Earnings Call: Q3 2015

Oct 20, 2015

Good day, ladies and gentlemen. Welcome to the TomTom Third Quarter 20 15 Results Analyst Call. Please note that this conference is being recorded. I will now turn the call over to your hostess for today's conference, Pisera Group Essex, Head of Treasury And Investor Relations. You may begin. Thank you, operator. Good afternoon, and welcome to our conference call during which we will discuss our operational highlights and financial results for the third quarter of 2015. With me today are Harold Houdein, our CEO and Taco Dittler, our CFO. You can also listen to the call on our website and the recording of the call will be available shortly afterwards. And as usual, I would like to point out that Safe Harbor applies. We will start today's call with Harold, who will discuss the key operational developments followed by a more detailed look at the quarterly financial results from Taco. We will then take your questions. And with that, Harold, I would like to hand it over to you. Well, thank you very much, Petera. Welcome, ladies Ladies and thank you for joining us on today's earnings call. We generated group revenue of 2 1,000,000 in the quarter and that is up 8% year on year. This is in line with our plan to deliver growth in the second half 2015. Taco will provide further information on financials and the outlook later during this presentation. I will now discuss our key operational highlights per business unit. Our consumer activities held up well through a combination of a resilient growth our PND and niche categories in the dry segment and growth in the sports products. In Q3, we saw a units decline of 8% in the European P And D market, whilst the North American markets declined by 20%. Our market share in Europe and North America improved year on year. We continued to strengthen our ASP as our product mix in the quarter was skewed towards higher priced models. We extended our sports product range with the launch of a new generation sports and fitness watches with integrated music player and 20 fourseven activity tracking. We continue to broaden our offering in niche markets with the introduction of trucker 5000 which is specifically designed for drivers of large vehicles. We also announced a number of new contracts with our bridge business to business drive terminal amongst others with Daimler, we, regarding feedboards, transport management services, with ASAP, which is a solution for field force automation in the utility sector. There was a Scandinavian company called frogney who developed a advanced physical taxi meter and Tech Mahindra developed a business to business ADAS Connected Car solution. Our Automotive business developed as anticipated owing to the phasing out of certain contracts. Our location technologies are gaining significant interest in the automotive industry, as reflected in the level of bookings we secured this year, which so far exceeds 1,000,000. This level of order intake is substantially higher than in previous years, which is a good indication that our strategy in automotive is taking hold. Our business will continue to require high levels of investments, both OpEx and CapEx in the near future. This is needed to support delivery of the new business won and sustainable future growth of TomTom. In the quarter, we announced a number of new contract wins with fee up, offer Romeo and Chang Young Motors. We also announced a partnership with Bosch, to collaborate in the area of mapping technologies for highly automated driving and we extended our product portfolio with Roche DNA, which offers precise location technology for automated driving. And we also launched an HAD map of Germany covering complete Autobahn network. I will give you a quick update on where we are with our new mapping plan with our new mapping platform, our mapping updates continuously using transactions with automatic quality control. An update is available to customer applications as soon as the transaction is completed, and this helps us to dramatically reduce the time to change detection and publishing a new map, which can also do incrementally now to deliver real time maps Some customer applications in particular automated driving plays a high premium on being up to date with the latest real world changes. For most countries, our maps are already being maintained on our new transactional mapmaking system, and we will be fully deployed towards the end of this year. And our telematics by the end of the quarter, we reported 522,000 vehicles subscribed to our Replice platform, which is a 26% increase year on year. The integration of the 2 acquisitions we made last year, dumps and fleet logic are developing according to plan. We also announced a partnership with Poom, who is the Dutch importer for Audi Volkswagen and Porsche. Under this partnership, we are developing and implementing systems for the connected car, we are making information about the car like engine stages, maintenance information, fuel consumption, driver behavior available to drivers who can share that information with others, including dealerships. And this continues my part of the presentation, I would now like to hand over to Taco. Thank you, Harold. I shall now review the financial results. We generated revenue of 1,000,000 in this quarter, that's 8% higher compared with the same quarter last year and that compares with the 3% growth that we saw in the first half of the year. Consumer revenue was up 5% year over year in the quarter compared with a decline of 2% that we saw in the first half of the year. The increase is the result of the resilient P and D