Release Date: February 04, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TomTom NV (TMOAF, Financial) successfully entered new market segments, including government and security markets, strengthening its position with traditional customers.
- Integration of TomTom's maps into Microsoft and Esri systems serves as a significant endorsement of their product and strategy.
- Enterprise revenue showed strong growth, increasing by 9% to EUR161 million, driven by higher product utilization and new customer traction.
- TomTom's new 3D map for automated driving received overwhelmingly positive feedback at CES, indicating strong market interest.
- The company is well-positioned to capitalize on trends such as the rise of electric vehicles and advancements in self-driving technology, which are expected to drive deeper integration of their technology.
Negative Points
- Automotive backlog decreased from EUR2.5 billion in 2023 to EUR2.1 billion in 2024 due to reduced expectations for near-term volumes and slower adoption of electric vehicles.
- Group revenue for the full year declined by 2% to EUR574 million, with automotive revenue decreasing by 4% due to industry headwinds and delays in new car model launches.
- Free cash flow saw an outflow of EUR4 million, influenced by low operational revenue in automotive and higher than anticipated receivables at year-end.
- Visibility remains limited in the automotive market due to ongoing uncertainty, impacting near-term development and volume growth expectations.
- Consumer revenue declined by 10% year-on-year, settling at EUR85 million, reflecting challenges in this segment.
Q & A Highlights
Q: Can you provide more details on the expected growth for the enterprise segment and the outlook for the automotive business?
A: Taco Titulaer, CFO, mentioned that while they expect enterprise to grow, they are cautious about providing specific growth figures due to fluctuations in the automotive sector. Harold Goddijn, CEO, added that the enterprise sales funnel is strong, with a broad range of deal sizes, including some significant opportunities that could impact 2025 results.
Q: Given the current uncertainty in the automotive market, why provide an outlook at all?
A: Harold Goddijn, CEO, acknowledged the peak uncertainty due to geopolitical and industry-specific challenges. However, he emphasized focusing on factors they can influence, such as winning future automotive deals and leveraging positive trends like shorter implementation times and increased interest in their products.
Q: With the decline in consumer revenue, should we expect an improvement in gross margins?
A: Taco Titulaer, CFO, confirmed that gross margins are expected to improve, potentially reaching closer to 90% as consumer revenue declines and enterprise revenue grows. However, reaching 90% might take a few more years.
Q: How is the adoption of ADAS technology progressing, and does it mitigate the decline in automotive revenue?
A: Taco Titulaer, CFO, stated that ADAS is a driver for future growth, with increasing take rates as more hybrid and electric vehicles are produced. ADAS features, such as intelligent speed assist, are becoming more integral, driving deeper integration and offering competitive advantages.
Q: Are there geographical variations in automotive customer dynamics, particularly in the US and China?
A: Harold Goddijn, CEO, noted that Asian and Chinese manufacturers are optimistic about gaining market share, while European and American manufacturers are in catch-up mode. The drive for modernization, especially in software, is evident across geographies, and TomTom's competitive position remains strong globally.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
