TomTom's Chief Executive Officer, Harold Goddijn
“Our strategy is to build on our navigation technologies to provide location-based content, software, and services to business customers, with high margins and recurring income. Combined Automotive, Licensing and Telematics revenue grew by 18% year on year in the quarter, ahead of expectations.”
Outlook 2017 updated
Hardware revenues were lower than planned because of disappointing Sports sales. The wearables market has fallen short of expectations. Because of this and because we want to focus on our Automotive, Licensing and Telematics businesses, we are reviewing strategic options for Sports.
As a result, we are updating our revenue outlook. We now expect to deliver full year revenue around the lower end of our guidance of between €925 million and €950 million. Adjusted EPS3 of around €0.25 remains unchanged.
We expect the combined revenue of the Automotive, Licensing and Telematics businesses to grow around 15% year on year in 2017.
We expect the level of investments (both CAPEX and OPEX) to show a modest increase compared with 20164, excluding acquisitions.
Goodwill impairment
The difficult market circumstances combined with lower sales than planned for the second quarter has resulted in a downward revision in the future profitability projections for Consumer Sports. As a result, TomTom recorded a full impairment charge against the goodwill of the Consumer segment of €169 million in the second quarter 2017. This non-cash impairment charge is included within operating income (loss). The goodwill that was impaired was originally recorded at the time of the acquisition of Tele Atlas in 2008.
New share buy-back program
TomTom intends to repurchase ordinary TomTom shares on Euronext Amsterdam for an amount up to €50 million. Based on the closing price of the TomTom share on Euronext Amsterdam on 18 July 2017, the repurchase represents approximately 2.5% of TomTom’s issued share capital. TomTom aims to start the repurchase in the second half of 2017.
The repurchase will be executed within the limits of relevant laws and regulations and the existing authority granted by the Annual General Meeting on 24 April 2017. TomTom will inform the market about the actual start of the repurchase and the progress made in the execution of this program through a press release and corporate website. The share buy-back will be used to cover TomTom’s commitments arising from its stock option and share plans.
Financial and business review Q2 2017
Revenue for the second quarter amounted to €253 million, 4% lower compared with the same quarter last year (Q2 '16: €265 million). Automotive, Licensing and Telematics jointly grew by 18% year on year, which was offset by lower Consumer revenue. Our gross margin for the quarter equalled to 63% (Q2 '16: 55%). The net result for the quarter was a loss of €160 million. Excluding the impairment charge, our net result for the quarter was €8.6 million. Adjusted EPS3 in Q2 '17 was €0.09, compared with €0.10 in the same quarter last year.
Automotive & Licensing
| (€ in millions) | Q2 '17 | Q2 '16 |
y.o.y.
|
H1 '17 | H1 '16 |
y.o.y.
|
|||||||
| Automotive | 48.4 | 34.9 | 39% | 89.5 | 64.6 | 39% | |||||||
| Licensing | 38.6 | 33.2 | 16% | 71.6 | 66.9 | 7% | |||||||
| Total Automotive & Licensing revenue | 87.0 | 68.1 | 28% | 161.1 | 131.5 | 23% | |||||||
|
Change percentages and totals calculated before rounding. |
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