business and the growth in our sports activities. Automotive revenue was flat year over year in the quarter compared with the 17% decline we saw in the first half of the year as Harold already mentioned earlier, our order book for this year so far is above 1000000 to 1000000. Which together with earlier secured orders will support growth in automotive from 2016 onwards. Lysourcing did very well. It was up 32% year over year in the quarter compared to 27% growth in the first half of the year. The year on year increase we have seen throughout the year is driven by both existing accounts as well by new accounts. Telemedix revenue was up 12% year over year compared with the 30% increase we saw in the first half of the year, This was driven by a relative, weak sales during the summer months and a normalized performance at the end of the quarter. We expect the 4th quarter as a whole showed stronger growth than what we reported over the 3rd quarter. Overall, we delivered a solid set of results for the quarter. However, to considerably impact our results, like it did in the first half of the year. Our gross margin was 53% in the quarter, which is 4 percentage points lower compared with the 57% we reported for Q3 2014. The gross margin for Q3 2015 at constant currencies was 58%. Which was actually 1 for the quarter was 1,000,000, which is 1,000,000 above the same quarter of last year. And that's driven by the growth of our workforce and higher marketing, which was partly offset by lower amortization of technology, and databases as we had a one off last year. We expect the quarterly run rate for OpEx in the 4th quarter overall to be mostly up to what we've seen in the third quarter. We delivered a net result of EUR 2,000,000, which translates in the adjusted earnings per share of on a fully diluted basis. And if you add the movements in our net deferred revenue and deferred console sales year over year of close to 1000000. You take off 25 percent corporate income tax and divided by the total number of shares, you could add $0.13 to the adjusted earnings per share. We finished the quarter with a net cash position of 1,000,000 compared with 1,000,000 last quarter and compared with 1,000,000 last year. We generated 1,000,000 of operating activities, capital investments equaled 1,000,000 and largely related investments in our new map production platform and a connected navigation system components for the automotive industry. Let's now move on to our outlook on Slide 7. We are reiterating our guidance for the full year. We continue to expect revenue to grow this year to around EUR 1,000,000,000, we expect to see growth in 3 of our 4 business units. So not in automotive, where we expect a modest decline year on year ahead of growth in 2016. We expect the level of investments, both CapEx and OpEx in our core technologies to be mostly higher than last year. That concludes the formal part of the presentation. Operator, we would now like to start with the Q and A session. We'll now take our first question from Alexander Peter from Exane. Please go ahead. Your line is now open. Yes, good afternoon and thanks for taking my question. I would just like to you to clarify the $0.13. Is that the just the quarter or the 9 months And is that just pertaining to the deferred revenue situation? Just like to understand that really well. And then the second question would be regarding your operating leverage in automotive and in licensing, if you could spell out to us a little bit, you know, how EBIT should evolve in those areas moving forward into next year, will we see more operating leverage in licensing and auto and why? Thank you. So the, the, the $0.13 adjusted income share is on a full year basis. So the non simply for Q3. There are some, the reason why we take the full year perspective is that there are some seasonal trends And so we have some accounts that pay once a year for the coming 12 months. So then you see a fluctuation in the deferred revenue line. As we've seen in, if you go from Q2 to Q3. So if you compare Q3 now with Q3 last year, then the net addition to our deferred revenue. And if you deducted the deferred co of sales is 1,000,000. If you take out the corporate income tax of 25 percent, you arrive at 29.6 percent and then you divide it by 2 36 or 37,000,000 shares and then you get to the $0.13. So that is a $0.13 that you could add to the overall adjusted earnings per share for the full year. So not specifically on Q3. The second question was operational leverage in automotive and licensing We need to, it's a bit too early to give guidance for 2016 2017 and beyond. But what you need to realize is that the, automotive bookings will have an effect on our OpEx levels, the, some contracts will require upfront investments in our map, content and technology. That's more the case without multiple guarantees with licensing. We, more and more view Automotive Licensing as a group. And we will see operational leverage but some of that operational leverage will be invested in the short term to, given the excellent product to our new customers We'll now take our next question. This comes from Mark Hessling from ABN AMRO. Please go ahead. Your line is now open. Yes, thank you. I would like to know your view on what happened in the competitive landscape. So obviously, here being sold to the consortium of the carmakers, but also in the market stories about Apple or Tesla Uber making some kind of proprietary map for themselves. How do you see that going forward and what will be your position in there and how can you compete with these players or will there be a competitor for some