Amsterdam, The Netherland. — TomTom reported lower revenues and wider losses for the first quarter, although margins held fairly steady and the company said overall growth of portable GPS in the U.S. grew 12 percent.
TomTom’s results were impacted by excess inventories in personal navigation devices (PNDs) during the first quarter, ended March 31, as distributors and retailers worked through overstocked product from the fourth quarter. “Although sell-in was difficult, end-user demand was in line with our expectations and it was encouraging that the market in North America continued to grow,” said CEO Harold Goddijn.
TomTom reported revenue of $275.5 million, a decrease of 31 percent from $397 million during the same quarter last year. Excluding Tele Atlas, which TomTom purchased last year, revenue was $222.43 million, down 35 percent from $341.4 for the first quarter last year.
TomTom’s PND revenue totaled $182.3 million, down from $302.6 million last year. North America represented 26 percent of total revenue and Europe represented 69 percent.
TomTom shipped 1.4 million PNDs in the quarter, a decrease of 29 percent over last year’s shipments of 2 million during the first quarter. The average selling price (ASP) for TomTom PNDs in the first quarter was $128, a decline of 15 percent from $151 in 2008. TomTom’s ASP declined by only 1 percent sequentially from the fourth quarter, leading the company to claim that its flat ASP was due to “a change in the product mix offset by less promotional activities compared to the previous quarter.”
For the total industry, PND sales were 2.5 million units in North America for the quarter, up from 2.1 million for the period last year. European sales were 3.3 million, down from 3.9 million. TomTom claimed it grew its market share in both North America and Europe to 19 percent and 44 percent, respectively, up from 18 percent and 42 percent during last year’s first quarter.
TeleAtlas revenue for the quarter was $53.02 million, down 4 percent from $55.6 million.
Gross margin for the group was 50 percent, an increase of one percentage point compared with the pro forma first quarter of last year.
Operating expenses were $152.6 million, down sequentially by 30 percent from $217.3 million in the fourth quarter 2008. Research and development expenses were $47.8 million, down 18 percent compared with the pro forma R&D expenses from the previous year.
TomTom remains debt-laden from its purchase of TeleAtlas claiming a net debt of $1.5 billion.
TomTom further reported that its advanced navigation services offered in Europe are seeing wider acceptance. The company offers an HD Traffic service which gives up to the minute traffic reports based on the road speed data from its PND users on the road. TomTom said it is starting to see the first round of subscription renewals for the service at a rate of 30 percent of users and growing.