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Research Tree provides access to ongoing research coverage, media content and regulatory news on TomTom. We currently have 12 research reports from 1 professional analysts.
Tomtom reported quite good Q1 results confirming the trend observed in recent quarters in its activities. Also, the proportion of revenues linked to data, software and services has continued to increase, pulling upward both the gross and EBITDA margins. Finally, thanks to a solid financial result, the net result reached €6.4m for Q1 18. The group has consequently confirmed its guidance for FY18, expecting revenues of about €800m and adjusted EPS of about €0.25.
TomTom reported Q4 revenues of €219.7m, down 17.3% yoy and up 1% sequentially. Consumer decreased by 40.2% yoy to €91m, as well as Licensing (€32.8m, -6.3%). The two other businesses grew by 46.9% for Automotive (€53.9m) and 1% for Telematics (€42m). The three non-legacy businesses combined grew by 13.6% to €128.7m, accounting for 59% of the total revenues. The gross margin came in at 59.4%, up 180bp yoy, while EBIT came in at €-29.5m. EPS came in at €-0.15 and adjusted EPS at €0.06. For FY17, revenues came in at €903.4m (-8.5%), with a strong decrease in Consumer (€412.5m, -26.8%) and the three non-legacy businesses up by 15.8% (€490.9m, 54% of total revenues). The gross margin came in at 62.4%, and the EBIT margin at -22.1%; reported EPS came in at €-0.87, and adjusted EPS at €0.26. For 2018, and under the new IFRS 15 & 16 rules, the company guided revenues of about €800m, a gross margin close to 70%, adjusted EPS of about €0.25 and combined opex and capex (excluding acquisitions) of about €700m. The restated adjusted EPS for FY17 was €0.18, the impact on revenues close to zero, the gross margin 63.1% and the EBIT margin -20.6%. The €50m share buy-back programme was completed on 8 December for a total of 5,384,450 shares.
TomTom reported Q3 revenues of €217.6m, down 9.1% yoy and 14.1% sequentially. Consumer decreased by 29.1% yoy to €97.2m, as well as Licensing (€33.8m, -1.7%). The two other businesses grew by 50.8% for Automotive (€47.2m) and 7.9% for Telematics (€39.4m). The three non-legacy businesses combined grew by 17.8% to €120.4m, accounting for 55% of the business. The gross margin came in at 64.6%, up 420bp yoy, while EBIT came in at -€5.9m. EPS came in at €-0.02 and adjusted EPS at €0.08. The company updated its guidance for FY17: the target for adjusted EPS remains at around €0.25, but revenues are now expected at about €900m due to the reorganisation in Consumer Sport. Capex and opex are also expected to grow marginally compared to 2016 (vs. modestly). Concerning the €50m share buy-back programme, 63,797 shares worth €6.1m have been acquired during the quarter.
TomTom reported Q2 revenues of €253.4m, down 4.4% yoy and up 19.1% sequentially. Consumer decreased by 19.7% yoy to €126.3m, representing the only down-mover. The three other businesses combined grew by 17.7% to €127.1m, with in decreasing order Automotive (€48.4m, +38.7% yoy), Licensing (€38.6m, +16.3%) and Telematics (€40.1m, +0.5%). The gross margin came in at 63.4%, up 860bp yoy, while the EBIT was strongly negative (€-159.5m) due to a €168.7m impairment charge related to Consumer. EPS came in at €-0.68 and adjusted EPS at €0.09. The company re-iterated its guidance for FY17 with adjusted EPS of around €0.25, but warned that the revenues would come in at the lower end of the previously communicated €925-950m range. The non-legacy business is expected to grow by 15%, while strategic options are being looked at for the Sport business. A €50m share buy-back was also announced.
TomTom reported Q1 revenues of €212.7m, down 2% yoy and 19.9% sequentially. Consumer decreased by 16% yoy to €98m, representing the main down-mover. The three other businesses combined grew by 14.1% to €114.7m, with in decreasing order Automotive (€41.1m, +38.4% yoy), Telematics (€40.6m, +9.4%) and Licensing (€33m, -2.1%). The gross margin came in at 62.2%, up 540bp yoy, while the EBIT margin lost 30bp to -2.3% (-€4.8m). EPS came in at €-0.02 and adjusted EPS at €0.03. The company re-iterated its guidance for FY17 with adjusted EPS of around €0.25 and revenues of between €1,025 and €1,050m.
