Telenav, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - 8-K - Telenav, Inc.	tnav331168-k.htm

Telenav Reports Third Quarter Fiscal 2016 Financial Results

-Automotive Revenue of $34.7 million, up 18% year-over-year

-Location-based Advertising Revenue of $5.2 million, up 28% year-over-year

-Total Billings of $53.1 million, up 25% year-over-year

Santa Clara, Calif. - May 3, 2016 -Telenav®, Inc. (NASDAQ:TNAV), a leader in connected car services, today announced its financial results for the third quarter that ended March 31, 2016.

“Telenav delivered solid results for the third quarter of fiscal 2016, achieving sequential and year-over-year growth in both revenue and billings,” said HP Jin, chairman and CEO of Telenav. “During the quarter, we benefited from the strength in orders from Ford SYNC 2 in Europe. More recently, SYNC 3 with Ford has been officially launched in China following our release of SYNC 3 in North America in 2015. We are very pleased with the positive reviews of the SYNC 3 platform as we progress through the transition from SYNC 2. We believe the strengthening market leadership of our automotive business combined with the increasing momentum in the location-based advertising business are key to our future success in becoming a global leader in the fast growing connected car industry.”

“Following a successful launch in North America, we look forward to consumer adoption of SYNC 3 in international markets,” said Michael Strambi, CFO of Telenav. “As we have noted in the past, revenue recognition for SYNC 3 differs from the SYNC 2 platform. As a result, we expect the transition to result in a sequential decline in revenue for the June quarter, which is reflected in our outlook.”

Financial Highlights


•	Total revenue for the third quarter of fiscal 2016 was $46.3 million, compared with $45.3 million in the second quarter of fiscal 2016 and $42.3 million in the third quarter of fiscal 2015.


•	Automotive revenue was $34.7 million, or 75 percent of total revenue, for the third quarter of fiscal 2016, compared with $31.8 million, or 70 percent of total revenue, in the second quarter of fiscal 2016 and $29.5 million, or 70 percent of total revenue, for the third quarter of fiscal 2015.


•	Advertising revenue was $5.2 million, or 11 percent of total revenue, for the third quarter of fiscal 2016, compared with $6.7 million, or 15 percent of total revenue, for the second quarter of fiscal 2016, and $4.0 million, or 10 percent of total revenue, for the third quarter of fiscal 2015.


•	Billings for the third quarter of fiscal 2016 was $53.1 million, compared with $48.4 million in the second quarter of fiscal 2016 and $42.5 million in the third quarter of fiscal 2015.


•	Deferred revenue at March 31, 2016 was $20.7 million, compared with $13.9 million at December 31, 2015 and $5.4 million at March 31, 2015.


•	Operating expenses for the third quarter of fiscal 2016 were $29.4 million, compared with $27.6 million in second quarter of fiscal 2016 and $30.4 million in the third quarter of fiscal 2015.


•	GAAP net loss for the third quarter of fiscal 2016 was ($9.8) million, or ($0.23) per diluted share, compared with a GAAP net loss of ($6.6) million, or ($0.16) per diluted share, in the second quarter of fiscal 2016 and a GAAP net loss of ($4.8) million, or ($0.12) per diluted share, for the third quarter of fiscal 2015.

•

Adjusted EBITDA for the third quarter of fiscal 2016 was a ($6.4) million loss after adjusting our GAAP net loss for the impact of stock-based compensation expense, depreciation and amortization expense, restructuring accruals and reversals, reversals of accruals related to deferred rent resulting from our lease termination, legal contingencies, interest and other income (expense), net and provision (benefit) for income taxes, compared with a ($4.1) million loss in the second quarter of fiscal 2016 and a ($4.7) million loss in the third quarter of fiscal 2015.


•	Ending cash, cash equivalents and short-term investments, excluding restricted cash, were $108.6 million, and Telenav had no debt as of March 31, 2016. This represented cash and short-term investments of $2.55 per share, based on 42.6 million shares of common stock outstanding as of March 31, 2016.


•	Free cash flow for the third quarter of fiscal 2016 was ($2.0) million, compared with ($0.9) million in the second quarter of fiscal 2016 and $5.8 million in the third quarter of fiscal 2015.

Business Outlook

For the fourth fiscal quarter ending June 30, 2016, Telenav offers the following guidance, which is predicated on management’s judgments.


