Thank you, operator. Good afternoon, and welcome to our conference call, during which we will discuss our operational and financial highlights for thethirdquarter 2021. Withme todayare HaroldGoddijn, our CEO; andTacoTitulaer, our CFO.
We will start today's callwithHarold, whowill discuss the keyoperational developments,followedbyamore detailedlookat thefinancial results and outlook from Taco. We will then take your questions. As usual, I would like to point out that Safe Harbor applies. And with that, Harold, I wouldlike tohandover toyou.
Yes. Thank you very much, Claudia. Welcome, ladies and gentlemen. Thank you for joining us today. I will briefly go over the key operational highlights forthe quarter, andthen Tacowill provide further information onthefinancials andtheoutlookfor the year.
The first 9 months of 2021 have delivered both positives and negatives. I think Enterprise continues to perform solidly, but of course the recovery of the Automotive segment disappointed, because of industry-wide semiconductor shortages. Encouragingly, the way we engage with our customersis evolvingfrom amore traditional supplier-customerrelationshiptoamorepartner-basedapproach.
Carmakers, in particular, are quickly developing software engineering capabilities, and we see more effective collaboration models that turn into long-term partnerships, customer intimacy, effective and productive engineering collaboration and, most importantly, better
We'vealsodeveloped,withourcustomers,mutuallybeneficialdataexchangeprograms.Wearestructurallyincreasingthoseprograms,whichnow involve,next tofloating-cardata,large-scaleexchangeofsensor-derivedobservationsfromvehicles,aswellasmapeditingpartnershipswherewe give customers direct access to our map database using friendly map editing tools. We are now at a point where we increasingly convert those datastreams in our automatedmapmakingprocessestoensurefresher andbetter maps.
Weextendedinthequarter,ourlong-standingpartnershipwithPrecisely,whichisformerlyknownasPitneyBowes,andwe'llcontinuetoprovide map andtraffic data,which Preciselyincorporates in their location andenrichmentproducts.
In Automotive, we saw the launch of the new Jeep Grand Cherokee and the Jeep Compass, which both feature a full stack navigation with over-the-airupdatesandanarrayofconnectedservices.FiatlaunchedthenewDucato,whichisEurope'sbest-sellinglightcommercialvehicle,and that carutilizesourfullstacknavigation,extensiveconnectedservices,ADAS.Andallthoseproductsincombinationenhancesafetyandletdrivers avoidroads thatarenotsuitedfor the vehicle. We alsolaunchedarealpredictive trafficserviceintheFordFocus.
Over the first 9 months of 2021, deal activity for both Enterprise and Automotive has been strong, and we expect further significant wins for the last quarter ofthe year.
This concludesmypartofthe presentation, andI'mhandingover toTaco.
Thank you, Harold. I will make some comments on the reported numbers and updated outlook, and then we'll go to the Q&A. We reported group revenue of EUR 127 million for the third quarter, which is a year-on-year decrease of 14%. Location Technology decreased 10% year on year toEUR95million.
Let me gothroughrevenue businessbybusiness. Automotive IFRSrevenuewas EUR52million, representingadecrease of21%comparedto the same quarter last year. Automotive operational revenue, which is IFRS revenue adjusted for the movement in deferred revenue, decreased 17% to EUR 58 million. These year-on-year decreases are primarily related to lower vehicle production, which is a result of ongoing industry-wide semiconductorshortages.
Enterprise reported revenue of EUR 43 million, a year-on-year increase of 8%. This increase is primarily due to the expansion of contracts from existingcustomers.
Consumerrevenuedecreased24%year on yeartoEUR32million,asoveralldemandforthecategoryisdecreasing.Thatsaid,theproductionand consequently, thesales ofour PNDs was alsoimpactedbysupplychainissues,implyingthatwecouldhave done betterifwehave more product toship.
Grossmarginforthethirdquarterwas81%,animprovementof5percentagepointsyear on year.Thethirdquarterof2020wasnegativelyimpacted bythestartofproductionofnewsoftwareplatformsinAutomotive,whichtriggeredthereleaseofcostsassociatedwithnon-recurringengineering. This quarter,in2021, there werehardlyanyincidentals, sothe north of80%gross margin isagoodproxyofwhatis normal.
Operating expenses were EUR 126 million, representing a decrease of EUR 53 million compared with the same quarter last year. This decrease results from lower amortization since the Tele Atlas databases that were acquired in 2008 were fully amortized last year. Excluding the impact of depreciation and amortization, operating expenses are roughly flat. Increased research and development relating to our application layer were offset bysavingsinsales and marketing.
The freecashflowforthe quarter was an outflowofEUR40million compared with anoutflowofEUR20millionin thesame quarter last year.This improvement reflects the timing of cash receipts from our customers. We reported a net cash position of EUR 302 million at the end of the third quarter.
Nowmoving tothe next slide. Looking ahead, we reiterate our revenue guidance, although we anticipate full year revenue tocome in at the low endof the range for both the group andLocation Technology. Shortages of semiconductors continuedtohamper car production volumes, which impacts Automotiverevenue.
For the year, we expect group revenue of around EUR500 milliontoEUR530 million andLocation Technologyrevenue between EUR400 million andEUR430million.Asaresultoflower-than-anticipatedoperationalAutomotiverevenue,weareadjustingourfreecashflowguidance.Wenow expect fullyear free cash flowtobe around2%of group revenue.