of them? And then secondly, related to that, your views on market shares, I think you're winning market share at the moment with current trends, but what are your trends and what are your discussions that you're currently having with the automotive clients? And a final question is also a bit related cost when you have the migration done on the year end, the investments that, that you spare on your old platform, We completely reinvest that into the new platform. Those were three questions. Okay. Thanks, Mark. Okay. Yeah. So, competitive landscape, yeah, obviously things are changing, with the plant acquisition of not yet here by the German carmakers, but it is, for me too early, to give you an indication of what that what the net result of debt is going to be. I prefer to wait until we have more clarity what, what is going to happen and how the German carmakers are going to play currently the transaction is not yet consumed. There's still, you know, what is it, the regulatory approvals needed announced that it will take some time before the dust settles and 4, we get better visibility on that. So I am not going to comment now for lasting the net effect of that is going to be. Yeah, competitive landscape beyond Nokia here, I think in the field of highly automated driving, there's a lot of experimentation going on. We know carmakers that have done proprietary stuff for test tracks, in terms of mapping. We're talking to those guys. We are comparing notes. I think there is a sense that, that this needs to be done professionally on a large scale And I think we are well positioned given where we are already with our HAD Investment Technologies and standardization, that we have a role to play in that space. But again, also in the term, in the area of highly automated driving, it will take at least, I would say 18 months, 24 months before we have more clarity on what it is exactly the industry will need from us and, and how those business models around highly automated driving and going to develop. But I can tell you there is a lot of activity going on, both in Europe, North America and in Asia, around topic. And as you can imagine, we are party to quite a few of those discussions going on. Your last question, if I understand correctly, is are OpEx related to the creation of a new mapmaking platform? Maybe I can take that one. So We're well advanced in migrating, all our countries to our new platform. That's a transaction based platform. We we aim to have concluded that transaction by the end of the year. A lot of these countries are already a lot of the countries are already edited on a new platform like the U. S. To just name 1. It does not mean that investment will stop on the 1st January. It will take time to further improve the platform, and add fee and quality rules and what have you. So I think that the investors will continue to in 2016 but indeed will start to decline to in the second half of twenty sixteen. That said, the enormous success that we have shown in the order book in automotive will lead to additional investments, both in CapEx and OpEx So some of the reduction in specific investments that we will see from investment in our technology will be will shift to investments that we need to make in the delivery of the new products to our new automotive clients That's clear. Maybe just one follow-up on the automotive order intake. Your winning market share, but there's also the buying is getting bigger quite quickly. Can you make, give a bit of a split? What is the most important driver of your order intake that's more than three times as big as your sales at the moment? You mean, if it is the buy or it is the market share? Yeah. What's the main driver at the moment for it for the strong order intake? The main driver for the year for the order intake is market share. We're winning more deals. So on the pie question, So the traditional use case for maths is entertainment and the take rate is 25%, 30%. And that is not fundamentally changing in the coming years, not this decade. And next decade, you can, you can talk about different use cases for the map. For highly automated driving and self driving cars and what have you and the take rates go from 25% to in theory to 100%. And that will indeed quadruple the pie, but the order intake that we're seeing today is not related to that. That is the more traditional use case, and as we call entertainment maps. For navigation. The next question comes from Hans Blobbs from Rabobank. Please go ahead. Your line is now open. Yes, thanks for taking my questions. First question is what percentage of your automotive bookings are with FOX Vaaren? Second question is, could you give an update on the insurance telematics initiatives? And third is, will the strong automotive bookings also likely drive further sales growth for TomTom Automotive in 2017. Yeah, so currently supplying Volkswagen in North America up. It's a relatively small compared to our total, revenue is that's a relatively small number. I can't disclose the exact number. And in the so that is, that is, I think that answers your question. There's not a lot else that we have in our forecast or in our plants is for the moment. The second question, what's going on in telematics on the insurer side. Well, it's quite interesting. There is, it's been long in the making. We've done a lot of trials and a lot of smaller deals. We start to see some traction in the insurance market, the usage based insurance. I wouldn't say it's Moss I wouldn't say it is a, you know, it's going to overtake the market by storm but we see higher levels of activity. We see some traction taking place in that space. In our telematics revenue, It is still modest amount of revenue that is generated through, insurance telematics. Your third question was, do you see further growth beyond 2017? Of 2016. And the answer is yes. So if you look at, for instance, our order intake for 20 and 'fifteen this year, which is currently or was at the end of the quarter $250,000,000, that will only start to be visible in the top line, on average 2 years off at the moment the deal is done. So you won't see any, positive contribution, of those orders in 2016 that will only start in 2017. So yes, we anticipate continued strong growth, top line growth in the Automotive segment beyond 2016. Thanks. Many thanks. Next question comes from Mark Sartenberg from ING. Please go ahead. Your line is now open. Yes, thank you for taking my questions. 