•	Total revenue is expected to be $40 to $43 million;


•	Automotive revenue is expected to be 72 to 75 percent of total revenue, including approximately $1.5 million of customized software development fee revenue;


•	Advertising revenue is expected to be approximately 14 percent of total revenue;


•	Billings are expected to be $43 to $46 million;


•	GAAP gross margin is expected to be approximately 47 percent;


•	Non-GAAP gross margin is expected to be approximately 48 percent;


•	GAAP operating expenses are expected to be $29.5 to $30.5 million;


•	Non-GAAP operating expenses are expected to be $27.5 to $28.5 million, and represent operating expenses adjusted for the impact of approximately $3.0 million of stock-based compensation expense;


•	Estimated provision (benefit) for income taxes is expected to be de minimis;


•	GAAP net loss is expected to be ($9.5) to ($10.5) million;


•	Diluted GAAP net loss per share is expected to be ($0.22) to ($0.24);


•	Non-GAAP net loss is expected to be ($7.0) to ($8.0) million, and represents GAAP net loss adjusted for the add back of approximately $3.0 million of stock-based compensation expense;


•	Non-GAAP diluted net loss per share is expected to be ($0.16) to ($0.19);


•	Adjusted EBITDA is expected to be ($6.0) to ($7.0) million, and represents GAAP net loss adjusted for the impact of approximately $3.0 million of stock-based compensation expense, and approximately $1.0 million of depreciation and amortization expense, interest and other income (expense), and provision (benefit) from income taxes; and


•	Weighted average diluted shares outstanding are expected to be approximately 43 million.

The above information concerning guidance represents Telenav’s outlook only as of the date hereof, and is subject to change as a result of amendments to material contracts and other changes in business conditions. 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

The company will host an investor conference call and live webcast at 2:00 p.m. PT (5:00 p.m. ET) today. To access the conference call, dial 888-329-8862 (toll-free, domestic only) or 719-457-2664 (domestic and international toll) and enter pass code 9337624. 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 for two weeks beginning approximately two hours after its completion. To access the replay, dial 888-203-1112 (toll-free, domestic only) or 719-457-0820 (domestic and international toll) and enter pass code 9337624.

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 billings, change in deferred revenue, change in deferred costs, non-GAAP net income (loss), non-GAAP net income (loss) per share, non-GAAP gross margin, non-GAAP operating expenses, adjusted EBITDA and free cash flow included in this press release are different from those otherwise presented under GAAP.

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 periods that are not influenced by certain items 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.

Billings measure revenue recognized plus the change in deferred revenue from the beginning to the end of the period. We consider billings to be a useful metric for management and investors because billings drive deferred revenue, which is an important indicator of the health and viability of our business. There are a number of limitations related to the use of billings versus revenue calculated in accordance with GAAP. First, billings include amounts that have not yet been recognized as revenue and may require additional services to be provided over contracted service periods. For example, billings related to certain connected solutions cannot be fully recognized as revenue in a given period due to requirements for ongoing provisioning of services such as hosting, monitoring and customer support. Second, we may calculate billings in a manner that is different from peer companies that report similar financial measures. When we use these measures, we compensate for these limitations by providing specific information regarding revenue and evaluating billings together with revenue calculated in accordance with GAAP. We have also provided a breakdown of the calculation of the change in deferred revenue by segment, which is added to revenue in calculating our non-GAAP metric of billings. In connection with our presentation of the change in deferred revenue, we have provided a similar presentation of the change in the related deferred costs. Such deferred costs primarily include costs associated with third party content and in connection with certain customized software solutions, the costs incurred to develop those solutions. As deferred revenue and deferred costs become larger components of our operating results, we believe these metrics are useful in evaluating cash flow.

Non-GAAP net loss and non-GAAP gross margin exclude the impact of stock-based compensation expense, capitalized software and developed technology amortization expense, and other applicable items such as legal contingencies, benefit from income taxes due to change in tax accounting method and amended tax return, restructuring accruals and reversals, and deferred rent reversals due to lease termination, net of taxes or tax benefits, as applicable to each non-GAAP financial metric. 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 that we exclude from non-GAAP financial metrics. Legal contingencies represent settlements and offers made to settle patent litigation cases in which we are defendants and royalty disputes. Deferred rent reversals represent the reversal of our deferred rent liability that is no longer required due to our facility lease termination. Capitalized software amortization expense represents internal software costs that were capitalized and are charged to expense as the software is used

in our operations. Developed technology amortization expense relates to the amortization of acquired intangible assets. Our non-GAAP tax rate differs from the tax rate due to the elimination of any tax effect of stock-based compensation expense, capitalized software and developed technology amortization expense, legal contingencies, restructuring accruals and reversals, and other applicable items that are being eliminated to arrive at the non-GAAP net loss.

Adjusted EBITDA measures our GAAP net loss excluding the impact of stock-based compensation expense, depreciation and amortization, interest and other income (expense), provision (benefit) for income taxes, and other applicable items such as legal contingencies, restructuring accruals and reversals, and deferred rent reversals due to lease termination. We believe this is a useful measure of profitability before the impact of certain non-cash expenses, interest income, income taxes, and certain other items that management believes affect the comparability of operating results. Adjusted EBITDA, while generally a measure of profitability, can also represent a loss.

Free cash flow is a non-GAAP financial measure we define as net cash provided by (used in) operating activities, less purchases of property and equipment. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by our business after purchases of property and equipment.

