Revenue
Group revenue for the quarter was €274 million, a 19% decrease compared to the same quarter last year (Q3 2011: €336 million) and a 4.5% increase sequentially (Q2 2012: €262 million). Year on year, revenue for Consumer, Automotive and Licensing declined, while Business Solutions continued to grow strongly.
Consumer revenue over the past quarter amounted to €172 million, which is a €53 million decrease year on year (Q3 2011: €225 million) and an increase of €17 million sequentially (Q2 2012: €155 million). The year on year decrease was driven by lower PND sales reflecting the decline of the size of the PND markets in our core geographies.
The market size in Europe for PNDs was 2.6 million units compared to 3.0 million units in the same quarter of last year. The North American market size was 1.5 million units compared to 1.9 million units last year; combined, our core PND markets declined by 17%. Our market share in Europe increased sequentially by 1 percentage point to 46%. In North America our market share increased sequentially from 19% to 22%.
Automotive revenue declined by 16% year on year to €49 million (Q3 2011: €59 million). The decline was mainly driven by lower hardware sales as the automotive industry was significantly impacted by the European economic situation. Sequentially revenue declined by 17% (Q2 2012: €60 million).
Licensing revenue decreased by €2.7 million or 7.4% year on year to €33 million and increased by €3.9 million sequentially (Q3 2011: €36 million, Q2 2012: €29 million). The year on year decline was mainly due to decline in the PND and internet segments, which was not fully offset by other segments.
Business Solutions revenue for the quarter increased by €2.4 million or 14% year on year to €19 million (Q3 2011: €17 million) mainly driven by a net increase of 62 thousand subscribers to the WEBFLEET subscriber base. Sequentially revenue increased by €1.5 million or 8.3% (Q2 2012: €18 million).
Hardware revenue for the quarter was €169 million across the group, a decrease of 26% year on year (Q3 2011: €229 million) and an increase of 3.7% sequentially (Q2 2012: €163 million). Hardware revenue accounted for 62% of total revenue.
Content & Services revenue for the quarter was €105 million, a slight decline of 2.2% year on year (Q3 2011: €107 million). Sequentially Content & Services revenue increased by 6.0%. Content & Services revenue accounted for 38% of total revenue (Q3 2011: 32%; Q2 2012: 38%).
Gross margin
The gross margin for the quarter was 55%. The gross margin increased by 4 percentage points compared to the same quarter last year due to a change in revenue mix towards higher margin Content & Services and because of some one-off releases relating to the reduction of provisions which positively impacted the gross margin. Excluding the one-off releases (-3 percentage points) and based on constant currencies (+2 percentage points) the gross margin would have been 54%. Sequentially the gross margin increased by 3 percentage points.
Operating expenses
Total operating expenses for the quarter amounted to €118 million, a decrease of €14 million or 10% year on year. Sequentially operating expenses decreased by €3.6 million or 3%. We are ahead of schedule with our cost savings programme and now expect to report total operating expenses for the full year of around €485 million compared to the earlier guidance of €500 million.
The year on year decrease in operating expenses reflects the implementation of the cost savings programmes across all functions and the adjusted level of marketing spend. R&D expenses decreased by 8% year on year to €40 million, marketing expenses decreased by 13% year on year to €15 million and SG&A expenses amounted to €42 million, a 15% year on year decrease.
The sequential decrease in operating expenses was mainly driven by a decline of €2.4 million in R&D expenses to €40 million (Q2 2012: €43 million).
As a percentage of revenue, operating expenses for the quarter were 43% compared to 39% in Q3 2011 and 47% in Q2 2012.
Financial results
The total interest charge for the quarter was €3.2 million (Q3 2011: €5.9 million, Q2 2012: €3.0 million). The interest expense on the loan facilities for the quarter amounted to €1.5 million. The amortisation of the transaction costs related to the facility amounted to €1.1 million. Other net interest expense for the quarter amounted to €0.6 million.
The other financial result for the quarter of €0.2 million comprised primarily of foreign exchange revaluations and hedging results.
Tax
The effective tax rate in the quarter was 22.7%. This compares to 22.4%
in the same quarter last year. The effective tax rate of the previous
quarter was low at 14.8%, fully utilising the impact of tax benefits in
the first half of the year which we could not reflect in the first
quarter.