1st, starting with the Q4 and your outlook. I'm seeing a working capital increase. Should we see based on, say, the inventory buildup, your working capital needs a stronger consumer segment in Q4 than is normally seasonally the development from Q3 into Q4. That's my first question. Then perhaps also on Q4, I'm looking at the exchange rate impact, so below the EBIT line. An exchange rate result is still quite negative. Should we expect, say, a more a zero result there because 4x comps are getting more normal year on year? Or should we expect a plus? Can you give us a bit more guidance on on that line? Then on OpEx, and that's for Q4 and beyond. I think Taco, you mentioned that OpEx should be modestly up in Q4. Is modestly up, say, sort of similar seasonality we saw last year, saying 1,000,000 dollars, $6,000,000 increase. And then beyond that, you're saying, okay. We're gonna see some more OpEx investment because of the, the, the development of the order book in automotive. Are we talking to them more about, say, in a $10,000,000 or $20,000,000 uptick in SG and A? Could you give us a bit more feel for what what we should should expect there. And then on Automotive, if I may continue, we see now Yes, what market share? Because it's been asked by Mark, I believe, what market share do you think you currently have based on your order book? Because we know that you, your March, say, 25%, 30% just on actual revenues. But where are we in terms of order book, if you take that into account? And then perhaps also following up on the diesel impact on the German carmakers and perhaps a consortium, do you see any developments in terms of how the other OEMs react to that is because you talked to assume all your all OEMs that are in the market. Do you see any different sort of stance towards TomTom now that here is bought by the consortium and on the back of that also in involved in a diesel scandal, Could you perhaps share us a bit what's what's, yeah, behind the scenes you feel is is is going on? That's it for now. So, I started to write down your questions when you talked about, Q4. Yes. What was the first question? Yes. The first question was about the consumer segment. We know that the Q4 is always a stronger seasonal quarter, but should we now see a stronger seasonal impact because of the new product launches and the fact that your working capital is up which I assume has to do with the inventory buildup. So should we expect a stronger seasonal uptick in Q4 normally in the consumer segment, it was the first one? Indeed. So PND, P and D, the seasonality in P and D has shifted, right? So, years ago, seasonality was that, that Q4 was very strong and now it's shifting more to Q2. It's more towards the holiday season. With, with new products like sport watches and action cameras, etcetera, you go, you go towards the Q4 as a stronger quarter. And indeed, so I think in absolute terms, the pickup this year, what we expect in consumer will be a bit higher than what we saw last year. So the next question is exchange rate. So the efforts euro dollar exchange rate last year was 100,000,001.25, so it's still a bit higher or and the softer dollar than what we are currently trading at. So, the dollar rate is now on 13. So, we're doing our best to, deal with the new reality. But it will still have an effect. It's not, I mean, the strengthening of the dollar was so big that it will take more than a year to completely recover from that. And you could question if you can completely recover from that. Now you're talking probably out about the gross margin that you can perhaps improve it within the channel, but I was referring to the exchange rate results below the EBIT in relation to your, EPS guidance that we if you get another hit sale of 3,000,000 on your exchange rate. No. No. No. No. No. No. No. No. That is not necessarily related to the dollar can also relate it to the other currencies. What do we expect there? We tend to hedge or we tend to hedge the US dollar and the pound but the other currencies like the, South Africa ramp devaluated a lot in Q3 and that had an effect on our financial income expense. So those are more incidental items that I don't expect to reoccur. OpEx will go up with the same as we saw last year, in absolute terms, a little bit less probably, but it will, see similar trends. Okay. Then your question was about, automotive investments for next year? No, a bit also on the OpEx, for next year, you say get some extra costs for the order book build up and automotive all that. What kind of impacts should we see on the OpEx line? Should we see, say, versus last year, you probably were now looking at just north of CHF 10,000,000 of an increase year on year on a full year basis. Should we expect say CHF 20,000,000 and for next year to