TomTom reported Q4 revenues of €265.6m, up 11% sequentially but down 6% yoy. Consumer accounted for most of the decrease (€152.3m, -13.4%), while Licensing was also down double-digit (€35m, -10.9%). Telematics and Automotive were up by double-digit (respectively €41.6m and +12.4%, and €36.7m and +21.1%). The gross margin came in at 57.6% (up 840bp yoy), for a negative EBIT margin of 0.2% (down 30bp yoy). For FY16, revenues reached €987.2m, down 1.9%. Consumer displayed here too the biggest decrease (€563.2m, -9.7%) followed by Licensing (€136.3m, -4.1%). Telematics and Automotive were also up by double-digit (respectively €155.1m and +14.9%, and €132.9m and +25.2%). Telematics almost reached the 700k subscribers mark (696k), corresponding to a 15% increase over FY15. The gross margin came in at 57.4%, up 590bp yoy, and the EBIT margin at 0.9%, up 80bp yoy, with a strong negative EBIT in Automotive (-€33.9m) offset by a strong performance in Telematics (€44.5m). The FY16 adjusted EPS came in at €0.23 (€0.21 in FY15). For FY17, the company is expecting revenues to decrease to a range of €925-950m, with a net decline in Consumer partially offset by a 10% combined growth in the rest of the business. Adjusted EPS is expected to reach €.25, while capex and opex are expected to grow modestly.
TomTom reported Q3 revenues of €239.3m, down 5.9% yoy and 9.8% sequentially. Consumer decreased by 15% yoy to €137.1m, representing the biggest down-mover. Automotive’s top-line grew by 20.4% to €31.3m, Telematics by 14.8% to €36.5m, while Licensing showed some weakness (€34.4m, -2.3%). The gross margin came in at 60.4%, up 730bp yoy, while the EBIT margin lost 150bp to 0.4% (€1m). EPS came in at zero and adjusted EPS at €0.05. Despite the weak market conditions in Consumer, the company re-iterated its adjusted EPS guidance for FY16 of around €0.23, while the revenues are now estimated to be around €980m, down from €1,050m.
TomTom reported Q2 revenues of €265.2m, flat yoy (+0.2%) and up 22.2% sequentially after the usual seasonal dip of Q1. Consumer decreased by 4.7% yoy to €157.2m, while the biggest down mover was Licensing with a 14% decrease at €33.2m. Automotive’s top-line growth accelerated by 34.2% to €34.9m, while Telematics decelerated but remained strongly positive at +13.7% (€39.9m).
TomTom reported Q1 revenues of €217.2m, up 5.7% yoy and down 23.2% sequentially due to the traditional seasonality. Consumer decreased by 4.1% yoy at €116.6m, while similarly to the previous quarter all other businesses displayed double-digit growth: 25.8% for Automotive (€29.7m), 16.2% for Licensing (€33.7m) and 19.3% for Telematics (€37.1m). The gross margin came in at 56.8%, up 330bp yoy, but a surge in opex led to a negative EBIT margin of -2% (€-4.3m); no divisional profitability was provided this quarter. In the end, after the income tax gain, EPS came in at €0.02 and adjusted EPS at €0.03. The company re-iterated its guidance for FY16, that is to say revenue of €1,050m and adjusted EPS of around €0.23.
TomTom reported Q4 revenues of €282.5m, up 9.3% vs. the previous year. Consumer accounted for the majority of the revenues with €176m, but saw its yoy growth slowing down to 2.2%. All the other segments grew by double-digit figures: 28.4% for Automotive (€30.3m), 24.4% for Licensing (€39m) and 19% for Telematics (€37m). For the full year 2015, revenues reached €1,007m, up 5.9%. Consumer accounted for most of the revenues and displayed flattish growth (€624m, +0.7%), due to lower PND revenues. Automotive was down 3.3% (€106m), due to the phasing out of legacy products. Licensing (€142m) and Telematics (€135m) were up by double-digit figures, respectively 27.3% and 22.5%. Telematics reached the 605,000 subscribers mark, up 30% from the 464,000 2014 figure, due to dynamic organic growth and the acquisition of the Polish fleet management solutions provider Finder in December, which added over 60,000 vehicles. The gross margin for Q4 came in at 49.2%, down 220bp yoy and 390bp sequentially, mostly due to an €11m impairment charge in Automotive. For the full year, the gross margin decreased to 51.5% from 55.1%, due to strong negative currency effects (at constant exchange rates, it would have reached 56%). The EBIT margin for the full year was nil, hampered by the Automotive business (-32%) but offset by Telematics (29.4%), while Consumer and Licensing are neutral. For the full year 2016, the company is expecting revenues to grow to c. €1,050m, and adjusted EPS to increase by 10%, with higher investments (opex and capex) in core technologies, especially in Automotive.
