TomTom : Q2 2022 results press release

Amsterdam

15 July 2022 | TOM2

SECOND QUARTER AND HALF YEAR 2022 RESULTS

TomTom shows solid performance in first half of 2022

TOMTOM'S CHIEF EXECUTIVE OFFICER, HAROLD GODDIJN

"Our Location Technology business performed according to expectations in the second quarter, recording solid growth in Enterprise, and performing in line with the Automotive market.

In the Enterprise business we secured several deals, underlining the versatility and competitiveness of our technology and offerings. Deal activity in Automotive, meanwhile, remains strong this year.

We have made significant progress with the automation of our mapmaking platform and are in the process of realigning our Maps organization. With these higher levels of automation and the integration of a variety of new digital sources, we will have fresher and richer maps, with wider coverage."

OPERATIONAL SUMMARY

• We launched ourNavigation SDK for mobile, enabling companies and developers to build professional navigation applications that can be customized for end users
• Our full stack navigation solution supports theOpel Astraand Citroën C5 launched by Stellantis, featuring advanced driver assistance technology
• We partnered with theDutch Ministry of Infrastructure and Water Managementto provide traffic services with more extensive and effective safety warnings to drivers
• We announcedimprovements in our mapmaking process, resulting in a realignment of our Mapsorganization

FINANCIAL SUMMARY SECOND QUARTER 2022

• Group revenue remained constant at €133 million (Q2 '21: €133 million)
• Location Technology revenue increased by 2% to €105 million (Q2 '21: €103 million)
• Automotive operational revenue increased by 12% to €71 million (Q2 '21: €63 million)
• Operating expenses included a restructuring charge of €31 million
• Free cash flow is an inflow of €0.2 million (Q2 '21: outflow of €16 million)
• Net cash of €329 million (Q1 '22: €331 million)

KEY FIGURES

			y.o.y.			y.o.y.
(€ in millions, unless stated otherwise)	Q2 '22	Q2 '21	change	H1 '22	H1 '21	change
Location Technology	105.3	103.2	2%	210.5	208.0	1%
Consumer	27.3	29.9	-9%	50.5	56.3	-10%
Revenue	132.6	133.1	0%	261.0	264.3	-1%
Gross result	109.8	102.7	7%	218.9	209.2	5%
Gross margin	83%	77%		84%	79%
Operating expenses	165.2	123.8	33%	294.2	244.5	20%
Operating result (EBIT)	-55.5	-21.1		-75.3	-35.3
Operating margin	-42%	-16%		-29%	-13%
Net result	-55.0	-23.6		-76.5	-35.1
Free cash flow (FCF)	0.2	-15.8		-23.1	-19.7
FCF as a % of revenue	0%	-12%		-9%	-7%

This report includes the following non-GAAP measures which are further explained at the end of this report: operational revenue; gross margin; EBITDA; EBIT (margin); free cash flow; net cash and gross deferred revenue.

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2/18

FINANCIAL AND BUSINESS REVIEW

TOMTOM'S CHIEF FINANCIAL OFFICER, TACO TITULAER

"We had a solid first half of the year, despite external uncertainties such as high inflation and strained supply chains. In the second quarter, group revenue was flat year on year. Stable performance in Automotive and growth in Enterprise offset a foreseen decline in Consumer.

Our operating expenses were impacted by a €31 million restructuring charge related to the realignment of our Maps organization. In addition, underlying operating expenses increased due to continued investments we are making to support our application roadmap.

Free cash flow for the quarter improved year on year, resulting from positive working capital development and a marked increase in Automotive operational revenue.

Despite the uncertainties in the market, we remain confident that we can deliver on our initial guidance. We expect relatively flat Location Technology revenue for 2022, and growth for 2023. The expected FCF increase between 2022 and 2023 is driven by a combination of efficiency gains following the improvements in our mapping technology and operational revenue growth, whereby the latter accounts for more than half of the effect."

OUTLOOK

	Actual	Outlook	Outlook
(€ in millions, unless stated otherwise)	2021	2022	2023
Revenue	507	470 - 510	500 - 550
Of which Location Technology	394	380 - 420	425 - 475
FCF as % of Group revenue	5%	Around -5%	At least 5%

Free cash flow guidance excludes restructuring charges. Throughout 2022 and 2023, we will report FCF excluding restructuring charges. Cash outflows related to the restructuring are expected to be weighted towards the second half of 2022, with roughly one third of the total expected to arise in 2023.