take into account that you have more cost related to the order book? I would really like to defer that question to, to February. It's too early to comment on that. Okay. We first need to, see where, 2050 will end and then we can make a proper analysis on, what kind of a year on year increase we can expect. Okay. Yeah. Mark's share of motive? Yes, that is a that's a tough one to say what our future market share is going to be. I think that's where the question boils down to, that would require a certain insight also in the order book of our main competitors, which we don't have. But the I think the trend is definitely positive. The 2 years ago order intake was, I think, 130,000,000 last year, it was 220 or $170,000,000 around the same time. Now that's gone up to $250,000,000. So we are on a positive trend And I think there is more to come. I think what we're doing is, seen as relevant innovative and strategically correct. We've seen that translated in, orders already. And I think, we are in a good position to continue trend. Okay. Harold, you mentioned that you were at 170 same time last year, you ended that to 20 years. Is that the normal seasonality through a year or is there nothing you can say about seasonality when do these deals really come in on a set date for it? No, that is, that is a difficulty with automotive. It is rather binary, whether it's a linear process. So that's also why I'm very reluctant to give you any indication for Q4 the order intake because it can really, it can be quite lumpy. So Can you share perhaps whether the pipeline in tendering is very busy or Well, yeah, the levels of activity are good. There's no, there's no doubt about that. We have the interest, we have the ear. As I said, we're doing enough of these things. We're leading in traffic, which is increasingly important and embedded in more cars now than ever before, and certainly in Europe, we have 86 market share which is very good. You know, so things are happening and that gives us confidence that we will be able continue to trend. Okay. Thank you. And then the final one on the diesel impact and the move? Yes, the diesel impact, the diesel gate is, is, I think, more in general terms, I think the industry is worried, and concerned. About, not in relation to maps but more in general, what diesel gate will eventually bring to the industry. I think everybody is watching that very, very closely and also nervously. But I don't see a direct link between Dieselgate and our position in the mapping market. You don't think there's an there's an effect that that's because the diesel gate and the construction being involved, that that's all just wanna keep away from that? No, I don't see that. Next question comes from Martin Ben driver from S And S Securities. Please go ahead. Your line is now open. Yes, thank you for taking my question. After the long list mark, I only have one question left. When we talk about the investments in the map for automotive clients. What you just mentioned is one of the reasons for the higher OpEx and CapEx. Can you elaborate a little bit on what types of investments you actually need to make because we've always been, and I've been assuming that you weren't, much behind or maybe not even at all, behind Nokia here in terms of the quality of your maps for the automotive market. So maybe you can shed some light on where that delta is coming from and how you can actually catch up on whether it can be done in 1 year, or should we think about a multiyear process? Yeah, Martin, I think the focus is so we do 2 things. We design and developed systems to create maps. Let's say we're building the infrastructure to factory. And then we, operate that factory and creating content. And what we see and what we expect is that the demand for accuracy and freshness will go up, in the coming years and that that factory needs to be able to handle that. We can't just build new factories and add a lot of, operators. That would not be the right strategy, the right strategy is to rely more than in the past on machine learning, on, processing sensor derived observations, and other ways of automated map make You know, if we look at our mapping platform, we've this year, we're finalizing a big milestone, and that is moving over from old to new, but you will see, and we will see ongoing in further automation. So we are working actively, for instance, with the tier 1s and also with OEs to, extract life information or information or from the vehicle live and ingest that in the map process that automatically and then give that back. But that's the type of investment that will continue to happen. So relatively speaking, We continue to invest at relatively high levels in the tools in automation and in machine learning. And the quality and the accuracy of the map will benefit from that. And the without having too high operational expense because that is not what the market can or want to afford. So effectively, you're saying that the whole map making process as you have it today, we'll ensure that the additional investment that you need in 2016 are some sort of a one off. After that, you can have maps that are equal to Nokia. So you don't have this catch up investment? Well, there is it's an ongoing game. As I said, the requirements of the amount of maps will go up. But we strongly believe that the one who can make those maps faster and at lower cost is the business that's going to win. And the efforts are designed around that strategy, do more automated, do that at lower cost, do that faster, get get high granularity and, and detail, but at constant cost, if you like. Okay. Thank