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MarketScreener Homepage  >  Equities  >  Euronext Amsterdam  >  TomTom NV    TOM2   NL0013332471

TOMTOM NV

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TomTom : Q2 2020 Transcript

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07/16/2020 | 08:51am EDT

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TOM2.AS - Q2 2020 TomTom NV Earnings Call

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

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JULY 15, 2020 / 12:00PM, TOM2.AS - Q2 2020TomTom NV Earnings Call

CORPORATE PARTICIPANTS

ClaudiaJanssen TomTom N.V. -Group Controller &HeadofIR

HaroldC.A.Goddijn TomTomN.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

Ladiesandgentlemen,thankyouforstandingby,andwelcometotoday'sTomTomQ22020ResultsCall.(OperatorInstructions)Imustadviseyou thatthiscallisbeingrecordedtoday,Wednesday,July15,2020.Iwouldnowliketohandthecallovertoyourhosttoday,Claudia.Pleasegoahead.

ClaudiaJanssen -TomTomN.V.-Group Controller &HeadofIR

Thankyou,operator,andgoodafternoon,andwelcometoourconferencecallduringwhichwewilldiscussouroperationalandfinancialhighlights for thesecond quarter of2020.WithmetodayareHaroldGoddijn, ourCEO;andTacoTitulaer, our CFO.We willstart today'scallwith Harold,who willdiscussthekeyoperationaldevelopments,followedbyamoredetailedlookatthefinancialresultsfromTaco.Wewillthentakeyourquestions. As usual, I wouldliketopoint out thatsafe harbor applies.

Andwith that, Harold, I wouldlike tohandover toyou.

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

Well,thankyou,Claudia.Welcome,ladiesandgentlemen.Thankyouforjoining.Sotheconsequences ofthepandemicremainachallengeforthe globaleconomy,butourrevenueisnowontheroadtorecoveryfromthelowsthatweexperiencedinApril.We'veseenaverygoodupwardtrend in the second half of the quarter, both for automotive and for retail products, and we expect thesecond half of this year to be cash flow positive. Wehaveputstrictcostcontrolmeasuresinplacewithoutcompromisingourdevelopmentandengineeringcapacity.Iamverypleasedtoseehow ouremployeeshavebeenabletodealwiththesituationwithnomateriallossinproductivityandverygoodcommunication. Wealsocontinueto recruit toptalent toTomTom, whoare helpingus toachieve ourstrategic objectives. We sawalarge volume ofdeal activity,combinedwith high successrate,especiallyinautomotive,whichwillcontributetoourfuturerevenue.It'sgreattoseethatwehavegoodtractionwithonlineproducts for the automotive industry, and that's a clear sign that our customers see us as a partner for a truly connected future. And that online future is helpingustosimplifyandharmonizeourproductportfolioacrossmultiplecustomersegmentsanddeliverabetterend-userexperienceasaresult.

Let'snowturntothekeyoperationalhighlightsforthequarter.We'vebeenawardedaglobalmultiyearcontractintrafficinformationanddynamic routingtoFord's SYNC platform.This contract furtherexpands our footprintin NorthAmericaandwill contribute tofurther improvements of our traffic product.

TogetherwithDelphiTechnologies,wecoulddemonstratefuelsavingsofupto10%inpassengercarsbycombiningDelphi'stechnologyandour ADASMap tocontrolgearboxandmotor management. Vehicleswere testedon avarietyofreal-worlddrivingconditions tovalidate the systems fuel efficiency, and we expect this technology to contribute to the development of safer and more sustainable costs. Our Enterprise business

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JULY 15, 2020 / 12:00PM, TOM2.AS - Q2 2020TomTom NV Earnings Call

recently announced an extension of our global deals with ViaMichelin to provide maps and traffic information services. And finally, we made improvements toour search APIbysignificantlyimprovingthe number andqualityofour POIs.

This concludesmypartofthe presentation, andI'mhandingover toTaconow.

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

Thank you, Harold. Let me make a couple of comments on the financials and outlook, and then we will go to the Q&A. In the second quarter of 2020, we reported group revenue of EUR 124 million, which is 41% lower compared with last year. Our Location Technology business, which representedroughly75%ofourgroup revenue, in the secondquarter decreasedby 19%year-on-year toEUR94million. The quarter started with factoryandretailclosuresimpactingtradingconditionsforAutomotiveandConsumer.InMay,thegradualreopeningofautomotivefactoriesand thereturntoretailactivityledtoimprovingconditions,whichcontinuedthroughoutthequarter.Junewasbyfarthestrongestmonthandcontributed abouthalfofthequarter'soperationalrevenueinAutomotiveandConsumer.Operationalrevenueisdefinedasreportedrevenueadjustedforthe movementin deferredandunbilledrevenue.

