October 16, 2019 / 5:39 AM / a month ago

TomTom third-quarter core earnings beat expectations, revenues dip

(Reuters) - Dutch mapping and navigation company TomTom (TOM2.AS) beat forecasts with its third-quarter core earnings on Wednesday, helped by higher proportion of high margin software and content revenue.

FILE PHOTO: TomTom navigation are seen in front of TomTom displayed logo in this illustration taken July 28, 2017. REUTERS/Dado Ruvic/File Photo

TomTom reported earnings before interest, taxes, depreciation and amortization (EBITDA) of 15.9 million euros ($17.6 million), nearly double the 8 million euro figure analysts had forecast in a poll compiled by the company.

The Amsterdam-based company confirmed its full-year free cash flow outlook, while slightly toning down its 2019 revenue guidance, saying it would be “around 700 million euros” rather than “at least 700 million” as previously forecast.

Third-quarter revenue fell 7% to 164.2 million euros, missing expectations as TomTom deferred a larger portion of operational revenue year-on-year.

TomTom shares were down 0.6% in early trade.

TomTom, which is moving away from selling devices to software as a service (SaaS), is expecting now however around 425 million euros for its location technology business, down from 435 million euros previously.

During its capital markets day in September, the company said it expected to increase its revenue from location technologies, such as maps, to around 500 million euros by

2021.

The company has also boosted its adjusted earning per share forecast, expecting now 0.20 euro per share from 0.15 euro previously, the statement said.

“The adjusted EPS is now expected to be around €0.20 partly due to higher gross margin. We expect a gross margin of at least 70% in the year,” TomTom added.

Its gross margin for the quarter ended in September was 78% compared with 71% last year.

Reporting by Charles Regnier and Pawel Goraj; Editing by Muralikumar Anantharaman and Tomasz Janowski

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