyproductsaredeliveringtoplan.Becauseofourstrongdebt-freebalancesheet, we have theresilience tomaintain our course despite thecurrentuncertainties. We are,ofcourse,carefullylookingat our cost base and avoiding expenses wherepossible.

In the next slide, I want togive youashort overviewofour operational highlights for2020. As I mentioned, we'reexcited with theprogress we've madeinbothwinningnewdealsandexpandingonexistingpartnerships.OneofthedealswecouldannouncetodayisforourMapsAPIsbusiness in an expandedcollaboration with Verizon. Verizon is integratingour Maps APIs in SDKs in location service offerings andit powersabroadrange ofapplications andasubstantialdeveloper community.

RelatedtoourAutomotivedriving--Automateddrivingactivitiesweannouncedearlyinthequarter,asuccessfuldemonstrationoffast,high-definitionmap-building methods in a joint effort with Toyota and DENSO. At the outbreak of the pandemic, we opened up our traffic reports and APIs to governments, researchers, financial analysts and journalists to better understand the effects of the lockdowns in various geographies. The data were widelyusedandreportedon.

This concludesmy partofthe presentation. I'mnowhandingover toTaco.

TacoJ.F.Titulaer -TomTom N.V. - Member ofManagementBoard&CFO

Thankyou, Harold.

Let memake acouple ofcomments on the financials andoutlook, andthen we'll gotothe Q&A.

In the first quarter of2020, we reportedgroup revenue ofEUR131million, which is 23%lower comparedwithlast year. Thelowergroup revenue is mainly due to the impact of COVID-19 and the anticipated decline in Consumer. Location Technology business, which represents roughly 70% ofour group revenue, decreased11%on year toEUR91million. Let me gothrough the details one byone.

Automotivereportedrevenuewasdownby24%toEUR50millioninthequarter,andoperationalrevenuewasdownby2%toEUR85million.The year-on-yearreportedrevenuedeclineisasaresultofhigherdeferralratesinthequarterincombinationwithloweroperationalrevenuefollowing factoryclosures.ForsomeAutomotivecustomers,revenueisrecognizedovertimebasedontheestimatedtotalcontractvalue,whichhasdecreased basedon the anticipatedimpactofCOVID. This hasledtohigherdeferral rates.

Enterprise revenue was upby10%toEUR42millioninthe quarter,reflectingincreasedrevenue from newandexistingcustomers.

Consumerrevenuewasdownby40%toEUR40millioninthequarter.RetailclosuresandfactoryclosuresduringMarchacceleratedtheanticipated declinein Consumer, reflectedbydeclinesin both consumer products aswellasautomotive hardware revenue.

Gross margin was strong at 78% during the quarter, an increase of 6percentage points year-on-year, aresult of larger proportion of high-margin software andcontent revenue versushardwarein ourrevenuemix.

Total operating expenses in the quarter was EUR 180 million, an increase of EUR 46 million compared with the same quarter last year. Of this increase,EUR40millionrelatedtotheincreasedamortization expenseresultingfrom thechangein theestimatedusefullifeof themap database implementedfromQ22019.

The free cash flow from continuing operations was an inflow of EUR 14 million in the quarter. The inflow is driven mainly by cash inflow from a strongercollection ofreceivables duringthe quarter, combinedwith a lower payout ofvariableemployeeexpensescomparedtolast year.

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OurdeferredrevenuepositionisnowEUR395millioncomparedwithEUR369millionattheendof2019.Automotivedeferredrevenueincreased byEUR37million.ReleasesinbothEnterpriseandConsumerpartlyoffsetthisincrease.ThedeferredrevenuebalanceinautomotiveisnowatEUR 315million. At the endofthefirst quarter of2020, we reportedanet cash position ofEUR432million.

ThesharebuybackprogramannouncedwithourQ4andfullyear2019results,beganinthebeginningofMarch.Asaprecautionarymeasureinthe currenteconomicenvironment,thisprogramwassuspendedattheendofMarchuntilfurthernotice.Bythatdate,wehavepurchasedapproximately2 millionshares or anamount ofEUR70million.

I wouldnow like tocomment onthe outlook. As previously communicated, given the uncertainty in the market, we have withdrawn our full year 2020guidance.AutomotiveandConsumerrevenuewerebothnegativelyimpactedinthefirstquarter,andweexpectthistrendwillworseninthe secondquarter.Weplantocontinueexecutingourlong-termstrategyandassociatedR&Dactivities,butwewilltakesomemeasuresintheSG&A area.

