TomTom N.V.

Georgia Vlachou - Corporate Office Coordinator Harold Goddijn - Member of the Management Board, Chief Executive Officer Marina Wyatt - CFO

Gareth Jenkins - UBS Youssef Essaegh - Barclays Marc Hesselink - ABN AMRO Andrew Humphrey - Morgan Stanley Shyam Kumar - TT International Peter Olofsen - Kepler Cheuvreux Marc Zwartsenburg - ING Alexander Peterc - Exane BNP Paribas Hans Slob - Rabobank

Thank you, operator. Good afternoon and welcome to our conference call, during which we will discuss our operational highlights and financial results for the second quarter of 2015.

With me today are Harold Goddijn, our CEO; and Marina Wyatt, our CFO. You can also listen to the call on our website, and the recording of the call will be available shortly afterwards.

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 from Marina.

We will then take your questions. With that, Harold, I would like to hand over to you.

Yes. Thank you Georgia.

Thank you very much. Ladies and gentlemen, welcome and thank you for joining us on today’s earnings call.

We generated €265 million in the quarter, which is 5% up year-on-year. Our gross margin was 51%, which is 5% below past year.

As the sanction of the door adversely impacted our second quarter results, Marina will provide further information on financials and the outlook for the full-year 2015 later during this presentation. I will discuss the key operational highlights for business unit.

Consumer products and revenue in Q2 was roughly flat year-on-year. This was driven by a low single-digit decline of PND-related content services revenue offset by a mid-double-digit increase of sports revenue.

Automotive hardware revenue decline was due to the phasing out of our automotive hardware contracts. In Q2, we also saw unit decline of 7% in the European PND market, whilst North American markets declined by 19%.

Our market share in both areas was flat to modestly up. We strengthened our ASP as our product mix in the quarter was skewed towards higher products.

In the quarter, our sports business launched the TomTom Bandit Action Camera. It is a first action camera with built-in media server.

That means the footage can be edited on the camera, which makes it easier and faster to share video clips. The Bandit Action introduction was well covered by press and received a number of awards.

TomTom Bandit started to shift towards the end of the quarter. We continue to burn our operating burn our operating PND category with the introduction of the new GO PND devices with lifetime maps and lifetime speed cameras.

We also launched TomTom MyDrive, which is a portal and application designed to seamlessly connect user data like destinations, favorites and routs across multiple devices. Our automotive business contracted as anticipated and newly book business continued at levels, which will support a growing business from 2016 onwards.

We will disclose the year-to-date booking number at the end of our Q3 results. We further expand our global partnership with Fiat to deliver our maps LIVE services and connected navigation in the Ucollect infotainment systems in the new Fiat 500.

We announced the partnership with Luxoft to integrate NavKit into their automotive infotainment solutions. Also, during this quarter, we announced renewal and extension of our global agreement with Apple for maps and related information.

To conclude, we acquired the map of Australia from our partner Sensis, which is a former subsidiary of the incumbent telecoms operator Telstra. On this slide about our mapmaking platform, we give you a brief update on the progress we are making.

Our new platform is, it will be possible to continuously update the map using transactions with automatic quality checks and updates of the map will be available to customer applications as soon as those transactions have been completed. This helps us to dramatically reduce the time between change detection and publishing a new map, which we can also do incrementally to deliver real-time maps.

Some customer applications such as automated driving place a high premium on being up-to-date with the latest real-world changes. We expect to fully replace our mapmaking system with the transaction based platform before the end of this year.

Now, Telematics, but the end of the quarter, we had over 500,000 vehicles subscribers to our WEBFLEET platform, which is a 28% increase year-on-year. In June, Telematics held its annual international developers conference for WEBFLEET connect, and our key professionals and software developers joined forces to encourage innovation in connected applications and integrations built around our WEBFLEET platform.

Today, we have more than 600 third-party solutions and applications connected to our WEBFLEET platform. The integration of the two acquisitions we made last year is developing according to plan.

This concludes my part of the presentation. I am now handing over to Marina.

Thank you, Harold. I shall now begin a more detailed look at our quarterly financial results.

We generated revenue of €265 million in the second quarter. Our Telematics, licensing and sports businesses grew well and more than offset the reduction in PND and automotive revenue.

At constant currency, revenue would have been €253 million, up from €252 million last year. Consumer revenue overall for the quarter was €165 million, which was 2% down compared to the same quarter last year, PND revenue was down 3% and that compares with a blended volume market decline of 11%.

