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

Attached files

file	filename
EX-99.2 - EXHIBIT 99.2 - Telenav, Inc.	tnavex992fy18q2investorlet.htm
8-K - 8-K - Telenav, Inc.	tnav1231178-k.htm

Telenav Reports Second Quarter Fiscal 2018 Financial Results

SANTA CLARA, Calif., February 1, 2018 -- Telenav®, Inc. (NASDAQ:TNAV), a leading provider of connected car and location-based platform services, today released its financial results for the second fiscal quarter ended December 31, 2017 by issuing this press release and posting a letter to stockholders on the quarter on its website. Please visit Telenav’s investor relations website at http://investor.telenav.com to view the Q2 fiscal year 2018 financial results and letter to stockholders.

“We are pleased that Ford has awarded us an extension of our SYNC® 3 partnership through December 2020. We are also excited to be awarded Ford’s next generation connected navigation for North America,” said HP Jin, Chairman and CEO of Telenav.

“During the quarter, Ford introduced our connected services on SYNC 3 in North America through its FordPass^TM and Lincoln Way^TMmobile applications. With this addition, there are now nearly 7 million connected cars on the road powered by Telenav’s location-based services platform.”

Financial Highlights for the second quarter ended December 31, 2017


•	Total revenue for the second quarter of fiscal 2018 was $39.1 million, compared with $52.0 million in the same prior year period.


•	Billings for the second quarter of fiscal 2018 were $70.1 million, compared with $59.7 million in the same prior year period.


•	GAAP net loss for the second quarter of fiscal 2018 was ($15.7) million, compared with a GAAP net loss of ($11.4) million for the second quarter of fiscal 2017.


•	Adjusted EBITDA on billings for the second quarter of fiscal 2018 was a ($1.8) million loss compared with a $1.3 million profit in the second quarter of fiscal 2017.


•	Ending cash, cash equivalents and short-term investments, excluding restricted cash, were $90.7 million as of December 31, 2017. This represented cash and short-term investments of $2.03 per share, based on 44.6 million shares of common stock outstanding as of December 31, 2017. Telenav had no debt as of December 31, 2017.

Recent Business Highlights


•	Ford® entered into an agreement to extend Telenav’s offering for SYNC 3 for calendar 2018 and awarded, subject to completion of contracts, a further extension of Telenav’s SYNC 3 partnership for all current geographies through calendar year 2020


•	Ford awarded Telenav, subject to completion of contracts, its next generation navigation solution for North America


•	Ford has entered into an agreement with Telenav to provide map updates in North America, China and South America, effective January 1, 2018


•	Ford launched our connected services across various model year 2018 SYNC 3 vehicles in North America using its FordPass and Lincoln Way mobile phone applications


•	GM has launched our premium embedded navigation in the Middle East in addition to the already launched geographies of North America, China and Europe


•	Fiat Chrysler Automobiles (FCA), another Top 10 Global Automotive OEM, will offer Telenav’s embedded navigation solution on select Jeep and Chrysler vehicles for the China market

Q3 Fiscal 2018 Business Outlook

Telenav’s amended Ford agreement and related awards specify future deliverables. In conjunction with these changes, under current GAAP, certain revenue which Telenav has been recognizing upon product delivery will prospectively not be recognized until these defined deliverables are met. This will result in a significant decline in revenue and gross profit, commencing in the March 2018 quarter. However, effective July 1, 2018, Telenav will adopt the new revenue recognition standard, ASC 606, resulting in the ability to once again recognize substantial revenue and gross profit from Ford as our product is delivered.

Telenav’s amended Ford agreement also reflects a decrease in pass-through third-party licensed content costs, which will result in a decrease in billings per unit, but an increase in direct contribution margin from billings. The company expects auto unit volumes to increase, which should result in an increase in direct contribution from billings in the automotive business unit. Telenav also expects to record a non-cash impairment of goodwill of approximately $2.7 million related to its declining mobile navigation business during the March 2018 quarter.