Overall,weexpectthat2020, thefreecashflowwillbe negative.We'll provideupdatedguidancewhen wecanreliablyestimatethe duration and consequences ofthe current situation.

With ourQ4pressrelease, wereiterated ourmidtermguidance for our Location Technologyrevenue andourfreecash flow. At thispoint,itistoo earlytomakeamendments tothis midterm guidance.

Operator, we wouldnowliketostart with Q&Asession.

QUESTIONS AND ANSWERS

Operator

(Operator Instructions) Andwe have acouple of questions that came through, sir. Andwe'll nowtake our first question. Thiscomes from the line ofFrancoisBouvignies.

Francois-XavierBouvignies-UBSInvestmentBank, Research Division -TechnologyAnalyst

IhaveacoupleandmaybeoneforHaroldandoneforTaco.ThefirstoneforHaroldis,youmentionedinthereleaseandyourremarksaswellthat youhad agoodstart of the year in terms of orders. SoI just wanted toknowwhat kindof products you're talking about. I mean doyou think you are gainingshares? Justtogetmore color aroundthis kindofgoodstart ofthe year, wouldbe veryhelpful. That'smyfirst question.

HaroldC.A.Goddijn -TomTom N.V. -Co-Founder, Chairmanofthe Management Board&CEO

Yes.Francois,thankyouverymuch.Yes,we'veseensubstantialinterestinournewnavigationproductsfortheAutomotiveindustry.Sotraditionally, weserve--ourtechnologywasmostlyembedded.We'reintheprocessofmovingallofourservicesonlineforonlinedeliveryforconnectedvehicles, butimportantly, alsowithanoff-linefullbackfacility.Thattechnologyismaturingnicely.Andwefoundtractioninthemarketforthoseproducts, andthathasresultedin some deals inthefirst quarter ofthis year. Andthatis --we'reveryhappyabout thatandis aconfirmationthatwe are on theright trackwith ourproductdevelopmentroadmap.

But it'snotjust in Automotive, we alsosaw --seensome activityin Enterprise business aswell. I thinkthe importance ofthe Verizon dealis not to be underestimated. It's a breakthrough deal for us. Verizon has been a customer, but they're now taking our APIs instead of uncompiled map content. I think that's an important one as well. And we see further traction for our APIs Enterprise business, especially on the West Coast. We're very encouraged by that as well. All that, in combination with long-term strategic accounts traction again in Automotive, take up of our new

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technology products thatwill beready somewherenextyear, forwhichwearewriting ordersalready, givesus alltheconfidencethat weneedto continue our investmentsin theareas thatare --thatwethinkare strategic.

Now the COVID situation, of course, is a tough one because we don't know how long it's going to take and how long it will take to fully recover from the current --from the levels ofbusiness that we'veseen before the pandemic.But the underlyingbusiness issolidandsound. Andthat has made us also decide to keep going where we're going, avoid cost where we can, but not compromise our ability to deliver against the product roadmap andour strategic priorities.

Francois-XavierBouvignies-UBSInvestmentBank, Research Division -TechnologyAnalyst

That's very helpful. Just a follow-up on that before asking Taco my second question is, in terms of Enterprise, I mean, it's always very difficult to model, like the long term. It seems that in the last few years, you have been successful with Microsoft, Verizon, and a couple of new deals. My questionis, whatchangedin thelast 2years afterthis acceleration ofthis within Enterprise, whatmakes yougainingmore deals in your view?

HaroldC.A.Goddijn -TomTom N.V. -Co-Founder, Chairmanofthe Management Board&CEO

Well,it'sanumberofthings.Theyarepartlycommercial.Ithinkwehavegoodpartners.Weworkwellwithourpartners,collaborative,committo, I think, that's an important part of the success. But I think fundamentally, it's the underlying technology that gives our customers the confidence thatthey'rechoosingthe right partner. These areimportant deals. They're lastingfor alongtime.It's noteasytoswitch. Soyouneedtodeal with partners that are transparent, reliable, but are also deploying modern software technology principles and have a kind of a modern stack. And I think our map-making platform is one of the things where we have a lead that inspires confidence. There's real end-user benefit from that to be gained as well. You add it all up, and we are successfully expanding our business, both in America and in the -- and globally in the Automotive industry.