Automotive hardware was down by 12% and sports revenue increased by a mid double-digit percentage. Our automotive business generated revenue of €26 million in the quarter compared to €31 million in the same quarter last year.

This decline was expected and as Harold mentioned was due to the phase out of certain contracts. Licensing revenue was up 42% compared to the same quarter last year and the increase included a €5 million catch-up from Q1.

Telematics revenue in the quarter was €35 million, which was a 37% increase compared to Q2 2014. The recurring subscription revenue for the quarter increased by 34% year-on-year and our monthly ARPU for subscriptions was flat year-on-year.

The strengthening of the dollar adversely impacted our second quarter results like it did in the first quarter. Our gross margin was 51%, which is five percentage points lower compared with the 56% we reported for Q2 2014.

The gross margin for Q2 2015 at constant currency was 57%, which was actually one percentage point higher than last year. Total operating expenses for the quarter were €134 million, which is €4 million above the same quarter of last year and that was mainly because of higher R&D and marketing expenses, which were partially offset by lower amortization, technology and databases.

Total operating expenses included a positive one-off as a result of the litigation settlement, which was partially offset by additional ForEx charges and higher costs related to the share based employee incentive schemes as a result of the appreciation of the share price. Overall for the full-year, these trends are expected to result in modestly higher R&D expenses, both in OpEx and CapEx.

We expect the quarterly run rate for OpEx overall to remain at similar levels to what we have seen in the second quarter, so the two courses for the remainder of the year. The net result for the court was a gain of €2.5 million and the adjusted net result on a post-tax basis was €12.4 million and this translated it into adjusted earnings per share of €0.05 for the second quarter.

At the end of the quarter, we reported a net cash position of €77 million. The cash flow used in investing activities during the quarter was €44 million and this included our recent acquisition of the mapping company in Australia.

During the quarter of 3 million stock options related to our long-term employee incentive programs were exercised, which resulted in a €16 million cash inflow. Finally, let us turn to the outlook 2015.

Today, we are reiterating our guidance for the full-year. We continue to expect revenue to grow this year to around €1 billion.

We expect to see growth in three of our four business units, so not it automotive where we expect a modest decline ahead of growth next year. We are now expecting the level of investment both, in CapEx and OpEx and our core technologies to be modestly higher than last year, mainly explained by FX and the higher costs related to our employee incentive programs.

We continue to expect adjusted earnings per share of around €0.20. That concludes the formal part of the presentation.

Operator, could we now hand over for questions?

Yes. Just a couple if I could or a few if I could, firstly, on sports revenues versus your original expectations of doubling this year.

Can you talk about how you expect the rest of the year to play out? Do you see acceleration there driven by the products and the investment you have made in SG&A?

Then just secondly on order backlog, I think you will typically give this maybe once a year, but could you just give us some sense of how that has been progressing as well and whether you still feel confident in kind of '16, '17 time horizon given that backlog? Thank you.

Yes. Let me handle the first question and then Harold will talk about automotive and the backlog there.

On the sports revenue side, what we have said is we have grown in the second quarter by a mid double-digit percentage, which for various conversations I think everybody understands what that means. What we see in the second half is that we will have a greater contribution from new products, so for example at the moment the action comes and you just started shipping.

TomTom, although we do not preannounce new products, but we have a track record of bringing new products into the market, so I think that together with continuing to expand our presence in sports. We have invested in the first half in media campaigns as well.

Seasonality will naturally draw us to having a stronger second half on sports, so we expect the growth to accelerate in the second half of the year, so we are satisfied with how we are going, particularly going well in Europe, I would say, but more to come in the second half.

Okay. Thank you.

On the auto order intake is developing according to plan. We expect significant order intake this year, same levels or higher than we had last year and we plan to give you an update at Q3 numbers later this year.

Yes. We will quantify the order book that at Q3 just to give an idea as we go into the end of the year, but we do not want to give this number out every quarter because of the lumpy nature of the automotive order book, but we will quantify it, but it is going fine.

It is on track.

Great. Thank you.

Thank you. Actually, my question was just asked by Gareth, although I can add a few follow-ups.

You have mentioned before that the ASP of the sports watches was basically more or less €100 based on the volume shipments and the revenue that you reported. Have you seen any pressure on this number and what about the gross margin?

Thank you.

I think there is a sort of cycle with sports watch product as with other consumer product, so over time in preparation of new products coming to market, we will bring prices down, but I think that is the main trend that we see, nothing more than that. What was your other question?