REVENUE

Revenue for the second quarter amounted to €133 million, flat compared with the same quarter last year (Q2 '21: €133 million).

Location Technology

			y.o.y.			y.o.y.
(€ in millions)	Q2 '22	Q2 '21	change	H1 '22	H1 '21	change
Automotive	60.0	61.0	-2 %	120.4	123.6	-3 %
Enterprise	45.3	42.2	8 %	90.1	84.4	7 %
Location Technology revenue	105.3	103.2	2%	210.5	208.0	1%
Segment EBIT				-46.0	-42.8
EBIT margin (%)				-22%	-21%
			y.o.y.			y.o.y.
(€ in millions)	Q2 '22	Q2 '21	change	H1 '22	H1 '21	change
Automotive revenue	60.0	61.0	-2 %	120.4	123.6	-3 %
Movement of Automotive deferred revenue	10.6	2.1		18.4	13.9
Automotive operational revenue	70.6	63.1	12%	138.8	137.5	1%

Location Technology revenue in the quarter increased by 2% to €105 million (Q2 '21: €103 million).

Automotive generated €60 million revenue in the quarter, representing a 2% decrease year on year. Automotive operational revenue increased by 12% to €71 million (Q2 '21: €63 million). The marked year-on-year growth in Automotive operational revenue resulted from increased car production and the ramp-up of some contracts.

Enterprise revenue increased year on year by 8% to €45 million (Q2 '21: €42 million), mainly benefiting from a stronger US dollar.

3/18

Location Technology segment EBIT for the first half of 2022 showed a year-on-year decline as a marginal revenue increase was more than offset by higher operating expenses.

In Enterprise, we launched our new Navigation SDK for mobile, enabling companies and developers to access our market-leading navigation software. The modular SDK combines all of TomTom's location APIs with turn-by-turn navigation to create an effective toolkit for developers. Supporting both Android and iOS, the SDK provides a host of features for drivers and fleet management providers. It includes detailed information on complex intersections, lane-level guidance, support for multiple scheduled delivery points and access to the latest, and highly accurate ETAs with our real- time traffic.

We have signed a three-year cooperation with the Dutch Ministry of Infrastructure and Water Management and five other companies so that drivers that rely on TomTom Traffic Services will benefit from improved safety features. Our data will be combined with data from the national road traffic database. As such, it will provide an even more complete picture of traffic obstacles, slow- moving traffic, and incidents such as roadwork, road closures and restrictions.

Our Automotive business saw the Citroën C5 and Opel Astra launched, both models showcasing our upgraded full-stack connected navigation solution, including over-the-air updates to provide fresh map information and accurate navigation. The suite also features extensive information on EV charging points, safety-enhancing ADAS Maps, and Virtual Horizon software, so drivers will know the road ahead, even beyond the vehicle sensors. The launches of the Astra and C5 signify a new

milestone in our longstanding relationship with Stellantis.

Consumer

			y.o.y.			y.o.y.
(€ in millions)	Q2 '22	Q2 '21	change	H1 '22	H1 '21	change
Consumer products	26.1	27.7	-6 %	47.7	51.1	-7 %
Automotive hardware	1.2	2.2	-45 %	2.8	5.2	-47 %
Consumer revenue	27.3	29.9	-9%	50.5	56.3	-10%
Segment EBIT				4.9	10.9
EBIT margin (%)				10%	19%

Consumer revenue for the quarter was €27 million, compared with €30 million in the same quarter last year. In the first half of 2022, Consumer segment EBIT declined following lower revenue.

GROSS MARGIN

The gross margin for the quarter was 83% compared with 77% in Q2 '21. Last year's second-quarter gross margin was impacted by the release of non-recurring engineering costs (NRE).

OPERATING RESULT

Operating result (EBIT) in the quarter was a loss of €55 million (Q2 '21: loss of €21 million). Total operating expenses in the quarter were €165 million, an increase of €41 million compared with the same quarter last year (Q2 '21: €124 million). Operating expenses in Q2 '22 include restructuring charges of €31 million related to the realignment of our Maps organization. Excluding the impact of the restructuring charge and D&A, our operating expenses increased by €15 million, mainly from increases in Research and Development (R&D) associated with our Application layer.

