Release Date: April 15, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TomTom NV (TMOAF, Financial) reported a strong start to 2025 with growing revenues and solid strategic progress, particularly in the enterprise segment.
- The enterprise segment saw significant revenue growth of 18%, reaching EUR42 million, driven by increased adoption of location technology products.
- The automotive business is well-positioned to meet evolving carmaker needs, with a 5% increase in operational revenue year-on-year.
- TomTom NV (TMOAF) introduced 3D map layers, enhancing their product offerings for higher levels of vehicle autonomy.
- Gross margin improved to 88%, up from 86% last year, due to a greater contribution from high-margin location technology revenue.
Negative Points
- Automotive IFRS revenue declined by 4% to EUR80 million, despite operational revenue growth.
- The consumer segment experienced an 8% year-on-year decline in revenue, impacting overall performance.
- Current trade tensions and market uncertainties pose challenges to short-term predictability and car volumes in key markets.
- Despite strong enterprise growth, the weakening dollar could negatively impact future revenues, as 75% of enterprise revenue is dollar-denominated.
- No significant deals were signed for 3D maps in Q1, despite positive market interest and intense discussions with potential clients.
Q & A Highlights
Q: How is the shift towards software-defined vehicles impacting TomTom's business model and relationships with automotive clients?
A: Harold Goddijn, CEO, explained that the shift towards software-defined vehicles is a gradual process, with carmakers moving towards more standardized and efficient software architectures. This transition allows TomTom to become a more product-focused organization, improving efficiency and reducing time to market. The company is adapting to this new reality by standardizing products and processes, which enhances repeatability and quality.
Q: What is the current status and future outlook for TomTom's HD/3D maps, and how does it affect market share and revenue visibility?
A: Taco Titulaer, CFO, noted that investments in HD/3D maps benefit both automotive and human-used maps. The market for autonomous driving is still nascent, but TomTom's market share in HD maps is similar to its SD maps. The new 3D mapping technology offers improved coverage and freshness, positioning TomTom well for future opportunities. Harold Goddijn added that the new technology opens doors to customers not currently sourcing from TomTom, potentially increasing market share.
Q: How is TomTom's enterprise segment performing, and what are the prospects for future growth?
A: Harold Goddijn highlighted that the enterprise segment is gaining traction, with a growing pipeline and shorter sales lead times. The government sector, field logistics, and ride-hailing are key areas of growth. The adoption of Orbis Maps by major clients like Microsoft and Esri enhances credibility and attracts new customers. The enterprise segment's revenue grew by 18% in Q1 2025.
Q: What impact do current trade tensions and market uncertainties have on TomTom's automotive business?
A: Harold Goddijn acknowledged the volatile environment but expressed confidence that tariffs would not materially impact revenue. While the short-term outlook is unpredictable, TomTom's exposure is relatively limited. The company remains focused on long-term opportunities in in-vehicle software, EV adoption, and self-driving advancements.
Q: Can you provide insights into TomTom's gross margin development and R&D capitalization?
A: Taco Titulaer stated that the gross margin for automotive and enterprise segments is over 90%, while the consumer segment is between 40% and 45%. As the consumer segment's contribution decreases, the overall gross margin will eventually exceed 90%, but not in 2025. Regarding R&D capitalization, the company advises modeling EUR 30 million for the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