Sorry.

Well, I was asking you about the gross margin, but it seems to be going in line with what you said on the ASP, but…

Yes. Exactly.

I think the gross margin in sports products is stronger and watches is stronger for PND, so over the average gross margin for consumer and we continue to see that.

Thank you. Can I ask you a quick one Telematics?

You said previously that you would be doing less acquisitions in 2015 than you did in 2014 is that you are you still looking to make acquisitions this year?

We have a team that is dedicated in the Telematics organization to searching out for acquisitions for us and they are continuing to do that. I mean, the comment that I made or we made was more to say that we have made three acquisitions.

We do see more consolidation going on in this market. We have a disciplined approach to make acquisitions.

There continues to be targets out there, but it gets harder, so there may be acquisitions. There may not be acquisitions.

We couldn't - but the strategy is unchanged.

Thank you. If I may one very final one still on Telematics, the growth of WEBFLEET subscribers is on one side, new subscribers, but it is also people that come from the acquisitions that you have migrated to the WEBFLEET platform.

Can you tell us what is the mix or how much do you still have to go with the acquisitions you did last year on that?

Overall, the subscriber base is up 34% and the majority of that is organic, but there is some contribution from the acquisition, so certainly acquisitions would be in the - the organic growth would be install bases in the mid-20% and the rest comes from acquisitions.

Thank you very much.

Hi. My first question is the Nokia Here selling process.

Do you see an impact in your automotive business at the moment? Are people delaying decisions there or anything around that?

Secondly is a bit speculative, but if indeed what is now the recent speculation that the German carmakers would acquire Nokia Here? Do you want to speculate on what that would be for your business.

What kind of impact that would have? Second question is on the market share of new contracts in automotive.

Do you still have the feeling that you are winning market share as you said in the first quarter? Finally, on pricing in automotive, you are clearly stating that the value of your products is increasing is a little bit of a long-term story, but do you believe that over time you will be able to raise prices in the automotive side, given that you are providing much more value to a connected car and highly automated driving?

Yes. Yes.

I think it is more or less business as usual in the automotive sector for the moment, but I think what did help us the process that Here is involved is that we got a lot of attention and lot of interest in our underlying platform and our capabilities. We go through massive transition.

We have been able to position that more clearly now and have been able to go through a number of in-depth presentations about our technologies and we got very good response for that, so I think it has helped us to establish ourselves as a good family or in a good alternative in the automotive industry, an incredible play and that puts us as a credible alternative both, to carmakers but also to the technology, companies and I think that is a positive.

What happened to Here is unclear. I do not want to speculate.

There is no point doing that, so I leave that for later what we have visibility on what is going to happen, who the new owners of Here are going to be and importantly how they are going to play it. If I look to your third question, so highly automated driving, yes there is a lot of interest there.

We have done a number of test coverage areas with our high definition maps that we are sharing with a lot of carmakers for evaluation for testing, lot of positive feedback coming from there. We are monitoring ahead, covering the highest world classes in North America and Europe.

We plan to have that available as a commercial product by the end of 2016. We see intermediate applications between highly automated driving and steps in between where do those new maps are going to be deployed, which is good for us, gives us a way to grow into the business and evolve our product roadmap, so there is a lot of activity development going on and a lot of interaction with the car industry to see how we need to progress our product roadmap.

Okay. The second question there on market share in automotive on current contracts?

Yes. We saw a good uptick in 2014.

I think that trend is continuing. I see a healthy order intake levels in the first half of this year and I am confident that in the second half of this year, we will continue on that path and that we will have another good year of order intake.

As Marina said earlier, we will quantify that when we give our Q3 results.

Okay. Thank you.

Hi. Just a couple for me if I may, firstly, I wanted to ask a bit more about autos orders.

I mean, clearly, you have given data points there previously and will do again. I just wanted to ask about your order booking policy.

I mean, are you typically booking entirety of an estimated size of order for a multi-year contract based on adoption rates uptake with particular customers or what is your booking policy on the auto side? My second question is just on OpEx actually if you could just run through the points you highlighted on OpEx trajectory of the remainder of this year and maybe talk about which of the areas really you are targeting in terms of additional investment and how the trajectory looks there based on your sort of preliminary views on how 2016 might develop.

Yes. First on booking policy, typically in the auto industry we respond to RFQs, and RFQs are quite detailed the vehicle line that needs to be cover expected volumes, introduction date and date of such contract and that gives us a quite accurate view on the total value of a contract over time.

