TomTom NV reported a five-fold increase in quarterly net profit on Tuesday, helped by its fast-growing automotive business and a strategic shift towards high-margin recurring content and services business.
The Dutch navigation systems company reported a net profit of 12.2 million euros for the April-June quarter. Adjusted net profit rose 87 percent on year to 23.2 million euros, while revenue was stable at 265.2 million euros.
Revenue from its automotive business jumped 34 percent to 34.9 million euros.
Analysts polled by Reuters expected an adjusted net profit of 12.6 million euros on a revenue of 267 million euros.
TomTom has been synonymous with satellite navigation systems. After launching the first TomTom GO portable satnav device in 2004, it quickly became the fastest adopted technology in the world, propelling the company to a market value of €15bn.
in 2008, TomTom’s sales started to fall off a cliff as the satnav market became saturated, with new cheaper alternatives becoming available on smartphones from the likes of Google and Nokia.
The company was forced to transform from a hardware business into a software and services provider that offered free mapping on smartphones and integrated traffic management systems used by governments to quell traffic and manage roads.
In 2013, TomTom branched out into sports watches. After partnering with Nike on the Nike+ SportWatch, it launched its own TomTom Runner and TomTom Multi-Sport devices, both of which had GPS sensors, allowing them to tap into TomTom’s navigation platform.
In 2015, TomTom launched the Bandit action camera. It too contains GPS sensors, allowing users to find and tag exciting moments in their video footage based on speed, altitude, G-force and acceleration. But the Bandit’s real selling point is its video editing and sharing capabilities.
TomTom’s forays into new markets do not mean it is abandoning navigation. Alongside its Bandit action camera, the company announced four new TomTom GO models and a new app called MyDrive that allows users to plan a route on their smartphone, tablet or PC and then transmit it to their sat-nav before they get in the car.
The company also has its sights set on driverless cars – something that Ms Vigreux describes as the “holy grail” for navigation companies. The company has been developing real-time map updates for a long time, and is already working with Volkswagen on its driverless cars.