We determined that it would be meaningful to investors to develop a breakout of the operating results of the advertising business beyond the current GAAP segment reporting of revenue, cost of revenue and gross margin, and we are including such presentation in our non-GAAP reporting results. This presentation reflects operating expenses that are directly attributable to the advertising business. We are unable to provide a similar breakout of operating results for the automotive and mobile navigation businesses beyond the current GAAP segment reporting of revenue, cost of revenue and gross margin because these segments share many of the same technologies and resources and as such, comprise operating expenses which are not fully attributable to either. In addition, the reported non-GAAP operating results for the advertising business only include an allocation of certain shared corporate general and administrative costs that directly benefit the business, such as accounting and human resource services.

To reconcile the historical GAAP results to non-GAAP financial metrics, please refer to the reconciliations in the financial statements included in this earnings release.

Forward Looking Statements

This press release contains forward-looking statements that are based on Telenav management's beliefs and assumptions and on information currently available to our management. 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; Telenav's ability to develop and implement products for General Motors ("GM") and Toyota and to support GM and Toyota and their customers; adoption by vehicle purchasers of Scout for Cars; Telenav's dependence on a limited number of automotive manufacturers and original equipment manufacturers ("OEM") for a substantial portion of its revenue; Telenav's ability to develop and implement products for Ford's Sync 3 system; the timing transition of Ford to its Sync 3 system and the timing of revenue recognition in connection with the Sync 3 due to different title transfer requirements, particularly outside of the U.S.; potential delays in new orders of Sync 3 as Ford uses its Sync 2 inventory in connection with the Sync 3 transition and the impact of the transition on order timing and delivery; automotive manufacturers, automotive OEM, and consumer acceptance of Scout; Telenav's success in achieving additional design wins from OEM and automotive manufacturers and the delivery dates of automobiles including Telenav's products; Telenav's ability to grow and scale its advertising business through the retention of additional, productive sales personnel, new advertising sales and technology delivery while also achieving cash flow break even and profitability in the advertising business; Telenav incurring losses; competition from other market participants who may provide comparable services to subscribers without charge; Telenav's limited history in the automotive navigation market and the advertising market; the timing of new product

releases and vehicle production by Telenav's automotive customers, including inventory procurement and fulfillment; Telenav’s ability to develop search products with Nuance; possible warranty claims, and the impact on consumer perception of its brand; Telenav's ability to develop and support products including OSM, as well as transition existing navigation products to OSM and any economic benefit anticipated from the use of OSM versus proprietary map products; the potential that we may not be able to realize our deferred tax assets and may have to take a reserve against them; Telenav's ability to qualify for tax refunds and credits; and macroeconomic and political conditions in the U.S. and abroad, in particular China. We discuss these risks in greater detail in "Risk factors" and elsewhere in our Form 10-Q for the three months ended December 31, 2015 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.

About Telenav, Inc.

Telenav is transforming life on the go for people - before, during, and after every drive. Leveraging our location platform, global brands such as Ford, GM, Toyota, and AT&T deliver custom connected car and mobile experiences. Additionally, advertisers such as Nissan, Denny’s, Walmart, and Best Buy reach millions of users with our highly-targeted advertising platform. To learn more about how Telenav’s location platform powers personalized navigation, mapping, big data intelligence, social driving, and location-based ads, visit www.telenav.com.

"Telenav," "Scout," and the Telenav and Scout logos are registered trademarks 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.

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Investor Relations Contact:

Cynthia Hiponia or Erin Rheaume

The Blueshirt Group for Telenav, Inc.

408-990-1265

IR@telenav.com



Telenav, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value)

	March 31, 2016			June 30, 2015*
	(unaudited)

Assets
Current assets:
Cash and cash equivalents	$	15,437		$	18,721
Short-term investments	93,147			101,195
Accounts receivable, net of allowances of $75 and $211, at March 31, 2016 and June 30, 2015, respectively	39,434			36,493
Deferred income taxes, net	—			327
Restricted cash	4,687			4,878
Income taxes receivable	5,464			6,080
Deferred costs	1,850			432
Prepaid expenses and other current assets	4,576			3,856
Total current assets	164,595			171,982
Property and equipment, net	5,846			7,126
Deferred income taxes, non-current	722			443
Goodwill and intangible assets, net	36,253			37,528
Deferred costs, non-current	8,567			2,709
Other assets	2,262			4,134
Total assets	$	218,245		$	223,922
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	6,438		$	830
Accrued compensation	8,064			9,628
Accrued royalties	11,235			9,358
Other accrued expenses	11,984			10,918
Deferred revenue	5,392			2,109
Income taxes payable	237			724
Total current liabilities	43,350			33,567
Deferred rent, non-current	983			4,858
Deferred revenue, non-current	15,315			4,719
Other long-term liabilities	2,673			4,595
Commitments and contingencies
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; 42,551 and 40,537 shares issued and outstanding at March 31, 2016 and June 30, 2015, respectively	43			41
Additional paid-in capital	147,822			140,406
Accumulated other comprehensive loss	(1,574		)	(1,540		)
Retained earnings	9,633			37,276
Total stockholders' equity	155,924			176,183
Total liabilities and stockholders’ equity	$	218,245		$	223,922

