Digital mapping specialist TomTom reported lower than expected revenue at its main location technology business on Friday, sending its shares down 7%.
The company, which competes with Google Maps and the world’s biggest mapping platform HERE, said third quarter sales at the location technology unit, home to TomTom’s automotive and enterprise businesses, rose 10% to 119.2 million euros (USD 125.8 million), missing analysts’ estimate of 122 million euros.
Sales in the auto sector rose 32% but the enterprise sector’s sales fell 20%, reflecting lower volumes of some renewed contracts. Both were below market expectations.
Total group sales rose 6% on the year to 144.1 million euros.
“Headline revenues were in line with consensus expectations, but the underlying quality was a bit light,” ING analyst Marc Hesselink said, with only the much smaller consumer unit ahead of estimates.
Shares in the Dutch company, which counts carmakers Volkswagen and Stellantis among its customers, were down 7% at 6.42 euros in morning trade, wiping out gains this year.
TomTom has been benefiting from a backlog in auto orders after extended supply disruptions. However, this could be changing as people delay buying new cars amid high inflation.
Finance chief Taco Titulaer said growth in car production might stabilise in the forth quarter, though he did not expect TomTom to suffer from it.
“Four out of 10 cars come with inbuilt navigation and we think that it will grow to 80% by the end of this decade,” Titulaer told Reuters, saying this should offset lower car production.
Titulaer said TomTom saw new opportunities in generative artificial intelligence (AI) and was “investing time and money and people” into the technology.
“What is unclear at this moment (is) what kind of business models and enhanced products (we) can deliver,” he added, expecting to shed more light on this in the coming quarter.
TomTom launched a large language model plugin for ChatGPT in the third quarter to allow the chatbot’s users to plan trips and explore new places using its maps.
