(Reuters) - Dutch navigation and digital mapping company TomTom (TOM2.AS) reported a forecast-beating 12% rise in second quarter revenue and raised its full-year outlook, citing the strength of its location technology business.
Second-quarter revenue reached 210.8 million euros (190.33 million pounds), the company said on Wednesday, above a 177 million euro consensus forecast from analysts polled by the company.
“The positive revenue trend continued into the second quarter, with location technology growing 25%,” Chief Executive Officer Harold Goddijn said in a statement.
TomTom’s shares opened about 5% higher, but later gave up all their gains and were down 2% by 0745 GMT.
ING analyst Marc Hesselink said the mixed market reaction reflected the fact that while TomTom’s underlying position was good, the company’s shift to operating expense from capital expense-based accounting blurred the financial picture.
The accounting change reflects the Amsterdam-based company’s transition to a primarily software business, which Hesselink said would eventually “result in a much cleaner balance sheet.”
TomTom upgraded its full year revenue forecast to at least 700 million euros from 675 million euros, saying it expected higher demand in its location technology business that provides maps, traffic information and navigation software to business customers.
TomTom said the higher guidance also reflected an expected 15% decline in its consumer business, which mainly sells consumer electronics such as portable navigation devices. It said the expected decline was smaller than earlier assumed, but did not give the previous forecast.
TomTom maintained its 2019 adjusted earnings per share outlook of 0.15 euros, but downgraded its full year free cash flow guidance to 9% of revenue from 10% because of “a higher unbilled revenue position which impacts the timing of cash inflow.”
TomTom, which is moving away from selling devices to software as a service (SaaS), sold its telematics division to Japan’s Bridgestone (5108.T) in January in order to focus on its digital map-linked businesses.
The Amsterdam-based company said it booked a net gain of 807 million euros from the sale, which boosted its net income to 742 million euros.
However, it reported a net loss of 65.3 million euros from continuing operations excluding the sold telematics business, compared with a loss of 11 million euros forecast by analysts polled by the company.
Reporting by Camille Raynaud; Editing by Tomasz Janowski