*Derived from audited consolidated financial statements as of and for the year ended June 30, 2015



Telenav, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)


	Three Months Ended March 31,						Nine Months Ended March 31,
	2016			2015			2016			2015

Revenue:
Product	$	33,936		$	28,915		$	96,205		$	71,292
Services	12,342			13,371			39,387			45,761
Total revenue	46,278			42,286			135,592			117,053
Cost of revenue:
Product	20,957			15,475			57,404			38,477
Services	5,149			5,364			16,621			17,855
Total cost of revenue	26,106			20,839			74,025			56,332
Gross profit	20,172			21,447			61,567			60,721
Operating expenses:
Research and development	16,990			17,384			51,630			51,002
Sales and marketing	6,793			6,869			20,315			19,775
General and administrative	5,521			5,682			17,600			17,592
Restructuring	107			422			(1,361		)	987
Total operating expenses	29,411			30,357			88,184			89,356
Loss from operations	(9,239		)	(8,910		)	(26,617		)	(28,635		)
Interest and other income (expense), net	(610		)	900			(277		)	3,073
Loss before provision (benefit) for income taxes	(9,849		)	(8,010		)	(26,894		)	(25,562		)
Provision (benefit) for income taxes	(11		)	(3,243		)	429			(10,135		)
Net loss	$	(9,838	)	$	(4,767	)	$	(27,323	)	$	(15,427	)

Net loss per share
Basic and diluted	$	(0.23	)	$	(0.12	)	$	(0.66	)	$	(0.39	)

Weighted average shares used in computing net loss per share
Basic and diluted	42,047			40,140			41,226			39,863



Telenav, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
	Nine Months Ended March 31,
	2016			2015

Operating activities
Net loss	$	(27,323	)	$	(15,427	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	2,696			4,054
Amortization of net premium on short-term investments	523			1,099
Stock-based compensation expense	8,887			8,559
Write-off of long term investments	977			460
(Gain) loss on disposal of property and equipment	(15		)	10
Bad debt expense	59			33
Changes in operating assets and liabilities:
Accounts receivable	(3,000		)	(11,076		)
Deferred income taxes	48			1,334
Restricted cash	191			910
Income taxes receivable	616			2,354
Deferred costs	(7,276		)	(2,061		)
Prepaid expenses and other current assets	(720		)	4,452
Other assets	895			277
Accounts payable	5,485			889
Accrued compensation	(1,564		)	(5,080		)
Accrued royalties	1,877			10,882
Accrued expenses and other liabilities	(2,456		)	(2,951		)
Income taxes payable	(487		)	(82		)
Deferred rent	(505		)	(1,149		)
Deferred revenue	13,879			2,986
Net cash provided by (used in) operating activities	(7,213		)	473

Investing activities
Purchases of property and equipment	(1,775		)	(650		)
Purchases of short-term investments	(38,010		)	(101,394		)
Purchases of long-term investments	—			(450		)
Proceeds from sales and maturities of short-term investments	45,686			109,215
Net cash provided by investing activities	5,901			6,721

Financing activities
Proceeds from exercise of stock options	1,536			3,321
Repurchase of common stock	(570		)	(2,519		)
Tax withholdings related to net share settlements of restricted stock units	(2,755		)	(2,057		)
Net cash used in financing activities	(1,789		)	(1,255		)

Effect of exchange rate changes on cash and cash equivalents	(183		)	(1,888		)
Net increase (decrease) in cash and cash equivalents	(3,284		)	4,051
Cash and cash equivalents, at beginning of period	18,721			14,534
Cash and cash equivalents, at end of period	$	15,437		$	18,585

Supplemental disclosure of cash flow information
Income taxes paid (received), net	$	150		$	(10,981	)



Telenav, Inc.
Condensed Consolidated Segment Summary
(in thousands, except percentages)
(unaudited)


	Three Months Ended March 31,						Nine Months Ended March 31,
	2016			2015			2016			2015

Revenue:
Automotive	$	34,717		$	29,472		$	98,306		$	73,051
Advertising	5,156			4,019			16,695			12,726
Mobile Navigation	6,405			8,795			20,591			31,276
Total revenue	46,278			42,286			135,592			117,053

Cost of revenue:
Automotive	21,495			15,759			58,947			39,395
Advertising	2,788			2,690			9,538			8,528
Mobile Navigation	1,823			2,390			5,540			8,409
Total cost of revenue	26,106			20,839			74,025			56,332

