- TomTom jumps 8% after profit beat and higher margins
- Shares rise 8% in early Amsterdam trade after stronger-than-expected quarterly results
- Operating profit hits €8.4 million, reversing last year’s loss
- Gross margin improves to 89% as software-led sales lift profitability
TomTom shares rose 8% in early Amsterdam trade after the Dutch maps and navigation group beat third-quarter profit expectations and flagged better profitability, easing nerves after a choppy year.
Operating profit came in at €8.4 million, comfortably ahead of forecasts, helped by improving margins and steadier car production at clients.
Automotive revenue rose 2% to €79.5 million as new car lines using TomTom software ramped up. Operating profit, or EBIT, is a simple measure of profit from day-to-day operations before financing costs and taxes.
Group revenue slipped 3% year on year to €137 million, but the product mix shifted in TomTom’s favour. Gross margin improved to 89% from 87% a year ago as more higher-margin software and content flowed through.
Free cash flow, which is the cash left after running the business and investing in equipment and software, was an inflow of €17 million when excluding restructuring payments tied to a June reorganisation. Net cash stood at €267 million, leaving the balance sheet unburdened by bank debt.
Management struck a steadier tone on the outlook. The company said it now expects full-year group revenue and Location Technology revenue to land at the upper end of its guidance ranges, with free cash flow around 5% of revenue.
That matters because TomTom’s model includes deferred revenue, which is money invoiced for multi-year software and map contracts that is recognised over time.
The company also reports operational revenue, which adjusts for movements in deferred balances to give a clearer view of underlying activity. In the third quarter, Automotive operational revenue rose 22% to €84.8 million as new programmes kicked in and prior-period royalties flowed through.
New products and deals helped lift sentiment. TomTom launched a next-generation Automotive Navigation Application built on its Orbis Maps platform and announced a multi-year agreement to supply live traffic and speed-camera services to Hyundai AutoEver for Hyundai, Kia and Genesis cars across Europe.
After a difficult 2024, when guidance cuts and weaker auto demand hurt sentiment, today’s results suggest the restructuring and product focus are feeding through to profits.
Investors appear encouraged by the stronger cash generation and margin improvements, while the company’s healthy cash pile offers a cushion if market conditions soften.