Amsterdam
14 October 2021 | TOM2
THIRD QUARTER 2021 RESULTS
TomTom pushes forward despite reduced car production
TOMTOM'S CHIEF EXECUTIVE OFFICER, HAROLD GODDIJN
"The first nine months of 2021 have delivered both positives and negatives. Enterprise continues to perform solidly. But the recovery of Automotive has lagged expectations because industrywide semiconductor supply chain issues are hampering car production volumes.
Encouragingly, the way we engage with our customers is evolving from a traditional supplier relationship to a partner approach. This is leading to longer-term partnerships, customer intimacy, productive software engineering collaborations and better products."
OPERATIONAL SUMMARY
- The extension of our long-standing partnership with Enterprise software company Precisely, a leading player in data management and integrity
- The launch of the new Jeep Grand Cherokee and Jeep Compass including our full stack navigation technology
- The launch of the new Fiat Ducato, Europe's most popular van, equipped with navigation, ADAS and connected services
FINANCIAL SUMMARY THIRD QUARTER 2021
- Group revenue decreased by 14% (Q3 '20: €148 million)
- Location Technology decreased by 10% (Q3 '20: €106 million)
- Automotive operational revenue decreased by 17% to €58 million (Q3 '20: €70 million)
- Free cash flow is an outflow of €14 million (Q3 '20: outflow of €20 million)
- Net cash of €302 million (Q2 '21: €319 million)
KEY FIGURES
y.o.y. | y.o.y. | |||||
(€ in millions) | Q3 '21 | Q3 '20 | change | YTD '21 | YTD '20 | change |
Location Technology | 95.4 | 105.6 | -10 % | 303.4 | 290.7 | 4 % |
Consumer | 32.1 | 42.3 | -24 % | 88.4 | 112.1 | -21 % |
Revenue | 127.5 | 147.9 | -14% | 391.8 | 402.8 | -3% |
Gross result | 103.6 | 112.0 | -7% | 312.9 | 320.3 | -2% |
Gross margin | 81% | 76% | 80% | 80% | ||
EBITDA | -5.3 | 3.9 | -0.4 | 5.7 | ||
EBITDA margin | -4% | 3% | 0% | 1% | ||
Operating result (EBIT) | -22.5 | -67.6 | -57.8 | -209.6 | ||
Operating margin | -18% | -46% | -15% | -52% | ||
Net result | -20.8 | -67.0 | -55.9 | -191.7 | ||
Free cash flow (FCF) | -13.5 | -20.0 | -33.2 | -60.3 | ||
FCF as a % of revenue | -11% | -14% | -8% | -15% |
This report includes the following non-GAAP measures which are further explained at the end of this report: operational revenue; gross margin; EBITDA (margin); EBIT (margin); free cash flow; net cash and gross deferred revenue.
Investor Relations | |
Phone | +31 20 757 5194 | |
Email | ir@tomtom.com | www.tomtom.com |
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FINANCIAL AND BUSINESS REVIEW
TOMTOM'S CHIEF FINANCIAL OFFICER, TACO TITULAER
"Location Technology revenue declined 10% compared with the previous year as semiconductor supply chain issues limited car production volumes, and therefore Automotive revenue. Enterprise performed solidly with 8% growth compared to the previous year, because of contract expansions from previous periods.
We reiterate our revenue guidance, though we anticipate full year revenue will be at the low end of the range because supply chain issues will continue to limit car production volumes. This has a direct impact on our operational revenue and thus on our cash flow. Consequently, we are lowering our full year 2021 FCF guidance as a percentage of group revenue to around 2%."
OUTLOOK 2021
Updated Outlook | Previous Outlook | Actual | |
(€ in millions, unless stated otherwise) | 2021 | 2021 | 2020 |
Revenue | 500 - 530 | 500 - 530 | 528 |
Of which Location Technology | 400 - 430 | 400 - 430 | 392 |
FCF as % of group revenue | Around 2% | Around 5% | -5% |
REVENUE
Revenue for the third quarter amounted to €127 million, a decrease of 14% year on year (Q3 '20: €148 million).