Gross profit:
Automotive	13,222			13,713			39,359			33,656
Advertising	2,368			1,329			7,157			4,198
Mobile Navigation	4,582			6,405			15,051			22,867
Total gross profit	$	20,172		$	21,447		$	61,567		$	60,721

Gross margin:
Automotive	38		%	47		%	40		%	46		%
Advertising	46		%	33		%	43		%	33		%
Mobile Navigation	72		%	73		%	73		%	73		%
Total gross margin	44		%	51		%	45		%	52		%



Telenav, Inc.
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands)

Reconciliation of Revenue to Billings

	Three Months Ended March 31, 2016									Nine Months Ended March 31, 2016
	Auto		Advertising		Mobile Navigation			Total		Auto		Advertising		Mobile Navigation			Total
Revenue	$	34,717	$	5,156	$	6,405		$	46,278	$	98,306	$	16,695	$	20,591		$	135,592
Adjustments:
Increase (decrease) in deferred revenue	6,992		—		(136		)	6,856		14,243		—		(364		)	13,879
Billings (Non-GAAP)	$	41,709	$	5,156	$	6,269		$	53,134	$	112,549	$	16,695	$	20,227		$	149,471


	Three Months Ended March 31, 2015									Nine Months Ended March 31, 2015
	Auto		Advertising		Mobile Navigation			Total		Auto		Advertising		Mobile Navigation			Total
Revenue	$	29,472	$	4,019	$	8,795		$	42,286	$	73,051	$	12,726	$	31,276		$	117,053
Adjustments:
Increase (decrease) in deferred revenue	297		—		(118		)	179		3,650		—		(664		)	2,986
Billings (Non-GAAP)	$	29,769	$	4,019	$	8,677		$	42,465	$	76,701	$	12,726	$	30,612		$	120,039



Telenav, Inc.
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands)

Reconciliation of Deferred Revenue to Increase (Decrease) in Deferred Revenue
Reconciliation of Deferred Costs to Increase (Decrease) in Deferred Costs

	Automotive				Advertising				Mobile Navigation						Total
	Three Months Ended March 31,				Three Months Ended March 31,				Three Months Ended March 31,						Three Months Ended March 31,
	2016		2015		2016		2015		2016			2015			2016		2015
Deferred revenue, March 31	$	19,435	$	3,780	$	—	$	—	$	1,272		$	1,642		$	20,707	$	5,422
Deferred revenue, December 31	12,443		3,483		—		—		1,408			1,760			13,851		5,243
Increase (decrease) in deferred revenue	$	6,992	$	297	$	—	$	—	$	(136	)	$	(118	)	$	6,856	$	179

Deferred costs, March 31	$	10,417	$	2,561	$	—	$	—	$	—		$	—		$	10,417	$	2,561
Deferred costs, December 31	7,443		1,223		—		—		—			—			7,443		1,223
Increase (decrease) in deferred costs	$	2,974	$	1,338	$	—	$	—	$	—		$	—		$	2,974	$	1,338


	Automotive				Advertising				Mobile Navigation						Total
	Nine Months Ended March 31,				Nine Months Ended March 31,				Nine Months Ended March 31,						Nine Months Ended March 31,
	2016		2015		2016		2015		2016			2015			2016		2015
Deferred revenue, March 31	$	19,435	$	3,780	$	—	$	—	$	1,272		$	1,642		$	20,707	$	5,422
Deferred revenue, June 30	5,192		130		—		—		1,636			2,306			6,828		2,436
Increase (decrease) in deferred revenue	$	14,243	$	3,650	$	—	$	—	$	(364	)	$	(664	)	$	13,879	$	2,986

Deferred costs, March 31	$	10,417	$	2,561	$	—	$	—	$	—		$	—		$	10,417	$	2,561
Deferred costs, June 30	3,141		500		—		—		—			—			3,141		500
Increase (decrease) in deferred costs	$	7,276	$	2,061	$	—	$	—	$	—		$	—		$	7,276	$	2,061



Telenav, Inc.
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands, except per share amounts)

Reconciliation of Net Loss to Non-GAAP Net Loss

	Three Months Ended March 31,						Nine Months Ended March 31,
	2016			2015			2016			2015

Net loss	$	(9,838	)	$	(4,767	)	$	(27,323	)	$	(15,427	)

Adjustments:
Benefit from income taxes due to change in tax accounting method and amended tax return	—			—			—			(4,061		)
Legal contingencies	—			—			750			—
Restructuring accrual (reversal)	107			422			(1,361		)	987
Deferred rent reversal due to lease termination	(621		)	—			(1,242		)	—
Capitalized software and developed technology amortization expense	260			753			1,275			2,523
Stock-based compensation expense:
Cost of revenue	39			15			110			66
Research and development	1,483			1,243			4,712			3,868
Sales and marketing	582			699			2,257			2,193
General and administrative	516			675			1,808			2,432
Total stock-based compensation expense	2,620			2,632			8,887			8,559
Tax effect of adding back adjustments	—			(217		)	—			(625		)
Non-GAAP net loss	$	(7,472	)	$	(1,177	)	$	(19,014	)	$	(8,044	)