Francois-XavierBouvignies-UBSInvestmentBank, Research Division -TechnologyAnalyst

Andwithin Automotive,I mean,doyouthinkyouare gainingmarket share?And...

HaroldC.A.Goddijn -TomTom N.V. -Co-Founder, Chairmanofthe Management Board&CEO

Yes, yes, yes.

Francois-XavierBouvignies-UBSInvestmentBank, Research Division -TechnologyAnalyst

Okay. AndHDMaps, any...

HaroldC.A.Goddijn -TomTom N.V. -Co-Founder, Chairmanofthe Management Board&CEO

Yes. HD Maps, it keeps going and we keep working, and we announced that some R&D work with Toyota and DENSO, where we do online, on-the-spot, immediate map making based on video and cameras on board of cars. So very, very cool stuff. That's happening and where we are maturing the pipeline and so on and so forth. But the introduction of fully automated cars has been pushed further out. So the applications that carmakers are lookingfornoware closertomore an increment ofwhatwe'realreadydoingwithcruisecontrolandlane guidanceandthose kind of things, where HD Maps will start playing a role. But the fully automated driving car is going to take longer than we all have hoped, but the business for HD Maps willcontinue todevelop graduallyover thenext 2,3, 4years.

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Francois-XavierBouvignies-UBSInvestmentBank, Research Division -TechnologyAnalyst

Thatwasgreat.AndmaybeTacoquickly.Onthefreecashflowguidancethatyougave,Imean,justthatit'sgoingtobenegativein2020.Iunderstand there is a lot of uncertainty, and I totally, yes, understand. Could you run through the different scenarios that you may experience in 2020? So without givinglike acleartarget,just tohelp us runthroughthedrivers ofthe freecashflowfor 2020 wouldbe great.

TacoJ.F.Titulaer -TomTom N.V. - Member ofManagementBoard&CFO

Yes. So as Harold already explained, it's that the Enterprise revenue is relatively not affected by COVID. For Consumer, it is different because it is relatedtoend-userdemand,peopledrivinglessandnotgoingonholidayorlessthannormally.Andtheretailclosureisalsolimitingtheaccessibility of our product. For Automotive, there's a direct correlation between factory closures. The royalty reports that we receive are coming from the factory. So when cars are being shipped out of the factory, the OEMs report those royalties to us. And yes, in a period where factories are closed, our revenue stops. And if factories are producing on lower capacity, our revenue is lower. So the modeling for Automotive is directly correlated basedon the number ofweeks thatthese factories areclosedornotoperatingatfullcapacity.

Yes,that'sallIcansayaboutit.Andwecan--youcanmodeleverysinglescenarioyoulike,obviously.Butwe--yes,wearehopefulthatduringQ2, we seean uplift again in the Automotive production volumes.

Francois-XavierBouvignies-UBSInvestmentBank, Research Division -TechnologyAnalyst

Okay. Andanyrange youcouldgive forfree cash flow,like arange even ifit's wide,couldyouprovide that?Or...

TacoJ.F.Titulaer -TomTom N.V. - Member ofManagementBoard&CFO

Idon'twant togothereat this point,no.

Francois-XavierBouvignies-UBSInvestmentBank, Research Division -TechnologyAnalyst

Okay. Okay, that's fair. But do you expect, for example, Q2 to have a big negative in Q2 and then unknown later? Or is it going to be more like unknown throughthe year,butnotnecessarilybadinQ2, ifyouunderstandwhere I'm going?

TacoJ.F.Titulaer -TomTom N.V. - Member ofManagementBoard&CFO

Well, Q2will seenegative cash flow. AndQ4willprobablysee apositive cash flow. Andyes,theQ3is abit ofaquestionmark.

Francois-XavierBouvignies-UBSInvestmentBank, Research Division -TechnologyAnalyst

Okay. YousaidQ2negative, right?Sorry, I didn'tget it.

TacoJ.F.Titulaer -TomTom N.V. - Member ofManagementBoard&CFO

Q2is negative. Yes.

Operator

Andwe willnowtake our next question, andthiscomes from theline ofMarc Hesselink.

