Group revenue for the quarter was €357 million, a decrease of 31% year on year (Q4 2010: €516 million), and an increase of 6.2% sequentially (Q3 2011: €336 million). The year on year decrease results from lower Consumer sales which were not compensated for by the increases in revenue in Automotive, Licensing and Business Solutions.
Consumer revenue in Q4 2011 was €242 million, which represents a 40% decrease year on year (Q4 2010: €406 million) and a 7.8% increase sequentially (Q3 2011: €225 million). The year on year decrease resulted mainly from the smaller size of the PND market especially in the US, from less participation by TomTom in US holiday season promotions compared to last year and by a proactive effort to go into Q1 with lower channel inventory than in previous years. Content & Services revenue in the Consumer business unit, on the other hand, increased strongly, mainly due to higher LIVE services revenue.
Automotive revenue increased by 2.1% from €55 million in Q4 2010 to €56 million in Q4 2011. Sequentially, revenue decreased by 5.3% (Q3 2011: €59 million) due to fewer production days in relation to the Christmas holiday season and as a result of our automotive partners managing the supply chain ahead of the new year.
Licensing generated revenues of €40 million in this quarter, a 3.3% increase compared to €39 million in Q4 2010. Sequentially, revenue increased by 12% (Q3 2011: €36 million) resulting from increased sales to PND and GIS customers.
Business Solutions achieved strong growth in Q4 2011, generating revenue of €19 million, a 19% increase year on year (Q4 2010: €16 million). The number of WEBFLEET subscriptions activated during the quarter reached a record number of nearly 19 thousand representing a 34% increase year on year. Sequentially, revenue increased by 13% from €17 million in Q3 2011.
Hardware revenue decreased by 40% year on year to €250 million (Q4 2010: €418 million), reflecting the PND revenue decline in our Consumer business. Sequentially, hardware revenue increased by 9.2% (Q3 2011: €229 million).
Revenue from Content & Services for the quarter was €107 million, a 10% increase year on year and flat compared to Q3 2011. The year on year increase was primarily attributed to higher Content & Services revenue within Consumer. Content & Services revenue accounted for 30% of total group revenue for the quarter.
Gross margin
The gross margin for the group was 46%. The gross margin was flat compared to the same quarter last year and was down by 5 percentage points sequentially (Q4 2010: 46%; Q3 2011: 51%). The sequential decrease results from the seasonal change in the revenue mix, a strengthening of the USD against the euro and the effect of the accelerated write-off of pre-paid third party services.
Operating expenses
For comparison purposes, we have excluded the impact of the restructuring charges from the operating expenses review.
Total operating expenses for the quarter were €142 million, a €29 million (17%) decrease year on year (Q4 2010: €171 million) and a €10 million (7.8%) increase sequentially (Q3 2011: €132 million). Q4 2011 operating expenses as a percentage of revenue were 40% (Q4 2010: 33%; Q3 2011:39%).
The main reduction in our operating expenses was in marketing, as we did not repeat the advertising campaign of the fourth quarter of the prior year. As a result, marketing spending was reduced from €48 million in Q4 2010 to €19 million in Q4 2011 (60% decrease year on year).
Amortisation of technology and databases for the quarter was €27 million, a €4 million increase year on year (Q4 2010: €23 million) and a €7 million increase sequentially. The increase results from accelerated amortisation of certain technologies.
Financial results
The net interest charge for the quarter was €3.8 million. Interest paid on our term loan for the quarter was €3.4 million. The amortisation of the transaction costs related to the term loan amounted to €1.3 million and the interest income was €0.9 million.
The other financial result for the quarter was a gain of €0.7 million, which mainly came from a foreign exchange gain resulting from the revaluation of monetary items on our balance sheet.
Tax
The normalised tax rate, which excludes one-off tax items of €5.9 million (Q4 2010: €3.0 million) as well as the tax effects of our restructuring charge, for the fourth quarter was 20.7% (Q4 2010: 21.3%; Q3 2011: 22.1%).
Cash flows
The cash inflow from operations for the quarter was €138 million compared with €143 million in the same quarter last year. The decrease resulted from the lower operating result (Q4 2011: €10 million versus Q4 2010: €65 million), which was almost fully offset by a year on year decrease in working capital.
The cash flow used in investing activities during the quarter was €11
million, down by €11 million compared to the same quarter last year (Q4
2010: €22 million) and €9 million lower compared to the previous quarter
(Q3 2011: €20 million). The decrease was driven by lower capitalisation
of technologies.