TomTom reported Q3 revenues of €254m, up 8.4% vs. the previous year. Consumer accounted as usual for most of the revenues, coming in at €161m for the quarter, representing a 5.4% increase yoy. The segment was driven by a favourable product mix as well as resilient growth in PND. Automotive reached €26m, flat yoy, vs. a 17.3% decrease in H1. The partnerships with Fiat-Chrysler were extended, as well as with South Korean’s SsangYong. A partnership with Bosch has been announced to collaborate in the field of mapping technology for autonomous vehicles. Licensing and Telematics reached €35.2m and €31.8m, growing by respectively 30.4% and 13.6%. In Telematics, the user base increased by 26% vs. the previous year, reaching 522,000 subscribers. The gross margin reached 53%, down from 57% last year, mainly due to the weakening of the euro vs. the dollar, EBITDA decreased by 20% at €33m, while EBIT decreased by 37% at €4.9m, corresponding to a 1.9% operating margin. With similar exchange rates, the gross margin would have reached 58% and the operating margin 6%. The company reiterated its guidance for the year. Revenues are still expected to reach around €1bn, with adjusted EPS at around €0.20. Both capex and opex should be slightly higher vs. the previous year.
Revenues grew 5% to €265m, up from: €252m in Q2 14 (3% revenue growth in H1 15 to €470m, up from €457m in H1 14). Consumer sales fell by 2% to €164.9m, driven by a single-digit decline of PND and related content & services revenue, offset by a mid double-digit increase in sports revenue. Automotive saw a strong 15% decline as anticipated to €26m due to the draw down on certain Automotive Hardware contracts which were linked, however TomTom continued to book new business at levels which will support a growing business from next year onwards. Telematics continued to grow strongly in Q2 (up 37% and 30% over H1) with sales reaching €35m as TomTom passed 500k subscriptions. Finally, Licensing also grew by 42% over the course of Q2 to €35.1m (€25m in Q2 14) or 27% over H1 15 (€67m in revenues) reflecting the improved deal with Apple and the signing of a deal with Telefonica and Mozilla to supply Maps Online and Nav Online to mobiles running Firefox OS. TomTom’s gross margin fell to 51% from 56% in Q2 14, impacted by 5ppts by the stronger dollar. As a result, EBITDA fell to €28m (Q2 14: €37m) and TomTom's net result came in at €3m, down from €9m in Q2 14. At the end of Q2, TomTom maintains a very healthy net cash position of €77m. The guidance for revenue and adjusted EPS for the full year is maintained. TomTom continues to expect revenues to grow to around €1bn, and adjusted EPS is expected to come in at c. €0.20. TomTom does however now expect to increase its investments moderately in terms of both capex and opex to develop further its core technologies. This is mostly as a result of the stronger dollar.
Research Tree provides access to ongoing research coverage, media content and regulatory news on TomTom. We currently have 12 research reports from 1 professional analysts.
2017 results are largely as expected after January’s trading update. Affected by a delayed delivery, revenue fell 36% YoY to £1.2m contributing to a cash loss of £10.7m. R&D spend increased during 2017 with development of a new standards based product which is now complete. Cash at the YE was £5.4m after an £11.3m equity injection in the year and we calculate current cash of under £3m but with a further £1.4m due from R&D tax credits. The cash burn will be reduced during 2018, and whilst there is no visibility on the Bangladesh order, new territories have been opened up and a large order for $3.2m in India is announced with the results. The cash should be sufficient through to Q4, when the bulk of the year’s £10m expected revenues are due to be booked. To be prudent, our forecasts do not include anything from Bangladesh and little from Iran; however, delivering them will require additional working capital (our forecasts assume £2m from equity) with a number of sources being considered, including licensing. The uncertainty on timing and funding means this remains a highly speculative holding and we place our TP under review. We do see opportunity in a huge order book and strong IP; also a shift of emphasis from hardware to software with a licence and royalty model for the new product developed during the year.