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MarcHesselink -INGGroep N.V., ResearchDivision -ResearchAnalyst

Firstly,Iwouldliketocomebackonthatstrongorderintakeoronthestrongmomentumthatyou'veseensincethestartoftheyear.Ontheother hand, youalsohavethenegative effect ofwhereyouhave toadjust your backlog alittlebit because ofthelowercar volumes. Couldyouindicate what currentlyis stronger?Is your backlogstillgrowingsince the beginningofthe year?Orisitin decline at the moment?

TacoJ.F.Titulaer -TomTom N.V. - Member ofManagementBoard&CFO

Sorry, I didn't get your question.Couldyourepeatthat,please?

MarcHesselink -INGGroep N.V., ResearchDivision -ResearchAnalyst

Yes. Soif I'm correct, there are 2things driving the backlog. One, actually, the order intake, whichyoualreadyelaboratedon, that'sprettystrong. Butthere'salsoanegativeeffectonthebacklog,ifI'mcorrect,thatbecausetherearelowervolumesatthemoment,youalsohavetodecreasethe expectations ofcar volumes in the future. Whatis astronger trendat themoment?

TacoJ.F.Titulaer -TomTom N.V. - Member ofManagementBoard&CFO

The former. [Harold]Yes, sogrowing...

TacoJ.F.Titulaer -TomTom N.V. - Member ofManagementBoard&CFO

Sothe order intakeis alotbigger thanthereassessment ofthecurrent order.

MarcHesselink -INGGroep N.V., ResearchDivision -ResearchAnalyst

Andthebigpush behindthat, isthatnewcontracts or the extension ofthe contracts or theexpansion ofthe contract, which 2ofthose?

HaroldC.A.Goddijn -TomTom N.V. -Co-Founder, Chairmanofthe Management Board&CEO

All ofthe above. Yes,soorder intake is strongthatleads toagrowingbacklog orderbook.

TacoJ.F.Titulaer -TomTom N.V. - Member of ManagementBoard&CFO

Yes.Sothereare--soifyoulookatthebacklog,thereare3elements.One--ifyoulookatthedeltaofthebacklog,thereare3elements:Oneisthe reportedrevenueintheperiod.Nowthatwasquitemodest.Andthenyouhavethereassessmentofthefuturerevenues.Andthenyouhavenew order intake. Nowthe last one, the neworderintake,is byfar thebiggest.

MarcHesselink -INGGroep N.V., ResearchDivision -ResearchAnalyst

Okay, that's clear. Then, on Automotive operational revenue, to get a little bit of a feel to help us with our own modeling. What is the run rate, rough numbers, post COVID andpre COVID?Are wedown like 50%?Or whatkindofmagnitude shouldwe thinkat the moment?

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TacoJ.F.Titulaer -TomTom N.V. - Member ofManagementBoard&CFO

For Automotive?

MarcHesselink -INGGroep N.V., ResearchDivision -ResearchAnalyst

Yes, for Automotive --the operational revenue in Automotive?

HaroldC.A.Goddijn -TomTom N.V. -Co-Founder, Chairmanofthe Management Board&CEO

Well, the way to think about the operational revenue is that when factories are closing down, the whole thing stops. So all car factories or nearly all car factories producing cars with our software and content stopped producing cars in March -- at some point in March, and that has a direct impactonourbillings.When--sothere'snowtalkthatcarfactorieswillstartproducingagain,albeitatalowerlevel.WeseenewsfromRenault,a couple ofother carmakers, whoare eitherpreparingtobringtheir machines andtheir productionlines online or arecommittedtodosoalready.

Sowe expect that manufacturing will start, not in April even at some factories, that in Mayit will continue. We don't expect thosefactories torun at full capacity, but they will slowly ramp up their capacity. We don't know to what extent the whole supply chain is affected. It's not just ours -- our components thatgoin, butalsoalotofothermanufacturersneedtobringtheir supplychainonline.

So there will be a gradual restart of production capacity. Once that is at full capacity, then we need to look at the end-user demand effects that come into place. And those are harder to predict. And what the economy will look like in 2021, of course, is still all-defining question. So from a financialperspective,2020willnotbegood,let'sfaceit.It'simpossibletocallitagoodyear.Butonproductdevelopment,onorderintake,long-term outlook, we still believe that we can produce a good year from that perspective, and we're fully in position to pick it up in 2021, when we hope everythingis backtonormal.Butwhat thestate ofthe overalleconomy will dotocardemand is,of course,the $1billion questionthat wecannot answer atthis stage.

