*Justin* schreef op 27 november 2016 20:15:
[...]Ouwe koeien over het tijdsbestek 2007-2015. Neem liever even de meest recente update.
Last Friday, TomTom organised a technology day for some 70 investors, analysts and media. Presentations were given by CEO Goddijn, board member Alain de Taeye (Maps), Antoine Saucier (Automotive), Willem Strijbosch (Autonomous driving) and Harold Schmidt (Telematics). As part of his presentation, CEO Goddijn provided FY20 guidance for Telematics, Licensing and Automotive combined,
stating that revenue of the 3 divisions would grow with a CAGR of 15%. Other key subjects were the competitive advantage versus Here, operational leverage and the US OEMs as targets for Automotive.
It is positive that TomTom has provided some guidance beyond the next year, which is what the company traditionally provides. Having said that, the 15% CAGR is more or less in line with consensus (we are at 15.9%). Nevertheless, the guidance does show that (assuming very modest growth for Licensing and around 10-12% organic growth for Telematics) Automotive revenue is set to grow substantially.
This was reiterated to a large extent by CEO Goddijn who stated that
automotive revenue growth for FY17 and FY18 was “pretty much in the bag”. All in all, Automotive revenue should therefore increase from EUR 127m in FY16 to around EUR 380m in FY20.
Given a gross margin of around 70%, TomTom will see operational leverage kicking in even if more opex will be added to be able to properly service all the OEMs and Tier1 and even if more map database costs will be allocated to Automotive (allocation is based on revenue development as well so if Consumer declines and Automotive grows, more costs will be allocated to Automotive). So implicitly, the revenue guidance also provides insight into the question on operational leverage.
With regards to Here and its technology,
board member de Taeye explained that Here still uses batch processing (albeit at a very high frequency) to refresh and update maps. That is still possible in today’s markets but Here will have to go to transactional map making (which is TomTom’s methodology) if it wants to compete in the (semi) autonomous driving markets where updates must be made available every hour or even faster. De Taeye also indicated that
if Here were to have unlimited funds available, it could replicate TomTom’s processes and products within a 3 year time frame but that a chance of a failure is also a possibility. De Taeye admitted that TomTom (TeleAtlas) only got it right the 3rd time around. TomTom will continue to work on automating its map updating process and that it expects the effectivity of that process to improve “not by percentages but by orders of magnitude”. That also bodes well for operational leverage going forward.
On the subject of winning clients like Ford and GM, Antoine Soucier answered that the TomTom brand is not as strong in North America as it is in Europe. During a break he added that TomTom’s Traffic service does not provide the same strategic advantage in the US as it does in Europe because there are very viable alternatives in the North American market.
However, as dual sourcing is the standard, he continues to expect that TomTom will eventually win contracts from both players (Ford and GM are 100% Here clients). It is a “matter of time”.When questioned about the future of Consumer within TomTom, CEO Goddijn reiterated that the division remains important. Our take is that any speculation about an equity carve out and sale is unrealistic.
A positive afternoon with guidance that not only shows confidence about Automotive and Telematics but also implies operational leverage. We retain our positive stance but do expect FY17 to finally show the anticipated operational leverage.