Typically, when we win an order, you can start shipping 12 and 24 months from taking the order and the runtime of the contract is three to four years, so what we do - order intake will be published that number. The typical of run time of such an order is for three to four years and it starts being visible on the top-line between 12 and 24 months after we have concluded that agreement and one that debut.

Does that answer your question?

Yes. That is great.

Thank you.

Okay. Just the trajectory on OpEx, so we have reported $134 million of OpEx in the second quarter, and looking at what we are expecting for the other two quarters of this year, we expect OpEx to be at relatively similar levels.

There will be a bit of a change in the mix. R&D was particularly high this quarter for reasons I have mentioned I expect that to come down.

It will still above the level we saw in Q1, but down from where it is in Q2. On the other hand, G&A costs will go up, because they have been flattered by the credit from a litigation side in Q2, but overall we expect things to be roughly a wash for the rest of the year.

Our major areas that we have been investing in this year has been on the R&D side have been very much on the mapping platform, where we are going through the transition to the new platform as we speak and that will continue throughout the rest of this year. Other sort of major area of investment is in the components that we are developing and upgrading for the connected car environment, so those are the major two that we have been investing in and are highly committed to getting those completed, so that will help us as we go forward to the next year.

Those are the main things.

That is great. If I can just follow-up briefly on the R&D side in particular, I mean, I think you mentioned previously that while you have been rolling out the transaction on mapping platform, you have been bearing sort of double R&D costs in some areas for supporting two platforms.

Should we basically think about you recycling any potential savings on that front you make into speeding up developments of HD maps and those sorts of things next year or how should we be thinking about the R&D trajectory?

Well, the new mapping platform is designed to be faster or more and cost effective and it is designed to apply a higher level of automation, machine learning, statistical analysis, it is what we are doing already with PRO data, so we collect PRO data on a large scale, use it for mapmaking and we want to extend that to other information that we automatically collect from car, sensors, but also from the community without any compromise on quality. That will help us to make better maps, make them faster and at lower cost.

At the same time, the requirements for maps will go up, so more attributes, high level of accuracy, more information, so it's a balancing act between higher levels of automation and efficiency. At the same time, meeting future requirements of our customers both, in the automotive industry and from the tech companies, where that exactly the right balance is, we will find out, but I do not expect overall despite higher efficiency levels in the mapmaking process, that we will we reduce our investment in platform development or operations for our mapmaking process.

Our aim is to win market share and to grow the top-line and use the funds generated as effective and efficient as possible to make the best possible map at lowest possible cost.

Okay. That is helpful.

Thank you.

Hi, there. I just want to ask a few kind of strategic top down views on, I guess, the mapping industry.

Just with this real time mapmaking platform I am trying to understand the kind of new addressable markets it is unlocking. For example, obviously with automotive, I guess my first question would be, three to five years from now how big could the addressable market be in terms of their mapping software going into the automotive industry?

Right now, I am guessing it is about $600 million tangible addressable market. What could that be, three to five years ahead?

Second question is, and I guess that also ties into the strong uplift you are seeing year-on-year, half-on-half, in licensing. What are the kind of new areas real time, mapmaking is going to kind of unlock from, is it e-commerce, is it search, just more of that kind of strategic thinking on the three-year to five-year view, because I guess kind of tied into that is just a view on.

Obviously, with Nokia Here going on, you are seeing potentially room is very high values of map assets, much higher than your entire market cap. The question is, it would be easy or potentially very lucrative to create shareholder value by going down that path depending on what happens.

At the same time, it is revision that there is significantly more value to be driven from owning this asset over this tech cycle of three to five years. It is good to kind of keep hold of the asset, so just anything that you can address around those three points would be very interesting please.

Yes. It is a broad topic and a broad set of questions you are raising there.

I think the addressable market is higher than what you - today is higher than the numbers you mentioned and we expect that addressable market to go up in value going forward and that is both driven by tech rooms, who independence from other mapmakers or other vendors want to protect their user data and have an independent product offering from Google in particular. We see a renewed interest from those companies and the willingness to invest in location-based services platforms and offerings, so we expect growth coming from that space.

There is growth coming from the GIS-type of applications, intelligent cities, more awareness for traffic and transport and what have you. We see good growth opportunities there.