Letmegothroughthedetailsbusinessbybusiness.Automotivereportedrevenuewasdownby32%toEUR52millioninthequarter,andoperational revenue was down by47%toEUR48 million. Both of these decreases reflect theimpact of the closure of automotive factories during the quarter as revenue is based on car production volumes. Enterprise revenue was up by 5% to EUR 42 million in the quarter, reflecting increased revenue fromnewandexistingcustomers.OperationalrevenuewasEUR20million,7%higherthaninthesamequarterlastyear.COVID-19hashadalimitedimpactonourEnterprisebusinessduetothenatureofcontracts,typicallylonger-termfixedfeecontractsandthenatureofourB2Bcustomerswho are mainlyactivein thetechnologyspace.

Consumer revenue was down by 68% to EUR 30 million in the quarter, and operational revenue was down by 76%to EUR22 million. The closure of retail stores has impacted consumer revenue. And while conditions have been tough, it is important to note that the year-on-year decline in consumer revenue is exaggeratedbythe strongreference quarter.

Gross margin wasstrongat 86%duringthe quarter,representingan increase of 19percentagepoints year-on-year. This high gross marginin the firstquarter --inthis quarter,sorry, canbeexplainedby3 things.Firstly,the ongoingchange ofhigher Location Technologyandlower Consumer revenuewillleadtoapositivemixeffectasconsumerproductshavelowermargins.Secondly,costsincurredforcustomengineeringworkforsome ofthe automotive customersisplacedonthebalance sheet. Thesecosts are taken as awhole inthe quarter when thecar line reachesthe start of production.Thislowersthemargin.Inthecurrentquarter,plannedofstartproductionswerepostponedtothesecondhalfoftheyeargiventheCOVID situation.Lastyear,thesecondquarterincludedtheimpactofsomelargestartofproductions,makingthisquarter'smarginhigherbycomparison.

The thirditemthatcanaffectthemarginisnormalmovementsinprovisions,such as warranty.Youcanseefrom ourcash flowstatementthat we have a net release from all our provisions of EUR 3 million. Most of these will impact the gross margin positively. Total operating expenses in the quarter wasEUR170million,adecreaseof EUR55millioncompared withthesame quarterlastyear. The decreaseis largerbecause thereference quarter includes catch-up amortization of EUR 41 million relating to the first quarter of 2019, following the change in the estimated usual life of themap databaseimplementedin Q2 2019.

Ifweexcludetheamortizationoftechnologyanddatabases,OPEXdecreasedby11%toEUR106million.Thedecrease,mainlyinselling,generaland administrativeexpenses,showstheeffectofdiscretionarycostcontrolmeasurestakeninthequarter.ThefreecashflowwasanoutflowofEUR54 million in the quarter. This reflects lower operational revenue and higher working capital usage. At the end of Q2 2020, we reported a net cash position ofEUR373 million.

Wewillnotprovideguidanceatthisoutlook--sorry,wewillnotprovideguidanceatthistime.Asmarketconditionsdevelop,wewillreassessthis position andalsowhethertoresume our sharebuybackprogram. Whatwe can sayisthatweexpect ourrevenue tocontinue its recoverypathin the second half of the year. In OPEX, our expenses in R&D are expected to increase quarter-on-quarter. However, we will continue to control our discretionaryspend.TherecoveryofrevenuecombinedwithourOPEXexpectationsandseasonalcustomerreceiptsmeansthatweexpecttohave apositive freecashflowinthe secondhalfof2020.

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JULY 15, 2020 / 12:00PM, TOM2.AS - Q2 2020TomTom NV Earnings Call

Operator, we wouldnowliketostart the Q&Asession.

QUESTIONS AND ANSWERS

Operator

(Operator Instructions)Our firstquestion comesfromtheline ofFrancoisBouvignies fromUBS.

Francois-XavierBouvignies-UBSInvestmentBank, Research Division -TechnologyAnalyst

Hi,thankyouverymuchfortakingmyquestions.Ihaveacouple.Andthefirstoneisonyourcommentsaroundthedealactivity.Harold,Imean, everyyear, yougivecomments,qualitativecomments aroundthese kindof deals, andhowis theorder intake for the year andbacklog. AndifI look at your comment forH1, itseems fairly positive or constructivecompared toprevious years. So Iwas just wondering howshouldwe thinkabout for the fullyear deal activity, notonlyH1, buthowdoyoucompare itversus theprevious years?And moreimportantly, whyisityouseeitbetter?Isit becauseofamarketshare?Isitbecauseofthe penetration ofin-dash going?Whatis drivingthesehigh volumes?