you. The next question comes from Youssef Seig from Barclays. Please go ahead. Your line is now open. Hello. Thanks for letting me in. I have two questions. The first one is on the consumer business. Initially, the strategy was to make a broad portfolio of of satnav that was very successful for years, but now it seems like that your business is evolving more and more towards a smaller and more niche products. So, I was thinking, do you expect to keep pushing in that direction or eventually to rationalize a little bit the various directions you've been exploring recently? Yes, it is a, it's a good question. So we feel good about our, the progress we've made in sports in particular. That is, that took a while, but we growing now, are we gaining momentum? We're getting also crucially credibility in that space. And we think we can turn it into a very significant revenue stream. So we're good about that and we will continue along that path. I think with the camera, it's a bit earlier. We've just launched that. Similarly, we'll take some time before that sticks and before we can see significant revenue coming through. We're busy now in developing those, those products categories. And that has our full focus, and we will see what that, whether that needs changing in the future or not. But for the moment, I think the traction we're having in sports products is okay, satisfactory, and we have a big opportunity with the camera. Ahead of us and we will continue to work on that and develop that further. Thank you. All right. Elsewhere in the business, just, I wanted to sense check your views on the Automotive business Sorry. 1 another one on automotive, but and sure, it's gonna be different. If you look at here today, they have a 80% share of what's out there. Maybe gaining a bit of share, but I mean, here being the leader, achieved more or less 10% underlying EBIT margin and we're talking about eventually getting somewhere into the low to mid teens as things like automated cars and more of these high end services around the map starts to roll out. So my question is, especially if you become aggressive on this market as well and try to gain share, where do you see the kind of margin that you can achieve knowing that here comes from 80% market share with 10% EBIT margin? If now year 2, even with the added sort of services, what sort of, margin in the industry do you think, we're going to see in the long term? Well, as I said earlier, in my previous comment, I think the one who's going to make the best maps at the lowest cost is going to win. And that is our strategy. And if you look at, cost effectiveness, I think we are a lot more cost effective already, than competition. We'll continue to add efficiency through automated map making, and that is where I want to be. So I don't want to compare how structure to cost structure of here at all. So, I mean, if you putting it slightly differently. If you achieve the same kind of market share that, here, have had historically, you see yourself, basically, with a higher margin than the 10% they've been doing? We are able to do it at much lower cost. Okay. Thank you. Next question Bovini. Please go ahead. Your line is now open. Yes, hello. Thank you for taking my question. I just have two questions. The first one is on spot revenues. Can you give us an update on your guidance? Because I think you mentioned you would double the revenues in 2015 So how's it going? And what is the growth this quarter for spot revenues? How should you should we think about next year? And the second one is on telematics. Obviously, Q3 was a bit lower than expected. So I wanted to have your thought on Q4. And how should we think about next year given the strongest you had this year? Thank you very much. Yeah, let me take the sports question. So, when we started the year, we we had, set ourselves an impressive target to double our revenue, in sports now 10 months into the year, we're very positive and enthusiastic still but also we, we suffered from some, launch delays. So the accident camp was, has launched a couple of months later. And also with our sport watches, we, we launched them towards the end Q3 where initially we will hope to launch them, earlier in third quarter. So if you add that all up, I think doubling the revenue for the full year is a bit of a stretch. The revenue that we've seen in Q3 is good, but that did not involve the new products yet because they only started shipping for a couple of days in the, at the end of the quarter. So, Q4, will be deciding, so far as a good enough demand. And we're working hard to meet all that demand. But, in the second half of the Q4, we will really have more insight about the sell through, but so far, so good for sports. And and just a follow-up on this. We saw, for example, Carmen, which is doing also sports revenues fitness. And there was some key lower the guidance from 25% to 15% showing a tough environment in this area. So do you see anything else kind as well? I think we're in a different position because we, we, we are introducing new products and we are, we are expanding our range. So, I am not pointing at the market or competition, competitive pressure at this point. It's more the launch dates of our products have had the biggest influence so far. Yes, telematics, I think telematics is good. So the good news about Q3 was that September was good. The not so good news about Q3 is that July August were not so good. But the September performance gives us confidence that we have a more normalized quarter again in the 4th quarter where you'll see revenue at the levels that we've seen in the second