Non-GAAP net loss per share
Basic and diluted	$	(0.18	)	$	(0.03	)	$	(0.46	)	$	(0.20	)

Weighted average shares used in computing non-GAAP net loss per share
Basic and diluted	42,047			40,140			41,226			39,863



Telenav, Inc.
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands)

Reconciliation of Net Loss to Adjusted EBITDA

	Three Months Ended March 31,						Nine Months Ended March 31,
	2016			2015			2016			2015

Net loss	$	(9,838	)	$	(4,767	)	$	(27,323	)	$	(15,427	)

Adjustments:
Legal contingencies	—			—			750			—
Restructuring accrual (reversal)	107			422			(1,361		)	987
Deferred rent reversal due to lease termination	(621		)	—			(1,242		)	—
Stock-based compensation expense	2,620			2,632			8,887			8,559
Depreciation and amortization expense	780			1,178			2,696			4,054
Interest and other income (expense), net	610			(900		)	277			(3,073		)
Provision (benefit) for income taxes	(11		)	(3,243		)	429			(10,135		)
Adjusted EBITDA	$	(6,353	)	$	(4,678	)	$	(16,887	)	$	(15,035	)



Reconciliation of Operating Expenses to Non-GAAP Operating Expenses

	Three Months Ended March 31,						Nine Months Ended March 31,
	2016			2015			2016			2015

Operating expenses	$	29,411		$	30,357		$	88,184		$	89,356

Adjustments:
Legal contingencies	—			—			(750		)	—
Restructuring accrual (reversal)	(107		)	(422		)	1,361			(987		)
Deferred rent reversal due to lease termination	588			—			1,176			—
Stock-based compensation expense	(2,581		)	(2,617		)	(8,777		)	(8,493		)
Non-GAAP operating expenses	$	27,311		$	27,318		$	81,194		$	79,876



Telenav, Inc.
Unaudited Reconciliation of Non-GAAP Adjustments
(in percentages)

Reconciliation of Gross Margin to Non-GAAP Margin

	Automotive				Advertising				Mobile Navigation				Total
	Three Months Ended March 31,				Three Months Ended March 31,				Three Months Ended March 31,				Three Months Ended March 31,
	2016		2015		2016		2015		2016		2015		2016		2015

Gross margin	38	%	47	%	46	%	33	%	72	%	73	%	44	%	51	%

Adjustments:
Capitalized software and developed technology amortization expense	1	%	—	%	—	%	11	%	1	%	1	%	1	%	2	%
Non-GAAP gross margin	39	%	47	%	46	%	44	%	73	%	74	%	45	%	53	%


	Automotive				Advertising				Mobile Navigation				Total
	Nine Months Ended March 31,				Nine Months Ended March 31,				Nine Months Ended March 31,				Nine Months Ended March 31,
	2016		2015		2016		2015		2016		2015		2016		2015

Gross margin	40	%	46	%	43	%	33	%	73	%	73	%	45	%	52	%

Adjustments:
Capitalized software and developed technology amortization expense	1	%	1	%	4	%	10	%	1	%	1	%	1	%	2	%
Non-GAAP gross margin	41	%	47	%	47	%	43	%	74	%	74	%	46	%	54	%



Telenav, Inc.
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands)

Reconciliation of Net Loss to Free Cash Flow

	Three Months Ended March 31,						Nine Months Ended March 31,
	2016			2015			2016			2015

Net loss	$	(9,838	)	$	(4,767	)	$	(27,323	)	$	(15,427	)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Increase in deferred revenue (1)	6,856			179			13,879			2,986
Increase in deferred costs (1)	(2,974		)	(1,338		)	(7,276		)	(2,061		)
Changes in other operating assets and liabilities	1,366			7,285			380			760
Other adjustments (2)	4,039			4,540			13,127			14,215
Net cash provided by (used in) operating activities	(551		)	5,899			(7,213		)	473
Less: Purchases of property and equipment	(1,443		)	(138		)	(1,775		)	(650		)
Free cash flow	$	(1,994	)	$	5,761		$	(8,988	)	$	(177	)

(1) Relates primarily to automotive royalties and customized software development fees
(2) Consists primarily of depreciation and amortization and stock-based compensation expense



Telenav, Inc.
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands)

Non-GAAP metrics for the Advertising segment and the combined Automotive and Mobile Navigation segments

	Three Months Ended March 31, 2016
	GAAP Consolidated			Non-GAAP Consolidated			Non-GAAP Advertising				Automotive ⁽¹⁾		Mobile Navigation ⁽¹⁾		Total Non-GAAP Automotive and Mobile Navigation ⁽¹⁾

