Hier SNS:
The facts:
TomTom has just reported 3Q13 results.
Our analysis:
TomTom's results were very strong. Revenue lagged expectations a bit but gross margin (despite higher deferred revenue because of life time maps and traffic) was well higher than expected and also higher than last year. Very strong indeed. EBIT was also well higher than expected, which was primarily due to the better gross margin as opex actually increased year on year by EUR 4m.
Apart from the strong P&L metrics, TomTom also reported very strong operating cash flow. OCF amounted to EUR 71m, which compares well to the EUR 52m achieved last year when EBIT was twice as high. This suggests pretty good balance sheet management but also solid sales in the new PND line up. Due to the strong cash flow, TomTom is now in a net cash position (EUR 52m), which brings dividends much closer (EUR 100m net cash position has been mentioned by the CFO as a threshold level).
As a result of the strong performance in the 3rd quarter and, we assume, rather solid outlook (Automotive is looking better), TomTom is raising guidance modestly. Revenue is now expected in the upper end of the range (EUR 900-950m) while adjusted EPS is now raised to EUR 0.25 per share (was EUR 0.20). This comes as no surprise as our estimates for the full year have always been at the high end in terms of revenues (EUR 975m) and well above guidance in terms of adj EPS (EUR 0.27).
Conclusion & Action:
A very strong performance of TomTom in gross margin (despite higher deferred income), EBIT and cash flow. The outlook seems to improve with healthy PND developments (market share and ASP up in Europe) and improving Automotive, which explains (alongside the strong 3Q results) the upped guidance increase.