In terms of service revenues, Q4 was quite as expected with organic growth at constant change of 1.4%, slightly better than the +1.1% recorded in Q3 but lower than the 2% recorded in H1. European growth, which had moderated to 0.3% in Q3, was 0.6% (excluding the positive impact of a legal settlement in Germany). Note that, in Europe, the increased drag from roaming regulation was completely offset by an improved global performance in mobile. In parallel, growth in AMAP was still strong at +7.7% during the quarter (vs 6.8% in Q3) but it was completely offset in reported terms by an 1.5ppt adverse impact from FX (particularly with regards to the Turkish lira). Note the group’s revenue for the whole year declined by 2.2% yoy in reported terms, primarily due to the deconsolidation of Vodafone Netherlands following the creation of the JV VodafoneZiggo and FX. Like in H1, the good news came from the EBITDA which was up organically by 10.6% yoy. Excluding the negative impact of net roaming declines in Europe and the benefits in the UK from the introduction of handset financing and regulatory settlements in the period, organic adjusted EBITDA grew by a solid 6.5% (lower, however, than the impressive +9.3% recorded in H1) with a broad-based EBITDA improvement in 20 out of Vodafone’s 25 markets. The group which had raised its full-year guidance to +10% last November (vs +4-8% previously) has eventually exceeded its target with an annual organic EBITDA growth of 11.8%. But the bad surprise was the announcement in parallel of the succession plan for the CEO. Effective from 1 October 2018, Vittorio Colao will be succeeded by Group CFO Nick Read. So it won’t be Colao(who was very much appreciated by investors) who will manage the recent big acquisitions made by the group (see our latest “_A brilliant deal which deserved a high price_”). As for 2018/19, the group expects EBITDA growth of 1-5%, excluding the impact of UK handset financing in both years, and the significant benefit in the prior year from regulatory settlements in the UK and a legal settlement in Germany. It’s a guidance that is a little bit disappointing, corresponding (on guidance FX rates) to an adjusted EBITDA range of €14.15-14.65bn for the year (we have €14.8bn in our model). Finally, note the final dividend per share of €0.1023, up 2%, giving the total dividends per share for the year of €0.1507. The board still intends to increase dividends per share annually.
Companies: Vodafone Group
Q4 sales at end March were down by 3% yoy (like in Q3 but they were flat in H1) with still a good performance by EE (+5%) but a continued sharp revenue decrease of 13% in Global Services. Q4 EBITDA was up by 1% yoy, a correct number compared to the 2% decline recorded in Q3 but the annual EBITDA at £7.5bn was towards the low end of the £7.5/7.6 guidance given by the group for the full year. Note, beyond a good 13% increase on the consumer side, that EE’s EBITDA was again up by 5% this quarter and not down by 6% like in Q3 (this was due to higher customer investment costs following the launch of new, premium smartphones and watches). Management has also given an expected poor outlook for 2018/19. Revenue should be down by 2% yoy mainly as a result of significant regulatory price reductions in Openreach (last March, Ofcom issued its final statement on the Wholesale Local Access Market Review). The group also expects an impact from its decision to de-emphasise lower margin products, particularly in the enterprise businesses. In parallel, EBITDA is expected to be in the range £7.3-7.4bn (we had currently £7.4bn in our model) corresponding to a c.2% decrease. Note also that capex should be higher in 2018/19 than what we expected, at around £3.7bn. It should remain at this level in 2019/20 as the business increases network investment through Openreach’s Fibre First programme and further 4G and 5G mobile network build. So, very logically, the Board has decided to hold the dividend unchanged for this year at 15.4p per share. The Board also expects to hold the dividend unchanged in respect of the next two financial years, given the outlook for earnings and cash flow over this period. Not at all enough to make investors dream, while most European telcos are more likely to increase theirs. Even if the free cash flow in 2017/18 was £2,973m (up by almost £200m yoy due to favourable working capital movements), note that for 2018/19 the group expects a free cash flow of £2.3-2.5bn. So there are no worries in the short term about BT’s no longer “progressive” dividend.
Companies: BT Group
Ethernity (ENET) designs and licenses data processing technology for the Carrier Ethernet market, so far deploying into over 500k systems globally. ENET is now working towards attracting Tier 1 Telcos and OEMs through the launch of its Smart NIC solutions, among various other initiatives. While market delays have resulted in share price volatility, we believe ENET’s market position, strong balance sheet and long-term potential to leverage a US$100bn+ market in network virtualisation are undervalued. Our scenario analysis shows the market is already pricing in a two year delay in commercialisation relative to our forecasts. We believe this is overly cautious and see a compelling balance of risk and reward.
Companies: Ethernity Networks
Q1 revenues were up by 2.7% yoy and lfl, confirming the reassuring Q4 performance (+2.8%) after a weaker Q3 (revenue was up by only 1.8% when it had grown by 3.2% in H1), while EBITDA (excluding non-recurring charges) was up by 1.8% yoy excluding non-recurring charges (€95m primarily due to provisions made against the financial penalty of €74.3m imposed for the alleged breach of article 2 of legislative decree 21 of 15/3/2012 (the “Golden Power” law), in an order issued on 8 May 2018). Note that domestic’s organic EBITDA was negatively impacted by the ongoing negotiations with the unions to renew the Personnel Solidarity Agreement which expired at the end of 2017. Net of one-offs, domestic’s underlying EBITDA trend shows a +1.3% yoy progression in line with Domestic’s organic revenue 2% growth. In Brazil, the recovery is well on track with a solid step up in cash flow generation, shown by an impressive +40% yoy growth in EBITDA less capex. The business unit posted a positive +4.8% yoy increase in total revenues while the EBITDA grew by 16.8%.
