By Federica Mileo
(Reuters) -Dutch navigation and digital mapping company TomTom said on Friday it expected revenue growth to continue in 2023, boosted by increased car production levels and new automotive contracts.
After being hit by a global chip shortage that disrupted the automotive and electronics industries, TomTom is now starting to benefit from a recovery in global car production.
"Pressures on supply chains are not gone away but they are reducing and there's better control", Chief Executive Harold Goddijn told Reuters, pointing to positive effects from increasing car volumes and a ramp-up in market share gains.
At 1000 GMT, TomTom shares were up 8%.
Increased car production volumes and a further ramp up of some contracts led Automotive to generate revenues of 77 million euros in the quarter, an increase of 64% year-on-year, Chief Finance Officer Taco Titulaer said in a statement.
The group, whose customers include Volkswagen (ETR:VOWG_p) and Microsoft (NASDAQ:MSFT), expects revenue growth to continue over the current fiscal year, with a strong increase in automotive revenues offsetting declines in both its consumer and enterprise businesses.
"The electrification drive will also have a positive effect on take rates, as so far all electric cars that are being produced have maps and range calculations and those specific functions that are mandatory for a good EV experience", Goddijn told Reuters.
The Amsterdam-based firm forecast revenue for 2023 in a range of 540 million euros to 580 million euros ($588.33 million-$631.91 million), with free cash flow of between 0% and +5% of the revenue, thanks to the positive impact of a change in revenue recognition timing for new map subscriptions contracts.
The group had previously guided for a revenue of 500-550 million euros and a free cash flow at breakeven.
"Due to a strong backlog and the upgrade to FCF (free cash flow) guidance, we would expect a positive reaction", UBS said in a note, while ING pointed to better-than-expected automotive revenue.
The company posted revenue of 139 million euros for the quarter ended Dec. 31, beating a company-compiled analysts' average forecast of 120 million euros.
($1 = 0.9179 euros)