Then finally, we see good growth opportunities in the automotive space and that is really coming from two directions and in TomTom's case, from three direction, first of all we see that despite the introduction of broader navigation like you get smartphones we see that the attachment rates for built navigation are going up. We see new use cases emerging, where maps are part of the overall infrastructure of the car [ph] infrastructure, so for adaptive cruise control for laying level guidance for helping to switch the gear box in a fuel efficient way ultimately leading to more advanced forms of automated driving.

Then the last element where we think we can grow. Again as especially in the motor space is that we win market share from our biggest competitors there, so there is a broader area for us to play with an overall good outlook and we feel good that we have transitioned to a new technology platform, so we can capture a larger part of the upcoming opportunities as well.

Okay. Just in terms of Telematics, I know you mentioned this TomTom Curfer, TomTom LINK 100, they seem more geared towards fleets.

What is the timeline on these kinds of products being rolled out to passenger vehicles for insurance purposes or just help people become better drivers or whatever?

Yes. That is a good point, so the core of Telematics business of course is business-to-business.

That is really to optimize and the use of mobile assets and to improve customer service and the overall integrity of the business, so that is an important application, but next to adapt there is reconvenes on the business development. There are two big areas of interest.

One is insurance, so driver-base, behavioral-based insurance premiums and risk assessment and that is getting some traction and we are making progress there. I would not say we have cracked the code, but there is more and more evidence that that this is technology is preparing itself for mainstream primetime application.

We have reasonable position in that space and we are expanding there. The second area is really connected car in the consumer sense.

We have got a couple of pirates there. We are investing in some product development there and I think that in 2016, we will see the first large scale applications coming to the market for connected car applications.

There is a little going on there, so it is a bit early to say how big the opportunity is and how fast it can go, but there is definitely a little of interest from the industry for these type of applications.

Thank you.

Good afternoon. I had a question on the gross margin erosion that you witnessed in the quarter.

I guess, it is mostly on the consumer side. Are you taking any initiatives in terms of pricing or bill of material reduction that could really help you to recover some of the gross margin decline in the second half of the year?

Yes. I mean, absolutely.

Of course, we are. It is a big impact on us and the brunt of the impact is felt in all consumer business units, absolutely.

On the other hand it is difficult to just take products and put up prices overnight, so we need to take the opportunities and the opportunities that are presented as we bring new products to market and look at the pricing then and adjust accordingly in order to get the margins to where they need to be. I think there are two from [ph] the pricing of products and also the underlying bill of material cost for our products and that is why we also look at our existing products as well, so this is going to take some time to adjust to, but already you see as the new products start to play more of a contribution in our results as we go through the year, but that would start have a positive impact.

Okay. Thank you.

Yes. Good afternoon, a few questions left.

First, on the camera, I know it is very premature, because you have just started shipping, but can you give us any color on expectations on what it can contribute, say, over the next six months because I think you mentioned we expect still the sports category to double in terms of revenues. Is that including in that also contributions from the camera?

What are the expectations going forward, so in 2016? What kind of volumes should we expect?

Can you also give us any guidance on the margins? Is it similar to the sports watches, also for the gross margin is better than on PNDs as well?

Then my second question, can you give us also the organic growth rate ex-ForEx and ex-PNDs. Is that a number you have at hand that you can give us?

Okay. Yes.

First of all, in terms of looking at sport products, I think the camera was your first question.

Yes.

The camera in Q2 is basically, it contributed only a tiny amount to Q2. Not really on the radar, because it only started shipping in May.

Yes, clearly, as we go through the rest of the year, we are expecting it to make a bigger contribution to the numbers, but it is a new category for us, so we need to see how that develops, but we are of course expecting that to contribute towards the high growth in the second half. We sell an action camera, but there are also whole range of accessories that go with that and so we look at that to the family, family as a whole in terms of driving a margin for that category.

It is relatively competitive, but overall when you put all that package together, that makes a decent margin for us.

Would you say that the sports category, is that €100 million and the doubling of, say, the sports watch contribution of €50 million to €100 million. Would you now include the camera in your guidance or should we see it as separately?

No. It has been set separately included.

In terms of size, because I think you mentioned that you say, okay, we have a track record of coming to the market with a new product. In terms of size of the market, the camera versus sports watch what kind of number should we think about for, say, next year, because we know the sports watch took off really fast?

I think we need to, yes, but when we introduced it, we were also giving the message let us see how it goes and see how it builds and I would say we need to adopt the same approach with the camera, so we cannot give prediction for next year at this point.

Okay. Clear.