Location Technology
y.o.y. | y.o.y. | |||||
(€ in millions) | Q3 '21 | Q3 '20 | change | YTD '21 | YTD '20 | change |
Automotive | 52.4 | 65.9 | -21 % | 176.0 | 167.3 | 5 % |
Enterprise | 43.0 | 39.7 | 8 % | 127.4 | 123.3 | 3 % |
Revenue | 95.4 | 105.6 | -10% | 303.4 | 290.7 | 4% |
Automotive operational revenue is calculated as follows:
y.o.y. | y.o.y. | |||||
(€ in millions) | Q3 '21 | Q3 '20 | change | YTD '21 | YTD '20 | change |
Automotive revenue | 52.4 | 65.9 | -21 % | 176.0 | 167.3 | 5 % |
Movement of Automotive deferred revenue | 5.8 | 4.1 | 19.7 | 22.0 | ||
Automotive operational revenue | 58.2 | 70.0 | -17% | 195.7 | 189.3 | 3% |
Location Technology revenue was €95 million, a decrease of 10% year on year (Q3 '20: €106 million), resulting from a decrease in Automotive revenue.
Automotive generated revenue of €52 million in the quarter, a decrease of 21% compared with the same quarter last year (Q3 '20: €66 million). Automotive operational revenue was €58 million in the quarter, a year-on-year decrease of 17% (Q3 '20: €70 million).
Enterprise revenue increased to €43 million in Q3 '21, 8% higher than the same quarter last year (Q3 '20: €40 million) resulting mainly from higher revenue from existing customers.
Within Automotive, the new Jeep Grand Cherokee and the Jeep Compass were launched including our full stack solution of navigation software, over-the-air-updated maps and connected services. Additionally, Fiat launched its new Ducato, Europe's best-selling light commercial vehicle. The new Ducato, which is also offered as a campervan, utilizes our full stack navigation, extensive connected services and ADAS to ensure safety and avoid roads not suited for the vehicle.
One of the announcements we want to highlight in the Enterprise segment is the extension of our long-term partnership with Precisely, to which we will continue to provide map and traffic data. Precisely incorporates our data into their location and enrichment products. These products are used by insurance, telecommunications, retail and financial companies that rely on highly accurate data to make business decisions. Furthermore, we worked together with Greater Than on a proof of concept to create safer roads and assess the potential to globally predict where, when and why road accidents occur.
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Consumer | |||||||
y.o.y. | y.o.y. | ||||||
(€ in millions) | Q3 '21 | Q3 '20 | change | YTD '21 | YTD '20 | change | |
Consumer products | 30.6 | 38.4 | -20 % | 81.7 | 101.4 | -19 % | |
Automotive hardware | 1.5 | 3.9 | -62 % | 6.6 | 10.7 | -38 % | |
Consumer revenue | 32.1 | 42.3 | -24% | 88.4 | 112.1 | -21% |
Consumer reported revenue of €32 million for the quarter, a decrease of 24% compared with the same quarter last year (Q3 '20: €42 million).
GROSS MARGIN
The gross margin for the quarter was 81% compared with 76% in Q3 '20. The Q3 '20 gross margin was negatively impacted by the start of production of new software platforms in Automotive. The start of production triggers the release of capitalized contract costs associated with customized non recurring engineering (NRE).
OPERATING RESULT
Operating result (EBIT) in the quarter was a loss of €23 million (Q3 '20: loss of €68 million). Total operating expenses in the quarter were €126 million, a decrease of €53 million compared with the same quarter last year (Q3 '20: €180 million). The year-on-year decrease in total operating expenses, reflected in Research and development (R&D) associated with our geographic data, is mainly from lower Depreciation and amortization (D&A) as the Tele Atlas databases were fully amortized during 2020.
Excluding the impact of D&A, operating expenses increased by 1% mainly from increases in R&D associated with our Application layer, partly offset by a decline in Sales and marketing.
A reconciliation of operating expenses excluding D&A is presented below:
y.o.y. | y.o.y. | |||||
(€ in millions) | Q3 '21 | Q3 '20 | change | YTD '21 | YTD '20 | change |
R&D - Geographic data | 45.3 | 47.7 | -5 % | 130.7 | 138.0 | -5 % |
R&D - Application layer | 35.5 | 31.2 | 14 % | 101.4 | 89.4 | 13 % |
Sales and marketing | 11.0 | 12.4 | -12 % | 32.5 | 38.7 | -16 % |
General and administrative | 17.2 | 16.9 | 2 % | 48.7 | 48.5 | 0 % |
Operating expenses excluding D&A | 109.0 | 108.1 | 1% | 313.2 | 314.6 | 0% |
Depreciation and amortization | 17.2 | 71.5 | -76 % | 57.5 | 215.3 | -73 % |
Operating expenses | 126.2 | 179.6 | -30% | 370.7 | 529.9 | -30% |
FINANCIAL INCOME, EXPENSES AND INCOME TAX
Total financial result, for the quarter was an income of €2 million (Q3 '20: expense of €4 million), which consisted primarily of foreign exchange gains from the revaluation of monetary balance sheet items.