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

Well, thankyou, Francois. The year order intake is always lumpy,especially in the automotive industry. It depends on --it's black andwhite. Deals areavailable,nordoyouwinthem,youlosethem.Butwe've--butatthesametime,thefirsthalf,itwentwell,betterthantypicallyforcomparable periods. Andwe wantedtoshare thatwith thecommunitythatdespite allthedoom andgloomthatwe're seeingin production land, incarland, businessis goingon asusual. Andactually, on the order intake side, it's been strong, andbetterthan yearsthatwetypicallysee at this stage in the calendar, I wouldsay.

Now you're saying, again, asking me what second half will look like is a tough one. I just don't know. And so it's difficult for us to say something about the whole year and the order activity andthe order intake. I'm not going to do that. But I do want to share that the first half was good, not onlyin terms ofvolume,but alsostrategically.SoanotherOEMsignedup, whichisimportantandalsostrategicallyimportantbecause westarted to get contracts for online technologies. And that is very significant for us. Because the mode of moving to online is important in multiple ways. And one opportunity we see is that by going online, we can really simplify, unify our technologies, make them available to different customer segments. We can start reducing the complexity associated to deals in the automotive industry, the branching and the forking, the maintaining of legacy systems. There is now a clear trend togo online and that's a good one. So I'm happy with what we have achievedin the first half of this year andlookingforwardtothesecondhalf.But qualitatively, Ican'tsaymuch whatasecondhalfis likelytolooklike.

Francois-XavierBouvignies-UBSInvestmentBank, Research Division -TechnologyAnalyst

Andshouldwe thinkthatthisstrong activityisinmarket overall?Or is it alsomainlydrivenbyyour high win rates,i.e., market share gain?

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

Ithinkitwillresultinmarketsharegainsovertimewhenthosecontractscomeonline.Sohappywiththat.They'renotnecessarilylinkedtoalarger addressable market. Although the market will grow with a higher percentage of electrical vehicles in the mix because electrical vehicles will all haveLocationTechnologyonboard,100%attachmentrate.That'ssomethingyoustilldon'tseeinpetrolcarsordieselcars.Sotheretheattachment rates are relatively low still. And if the EV vehicles take a meaningful proportion to total production volumes, then the total attachment rate of Location Technologyinvehicleswill improve --will goup

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JULY 15, 2020 / 12:00PM, TOM2.AS - Q2 2020TomTom NV Earnings Call

Francois-XavierBouvignies-UBSInvestmentBank, Research Division -TechnologyAnalyst

Okay. That's very clear, Harold. The second one is on the HD Maps. I mean you usually give somecomments. This quarter, you're abit more quiet on this side. Iknowthat last quarter, yousaidtheremaybe somepushouts because of what's going on with the pandemic. Couldyougive some update there?

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

Well, we don't see an acceleration. We haven't seen an acceleration in HD demand in Q2. And carmakers are still hesitant. Not clear about the volumes,notclearabouttheintroductiondate.SoweareveryactivewithHDMaps.WehaveanumberofRFQsoutstanding.Butit'sabitdisappointing ifwe talkabout take-up andclaritythatwe're gettingfromthemarket atthisstage.

Francois-XavierBouvignies-UBSInvestmentBank, Research Division -TechnologyAnalyst

And do you think it could be structural with the issue of HD Maps, I don't know, because it's too expensive or because the industry is not really ready?Or isitmainlydue toshort-term uncertaintybecause ofthe crisis?

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

I can't say that. It's difficult for me to judge. I don't think the pandemic is helping, but I see nervousness with carmakers to add at scale all the hardware andall the kit thatis neededtoget ittoworkandtheirabilityto charge thatbill ofmaterialtothe endcustomer.

Francois-XavierBouvignies-UBSInvestmentBank, Research Division -TechnologyAnalyst

Okay.AndthelastoneismaybeforTaco.IfwelookattheAutomotiverevenuesforthisyear,youmentionedinthereleasethathitatroughbasically inAprilandthatyouseearecovery.SoshouldweexpectagradualimprovementinyourAutomotivequarter-on-quarterinQ3andQ4asitrecovers slightly?I mean,reportedrevenues.