For the quarter ending March 31, 2018, Telenav offers the following guidance:


•	Total revenue is expected to be $13 to $14 million


•	Billings are expected to be $56 to $59 million


•	Deferred revenue is expected to increase by approximately $43 to $45 million


•	Deferred costs are expected to increase by approximately $23 million


•	GAAP gross profit is expected to be approximately $6 million


•	GAAP gross margin is expected to be approximately 45 percent


•	Direct contribution from billings is expected to be approximately $26 to $28 million


•	Direct contribution margin from billings is expected to be approximately 47 percent


•	GAAP operating expenses are expected to be $38 to $39 million, and include a $2.7 million goodwill impairment related to Telenav’s mobile navigation business


•	GAAP net loss is expected to be $(32) to $(34) million


•	Adjusted EBITDA loss is expected to be $(25) to $(27) million


•	Adjusted EBITDA loss on billings is expected to be $(4) to $(6) million


•	Automotive is expected to be approximately 35 percent of total revenue and 83 percent of billings


•	Advertising is expected to be approximately 45 percent of total revenue and 11 percent of billings


•	Weighted average diluted shares outstanding are expected to be approximately 44.8 million

The Company anticipates that for the second half of fiscal 2018, adjusted EBITDA on billings will continue to be negative. Subject to anticipated volumes, take rates and timing of model expansion under the Company’s various automotive OEM programs, the Company anticipates that adjusted EBITDA on billings will be positive for fiscal 2019.

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 and Quarterly Commentary

The company will host an investor conference call and live webcast on Thursday, February 1, 2018 at 2:30 p.m. Pacific Time (5:30 p.m. Eastern Time). Management has posted its letter to stockholders in combination with our Second Quarter Fiscal 2018 Financial Results press release on Telenav’s investor relations website in lieu of management providing remarks at the start of the conference call. Instead management will respond to questions during the call. To listen to the webcast and view the company’s quarterly commentary, please visit Telenav's investor relations website at http://investor.telenav.com. Listeners can also access the conference call by dialing 800-281-7973 (toll-free, domestic only) or 323-794-2093 (domestic and international toll) and entering pass code 7507108. 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 7507108.

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, direct contribution from billings, direct contribution margin from billings, change in deferred revenue, change in deferred costs, adjusted EBITDA, adjusted EBITDA on billings 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 GAAP revenue recognized plus the change in deferred revenue from the beginning to the end of the period. Direct contribution from billings reflects GAAP gross profit plus change in deferred revenue less change in deferred costs. Direct contribution margin from billings reflects direct contribution from billings divided by billings. Telenav has also provided a breakdown of the calculation of the change in deferred revenue by segment, which is added to revenue in calculating its non-GAAP metric of billings. In connection with its presentation of the change in deferred revenue, Telenav has provided a similar presentation of the change in the related deferred costs. Such deferred costs primarily include costs associated with third party content and certain development costs associated with our customized software solutions. As deferred revenue and deferred costs become larger components of its operating results, Telenav believes these metrics are useful in evaluating cash flows.

Telenav considers billings, direct contribution from billings and direct contribution margin from billings to be useful metrics for management and investors because billings drive revenue and

deferred revenue, which is an important indicator of its business. Telenav believes direct contribution from billings and direct contribution margin from billings are useful metrics because they reflect the impact of the contribution over time for such billings, exclusive of the incremental costs incurred to deliver any related service obligations. There are a number of limitations related to the use of billings, direct contribution from billings and direct contribution margin from billings versus revenue, gross profit, and gross margin calculated in accordance with GAAP. Second, billings, direct contribution from billings and direct contribution margin from billings include amounts that have not yet been recognized as revenue or cost 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, including certain third-party technology and content license fees as applicable. Accordingly, direct contribution from billings and direct contribution margin from billings do not include all costs associated with billings. Second, Telenav may calculate billings, direct contribution from billings, and direct contribution margin from billings in a manner that is different from peer companies that report similar financial measures, making comparisons between companies more difficult. When Telenav uses these measures, it attempts to compensate for these limitations by providing specific information regarding billings, direct contribution from billings and direct contribution margin from billings and how they relate to revenue, gross profit and gross margin calculated in accordance with GAAP.

Adjusted EBITDA measures GAAP net loss excluding the impact of stock-based compensation expense, depreciation and amortization, other income (expense), provision (benefit) for income taxes, and other applicable items such as legal settlements and contingencies, and deferred rent reversal and tenant improvement allowance recognition due to sublease termination, net of tax. Stock-based compensation expense relates to equity incentive awards granted to its employees, directors, and consultants. Legal settlements and contingencies represent settlements and offers made to settle litigation in which Telenav is a defendant and royalty disputes. Deferred rent reversal and tenant improvement allowance recognition represent the reversal of Telenav’s deferred rent liability and recognition of Telenav’s deferred tenant improvement allowance, as amortization of these amounts is no longer required due to the termination of our Santa Clara facility sublease and subsequent entry into a new lease agreement with our landlord for this same facility effective September 2017.

