TomTom NV said revenue for the third quarter reached €375 million ($483.8 mm), up 3% from the prior year and up 4% from the second quarter. The Dutch maker of GPS gear said it grew market share significantly in both in Europe and the United States, but that profits fell by more than a third due largely to the strengthening of the U.S. dollar.
The company said its gross margin shrank 400 basis points to 48% from the same quarter a year ago. EBITDA margins also shrank by 400 points to 22% from the year ago quarter.
The company reported an operating result of €55 million ($71.0 mm), down 21% from the third quarter of 2009 on a 400 point decline in operating margin. Net profit fell by 37% to €19 million ($26.5 mm).
Marketing expenses for the quarter amounted to €17 million ($21.9 mm), a sequential decrease of 28% and a year on year decrease of 19% (Q2 2010: €24 million; Q3 2009: €21 million). This sequential decrease results from the seasonal pattern of TomTom's business with higher marketing spend in the second and especially the fourth quarters. Total marketing expenses represented 5.9% of Consumer revenue, a decrease of 2.9 percentage points sequentially and 1.4 percentage point decrease year on year (Q2 2010: 8.8%; Q3 2009: 7.3%). Marketing expenses will increase significantly in the fourth quarter.
Balance sheet
Guidance
“Our Consumer business unit performed well in a soft market through strengthened market share, slowing price declines and an increased contribution from service and subscription sales,” said TomTom’s CEO Harold Goddijn. “We made good progress in securing new automotive contracts and our Business Solutions unit continues to deliver strong increases in subscriber numbers. We are focused on broadening our revenue base and on rolling out high quality content and services to our customers and I am pleased with the progress we are making.”