Tomtom Nv Unsp/Adr

Good day, ladies and gentlemen. Welcome to TomTom's third quarter 2025 results conference call. At this time, all participants are in a listen-only mode. We will be facilitating a question and answer session towards the end of today's prepared remarks, at which time, if you would like to ask a question, you may do so by pressing star 11 on your telephone keypad, where you will hear an automated message advising your hand is raised. If you are calling in via Microsoft Teams, please ensure you press star 11 from the keypad where the call is made and not from your Teams screen in order to enter the queue. Please note that this conference is being recorded. I will now turn the call over to your host for today's conference, Claudia Janssen, Group Controller, Head of Investor Relations. You may begin.

Thank you, Mel, and good afternoon, everyone, and welcome to our conference call. In today's call, we will discuss the third quarter 2025 operational highlights and financial results with CEO Harold Ferrein and CFO Taco Tizia. Harold will begin with an update on strategic developments. Taco will then provide an overview of financial performance and outlook. After their prepared remarks, we will open the line for your questions. As always, please note that safe harbor applies. And with that, Harold, let me pass it over to you.

Well, thank you very much, Claudia, and good afternoon, everyone. Appreciate you joining us today. I'll give you a short strategic and operational update for the third quarter, and then I'll hand over to Taco for the financials. So this quarter we launched our next generation automotive navigation application, which is a ready-to-use but also configurable application. and integrated solutions for OEMs that enables quick deployment of high-quality navigation systems. The product sets a new benchmark for user experience, quality, and flexibility in the industry, and we see the products generating strong interest. The release is an important milestone in our quest to deliver a standardized product portfolio. The automotive market remains dynamic But we are encouraged by several promising developments. We announced the expansion of our partnership with Hyundai, and we secured a multi-year agreement to provide real-time traffic and speed camera services for the vehicles across Europe. But also promising discussions around automated driving use cases and our continued investment in mapping and next-generation solution positions as well, to support our partners as the industry evolves. We are encouraged by the progress we're making and we remain confident in our long-term prospect within the automotive sector. Enterprise is progressing, though adoption is building more gradually with US dollar currency movements adding some pressure. We continue adding new customers and broadening the customer base. We will make it easier for developers and for businesses to access our data. And this will be a key driver of future growth. Taco will now walk you through the financial. So with that, I hand it over to you, Taco. Thank you. Thank you, Harold. Before discussing our outlook, I'll walk you through our financial results and highlight a few key developments. After my prepared remarks, we'll open the line for your questions. Group revenue for the third quarter was €137 million from €141 million in the same period last year, and location technology revenue totaled €180 million. Let me briefly touch on performance business by business, starting with automotive. Automotive operational revenue saw a strong year-on-year increase of 22% to €85 million. This increase can be attributed to multiple factors, the ramp-up of new vehicle lines we supply, a recovery in automotive production volumes, especially within the United States, and certain royalty reports related to previous periods, which amounted to roughly 5 million euro. Automotive IFRS revenue came in at 80 million, a 2% increase compared with the same period last year. The difference between the operational reported trend is partly due to royalty reports from prior periods, that will be recognized later. And like mentioned in previous quarter already, on a year-to-year basis, the trends of automotive IFRS and operational revenue are much more aligned, as IFRS revenue typically shows a more stable pattern, while operational revenues can be influenced by periodic savings that are neutralized when looking at longer periods of time. Enterprise revenue was €39 million just for constant currency, we maintained stable revenue quarter on quarter. We realized a strong gross margin of 89% up from 87% last year. The year-on-year increase in gross marketing primarily reflects a greater share of high-margin content and software revenue within our overall revenue mix. Our operating expenses were $140 million, reflecting a marked year-on-year decrease. This decrease was mainly driven by strong cost discipline the capitalization of our mapping development costs, and lower amortization charges. Free cash flow was an inflow of €17 million in the quarter, compared with €50 million last year. For completeness, the €70 million is excluding €14 million restructuring charges paid during the quarter. We expect the majority of the remaining €11 million we provided for will be paid out in the next two quarters. Our net cash position at the quarter end was €267 million, equal to the end of last quarter and up from €264 million at the end of 2024. Having covered our results, let me touch on our outlook. Revenue performance this year so far was solid. Currently, we are increasing our expectations. We now forecast that both full-year group revenue and location technology revenue we'll approach the upper end of our previously communicated guidance range. Free cash flow is expected at around 5% of group revenue. Our business fundaments are strong. We are beginning to see how the stronger emphasis on our product approach is positioning us well for long-term growth. And with that, we're now ready to take your questions. Mel, please start the Q&A session.