Telenav, Inc. - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - FORM 8-K - Telenav, Inc.	d8k.htm

Exhibit 99.1

LOGO

TeleNav Reports Second Quarter Fiscal 2011 Financial Results

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Quarterly revenue increased 19 percent year over year to $48.0 million

•

Average monthly paid subscribers for the second quarter reached 19.6 million, up from 17.7 million in the prior quarter

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TeleNav announces two-year extension of AT&T agreement with no change in terms

Sunnyvale, Calif. – January 27, 2011 –TeleNav, Inc. (NASDAQ:TNAV), one of the largest global wireless location-based services providers, today announced its financial results for the second quarter of fiscal 2011 ended December 31, 2010.

Financial Highlights

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Revenue for the second quarter of fiscal 2011 grew 19 percent over the second quarter of fiscal 2010 to $48.0 million.

•

Average monthly paying end users for the second quarter of fiscal 2011 increased 54 percent over the second quarter of fiscal 2010 to 19.6 million.

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Revenue from automotive, enterprise LBS, mobile advertising and commerce and premium LBS was seven percent of total revenue for the second quarter of fiscal 2011, up from approximately six percent of total revenue for the first quarter of fiscal 2011.

•

Cash generated from operations for the second quarter of fiscal 2011 was $28.5 million.

“We have continued to substantially increase the number of our paying end users and we have also grown revenue outside of our core navigation services,” said HP Jin, president, CEO and co-founder of TeleNav. “Revenue from our strategic growth areas: automotive, enterprise LBS, and mobile advertising and commerce and premium LBS grew both in absolute dollars and as a percent of revenue, comprising more than seven percent of our total revenue in the December quarter.”

Revenue for the second quarter of fiscal 2011 was $48.0 million, compared to revenue of $40.5 million for the second quarter of fiscal 2010. Revenue for the second quarter of fiscal 2011 reflects the first full quarter impact of the September 2010 amended Sprint agreement.

Net income for the second quarter of fiscal 2011 was $10.0 million, or $0.22 per diluted share, compared to net income of $10.1 million, or $0.19 per diluted share, for the second quarter of fiscal 2010.

Non-GAAP net income for the second quarter of fiscal 2011 was $10.8 million, or $0.24 per diluted share, compared to non-GAAP net income of $10.6 million, or $0.28 per diluted share, for the second quarter of fiscal 2010. Non-GAAP net income excludes stock-based compensation expense net of the related tax effect.

As part of its $20 million stock repurchase plan authorized in November 2010, TeleNav repurchased a total of 328,000 shares of its common stock for an aggregate cost of $2.3 million during the second quarter of fiscal 2011.

“We generated cash from operations of $28.5 million and increased our cash, cash equivalents and short term investments to $155.7 million in the December quarter,” said Douglas Miller, chief financial officer of TeleNav. “Our strong balance sheet, large and growing subscriber base and continued investment in our strategic growth areas beyond our core navigation services helps position us to grow quarterly revenue for the remainder of fiscal 2011.”

Recent Business Highlights

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In January 2011, TeleNav and AT&T have amended the agreement between them to extend its existing terms for two additional years to March 2013.

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In January 2011, TeleNav and Delphi, a leading global supplier of electronics and technologies for automotive, commercial vehicle and other market segments, signed an agreement to work together to supply in-dash navigation to a global vehicle manufacturer. Using TeleNav’s embedded software, the Delphi navigation system is expected to be available in selected models from this manufacturer.

•

In January 2011, TeleNav announced its latest feature-rich version of TeleNav GPS Navigator 6.2 for select Android devices. TeleNav added new features such as expanded Speech Recognition, Quick Search, Multiple Route Suggestions, enhanced local search content with more listings, as well as substantially improved overall application speed.

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In January 2011, TeleNav announced a partnership with QNX that enables TeleNav connected GPS navigation to work with the QNX CAR™ Application Platform. Automakers and tier one suppliers using the QNX CAR Application Platform will have the ability to offer connected navigation and search, providing drivers with 3D turn-by-turn navigation and voice/audio prompts, along with real-time information such as up-to-date maps, business listings, local places, traffic information, gas prices and more.

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In December 2010, TeleNav announced that Ford would bring connected navigation to its MyFord Touch and MyLincoln Touch-equipped vehicles around the world. Ford’s second-generation SYNC™ system uses TeleNav’s automotive-grade GPS navigation software to deliver real-time information to help drivers search, find and drive to places more

reliably and efficiently. MyFord Touch and MyLincoln Touch are currently available in the US in the Ford Edge, Ford Explorer and Lincoln MKX models. Starting this year, TeleNav’s connected navigation solution will be offered in the all-new Ford Focus, and is expected to be available globally in North America, South America, China and Europe.