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

Yes. So I think that both Q3 and Q4, we will be able to report higher numbers than we've seen in Q1 and Q2. The operational revenue will see a stronger recovery. We also think that the operational revenue is more skewed towards Q4. So Q3 will be better than Q2 in operational point of view, butQ4 willbeevenbetterthanQ3, again, operationalrevenue.

But toanswer your first -- yes. So Francois, so answering your first question, yes, reported revenue will be higher in Q3 andQ4, that is our current expectation.

Operator

Our next question comesfromthe lineofMarc Hesselinkfrom EFA(sic)[ING].

MarcHesselink -INGGroep N.V., ResearchDivision -ResearchAnalyst

First question is also coming back on the commercial traction comment. You've seen success both on the Automotive and the Enterprise side. But if youmentioneditin thisrelease,is thatalsoonboth sides or isitanyofthe2 more particular?

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JULY 15, 2020 / 12:00PM, TOM2.AS - Q2 2020TomTom NV Earnings Call

HaroldC.A.Goddijn -TomTomN.V.-Co-Founder, Chairmanof the Management Board&CEO

No, it's onboth sides. SobothinEnterprise andinAutomotive.

MarcHesselink -INGGroep N.V., ResearchDivision -ResearchAnalyst

Okay. YourpositiontodayinNorth America, we've seen thesuccesswithpreviousquarter Verizon andthis quarterFord.What'syour feel onyour relativepositioninthatmarket?Anddoyouhavetofeelthatbecauseoftherecentwinsthatyouarenoweveninabetterpositiongoingforward alsotoshowtoother North American clients.

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

Yes. We --I'm kindof happywhat we have achievedthere. We have anumber of verybig names in our client portfolio. It'sreally goodtosee that theprivateteamthatwemanagedtopullthatoff.Soyoulookat UberandMicrosoft,Appletonameafew.Thoseareleadingcompanies.Andwe seemtohavetherightmixofproductsandpeopleandconnectionstobesuccessfulinthatspace.We'verecentlymanagedtoextendthatsuccess also into the automotive industry with FCA wins and now Ford as well. And that's an important --it's important for us because we -- like it or not, most innovations come from the West Coast, that's where we learned the most from our customers that they ask us to keep up and move fast. It has a very positive effect on our visibility of TAC gives us access to talent also in the West Coast. So I'm happy that we are where we are, and we can buildfrom thatposition further. I'm convincedofthat.

MarcHesselink -INGGroep N.V., ResearchDivision -ResearchAnalyst

Great. And if --coming back on that, if --in Automotive, you see that lead times are pretty long and then alsoit still takes quite along time before theothersactuallygointoproduction.IsitpossibleintheEnterprisesidethatthisallmovesabitquicker,thatpeoplemovetowardsyourplatform andthatyouactuallyseetherevenuescomingin?

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

Well, also in Enterprise, you need to have patience. So it takes some time between the sales cycles are long and also before technology is actually used, can also take quite a while. I wouldn't say the sales cycles in Enterprise are that different. It's starting to change now with bigger uptake of our APIs.SoweseealargercommunityofdevelopersusingourAPIs.Andthatgoesmuchmoregradualandfaster.Butalsothere,youneedto--there's asalescycletimeintermsofdevelopingtheapplications.Andthentheapplicationitselfneedstogaintraction.Andnotallthoseapplicationsthatare poweredwithourtechnologymakeitorarescaledwell.Soit'salso--don'tcountonovernightsuccessorexplosionofsales.It'sagradualstep-by-step approach, but we'rebuilding, we're goingfrom strength tostrength. Wehave amuch largercommunityofdevelopers nowusing our APIs. Some ofthose developers willturnintobigaccounts in the future.

Operator

Our next question comesfromthe lineofWim Gille from ABNAMRO.

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

Wim Gille from ABNAMRO. I got 3 questions. First is,if we lookat the discussions that youhave with your automotive clients, obviously, they're a bitstuckatthemomentbetween,ontheonehand,ongoingdevelopmentforelectricvehiclesandrobo-taxis,especiallyWaymo,CruiseandAptiv, etcetera,wereallmakingquiteadecentprogressonautonomousdrivingintheirownfield,wheresimultaneouslytheseOEMsarealsoscrambling for survival atthispointintime.So whatis yourcurrentfeelingon howtheylookattheirownroadmaps?Aretheystillontrack with thelaunches

