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Telematics Business & Financial review

5.1


STRATEGIC PRIORITIES

• Continue to expand the WEBFLEET installed base
• Continue to expand the eco-system of software and hardware partners
• Diversify into the aftermarket Connected Car opportunity using our Telematics capability

5.2Business review

subscriber base

Our Telematics business continued to perform strongly in 2015. We saw strong growth in our subscriber base reaching 605,000 subscriptions at the end of 2015, a 30% growth compared with last year. Telematics now serves more than 40,000 customers worldwide.

Our strong growth was achieved through a combination of organic growth and the acquisition of Finder S.A., the leading Polish fleet management service provider. This acquisition added over 60,000 subscriptions to our active installed base and enables us to further strengthen our market position in one of the fastest growing telematics markets in Europe.

In December, WEBFLEET was launched in Mexico and Chile in order to capitalise on two emerging South American markets. This launch is built on the infrastructure previously owned by Coordina, which was acquired by TomTom in 2013. It will allow operators in these countries, particularly medium-sized companies, to use WEBFLEET to improve operational efficiency.

Award-winning innovation

In 2015, Telematics has been recognised as Europe’s largest and fastest-growing provider of fleet management solutions by Berg Insight. A strong product portfolio, with WEBFLEET at its centre, has been key to our market-leading success. Continuous innovation ensures customers benefit from a market-leading fleet management software that is adaptable and future-proof.

The market-leading position of WEBFLEET has been recognised with a series of awards, including Best Commercial Vehicle Systems Integrator at the global TU-Automotive Awards and the Safety Innovation Award from UK charity Brake. Availability and confidentiality are essential. WEBFLEET complies with ISO 27001 certified standards of information confidentiality, integrity and availability.


OptiDrive 360

This year, we launched OptiDrive 360 following extensive research conducted by the academically-led European Union ecoDriver project. OptiDrive 360 combines pre-trip, real-time and post-trip advice to provide a complete approach to driver improvement. The real-time element uses vehicle and map data to provide fleet drivers with predictive real-time driving advice. The success of the product has also resulted in the creation of partnerships with a number of European eco-driving and road safety organisations, including DEKRA, RACC and Prévention Routière. OptiDrive 360 has also been recognised by the industry, winning the Brake Fleet Safety Product Award, the Deutschen Telematik Preis and a fleet innovation award from Link2Fleet.

WEBFLEET technology platform

The open WEBFLEET platform, made possible through stable open APIs and SDKs, was showcased at the 2015 .connect Developer Conference. This has led to increased integration possibilities for customers and development of further connected, third-party applications. An ecosystem of more than 350 software and hardware application developer partners includes key partnerships with Esri and PTV. The PRO 8 series driver terminals have extended the WEBFLEET platform by integrating real-time information captured in the field into back-end systems. We announced a partnership with Shell this year to integrate euroShell Card data with the WEBFLEET platform, making fuel transactions and fuel management information available for customers in one system.

Aftermarket Connected Car

Further expansion of our WEBFLEET technology has been achieved by creating opportunities in markets where Connected Car technology has great future potential. This includes usage-based insurance (UBI), where new products have been created with Allianz in France, Woop and Towergate in the UK and Signal Iduna in Germany. Our CURFER product, underpinned by LINK 100, was launched to showcase the insurance solution, using a smartphone app to provide feedback on driving style. Pon, the largest importer of cars in the Netherlands, adopted the Connected Car technology from Telematics to offer dealerships and customers real-time information into their vehicles’ status and performance.

5.3Financial review

Telematics revenue in 2015 was €135 million, a 22% growth year on year (2014: €110 million). The recurring subscription revenue for the year was €98 million compared with €76 million in 2014, an increase of 29% year on year. This strong increase was driven by the ongoing growth of the subscriber installed base. Hardware revenue and other services increased by 7% year on year, which is lower than in previous years as a result of a higher proportion of hardware rental in our new subscriber sales mix.


Table_4 Key Figures Telematics

 
 
(€ in millions,unless stated otherwise) 20151 2014 y.o.y. change2
Hardware and other services revenue3 37.2 34.6 7%
Subscription revenue 97.8 75.6 29%
Total Revenue 135.0 110.2 22%
EBITDA 49.0 39.1 25%
EBITDA margin (%) 36% 35%  
EBIT 39.7 33.8 17%
EBIT margin (%) 29% 31%  
Monthly subscription ARPU 15.9 16.2 -2%
Subscriber installed base (# in thousands) 605 464 30%
 
1. 2015 financial metrics and YoY change percentages exclude Finder S.A.; the acquisition is effective as of the end of December 2015.
2. Change percentages are based on non-rounded figures.
3. Other services revenue comprises installation services and separately purchased traffic service and/or map content.

Telematics EBITDA increased by 25% year on year to €49 million in 2015 (2014: €39 million), which led to an EBITDA margin of 36% in 2015, slightly higher compared with last year. EBIT amounted to €40 million in 2015, a 17% increase compared with last year (2014: €34 million). In 2015, Telematics saw a strong gross margin slightly offset by higher operating expenses. Telematics increased its sales and marketing cost in 2015 to support further organic growth. Operating expenses were also impacted by the integration cost related to our recent acquisitions. Monthly subscription ARPU was 2% lower year on year.

5.4


BUSINESS OUTLOOK

With our ongoing commitment to innovation, sustained investment in R&D and capacity to leverage economies of scale, we are in a strong position to capitalise on favourable market opportunities. We expect to see continued strong growth in our Telematics business in 2016 and we are committed to continued investment in innovation to build on the strength, reliability and performance of our WEBFLEET platform.

The growth potential for aftermarket Connected Car services offers opportunities for increased adoption of WEBFLEET and wider TomTom Telematics technologies, for both consumer and business solutions. Telematics aims to capitalise on these opportunities and develop further partnerships with
industries such as insurance and automotive.