Though we hadacash outflowin thefirst3 quarters ofthe year,wewant toemphasize thatour cash inflowthis yearis weightedtowards the last quarter ofthe yeardue tothe timingofvarious customer payments.
Operator, we wouldnow liketostart the Q&Asession.
QUESTIONS AND ANSWERS
(Operator Instructions)Andyour first question,sir, comesfromthe line ofMarc Hesselinkfrom ING.
Okay, I'll take the first question first then. Sorry, there is asmall delayonline,soapologies.
No,itdoesn'tchangetheuniteconomicsnecessarily,butwhatitdoesdoisitimprovestheefficiencyandthevaluecreation.Ithinkoneofthekey issuesthatwewanttoaddressistogettheend-userexperienceforin-builtnavigationsystemsatahigherlevel,wherewecansuccessfullycompete with mobile phone usage. And we see a number of positive trends. First of all, there's more glass in cars. So the screens are getting bigger and there are more screens. Andthose screens have acompletelydifferent form factor from the mobile phone.
Secondly, we see deeper integration with other systems in the vehicle, ADAS, safety systems and so forth. And thirdly, we see deeper integration, becauseofelectrification.Andinordertocomeupwiththerightproduct,weseethatmoreandmoreOEMsarekindofmovingawayslightlyfrom thetypicalRFQprocess,whichisahorribleprocess.Iunderstandwhyit'sthere,butitisnothelpinginefficiency,efficientcollaboration,discovery, experimentation, integration ofuser feedbackin the finalproduct, A/Btesting, thatkindofthings.
A typical RFQprocesscannotprovide forthosesubtleties.Andifyoubase yourcollaborationwithacarmaker onadifferentfooting,more, deeper integration, closer collaboration allowing for discovery and innovation, that significantly reduces the cost on both sides. So, it reduces cost for carmaker,reducescostforus,anditwillleadtobetterproductsandabetterend-userexperience.Andforus,it'simportantbecauseweentera more trustedlonger-termrelationship whereit'snotjust all about money,but alsoaboutinnovation, qualityandend-usersatisfaction.
And I think that's a relevant development for survival and growth of embedded navigation information systems in general. And we seem to be particularly well placedtobethe trusted party for --with more andmore carmakers. Sonet-net, I see this as a long-term positive, not necessarily affectingthe unit economics,but certainlyaffectingthe valuecreation, which wecanachieve in collaboration with our customers.
Okay,clear.Andthenthesecondquestionwasactuallyquitesomequestionsinone.Andit'sallabout,howdoyouexpectthisindustrytonormalize? So first, we hadCOVID, and then we have the -- alsothe second lag effect, the semiconductor shortages. Do you believe that the lost production overthelast2yearswillbecaughtupatsomestage?Whatorderdidyouseeintheunderlyingtrendsof,forexample,takerates,ifyougobackto like anormalsituation with supplychains again?Doyouthinkthat take rates will be higher again?
It's -- it's as hard for us as for anyone else, is the honest answer, to predict where this will go and what the net effect will be for the remainder of this year andevenfor2022. Therealansweris, thereishistoricallyaverylowlevelof visibility.Ifyoulookat themacro, then wesee that delivery times for new vehicles are at their all-time longest. We see prices of secondhand vehicles at their all-time high. So you would expect that there is -- andthose numbers suggestthere is undersupplyandtoanextent, pent-up demand.
Whencarmakerscanstarttoaddressthatdemand,andnotbeingknockedoffcoursebycomponentandsupplychainissues,isanybody'sbest guess.Butunfortunately,whatwehavenotseeninQ3andwhatwe'realsonotseeingin Q4isaneasingofthesituationfortheremainderofthe year.Andthere'salsonothing in the market reports, in the press releases from various players, that are active in the -- particularly in the semiconductor market thatsuggeststhatthe shortages will disappear anytime soon.
We hope, of course, in 2023, things will ease and people will be able to deal with those issues in a better way. But I think everybody is trying to figure out whatitmeansfor '22andwhen thoseshortages will stop compromisingtotalproduction output.
Okay. What does thatmean for your '23 target?If I'm correct, it was more like atop-down approach, you're really looking at car volumes andtake rates andthen takingyour share.If everythingis backtonormal,does itmeanthatthe '23 targetsare still --thatis still possible?
(OperatorInstructions)Wedohaveaquestion,sir,wearejusttakingthenameforyou,onemoment.(OperatorInstructions)Wedohaveaquestion, andit's from the lineofFrancois-XavierBouvignies.
Francois-XavierBouvignies-UBSInvestmentBank, Research Division -TechnologyAnalyst
Ihave acouple,ifImay. The firstone ison the 2022is abit ofafollow-up ofthe previous question.Can youmaybe give us asenseofhow should wethinkabouttheAutomotiverevenuegrowthforTomTomin2022?AndIdon'texpectyoutogiveaquantificationhere,butmorelikeaqualitative, what are the main drivers that will be in 2022 on top of the production forecast from IHS that we are seeing for double-digit percentage growth on the production in 2022?Sohowshould we think about TomTom's growth relatedtothat?Andwhat are the drivers, you're looking into 2022? That's myfirst question.