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In November 2010, TeleNav introduced TeleNav Connect and TeleNav Share - which are APIs for mobile and web developers to connect to navigation and location sharing services. These cross-platform, multi-carrier, and multi-device APIs allow developers to effortlessly reach millions of users and deliver a consistent experience regardless of a user’s device or carrier.

Business Outlook

TeleNav offers the following guidance for the quarter ending March 31, 2011:

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Total revenue is expected to be $48.0 to $50.0 million;

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Gross margin is expected to be approximately 80 percent;

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Non-GAAP operating expenses are expected to be $26.0 to $27.0 million, and exclude approximately $1.0 million in stock-based compensation;

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GAAP net income is expected to be $7.0 to $8.0 million;

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GAAP diluted net income per share is expected to be $0.15 to $0.17;

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Non-GAAP net income is expected to be $7.5 to $8.5 million;

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Non-GAAP diluted net income per share is expected to be $0.16 to $0.18;

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Effective tax rate is expected to be approximately 40 percent;

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Weighted-average diluted shares outstanding are expected to be 45 to 46 million.

TeleNav offers the following guidance for the fiscal year ending June 30, 2011:

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Total revenue is expected to be $195.0 to $200.0 million;

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Gross margins are expected to be approximately 80 percent;

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Non-GAAP operating expenses are expected to be $97.0 to $100.0 million, and exclude approximately $4.0 million in stock-based compensation;

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GAAP net income is expected to be $36.0 to $38.0 million;

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GAAP diluted net income per share is expected to be $0.79 to $0.83;

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Non-GAAP net income is expected to be $38.0 to $40.0 million;

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Non-GAAP diluted net income per share is expected to be $0.84 to $0.88;

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Effective tax rate is expected to be approximately 40 percent;

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Weighted-average diluted shares outstanding for the year are expected to be approximately 45 million.

The above information concerning the forecast for the quarter ending March 31, 2011 and fiscal 2011 represents TeleNav’s outlook only as of the date hereof, and TeleNav undertakes no obligation to update or revise any financial forecast or other forward looking statements, as a result of new developments or otherwise.

Conference Call

TeleNav will host an investor conference call and live webcast today at 2:00 p.m. PST (5:00 p.m. EST) to discuss its second quarter fiscal 2011 results and outlook for the third quarter and full year of fiscal 2011. To access the conference call, dial 888-208-1361 or 913-312-9321. The webcast will be accessible on TeleNav’s investor relations website at http://investor.telenav.com/. A replay of the conference call will be available approximately two hours after its completion and will be available through Tuesday, February 1, 2011, 5:00 p.m. PST. To access the replay, please dial 888-203-1112 or 719-457-0820 and enter pass code 6349428.

Use of Non-GAAP Financial Measures

TeleNav prepares its financial statements in accordance with generally accepted accounting principles for the United States, or GAAP. The non-GAAP financial measures such as net income and earnings per share information included in this press release are different from those otherwise presented under GAAP. The following are explanations of each type of adjustment that we incorporate into non-GAAP financial measures:

Stock-based compensation expense relates to equity incentive awards granted to our employees, directors, and consultants. Stock-based compensation expense has been and will continue to be a significant recurring non-cash expense for TeleNav. While we include the dilutive impact of such equity awards in weighted average shares outstanding, the expense associated with stock-based awards reflects a non-cash charge that we exclude from non-GAAP net income.

Our non-GAAP tax rate differs from the GAAP tax rate due to the elimination of the tax effect of the GAAP stock compensation expenses that are being eliminated to arrive at the non-GAAP expenses.

The shares used to compute non-GAAP basic and diluted net income per share for fiscal 2010 include the assumed conversion of all outstanding shares of convertible preferred stock into shares of common stock using the as-if converted method as of the beginning of each period presented or the date of issuance, if later. In May 2010, in conjunction with the closing of our initial public offering, all of our outstanding preferred stock was converted into shares of our common stock.

TeleNav has provided these measures in addition to GAAP financial results because management believes these non-GAAP measures help provide a consistent basis for comparison between quarters and fiscal year growth rates that are not influenced by certain non-cash charges and therefore are helpful in understanding TeleNav’s underlying operating results. These non-GAAP measures are some of the primary measures TeleNav’s management uses for planning and forecasting. These measures are not in accordance with, or an alternative to, GAAP and these non-GAAP measures may not be comparable to information provided by other companies. Reconciliations of the GAAP to non-GAAP results are presented at the end of this press release.