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JULY 15, 2020 / 12:00PM, TOM2.AS - Q2 2020TomTom NV Earnings Call

of the new models that they have been planning for years? Or do you see a lot of push-outs where OEMs are basically considering to push out productlaunchesandrealinnovationsbecauseoftheuncertaintythattheycurrentlyface?Andinrelationtothat,duringtheCapitalMarketsDay, yougavequiteadecentguidanceonthemid-termfuture,especiallyontheAutomotiveside,wheretherewasbasicallyaninflectionpointin2021, wherewecouldbeseeinganaccelerationofgrowthbecauseadoptionratesaregoingupbecauseofalltheseaforementionedtrendsinelectrification, et cetera, et cetera. Isthatinflection point still goingtobethere?Or wouldit be likelythat, thatinflection point willpushedout ayear because of COVID?Sothatwillbemyfirst question.

The second is more on exit rates. Obviously, you've shown great improvement during the quarter with June being significantly better than May and May being better than April. But in terms of year-over-year comparison on an operational level, if I make my calculations, I would argue that inJune, Automotiverevenues hadan exitrate of,roughlyspeaking,minus20%.Isthat acorrectcalculation? Is thatinlinewith what youguys are lookingat?AndwhatshouldwebeexpectingintermsofrunrateforJuneasanexitrateontheConsumersidebecausethere,obviously,wehave 2 factors playing arole being retail closures and alsothe difficult comparable base. Sohow should I look at an exit rate, anormalized exit rate for June on theConsumerside?

Andthenlastly,onthecommercialactivity,you'vebeenquitesuccessful,bothintermsofnumberofRFPsandordersinthemarketaswellasyour winrate.Isitfairtoassume,andIunderstandthere'smultiplethingsinfluencingtheorderbook,butisitfairtoassumethatwewillseeasignificant double-digitincrease in the order bookbyyear-end?

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

Yes.Thanks,Wim.Sothe--yes,theautomotiveindustry,asyourightlysay,theinboxoftheAutomotiveCEOisratherfull.Andit'snoteasytoplan

  1. a number of industry developments whocontribute to that. You put COVID into the mix, andyou have a fairly fluid situation. The-- I don't get the impression--so my impression is that carmakers is seeing this as a temporary dip. And their longer term planning, their strategic choices are notreallyinfluencedbythispandemic,althoughtheircashbalancesare.Sotheremaybekindofahardchoicesbetweenwhattheycanandcannot afford. ButI don'tsee astrategicshiftin theprioritiesassuch.AndI seemore andmorecarmakers investinginsoftwaredevelopmentcapabilities as well. Ithinkthe EV train has left the station. I don't thinkthere's anycarmaker nowwhois not taking it serious andis not putting out models in the coming years. So I think that's going. And that will -- I do think that at some point in the near future, we do see an inflection point where EV vehiclesales will take up fasterthanwhatwehave seensofar.

Yes, the exit rates that you're referring to, I think I'll hand it over to Taco to see if he can shine some light on the specific numbers. When you look at the overall order book for how we want to finish that at the end of this year, again, Wim, I find it difficult to make further comments and that thefirsthalfwas good.Andwhat --howthe whole year willpan out,Ireallywantto--weneed toseethat.But there'squitesomestuffinthe pipeline that we can win or that we cannot win or that can be postponed, I don't know. We'll see. But so far, it's been a strong first half year for contracts andnewcontracts. Ican'tsaymuchmore thanthat.

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

Yes. So on the rates of decline that we saw at the end of the quarter, both for Automotive and Consumer, these decline rates were lower than we sawforthewhole quarter,asyousaid yourself,obviously. IthinkAutomotive, willprobablystartwith ahigh3 or4.Soit'sour numbers area

bit less optimistic than yours. And for Consumer, the comparison is very difficult, as you said, as well as we had the weak number rollover last year. And also June is more -- traditionally more stronger month in the quarter anyway. So -- but the year-on-year decline is probably 50% or so in Consumer attheendofthe quarter. But that's includingthe great results oflast year.

So I think for a -- on -- from a planning point of view, if you leave our -- if you -- well, if you continue the improvement in Consumer, and in 1 or 2 months, the WNRO effect will be gone out from the 2019 number, so it didn't have a big effect as of September anymore. We think that we can have a--we're trendingtowards25%decline --25%to30%decline in Consumer fortherest ofthe year.