Revenue	$	46,278					$	5,156			$	34,717	$	6,405	$	41,122
Cost of revenue	26,106						2,788				21,495		1,823		23,318
Gross profit	20,172						2,368				$	13,222	$	4,582	17,804
Operating expenses:
Research and development	16,990						978			⁽²⁾					16,012
Sales and marketing	6,793						3,606			⁽²⁾					3,187
General and administrative	5,521						494			⁽³⁾					5,027
Restructuring	107						146								(39		)
Total operating expenses:	29,411						5,224								24,187
Loss from operations	(9,239		)				(2,856		)						(6,383		)
Interest and other income (expense), net	(610		)				—			⁽⁴⁾					(610		)
Loss before provision for income taxes	(9,849		)				(2,856		)						(6,993		)
Benefits for income taxes	(11		)				—								(11		)
Net loss	$	(9,838	)	$	(9,838	)	$	(2,856	)						$	(6,982	)

Adjustments:
Legal contingencies				—			—								—
Stock-based compensation expense				2,620			196								2,424
Restructuring accrual (reversal)				107			146								(39		)
Deferred rent reversal due to lease termination				(621		)	(141		)						(480		)
Depreciation and amortization expense				780			94								686
Interest and other income (expense), net				610			—			⁽⁴⁾					610
Benefits for income taxes				(11		)	—								(11		)
Adjusted EBITDA				$	(6,353	)	$	(2,561	)						$	(3,792	)

⁽¹⁾Automotive and mobile navigation segments share many of the same technologies and resources. Accordingly, we are unable to allocate the operating expenses, other income (expense), net and provision (benefit) for income taxes to these individual segments.

For purposes of calculating the Non-GAAP net loss attributable to the advertising segment :
⁽²⁾These expenses represent research and development and sales and marketing costs directly attributable to the advertising segment.
⁽³⁾These expenses represent actual general and administrative costs directly attributable to the advertising segment as well as an allocation of certain shared corporate costs that directly benefit the advertising segment such as accounting and human resource services.
⁽⁴⁾Expenses or income cannot be directly allocated to the advertising segment.



Telenav, Inc.
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands)

Non-GAAP metrics for the Advertising segment and the combined Automotive and Mobile Navigation segments

	Three Months Ended March 31, 2015
	GAAP Consolidated			Non-GAAP Consolidated			Non-GAAP Advertising				Automotive ⁽¹⁾		Mobile Navigation ⁽¹⁾		Total Non-GAAP Automotive and Mobile Navigation ⁽¹⁾

Revenue	$	42,286					$	4,019			$	29,472	$	8,795	$	38,267
Cost of revenue	20,839						2,690				15,759		2,390		18,149
Gross profit	21,447						1,329				$	13,713	$	6,405	20,118
Operating expenses:
Research and development	17,384						1,552			⁽²⁾					15,832
Sales and marketing	6,869						3,544			⁽²⁾					3,325
General and administrative	5,682						517			⁽³⁾					5,165
Restructuring	422						103								319
Total operating expenses:	30,357						5,716								24,641
Loss from operations	(8,910		)				(4,387		)						(4,523		)
Interest and other income (expense), net	900						—			⁽⁴⁾					900
Loss before benefit from income taxes	(8,010		)				(4,387		)						(3,623		)
Benefit from income taxes	(3,243		)				(1,612		)						(1,631		)
Net loss	$	(4,767	)	$	(4,767	)	$	(2,775	)						$	(1,992	)

Adjustments:
Stock-based compensation expense				2,632			333								2,299
Restructuring accrual				422			103								319
Depreciation and amortization expense				1,178			502								676
Interest and other income (expense), net				(900		)	—			⁽⁴⁾					(900		)
Benefit from income taxes				(3,243		)	(1,612		)						(1,631		)
Adjusted EBITDA				$	(4,678	)	$	(3,449	)						$	(1,229	)

⁽¹⁾Automotive and mobile navigation segments share many of the same technologies and resources. Accordingly, we are unable to allocate the operating expenses, other income (expense), net and provision (benefit) for income taxes to these individual segments.

For purposes of calculating the Non-GAAP net loss attributable to the advertising segment :
⁽²⁾These expenses represent research and development and sales and marketing costs directly attributable to the advertising segment.
⁽³⁾These expenses represent actual general and administrative costs directly attributable to the advertising segment as well as an allocation of certain shared corporate costs that directly benefit the advertising segment such as accounting and human resource services.
⁽⁴⁾Expenses or income cannot be directly allocated to the advertising segment.