callers were not the levels that we saw in the 3rd quarter. Yeah. So I don't, I don't think there's anything fundamental here. It's a bit, the effect of the strong second quarter where our, distributor partners have a bit has a bit too much hardware at hand and had to we had to wait until that sold through, but it happened at the end of the quarter. And any color on next year, given the stronger that you have with acquisitions. So I was wondering what type of growth we should look at? It's a bit too early. So I would rather wait with all got the question that I have the full results, and then I can have a better estimate Otherwise, I have 2 variables, right? I don't know exactly what 2015 is and I don't know what 2016 is. So that makes it a bit hard. So, but I can, I see growth? I can say that for 2016. But how big the growth will be that, that question I have that answer has to wait until February. The next question comes from shyam Kumar from TT International. Please go ahead. Your line is now open. Hi there. Thank you very much. I'd like to ask a strategic question regarding the Automotive Licensing business. And I'm trying to get a sense of what the tangible addressable market you believe you could face in those businesses going out, say, 3, 4, 5 years in that obviously it's fine to be investing. I think there's a huge opportunity for you guys to go for, as you said, your order growth has already hit sort of 250,000,000 in autos and that's market share driven before we get any inflection from the growth of semiautonomous and autonomous vehicles. So I just like, you know, your kind of internal projections or not internal projections I rephrase that. How you're thinking about it in terms of the market opportunity you're targeting on a 3, 4, 5 year view? And the reason I'm thinking that is that part of it comes down to how one values your mapping asset with variations I've seen from the analysts from 400,000,000 looking to today's revenue base to comparable to where the Nokia evaluation was. So I think to square that circle, maybe understanding the longer term tangible addressable market and how you think that can really develop in Automotive And Licensing through till the end of the decade, please? Yes, that is a, that's a tough one. So we have reasonable visibility of what's happening to, let's say, traditional map product, which is used for navigation, embedded in infotainment systems. If you look at those, the market development also not just projected by ourselves, but also by others that is likely to go up. So market penetration despite some, brought in products like Apple CarPlay and Google have a product as well. I think the industry is fully expecting that the penetration and attachment rate for embedded navigation will continue to go up because already you see integration of map with the security safety systems in the car ADAS type of applications are gaining traction in the marketplace as well. And surprisingly, the attachment currently is relatively slow. People think it's 100%, but in reality, it is about 25%, 26% of cars that are now coming with the car navigation system built in. So there's there's room for growth. Now if you look at the new types of mapping, for highly automated driving, you know, there that is, that is uncertain, uncertain is exactly the introduction dates the growth, the acceptance by ordinary people of those new technologies, the cost at which they will come to the market initially. So there's a lot to learn and a lot to explore in the coming years. But I think it's fair to say that all mainstream established players are looking to have self driving cars in the marketplace. They will start on the motorways. They will learn and they will continue to refine those systems. Maps are needed for that. We are well positioned to play a role there, but quite frankly, I cannot give you an indication how they will financially, pack out other than that there is a huge opportunity. To have, but how, when and how fast is much more, it's much hard to predict. But, theoretically in terms of the attachment rates, I know earlier on Taco said, we haven't quite seen the pick up yet from these more autonomous or semi autonomous features, but attachment rates theoretically could reach 100% as and when more you know, well, Samuel Thomas features comes endemic in all cars. Any sense of the time frame? Is that towards the end of the decade, maybe? We start moving to that to a level? No, this is far too early. I think 2019 year we'll see the first cars coming to market. Okay. And that will be niche. And the next question is how quickly will that be accepted by users and how quickly prices for the sessions will come down before they can become mainstream. Okay, fine. And just in terms of your order growth this year, so you're doing about sort of 50% order growth in your order business this year. I know it's lumpy, but there's obviously kind of structural trend growth there. Is it going to remain in this kind of 20, 30, 40, 50 percent growth level going out, do you think, or is it too early to do you want to forecast that? No, again, I don't want to forecast that this month, there's change going on in the industry as well that we all aware of. We'll take some time for that news to settle and for everybody to, to come to Chris's new situation and, and then place his bets. There are no further questions in the queue. Thank you, operator. I would like to thank you all for joining us this afternoon. If you have any follow-up questions at a later time, please don't hesitate to give me a call and thank you all very much. Operator, you can close the