Companies: Telecom Italia
Mobile Tornado (MBT.L) is a leading global provider of Push To Talk over Cellular (PoC) solutions. It has developed an enterprise-grade platform with a broad and deep set of instant communication applications with competitive advantages in availability, performance, capacity, functionality and price. MBT has established relationships with mobile network operators (MNOs) in multiple geographies and secured customers in numerous vertical sectors. Since the arrival of CEO Avi Tooba in May 2016, the company has undergone a substantial overhaul with heavy investment in its technical engineering resources to expand platform functionality and robustness as well as reducing deployment costs and times. Mobile Tornado has sold its software as a subscription to date. Going forward, the service will also be offered as a perpetual bundle with hardware. This should result in an acceleration in revenue while operational gearing will also contribute to MBT’s expected move into profitability in FY19.
Companies: Mobile Tornado Group
Delivery on one of the major project orders announced last year has been delayed until H1 2018. Management had been expecting deployment to commence prior to the Y/E but due to external circumstances the customer has yet to call down the modules. However, it has assured CyanConnode that it remains committed to using its technology in this and other major projects. This delay has implications for our FY 2017 sales forecasts which relied on it in H2; we are forced to cut expectations from £2.1m to £1.2m and while this revenue is now set for FY 2018, we anticipate the knock-on delay to push revenue on into FY 2019, so we leave current year sales forecast unchanged at £10.0m. Given the scale, bottom-line impact is relatively small; we increase FY 2017 adj. LBT by 5% to £10.4m and cost control should actually see FY 2018 loss reduced slightly to £7.0m.
We estimate that SigmaRoc’s recently announced acquisition of pre-cast concrete products business Topcrete should be earnings and margin enhancing to the group this year, with further benefits in 2018. Assuming Topcrete continues to perform at past levels (conservative – SigmaRoc sees scope for better optimising certain commercial aspects of the business), we estimate it will lift group-level EBITDA by 7% compared with our pre-deal estimate for the current year, and by 37% for 2018. EBITDA margins could rise from 20% to 23%. After adjusting for positive working capital within the business, the acquisition price equates to just 6x incremental EBITDA – excellent value given SigmaRoc’s pre-deal market EV/EBITDA multiple of 10x, and illustrating the merits of its niche-asset buy-and-build growth strategy. Adjusting our EV estimate for debt taken on to fund the transaction, SigmaRoc is now trading at just 8.7x our revised 2018 EBITDA estimate for the enlarged group. This represents an attractive valuation relative to the peer-group median of 10.4x, notwithstanding the potential for more earnings growth as the group further rolls out its deal pipeline.
In terms of service revenues, Q3 was a little bit disappointing with organic growth at constant change of 1.1%, slightly lower than that recorded in the previous quarter (1.3% in Q2). European growth moderated to 0.3% or 1.9% excluding the impacts of the roaming regulation and the handset financing in the UK (these growths are indeed 0.5% below the Q2 numbers). Note, however, in parallel, growth in AMAP was still strong at +6.8% during the quarter (vs 6.2% in Q2). Note also that, as usual, reported numbers exclude the results of Vodafone Netherlands following the disposal of its consumer fixed business and subsequent merger into VodafoneZiggo (this has an impact of 5.3% on the European revenues).
Companies: Vodafone Group
Gamma has reported Adjusted EBITDA 2% ahead of our estimate at £41.6 million. Overall, revenue, margins and earnings increased despite the continued decline of the traditional business in the partner channel. While the mobile proposition has been slower to become established in the channel, it is now growing and Gamma’s Cloud PBX and SIP Trunking products continued to grow ahead of the market. Gamma launched its initial fixed/mobile converged offering in December and its new high capacity national optical network project remains on schedule. The direct business announced a number of significant contracts as it produced its best year to date with the Public Sector base securing new wins. The outlook statement states that the Group is ‘in great shape for 2018 and the foreseeable future’. Gamma has also announced the appointment of new CEO Andrew Taylor who will take over from Bob Falconer following May’s AGM. We have upgraded estimates for FY 2018E and FY 2019E to reflect good growth prospects, and we introduce new FY 2020E estimates.
Companies: Gamma Communications