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JULY 15, 2020 / 12:00PM, TOM2.AS - Q2 2020TomTom NV Earnings Call

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

Fortherestoftheyear,okay.Okay,fair.Andthenmaybeasafollow-uporbasedonthestrategicchoicesthatcarmakershavebeenforcedtomake, et cetera, and also the model launches that they are planning, is it still fair to assume that all other things being equal that, that inflection point thatyoushowedduringtheCapital Markets Daysomewhere around2021,where growth ratesintheindustryshouldaccelerate basedon higher take rates that, thatinflectionpointis stillclose.

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

Well, as Iremember, we gave aCAGRfor the current periodthatwe were in, andwe gave CAGRbeyondthat at the time. I don't want topinpoint theinflectionmomentonthatyear.Butbasedonthedealactivitythatwe'veseeninthefirsthalfoftheyearandalsothecontentoftheRFQsand ROIs thatwe arereceiving, alsoon theOEMside, theyare workingwith highertake up ratios.

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

Verygood.AndthenalastquestionfrommyendwouldbeonGoogle.Obviously,it'sbeenquiteawhilebefore--whentheyannouncedthedeals with VolvoandwithRenault-Nissan.Volvo,we'venowseen thatcarcoming tothemarket,sothat hasbeenlaunched.Butit'sbeen fairlyquiet on that front from Renault-Nissan. Sowhat are youseeing in terms of your discussions andthe volumes that theyare planning todo with youguys? Is there any sign that you or your contract with or the volumes that you are shipping to Renault-Nissan will come to an end soon? Or is that still notsomethingforthenear future?

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

Well,IthinktheRenaultsituationisdifferentfromVolvobecauseinRenaultcars,onlyasmallpercentage ofcarswillbeequippedwiththeGoogle solution,it's atthe high endoftheir range.Sothere's averysignificantportion ofbusinessstill tobe done therein the volume segment.

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

Okay. Andisthere anysign thattheywill beshippinganyGoogle equippedcars anytimesoon?I haven'tseen anythingfrom them recently.

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

It does notfor us, Wim, Iam afraid, tocommenton. That's --yes.No, I don't feel thatwe shoulddothat.

Operator

Our next question comesfromthe lineof Francois Bouvignies from UBS.

Francois-XavierBouvignies-UBSInvestmentBank, Research Division -TechnologyAnalyst

Ijusthadanotherone.IthoughtIwantedtoaskyou.It'sonApple.Imean,ifwelookatApple,theydidtheirdevelopereventandtheyannounced that the Map is done in the U.S. basically, and now they are starting to roll out in Europe, including the U.K. If we look at -- it's been 2 years since they announced that they will do their own map. And when I look at your trackrecord, you renew the contract with Apple in 2015. Soit's been 5 yearsnow,maybeyousignedevenbeforeyouannouncedit.Somaybeatleast5years.Andifwelookattheaveragelengthofthecontract,Imean, Ithinkwearearoundthis5,6or7years.Somyquestionissincetheyarerollingout,wedidn'tseeanimpactfromAppleonyourEnterprisebusiness at all so far (technical difficulty)impact from this in the next future either because the contract is coming to an end, and we should expect some

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JULY 15, 2020 / 12:00PM, TOM2.AS - Q2 2020TomTom NV Earnings Call

impactthatthefactthattheycreatetheirownmaps.Justtryingto--nowyouknowit'sbeen2yearssincetheyannouncedthat.Youneverexplain ifthere is anyimpact on you. Sojust wantingtoaskyou.

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

Yes. Again, it's a commercially sensitive topic. We have a long-term relationship with Apple. The nature of that relationship is changing, as you rightlycomment.Butit'stooearlytosayif,how,thatrelationshipwillendorwhatshapethatrelationshipwilltakeinlongertermfuture.SoI--very difficult to comment on that. It'scommercially sensitive. We all know what Apple is doing. We still have avery good relationship. We're sharing a lot of data and information. I think that relationship is intact. And I think there will be opportunities for extending that relationship, but it will be ofadifferentnaturethanit usedtobe.

Francois-XavierBouvignies-UBSInvestmentBank, Research Division -TechnologyAnalyst

Okay. Andjust tobeclear,thefact thattheyfinishedtheU.S.,forexample, dotheystilluse TomTom mapsintheU.S. orit'snowover?

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

No. In the U.S., they don't use our maps anymore. They're still relying on some of the content that we have provided. Their mapping system has completelymovedtotheir proprietarymappingeffort.

Operator

Therearenofurther questions. (Operator Instructions)

ClaudiaJanssen -TomTomN.V.-Group Controller &HeadofIR

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

Operator

Thankyou. Andthatdoesconclude today's conference.Thankyoutoeveryonewhohasparticipatedin today's call.Youmaynowall disconnect.

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