MarcHesselink -INGGroep N.V., ResearchDivision -ResearchAnalyst

That's veryclear,thanks. Final question is the part that actually you have the feasibility on Enterprise. It seems tohave a good start of the year and a nice contract with Verizon. Whatkindofgrowthrate, roughnumbers,shouldwe thinkfor the full year?

TacoJ.F.Titulaer -TomTom N.V. - Member ofManagementBoard&CFO

Well, I think the revenue that we reported in Q1 was a good indicator for the further quarters in the year. So it's quite stable sequentially as well. And year-over-year, we see a bit of increase compared to the increase that we saw also Q1-Q1. So EUR 41 million in Q1 that is the run rate. And maybe at the endofthe year, weare acouple ofmillionhigher, but it will be --it will start with a4.

Operator

Andwe willnowtake our next question, andthiscomes from theline ofWim Gille.

WimGille -ABNAMRO BankN.V., Research Division -HeadofResearch & EquityResearch Analyst

Sorry,ifIaskquestionsthathavebeenaskedbefore,butmylinegotcutoffafewtimesearlierinthecall.Firstofall,onthecontractwinsin--with OEMs, you'rereferringtoneworcontract extensions,but more importantly, alsonewdeals withboth newapplications as well asnewclients, i.e., newOEMs. Can yougive us abitmore granularityon where youhave been winningthese contracts without namingthe actual client,obviously? Butcanyougiveusabitoffeelingonwhattypeofproduct?Isitmainlythenewsoftwareapplications thatyou'velaunchedearlierintheyear?Or

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is it Maps? Is it Traffic, Europe versus U.S.? So that we have a bit more feeling on what it's actually -- which corners you're actually winning at this pointin time.

SecondlyisonEnterprise.Obviously, alotofquestionsalreadyaboutthegrowth.Butindeed,itappearsthatyou'vepasttheinflectionpointhere, growingdouble-digitratesinQ1alreadycoming fromastrongorahighbase.Sowhat'sbeendrivingthis growth?Isit theVerizonextension and some other kindofnewdeals?Or isitexistingclients thatdomore work?Is itincompiledMaps oris it Map APIs?Andmaybe on the Map API, I've gotafewfollow-up questions, but let's start with these 2questions.

HaroldC.A.Goddijn -TomTom N.V. -Co-Founder, Chairmanofthe Management Board&CEO

Yes. Wim, thank you very much. Yes, it's difficult to give you a lot of detail. But I think the most important thing for us, and I think for TomTom is that those -- that we see significant deal flow now on the new technology and that is -- I referred to it earlier in the Q&A session. So we have -- in fact,wehave2typeofcustomers.WehaveWestCoastcustomerswhoarekindofpullingusaheadintermsofourtechnology.Andthenwehave a more conservative Automotive customer base with embedded applications, broad variety, little standardization. And generally speaking, high cost to serve per contract. Now what we see now is the new technology and these carmakers are moving online as well. They have now kind of cometotheviewthatitisharderandhardertodeliveragoodend-userexperienceifyou'reonlyrunningembeddedsoftware.Sowehaveinitiated achangemore than ayearago. It istimethat weswitchgear andput allof ourefforts on online deliveryof ourproducts.Andthatis --that wasin time. We are nowsufficientlydevelopedin our products,thatwe're winningsignificant deals on thattechnology.

Longerterm,thisisveryimportantbecausethecosttoservewillgodown.Wegetmoreuniformityinourproductoffering.Thedifferenceinwhat weneedtobuildforMapsAPIsandautomotiveapplicationswillgetnarrower.TherewillbemorecommonalityinourAPIsandourproductoffering. Andthatpreparesusformoreengineeringandsoftware-drivenapproachtoinnovationwithlessvariety,moreuniformity,andgenerallyspeaking, better products. And the fact that we won those contracts in the beginning of the year for that online delivery of our product portfolio is very encouragingbecauseit willprepare the wayfor better products,moremature, better user experience, lowercost todevelop, more benefit of the scale we have in Automotive and Enterprise will come through as a result of that. So we're very happy that we have those early proof points. We believethatit'llhelpotherOEMstofollowthesametrajectory.Andasaresult,wewillbelookingatabusinessthatwillbesimplerandwithamore uniformproduct portfoliogoingforward.

