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TomTom, the Amsterdam-based digital mapping specialist, announced it is suspending its revenue target 2025 due to weak demand in the automotive sector.
The company anticipates 2024 sales to be at the lower end of the earlier forecasted range of 570 million to 610 million euros, missing the 2025 location technology revenue target of 600 million euros ($654 million).
Following the announcement, TomTom shares dropped by 8.1%, trading at 5.12 euros as of 0813 GMT.
Factors Influencing Performance:
Chief Executive Harold Goddijn cited downward revisions in near-term car production volumes and delays in new model introductions as reasons for the unpredictable market environment. This has directly impacted the company’s automotive location technology business.
European new car sales declined by 3% year-on-year in May, contributing to the challenges faced by TomTom.
In the second quarter, sales in TomTom’s automotive location technology business fell by approximately 4% to 87.3 million euros, constituting more than half of the company’s total revenue of 152.2 million euros.
Finance Chief Taco Titulaer mentioned that the company faces short-term revenue headwinds in the automotive sector. However, he emphasized that there are no fundamental issues within the business itself.
Mapping Platform Delays:
The introduction of TomTom’s new mapping platform, TomTom Orbis, has taken longer than anticipated to come online, further affecting overall sales.
For the second quarter, TomTom reported a loss before interest and tax of 5.2 million euros, up from 3.6 million euros a year earlier. The consensus from analyst forecasts compiled by the company was a loss of 4 million euros.
Future Outlook and Strategic Moves:
TomTom plans to provide new revenue targets for next year when it reports its full-year results for 2024.
TomTom is deepening its collaboration with Microsoft, which includes the adoption of TomTom Orbis across Microsoft’s products. The new contract between TomTom and Microsoft extends until the end of this decade, which is expected to bolster TomTom’s future business prospects.