A reconciliation of Operating expenses excluding D&A and restructuring charge is presented below:

			y.o.y.			y.o.y.
(€ in millions)	Q2 '22	Q2 '21	change	H1 '22	H1 '21	change
R&D - Geographic data	46.3	44.0	5 %	93.7	85.4	10 %
R&D - Application layer	43.0	33.6	28 %	81.4	65.8	24 %
Sales and marketing	12.1	11.3	7 %	22.6	21.5	5 %
General and administrative	18.7	16.2	15 %	36.2	31.5	15 %
Total excluding D&A and restructuring	120.1	105.0	14%	233.9	204.2	14%
Depreciation and amortization	14.4	18.8	-23 %	29.6	40.3	-26 %
Restructuring	30.7	0.0	100 %	30.7	0.0	100 %
Total operating expenses	165.2	123.8	33%	294.2	244.5	20%

4/18

FINANCIAL INCOME, EXPENSES AND INCOME TAX

Total financial result, for the quarter was an income of €2.2 million (Q2 '21: expense of €1.8 million), consisting primarily of foreign exchange gains from the revaluation of monetary balance sheet items.

The income tax expense for the quarter was €1.7 million compared with an expense of €0.8 million in Q2 '21.

BALANCE SHEET

Other intangible assets decreased to €58 million from €70 million at the end of 2021 primarily due to the amortization of map databases. Cash balances, including fixed-term deposits, decreased by €26 million to €329 million (Q4 '21: €356 million) reflecting cash consumed in H1 '22.

At the end of the quarter, inventory was €15 million, a €5 million decrease from the end of last year. Inventory levels were exceptionally low as PND production was impacted by lockdown measures in China. Trade receivables were €66 million at the end of Q2 '22 compared with €56 million at the end of 2021. The balance at the end of 2021 was relatively low mainly due to faster than anticipated collection.

Current liabilities, excluding deferred revenue, increased to €145 million compared with the end of 2021 (Q4 '21: €110 million) mainly due to the restructuring provision recognized in the quarter.

DEFERRED REVENUE

Deferred revenue was €434 million at the end of quarter. The decrease in deferred revenue from Q4 '21 is driven by the release of deferred revenue in Enterprise and Consumer, partly offset by the increase in deferred revenue of Automotive.

The following table presents the deferred revenue including the effect of netting:

(€ in millions)	30 June 2022	31 December 2021
Automotive	413.4	395.0
Enterprise	16.0	41.5
Consumer	22.2	25.5
Gross deferred revenue	451.6	461.9
Less: Netting adjustment to unbilled revenue	17.4	21.2
Deferred revenue	434.2	440.7

CASH FLOW

In Q2 '22, free cash flow (FCF) was an inflow of €0.2 million versus an outflow of €16 million in Q2 '21. The year-on-year improvement is mainly because of positive working capital development and higher Automotive operational revenue.

Cash flows from investing activities include cash flows from fixed-term deposits. The year-on-year decrease mainly reflects movements in the fixed-term deposit balance as some fixed-term deposits matured during the quarter.

The cash flow from financing activities for the quarter was an outflow of €1.9 million mainly comprising of cash outflow relating to lease payments partly offset by cash inflows from the exercise of employee stock options. During Q2 '22, 212 thousand options relating to our long-term employee incentive programs were exercised (Q2 '21: 773 thousand options).

On 30 June 2022, the Group had no outstanding bank borrowings and reported a net cash position of €329 million (Q4 '21: net cash of €356 million).

Free cash flow is reconciled to the cash flow statement as follows:

(€ in millions)	Q2 '22	Q2 '21	H1 '22	H1 '21
Cash flow from operating activities	1.2	-13.1	-15.7	-13.8
Investments in intangible assets	0.0	0.0	-5.1	0.0
Investments in property, plant and equipment	-1.0	-2.7	-2.3	-5.8
Free cash flow	0.2	-15.8	-23.1	-19.7

- END -

5/18

TomTom NV

Interim Financial Report

30 June 2022

(Unaudited)

Contents:

Semi-annual financial report

Consolidated condensed statement of income

Consolidated condensed statement of comprehensive income Consolidated condensed balance sheet

Consolidated condensed statements of cash flows Consolidated condensed statement of changes in equity

Notes to the consolidated condensed interim financial statements