Forward Looking Statements

This press release contains forward-looking statements that are based on TeleNav’s management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include information concerning TeleNav’s anticipated or assumed future financial results, shares outstanding and anticipated business activities. Actual events or results may differ materially from those described in this document due to a number of risks and uncertainties. These potential risks and uncertainties include, among others, fluctuations in TeleNav’s quarterly and annual operating results; TeleNav’s dependence on Sprint and AT&T for a substantial majority of its revenue; changes in the contractual relationships with Sprint, AT&T and other wireless carriers to whom TeleNav provides services, competition from other market participants who may provide comparable services to subscribers without charge; TeleNav’s inexperience in the automotive navigation market; TeleNav’s ability to offer premium services successfully; TeleNav’s inexperience in the mobile advertising market; TeleNav’s ability to estimate and sustain or increase its revenue and profitability; TeleNav’s ability to attract, migrate and retain new wireless carriers and auto manufacturers and automotive equipment suppliers; TeleNav’s ability to issue new releases of its products and services and expand its product portfolio; changes to current accounting standards which may have a significant, adverse impact upon TeleNav’s financial results; the introduction of new products by competitors or the entry of new competitors into the markets for TeleNav’s services and products; the impact of current or future intellectual property litigation and claims for indemnification and litigation related to U.S securities laws and economic and political conditions in the US and abroad. We discuss these risks in greater detail in “Risk factors” and elsewhere in our Annual Report on Form 10-K for the fiscal year ended June 30, 2010, our Quarterly Report on Form 10-Q for the three months ended September 30, 2010 and other filings with the U.S. Securities and Exchange Commission (SEC), which are available at the SEC’s website at www.sec.gov. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date made. You should review our SEC filings carefully and with the understanding that our actual future results may be materially different from what we expect.

Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

TeleNav, Inc. is a leading provider of consumer location-based services (LBS), enterprise LBS and automotive LBS. TeleNav’s solutions provide consumers, wireless service providers, enterprises and automakers with location-specific, real-time, personalized services such as GPS navigation, local search, mobile advertising, mobile commerce, location tracking and workflow automation. TeleNav’s technology is available across more than 600 types of mobile phones, all major mobile phone operating systems and a broad range of wireless network protocols. TeleNav’s service providers and partners include AT&T, Bell Mobility, Boost Mobile, China Mobile, Cincinnati Bell, Ford Motor Company, NII Holdings, Rogers, Sprint Nextel, Telcel, T-Mobile UK, T-Mobile USA, U.S. Cellular, Verizon Wireless and Vivo Brazil.

For more information on TeleNav, please visit www.telenav.com. Follow TeleNav on Twitter at www.twitter.com/telenav or on Facebook at www.facebook.com/telenav.

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“TeleNav,” the TeleNav logo, “telenav.com” and “OnMyWay” are registered and unregistered trademarks and/or service marks of TeleNav, Inc. Unless otherwise noted, all other trademarks, service marks, and logos used in this press release are the trademarks, service marks or logos of their respective owners.

TNAV-F

Media Contacts:

Mary Beth Lowell

TeleNav, Inc.

425-531-0122

marybethl@telenav.com

Investor Relations:

Cynthia Hiponia

The Blueshirt Group (for TeleNav)

408.990.1265

IR@telenav.com

TeleNav, Inc.

Condensed Consolidated Balance Sheets

(in thousands)


	December 31, 2010		June 30, 2010*
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	42,681	$	112,862
Short-term investments		112,998		—
Accounts receivable, net of allowances of $360 and $246, respectively		18,546		37,322
Deferred tax assets		3,000		3,247
Prepaid expenses and other current assets		10,979		3,020

Total current assets		188,204		156,451
Property and equipment, net		10,031		9,637
Deferred tax assets, non-current		1,188		1,874
Deposits and other assets		6,291		5,758

Total assets	$	205,714	$	173,720


Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,969	$	2,507
Accrued compensation		6,566		5,583
Accrued royalties		3,524		2,988
Other accrued expenses		3,978		2,721
Deferred revenue		11,487		6,746
Income taxes payable		129		1,028

Total current liabilities		27,653		21,573
Deferred revenue, non-current		2,873		172
Other liabilities		3,700		2,938

Stockholders’ equity:
Preferred stock, $0.001 par value: 50,000 shares authorized; no shares issued or outstanding		—		—
Common stock, $0.001 par value: 600,000 shares authorized; 42,372 shares issued and 42,043 outstanding at December 31, 2010, and 42,140 issued and outstanding at June 30, 2010		42		42
Additional paid-in capital		111,259		109,687
Accumulated other comprehensive income		237		399
Retained earnings		59,950		38,909

Total stockholders’ equity		171,488		149,037

Total liabilities and stockholders’ equity	$	205,714	$	173,720

*	Derived from audited consolidated financial statements as of June 30, 2010

TeleNav, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)