The income tax expense for the quarter was €0.5 million compared with a gain of €4 million in Q3 '20. The tax gain in Q3 '20 resulted from a release in deferred tax assets and liabilities, which was driven by the amortization of acquisition-related intangible assets.
BALANCE SHEET
Other intangible assets decreased to €81 million from €117 million at the end of 2020 mainly due to amortization of map database. Cash balances, including fixed-term deposits were €302 million at the end of the quarter (Q4 '20: €372 million). The decrease during the year is from share repurchases under the share buyback program and negative cash flow from operating activities.
At the end of the quarter, inventory was €19 million, a €7 million decrease from the end of last year, mainly due to supply constraints. Trade receivables were €130 million at the end of Q3 '21 compared with €80 million at the end of 2020. The increase is due to the seasonality of invoicing.
Current liabilities, excluding deferred revenue, were €106 million, compared with €116 million at the end of 2020. The decrease is mainly due to decreases in trade payables and provisions.
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DEFERRED REVENUE
Deferred revenue increased to €433 million from €404 million at the end of 2020 due to increased deferrals in Automotive and Enterprise, partly offset by the release of deferred revenue in Consumer.
The following table presents the deferred revenue including the effect of netting:
(€ in millions) | 30 September 2021 | 31 December 2020 |
Automotive | 371.4 | 351.7 |
Enterprise | 54.2 | 34.9 |
Consumer | 27.4 | 39.7 |
Gross deferred revenue | 452.9 | 426.3 |
Less: Netting adjustment to unbilled revenue | 19.7 | 22.6 |
Deferred revenue | 433.2 | 403.7 |
CASH FLOW
In Q3 '21, free cash flow (FCF) was an outflow of €14 million versus an outflow of €20 million in the same quarter last year. The improved FCF reflects the timing of cash receipts from customers.
The cash flow from financing activities for the quarter was an outflow of €4 million and relates to the payment of lease liabilities. No options relating to our long-term employee incentive programs were exercised during the quarter (Q3 '20: 12 thousand).
On 30 September 2021, the Group had no outstanding bank borrowings and reported a net cash position of €302 million (Q4 '20: net cash of €372 million).
Free cash flow is reconciled to the cash flow statement as follows:
(€ in millions) | Q3 '21 | Q3 '20 | YTD '21 | YTD '20 |
Cash flow from operating activities | -10.9 | -19.0 | -24.7 | -55.3 |
Investments in property, plant and equipment | -2.6 | -1.0 | -8.5 | -5.0 |
Free cash flow | -13.5 | -20.0 | -33.2 | -60.3 |
- END -
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CONSOLIDATED CONDENSED STATEMENT OF INCOME | ||||||
Q3 '21 | Q3 '20 | YTD '21 | YTD '20 | |||
(€ in thousands) | Unaudited | Unaudited | Unaudited | Unaudited | ||
Revenue | 127,469 | 147,851 | 391,762 | 402,750 | ||
Cost of sales | 23,842 | 35,861 | 78,890 | 82,413 | ||
Gross profit | 103,627 | 111,990 | 312,872 | 320,337 | ||
Research and development expenses - Geographic data | 55,822 | 109,177 | 164,350 | 323,793 | ||
Research and development expenses - Application layer | 37,040 | 35,271 | 107,710 | 100,959 | ||
Sales and marketing expenses | 10,994 | 13,536 | 32,536 | 42,124 | ||
General and administrative expenses | 22,315 | 21,616 | 66,120 | 63,016 | ||
Total operating expenses | 126,171 | 179,600 | 370,716 | 529,892 | ||
Operating result | -22,544 | -67,610 | -57,844 | -209,555 | ||
Financial result | 2,213 | -3,716 | 4,850 | -1,094 | ||
Result before tax | -20,331 | -71,326 | -52,994 | -210,649 | ||
Income tax (expense)/gain | -452 | 4,358 | -2,884 | 18,914 | ||
Net result1 | -20,783 | -66,968 | -55,878 | -191,735 | ||
Earnings per share (in €): | ||||||
Basic | -0.16 | -0.51 | -0.44 | -1.47 | ||
Diluted2 | -0.16 | -0.51 | -0.44 | -1.47 |
1 Fully attributable to the equity holders of the parent.
- When the net result is a loss, no additional shares from assumed conversion are taken into account as the effect would be anti-dilutive.
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TomTom NV published this content on 14 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 October 2021 07:41:09 UTC.