Okay. Your next question, can you just remind me please?

Yes, the organic growth, if you exclude, say, the ForEx impact, but also if you exclude the PND category that's still declining, could you give me the organic growth rate of all those excluding those elements?

In consumer?

No. Of the group.

Overall? In the group?

We have said organically, we as a company so excluding on a constant currency basis our revenue was up year-on-year by a small amount, so I think $1 million. Clearly within that we had PND declining overall by 3%, so if we take out PND clearly the organic growth rate is higher, but I am afraid that does not have to be exact place as the ForEx impact by product category in front of me, but we can get it to you.

It will go a bit higher.

The decline of three percentage points you mentioned. That is including ForEx?

Yes.

Okay. All right, that is it.

Thank you very much.

Thank you.

Yes. Hi.

Thanks for squeezing me in. I just wanted to ask you a little bit about margins in licensing and in Telematics.

From what I see in H1, you had a slight decline from 32.5% to 27% EBIT margin in Telematics. Is there anything special going on there?

Is it attributable basically to the hardware that you sell within Telematics as well, so there's this pressure from FX and that would then explain why EBITDA margins are actually quite flat to a little bit down? Then secondly, on licensing, here I would just like to understand, because to me it looks like the business should scale quite well as revenue growth returns to more normal levels.

You now have 24%, 25% growth in H1, and I do not see any scale effect that would benefit your EBIT that is negatively same level and the EBITDA margin as well is also down a little bit, so if you could just clarify those points for me. Thank you so much.

Yes. I think, the impact that we see in Telematics is very much caused by the acquisitions, so in the EBITDA we are stripping out the amortization effect from the acquisition that is the most of the dough that you see, so it think when you strip those out, that charge has gone up, because we have made more acquisitions.

We are amortizing them. That is why it looks relatively flat, so that is kind of telling you that in underlying terms the Telematics, EBIT margins are pretty much intact.

What I would say is when we make acquisitions, we do end up with a slightly inefficient operating cost structure that we have to work through and it takes a bit of time to work through as we assimilate the acquisitions, so that is really explaining what is going on in Telematics. In licensing, your point about revenues increased significantly in licensing, but we have not seeing that translating through to the EBIT line is purely because as we have already said, we are investing at a higher level in our map.

When we do the segment, when we prepare the segment note, any unabsorbed cost of the map so they are not absorbed within the consumer business or elsewhere end up being apportioned in the automotive and licensing business, so all the cost of the map get apportioned out and we apportion them on a simple metrics, which is driven main by revenue. The fact that licensing did better also meant that it absorbed more of the mapping cost, so the way to read it is just automotive and licensing together are bearing the lion share of the cost of the map and we need to continue to increase revenue in those two business units in order to turn that bottom-line profitable.

Okay. Just lastly as a follow-up, is there a point in time where you think you will be able to stop growing the cost base in mapmaking alongside the revenue base; i.e.

will we see scale effects at some point?

Yes. I mean, I think we are focused.

we Need to make sure that we have the products we want at the quality level we want. We have been incredibly focused on delivering and we continue to be on delivering the new mapping platform, but there is need to continue to upgrade the content.

We see now that it is important to continue to invest at high levels in our map and we will so see that revenues in us as we go forward are increasing and will continue to increase as we win new business, so I think there is a bit of making sure we are as efficient as we can be in our cost, but maintaining the quality of the product but really the real drive is to drive more revenue.

Okay. Thanks.

Yes. Thanks for taking my question.

My question is on the licensing business. Even stripping out the €5 million impact in Q2, the licensing sales were still pretty strong.

Maybe could you explain the underlying drivers for your licensing business and should we also expect a higher run rates for your licensing business as you have extended and expanded your relationship with Apple, so I maybe need a little bit more color on that subject.

Yes. We have got €5 million in Q2 that should be apportioned to Q1 as you look at your quarterly comps going forward.

Then if you strip out that $5 million from Q2, that should give you a decent feel for the run rate going forward in the licensing business. Then data you will see is that running quite a bit high of it was last year.

Without being specific about customers that is due to new customer wins coming in, including the Apple contract that we announced in May.

All right, so let us say going forward, we should strip out the €5 million and take that as a run rate for your next quarter.

Yes.

All right, thanks.

Thank you, operator. I would like to thank you all for joining us this afternoon.

If you have any follow-up questions at the later time, please do not hesitate to give us a call. Thank you all very much.

Operator, you can close the call.