Mapping the Future: TomTom's Turnaround Signals a Sector Rebound in Location Technology

TomTom's upgraded revenue outlook for 2025, driven by advancements in autonomous vehicle technologies and smart city projects, marks a pivotal shift for the location data services sector. As global infrastructure spending surges to meet the demands of automated driving and urban connectivity, TomTom's strategic pivots—such as its modular software solutions and partnerships with electric vehicle (EV) manufacturers—are positioning it as a leader in a market poised for growth. This article explores how TomTom's rebound reflects broader opportunities in digital infrastructure and navigates the risks investors must weigh.

A Sector Turnaround, Anchored in 3D Mapping and Partnerships

TomTom's Q2 2025 results reveal a company transitioning from cyclical challenges to long-term structural growth. While automotive revenue dipped 13% due to industry-wide headwinds—such as reduced car volumes and program ramp-downs—the company's 3D map layers, critical for autonomous driving, are now being capitalized as long-term assets. This signals confidence in their role as foundational infrastructure for Level 4 autonomous systems, where precise spatial data is non-negotiable.

The company's partnership with smart, a premium all-electric vehicle brand, exemplifies this strategic shift. TomTom's ADAS (Advanced Driver Assistance Systems) maps and real-time traffic data enhance safety and route optimization for smart's global EV fleet. At Auto Shanghai 2025, TomTom further showcased its Model Context Protocol Server, which enables AI agents to integrate spatial data for autonomous decision-making—a capability increasingly demanded by automakers and tech firms alike.

Smart Cities: A Growth Engine Igniting

TomTom's enterprise segment, which grew 6% in H1 2025, underscores the expanding role of location data in urban planning. Partnerships with SYSTRA (UK/Ireland congestion management), EFLA (Nordic infrastructure investment analysis), and NextBillion.ai (global logistics optimization) highlight how its maps are becoming the backbone of smart cities. For instance, SYSTRA uses TomTom's traffic analytics to reduce congestion and improve sustainability, while IFS integrates TomTom's routing algorithms to streamline field service operations. These projects reflect a broader trend: cities globally are allocating funds to digitize infrastructure, with the smart cities market projected to reach $2.5 trillion by 2030.

Financial Resilience and Strategic Realignment

TomTom's upgraded full-year guidance—projecting €535–565 million in revenue, with free cash flow at ~5% of revenue—stems from operational discipline. A €25 million restructuring charge in Q2 2025 has already begun yielding annualized savings of €35 million, reducing complexity and boosting gross margins to 88% (up from 80% in 2024). This efficiency, combined with capitalizing high-definition map development costs, positions TomTom to scale profitably as autonomous and smart city projects gain traction.

Investment Considerations: Risks and Rewards

While TomTom's strategic moves are compelling, investors must navigate near-term risks:- Automotive Volatility: EV adoption and software-defined vehicle rollouts remain uneven, with carmakers' project delays impacting revenue.- Currency Headwinds: A strong euro has dented USD-denominated enterprise revenue, though underlying demand remains robust.- Competition: Rivals like HERE Technologies (owned by BMW, Daimler, and Audi) and Waymo's internal mapping efforts could intensify pricing pressures.

However, the long-term tailwinds are formidable. The global ADAS market, valued at $35 billion in 2023, is expected to grow at a 16% CAGR through 2030, while smart city projects are a direct beneficiary of government infrastructure spending. TomTom's strong net cash position (€267 million) also provides a buffer for R&D investments.

The Bottom Line: A Strategic Bet on Digital Infrastructure

TomTom's rebound is not just a company story—it's a sector signal. Its advancements in modular software, 3D mapping, and enterprise partnerships align with two megatrends: the shift to autonomous driving and the digitization of urban infrastructure. While short-term volatility persists, TomTom's upgraded guidance and capital allocation strategy make it a compelling play on location technology's role in the digital economy. For investors willing to look past near-term automotive headwinds, TomTom offers exposure to a market set to grow for decades.

Consider TomTom as a core holding for portfolios emphasizing digital infrastructure, but pair it with broader sector analysis to mitigate industry-specific risks.