TomTom's financial struggles intensify amid auto industry decline
Representational image of a person driving a car.
Digital mapping specialist TomTom has withdrawn its financial targets for 2025 following the announcement of an operating loss in the second quarter of more pronounced proportions than predicted, as weak demand for new cars hit the key automotive location technology business.
"A combination of downward revisions for near-term car production volumes and delays in new model introductions has resulted in a generally less predictable market environment," CEO Harold Goddijn said in the earnings statement.
New car sales in Europe dropped by 3 per cent in May year over year, the key bellwether of TomTom's revenues. Consequently, the Amsterdam-based company said it would miss its guidance for 2025 and intends to give new targets the following year when it reports its full-year results for 2024. TomTom had earlier forecasted to reach 600 million euros in location technology revenues in 2025.
TomTom now expects its revenue for 2024 to be at the lower end of the 570-610 million euro guidance range. The business announced a 5.2 million loss before interest and taxes in the second quarter of 2024, compared with a loss of 3.6 million euros in the same period a year ago. That was worse than analysts' expectations of a 4 million euro loss for the quarter, according to a company-compiled consensus.
In a separate company statement, amidst this financial struggle, TomTom announced an expansion and intensification of its partnership with Microsoft. This collaboration would entail the supplying of location technology by TomTom across the U.S. group's solutions, which will eventually pave the way for new opportunities in growth and innovation.
While TomTom faces formidable challenges as a result of the slowdown in demand for the automotive sector, the strategic tie-up with Microsoft could just help wriggle out of some of its problems. The company's revised targets and future plans will now be interesting to see as the company tries to ride out these stormy times.
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