TomTom NV Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Marc Hesselink - ING FM - Analyst : Yes. Thank you. My first question is on enterprise. As you said, it had quite some traction over the quarter, also some announcement with press releases during the quarter. You also say that the ramp up is going a bit slower than expected? How do you mean that's slower? Is it -- you still expect an aggressive ramp, but at a later stage? Or is it going to be more of a gradual growth business over the next few years?

Question: Marc Hesselink - ING FM - Analyst : Okay. And is it correct that also the reason why the sales side were a bit longer that you still had to finish some parts of your product. And I guess they are now fully in place. So should -- from now on the sales side to be a bit quicker? Or is it just something you underestimated that these sales cycles are low?

Question: Marc Hesselink - ING FM - Analyst : Okay. Thanks. Second question is on automotive. Clearly, the market is a bit slower. I mean there's no surprise, I think. But can you maybe talk a bit what's happening on the line? Like, what you're seeing on new RFQs, the dynamics there, competitive dynamics?

Question: Marc Hesselink - ING FM - Analyst : Okay. Clear, thanks. And final question is on the free cash flow guidance. You actually have a -- actually you downward or pushed down on the guidance range for revenue, but the free cash flow is actually quite a bit lower. Can you maybe help me to understand that? Is there also some big items that maybe shift into next year to explain that relatively big decrease in the free cash flow relative to the revenue?

Question: Marc Hesselink - ING FM - Analyst : Okay, clear. Thanks.

Question: Andrew Hayman - Independent Minds - Analyst : Yes. I was just looking at one of your recent presentations in May. And there you showed your direct peers as being Google here, Mapbox, Zenrin, and then some local players. You were just talking a little bit about the competitive dynamics, but maybe a little bit more detail would be interesting. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 15, 2024 / 11:00AM, TOM2.AS - Q2 2024 TomTom NV Earnings Call And maybe to give it something specific. I saw that Mapbox announced that they had some business from Toyota recently. Why would they choose to do business? Why would Toyota to do business with Mapbox versus you? I mean, in the past, you've had a relationship with Toyota. And then similarly, you note -- we see that BMW and VW are coming through as clients. In some ways, that's quite surprising. You would expect them to be predisposed to use here. So what do you -- what's the trigger for them to go with you? Is it the fact that they start with traffic, for example, and then that opens the door to sell them additional aspects of your offering? And then maybe just tied to this, are the auto companies a bit resistant to be tied too closely to one map company, and they are quite happy to use multiple sources or shift occasionally between the map providers? Thank you.

Question: Andrew Hayman - Independent Minds - Analyst : Good. Thank you.

Question: Maarten Verbeek - The IDEA! - Analyst : Good afternoon. It's Maarten Verbeek from The Idea. I would like to get back to the longer than anticipated sales cycles within enterprise. When TomTom presented its full year results, so roughly half year ago, it mentions that it takes some six-month from first contact to first revenue. So how much has that changed? Is now an expectation of nine month or even now one year? And attached to that question, you also gave some insight without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 15, 2024 / 11:00AM, TOM2.AS - Q2 2024 TomTom NV Earnings Call about your sales funnel with how many mid to large size customers you were on speaking terms for signing up a new contract. Could you give an update with respect to your sales funnel?

Question: Maarten Verbeek - The IDEA! - Analyst : The sales funnel. You, roughly a year ago, you gave some insight with how many mid- to large customers you were speaking in terms for signing up the contract?

Question: Maarten Verbeek - The IDEA! - Analyst : Okay. Thank you.

Question: Tim Ehlers - Kepler Cheuvreux - Analyst : Yes. Hi. Thanks for taking my question. I have a question with regards to the free cash flow just to get a better feeling on the moving parts there and also on the outlook for the year. Could you give some insights on the working capital movements that we can expect? Is that something you've seen in the first six months that was unusual and not necessarily planned or was it just normal seasonal pattern and the working capital is moving as you would expect it in the beginning of the year? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 15, 2024 / 11:00AM, TOM2.AS - Q2 2024 TomTom NV Earnings Call

Question: Tim Ehlers - Kepler Cheuvreux - Analyst : Okay, thanks. And then also just for a better understanding on the profitability and eventually the free cash flow then. So if we would exclude the one-off costs that occurred in Q2. You mentioned that the gross margin would be approximately the same as in Q1. Did you see any other effects on the profitability other than the operational leverage that you mentioned, which eventually led you to lower the guidance.

Question: Tim Ehlers - Kepler Cheuvreux - Analyst : Okay. Great. And then you mentioned in one of the previous analyst calls that the goal is to go towards a 90% gross margin --

Question: Tim Ehlers - Kepler Cheuvreux - Analyst : Okay. Clear. Thanks for that. That's it for me.