Telenav, Inc.
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands)

Non-GAAP metrics for the Advertising segment and the combined Automotive and Mobile Navigation segments

	Nine Months Ended March 31, 2016
	GAAP Consolidated			Non-GAAP Consolidated			Non-GAAP Advertising				Automotive ⁽¹⁾		Mobile Navigation ⁽¹⁾		Total Non-GAAP Automotive and Mobile Navigation ⁽¹⁾

Revenue	$	135,592					$	16,695			$	98,306	$	20,591	$	118,897
Cost of revenue	74,025						9,538				58,947		5,540		64,487
Gross profit	61,567						7,157				$	39,359	$	15,051	54,410
Operating expenses:
Research and development	51,630						3,508			⁽²⁾					48,122
Sales and marketing	20,315						11,097			⁽²⁾					9,218
General and administrative	17,600						1,538			⁽³⁾					16,062
Restructuring	(1,361		)				(229		)						(1,132		)
Total operating expenses:	88,184						15,914								72,270
Loss from operations	(26,617		)				(8,757		)						(17,860		)
Interest and other income (expense), net	(277		)				—			⁽⁴⁾					(277		)
Loss before provision for income taxes	(26,894		)				(8,757		)						(18,137		)
Provision for income taxes	429						—								429
Net loss	$	(27,323	)	$	(27,323	)	$	(8,757	)						$	(18,566	)

Adjustments:
Legal contingencies				750			—								750
Stock-based compensation expense				8,887			855								8,032
Restructuring accrual (reversal)				(1,361		)	(229		)						(1,132		)
Deferred rent reversal due to lease termination				(1,242		)	(300		)						(942		)
Depreciation and amortization expense				2,696			750								1,946
Interest and other income (expense), net				277			—			⁽⁴⁾					277
Provision for income taxes				429			—								429
Adjusted EBITDA				$	(16,887	)	$	(7,681	)						$	(9,206	)

⁽¹⁾Automotive and mobile navigation segments share many of the same technologies and resources. Accordingly, we are unable to allocate the operating expenses, other income (expense), net and provision (benefit) for income taxes to these individual segments.

For purposes of calculating the Non-GAAP net loss attributable to the advertising segment :
⁽²⁾These expenses represent research and development and sales and marketing costs directly attributable to the advertising segment.
⁽³⁾These expenses represent actual general and administrative costs directly attributable to the advertising segment as well as an allocation of certain shared corporate costs that directly benefit the advertising segment such as accounting and human resource services.
⁽⁴⁾Expenses or income cannot be directly allocated to the advertising segment.



Telenav, Inc.
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands)

Non-GAAP metrics for the Advertising segment and the combined Automotive and Mobile Navigation segments

	Nine Months Ended March 31, 2015
	GAAP Consolidated			Non-GAAP Consolidated			Non-GAAP Advertising				Automotive ⁽¹⁾		Mobile Navigation ⁽¹⁾		Total Non-GAAP Automotive and Mobile Navigation ⁽¹⁾

Revenue	$	117,053					$	12,726			$	73,051	$	31,276	$	104,327
Cost of revenue	56,332						8,528				39,395		8,409		47,804
Gross profit	60,721						4,198				$	33,656	$	22,867	56,523
Operating expenses:
Research and development	51,002						4,482			⁽²⁾					46,520
Sales and marketing	19,775						10,069			⁽²⁾					9,706
General and administrative	17,592						1,610			⁽³⁾					15,982
Restructuring	987						235								752
Total operating expenses:	89,356						16,396								72,960
Loss from operations	(28,635		)				(12,198		)						(16,437		)
Interest and other income (expense), net	3,073						—			⁽⁴⁾					3,073
Loss before benefit from income taxes	(25,562		)				(12,198		)						(13,364		)
Benefit from income taxes	(10,135		)				(3,396		)						(6,739		)
Net loss	$	(15,427	)	$	(15,427	)	$	(8,802	)						$	(6,625	)

Adjustments:
Stock-based compensation expense				8,559			1,427								7,132
Restructuring accrual				987			235								752
Depreciation and amortization expense				4,054			1,546								2,508
Interest and other income (expense), net				(3,073		)	—			⁽⁴⁾					(3,073		)
Benefit from income taxes				(10,135		)	(3,396		)						(6,739		)
Adjusted EBITDA				$	(15,035	)	$	(8,990	)						$	(6,045	)

⁽¹⁾Automotive and mobile navigation segments share many of the same technologies and resources. Accordingly, we are unable to allocate the operating expenses, other income (expense), net and provision (benefit) for income taxes to these individual segments.

For purposes of calculating the Non-GAAP net loss attributable to the advertising segment :
⁽²⁾These expenses represent research and development and sales and marketing costs directly attributable to the advertising segment.
⁽³⁾These expenses represent actual general and administrative costs directly attributable to the advertising segment as well as an allocation of certain shared corporate costs that directly benefit the advertising segment such as accounting and human resource services.
⁽⁴⁾Expenses or income cannot be directly allocated to the advertising segment.

Telenav, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - May 3, 2016

Attached files

Telenav, Inc. Reports