WimGille -ABNAMRO BankN.V., Research Division -HeadofResearch &EquityResearch Analyst

Anddoes it alsomake youmoreeffectivein basicallycompetingagainst Googlein thisparticularcase?

HaroldC.A.Goddijn -TomTom N.V. -Co-Founder, Chairmanofthe Management Board&CEO

Absolutely. Absolutely. We started that development was a -- I'm not going to sugar coat it, it was a direct reaction to developments in the market. OEMs hadtofollowthrough as well. They've long been preventing us from delivering our products online because of cost. Theynowaccept that there's no longer a strategy they can stick to and need to follow the mainstream in order to satisfy their end customer with experiences that are compatible towhatyouget onthe mobile phone.

Nowwestartedthatdevelopment.It'stakenup.There'sgoodproofpointsandit'sallworking.Andnowwealsohavethecommercialproofpoints thatcarmakers are comingtousfor onlineproducts aswell.

WimGille -ABNAMRO BankN.V., Research Division -HeadofResearch &EquityResearch Analyst

Very good. And then maybe on APIs and Enterprise. At the Capital Markets Day, you already alluded to the fact that API is kind of the, let's say, future revenue stream for Enterprise. At least, it's anewareaforyouguys during the Capital Markets Day. The revenues yougeneratedfrom Map APIs were still relativelylimited compared tothe revenues you're generating in compiled Maps. So can you give us a bit of feeling where you are

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now in that transition? When can we expect Map APIs to become a meaningful revenue stream? Can you maybe share some data points? How manyMap APIcalls doyouget on amonthlybasis?Andat whichrate is this growing?

HaroldC.A.Goddijn -TomTom N.V. -Co-Founder, Chairmanofthe Management Board&CEO

Yes. So the -- I think we're doing very well in the Enterprise business, and there's proof for that with deals that we did with Microsoft, of course, who are using our APIs for their Location Technology products. The new contract with Verizon is not a proof point. But there's a long way to go, especiallyintheindependentdeveloperroute,that'swherewe'relackingstrength.Weneedtoimprovethere.Andthat'soneoftheareasthatwe have onour to-dolist is toalsomake product offeringsthatarecompellingfortheindependentanddevelopercommunity. Wehave alittlebitof traction there. That's clearlyanareawhere we can andwillimprove.

WimGille -ABNAMRO BankN.V., Research Division -HeadofResearch &EquityResearch Analyst

Very good. And then maybe on lastly, the widely publicized Huawei contract. Basically, developers on the Harmony OS platform can access your APIs now. Doyousee anytraction on the developer communityon thatparticular platform?

HaroldC.A.Goddijn -TomTom N.V. -Co-Founder, Chairmanofthe Management Board&CEO

Icannotanswerthequestion.IneedtoreferthattoHuaweitoanswerthat.Itiscommerciallysensitive.SoIamnotinpositiontoanswerthat,Wim.

WimGille -ABNAMRO BankN.V., Research Division -HeadofResearch & EquityResearch Analyst

Allright.Iunderstand.Andthenmaybelastly,withrespecttoHDMaps,isthereanyindication, ordoyouhaveanyfeelingonwhetherornotthis crisis,whichobviouslyisleavingdeepscarsintheautomotiveindustry,ifthiscrisiswillhaveanimpactontheOEM'sroadmaptowardsautonomous driving? And in a similar fashion, will it impact the road map for HD Maps? And can you just remind us on kind of when the first, let's say, level 2 vehicles will enter the market ingeneratingmeaningful revenuestreams ontheHD Map side?

HaroldC.A.Goddijn -TomTom N.V. -Co-Founder, Chairmanofthe Management Board&CEO

Well, I think the -- I think you cannot underestimate what will happen to the car industry at this stage, and fighting -- for carmakers to fight their waybackouttopositionthey'reholdinginatthemomentispriority#1,2and3.There'slimitedbandwidthnowtothinkaboutthewider,longer-term strategic implications of what has happened. I think it will take some time before for the dust to settle and then to analyze what the impacts are on thelonger-termroadmap andproduct development cyclesfor carmakers. Butit'sclear thatthiscomes at abadmomentwhen there's alot of transitiongoingonalreadyinthecarindustryandthisisnothelping.Wecanonlyhopethatproductionwillresumerelativelyquickly.Ithinkthere is indications that, that will happen. It will take a couple of weeks, maybe months for the whole supply chain to get adjusted to the new normal. But then we will start to get visibility on end-user demand andon the more longer-term strategic implications. I think it's a bit too early to call at thisstage.