	Three Months Ended December 31,				Six Months Ended December 31,
	2010		2009		2010		2009
Revenue	$	48,022	$	40,503	$	99,122	$	76,551
Cost of revenue		8,828		6,890		17,680		13,957

Gross profit		39,194		33,613		81,442		62,594
Operating expenses:
Research and development		13,473		9,389		26,500		17,301
Sales and marketing		5,804		4,098		10,530		8,012
General and administrative		4,723		3,104		8,469		5,663

Total operating expenses		24,000		16,591		45,499		30,976


Income from operations		15,194		17,022		35,943		31,618

Interest income		170		23		267		55
Other income (expense), net		78		189		178		(365	)

Income before provision for income taxes		15,442		17,234		36,388		31,308
Provision for income taxes		5,402		7,098		13,990		13,051

Net income	$	10,040	$	10,136	$	22,398	$	18,257

Net income applicable to common stockholders	$	10,040	$	5,474	$	22,398	$	9,847

Net income per share applicable to common stockholders:
Basic	$	0.24	$	0.47	$	0.53	$	0.85
Diluted	$	0.22	$	0.19	$	0.50	$	0.34
Weighted average shares used in computing net income applicable to common stockholders:
Basic		42,119		11,527		42,135		11,542
Diluted		44,894		28,833		44,925		28,627

TeleNav, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Six Months Ended December 31,
	2010			2009
Operating activities
Net income	$	22,398		$	18,257
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion		4,373			2,202
Stock-based compensation expense		1,759			837
Write-off of capitalized software		691			—
Revaluation of preferred stock warrants		—			346
Excess tax benefit from stock-based compensation		(216	)		(216	)
Changes in operating assets and liabilities:
Accounts receivable		18,756			(956	)
Deferred income taxes		933			1,248
Prepaid expenses and other current assets		(8,069	)		186
Other assets		(1,661	)		(2,995	)
Accounts payable		(518	)		(881	)
Accrued compensation		983			949
Accrued royalties		536			(201	)
Accrued expenses and other liabilities		2,018			2,159
Income taxes payable		(683	)		—
Deferred revenue		7,442			988

Net cash provided by operating activities		48,742			21,923


Investing activities
Purchases of property and equipment		(3,128	)		(3,336	)
Additions to capitalized software		(501	)		(1,620	)
Purchases of short-term investments		(127,575	)		—
Proceeds from sales of short-term investments		13,899			—

Net cash used in investing activities		(117,305	)		(4,956	)


Financing activities
Proceeds from exercise of stock options		551			403
Proceeds from exercise of Series E preferred stock warrants		—			863
Repurchase of common stock		(2,310	)		(1,228	)
Excess tax benefit from stock-based compensation		216			249

Net cash provided by (used in) financing activities		(1,543	)		287

Effect of exchange rate changes on cash and cash equivalents		(75	)		(21	)

Net (decrease) increase in cash and cash equivalents		(70,181	)		17,233
Cash and cash equivalents, at beginning of period		112,862			33,128

Cash and cash equivalents, at end of period	$	42,681		$	50,361


Supplemental disclosure of cash flow information
Income taxes paid	$	19,321		$	10,408

TeleNav, Inc.

Unaudited Reconciliation of Non-GAAP Adjustments

(in thousands except for per share amounts)


	Three Months Ended December 31,						Six Months Ended December 31,
	2010			2009			2010			2009
GAAP net income	$	10,040		$	10,136		$	22,398		$	18,257
Stock-based compensation:
Cost of revenue		22			4			47			6
Research and development		425			264			918			421
Sales and marketing		229			130			380			208
General and administrative		231			124			414			202

Total stock-based compensation		907			522			1,759			837
Tax effect of adding back stock-based compensation		(106	)		(36	)		(163	)		(57	)

Non-GAAP net income	$	10,841		$	10,622		$	23,994		$	19,037


Shares used in computing GAAP basic net income per share		42,119			11,527			42,135			11,542
Weighted average effect of the assumed conversion of convertible preferred stock on the original dates of issuance		—			23,151			—			23,117

Shares used in computing non-GAAP basic net income per share		42,119			34,678			42,135			34,659


Shares used in computing GAAP diluted net income per share		44,894			28,833			44,925			28,627
Weighted average effect of the assumed conversion of convertible preferred stock on the original dates of issuance		—			9,168			—			9,134

Shares used in computing non-GAAP diluted net income per share		44,894			38,001			44,925			37,761


Non-GAAP basic net income per share	$	0.26		$	0.31		$	0.57		$	0.55
Non-GAAP diluted net income per share	$	0.24		$	0.28		$	0.53		$	0.50

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