Operator

Andnofurther questions havecame through at thistime, youmaycontinue.

ClaudiaJanssen -TomTomN.V.-Group Controller &HeadofIR

Since there arenofurther questions, I wouldlike tothankyouall for joiningus this afternoon.Operator, youcanclose thecall.

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APRIL 15, 2020 / 12:00PM, TOM2.AS - Q1 2020 TomTom NV Earnings Call

Operator

Yes, ma'am. Thankyou. That concludes our conference for today.Thankyouall for participating.Youmaynowdisconnect.

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TomTom NV published this content on 16 April 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 April 2020 11:05:15 UTC

Real-time Euronext Amsterdam Other stock markets 07:44:38 2024-04-23 am EDT			5-day change	1st Jan Change
5.505 ^EUR	+0.82%		-24.33%	-13.78%

Apr. 17	TOMTOM : TomTom starts the year on the wrong foot
Apr. 17	TomTom N.V. Provides Revenue Guidance for the Year 2024	CI

TOMTOM : TomTom starts the year on the wrong foot	Apr. 17
TomTom N.V. Provides Revenue Guidance for the Year 2024	Apr. 17	CI
Transcript : TomTom N.V., Q1 2024 Earnings Call, Apr 17, 2024	Apr. 17
European shares lifted by Adidas, LVMH on healthy earnings	Apr. 17	RE
Navigation firm TomTom Q1 operating result turns to loss on higher R&D costs	Apr. 17	RE
TomTom N.V. Reports Earnings Results for the First Quarter Ended March 31, 2024	Apr. 17	CI
Quotes from Dutch companies on the worsening business climate	Mar. 12	RE
TOMTOM : EPS cut (2023: from € -0.17 to -0.17, 2024: from € 0.01 to -0.02)	Feb. 16
TomTom N.V. Reports Earnings Results for the Full Year Ended December 31, 2023	Feb. 02	CI
FTSE 100 Ends Week Down, Dragged by Oil Majors	Feb. 02	DJ
TOMTOM : Q4 23: final preparations before the ramp-up	Feb. 02
TomTom N.V. Provides Revenue Guidance for the Year 2024	Feb. 02	CI
Transcript : TomTom N.V., Q4 2023 Earnings Call, Feb 02, 2024	Feb. 02
Navigation firm TomTom sees broadly flat 2024 sales on subdued auto sector	Feb. 02	RE
Tomtom and Mitsubishi Electric Collaborate to Advance Automated Driving	Jan. 08	CI
TOMTOM : EPS cut (2023: from € -0.12 to -0.17, 2024: from € 0.02 to 0.01)	Dec. 19
Microsoft and TomTom to Bring AI Voice Interaction to Motor Vehicles	Dec. 19	MT
TomTom creates AI-based conversational assistant for vehicles with Microsoft	Dec. 19	RE
Italy's Nextalia, NB Renaissance to file joint Verisem bid - source	Dec. 05	RE
TomTom Lands Multi-year Deal with Bridgestone's Mobility Unit	Nov. 16	MT
TomTom N.V. announces an Equity Buyback for 7% of its issued share capital, for ?50 million.	23-10-30	CI
TomTom N.V. authorizes a Buyback Plan.	23-10-29	CI
TOMTOM : DCF cut by -11.1%	23-10-16
TomTom N.V. Reports Earnings Results for the Third Quarter and Nine Months Ended September 30, 2023	23-10-13	CI
Global markets live: Wells Fargo, JPMorgan, Citigroup, Blackrock, UnitedHealth...	23-10-13

	1st Jan change	Capi.
TOMTOM NV	-13.78%	742M
BAYANAT AI PLC	-19.22%	1.88B
NEXTNAV INC.	+88.76%	945M
HI-TARGET NAVIGATION TECH CO.,LTD	-36.58%	468M
IMAGESAT INTERNATIONAL (I.S.I) LTD	+30.81%	220M
THINKWARE CORPORATION	-12.21%	108M
QUARTIX TECHNOLOGIES PLC	+2.27%	92.52M

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