Adjusted EBITDA and adjusted EBITDA on billings are key measures used by Telenav’s management and board of directors to understand and evaluate Telenav’s core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, Telenav believes that the exclusion of the expenses eliminated in calculating adjusted EBITDA can provide a useful measure for period-to-period comparisons of Telenav’s core business. In addition, adjusted EBITDA is a key financial measure used by the compensation committee of Telenav’s board of directors in connection with the development of incentive-based compensation for Telenav’s executive officers. Accordingly, Telenav believes that adjusted EBITDA generally provides useful information to investors and others in understanding and evaluating Telenav’s operating results in the same manner as its management and board of directors.

Adjusted EBITDA on billings measures adjusted EBITDA plus the effect of changes in deferred revenue and deferred costs. Telenav believes adjusted EBITDA on billings is a useful measure, especially in light of the impact it continues to expect on reported GAAP revenue for certain

value-added offerings the company provides its customers, including Ford map updates. Adjusted EBITDA and adjusted EBITDA on billings, while generally measures of profitability, can also represent losses.

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

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.

In this press release, Telenav has provided guidance for the second quarter of fiscal 2018 on a non-GAAP basis, for billings, change in deferred revenue, change in deferred costs, direct contribution from billings, direct contribution margin from billings, adjusted EBITDA and adjusted EBITDA on billings. Telenav does not provide reconciliations of its forward-looking non-GAAP financial measures of billings, change in deferred revenue, change in deferred costs, direct contribution from billings, direct contribution margin from billings, adjusted EBITDA and adjusted EBITDA on billings to the corresponding GAAP measures due to the high variability and difficulty in making accurate forecasts and projections with respect to deferred revenue, deferred costs, stock-based compensation and tax provision (benefit), which are components of these non-GAAP financial measures. In particular, stock-based compensation is impacted by future hiring and retention needs, as well as the future fair market value of Telenav’s common stock, all of which is difficult to predict and subject to constant change. The actual amounts of these items will have a significant impact on Telenav’s GAAP net loss per diluted share and GAAP tax provision (benefit). Accordingly, reconciliations of Telenav’s forward-looking non-GAAP financial measures to the corresponding GAAP measures are not available without unreasonable effort.

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 its 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 Ford, GM and Toyota and to support Ford, GM and Toyota and their customers; Telenav's success in extending its contracts for current and new generation of products with its existing OEMs and automotive manufacturers, particularly Ford; achieving additional design wins and the delivery dates of automobiles including Telenav's products; adoption by vehicle purchasers of Scout GPS Link; Telenav's dependence on a limited number of automotive manufacturers and OEMs for a substantial portion of its revenue; reductions in demand for automobiles; potential impacts of OEMs including competitive capabilities in their vehicles such as Apple Car-Play and Android Auto; exposure from the potential impairment of the carrying value of certain goodwill and intangible assets within Telenav’s mobile navigation business unit where revenue continues to decline; Telenav's ability to grow and scale its advertising business; Telenav’s ability to develop new advertising products and technology while also achieving cash flow break even and ultimately profitability in the advertising business; Telenav incurring losses and operating expenses in excess of expectations; failure to reach agreement with customers for awards and contracts on products and services in

which Telenav has expended resources developing; competition from other market participants who may provide comparable services to subscribers without charge; the timing of new product releases and vehicle production by Telenav's automotive customers, including inventory procurement and fulfillment; possible warranty claims, and the impact on consumer perception of its brand; Telenav's ability to develop and support products including OpenStreetMap (“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 Telenav may not be able to realize its deferred tax assets and may have to take a reserve against them; the impact on revenue recognition and other financial reporting due to the amendment of contracts or changes in accounting standards, such as the implementation of ASC 606; and macroeconomic and political conditions in the U.S. and abroad, in particular China. Telenav discusses these risks in greater detail in "Risk factors" and elsewhere in its Form 10-Q for the quarter ended September 30, 2017 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 management's beliefs and assumptions only as of the date made. You should review our SEC filings carefully and with the understanding that actual future results may be materially different from what Telenav expects.

ABOUT TELENAV, INC.

Telenav is a leading provider of connected car and location-based platform services, focused on 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. Fortune 500 advertisers and local advertisers can now reach millions of users with Telenav’s 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 advertising, 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.

TNAV-F

TNAV-C

Investor Relations:

Michael Look

408-990-1232

IR@telenav.com

Media:

Raphel Finelli

408-667-5970

media@telenav.com



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

	December 31, 2017			June 30, 2017*
	(unaudited)

Assets
Current assets:
Cash and cash equivalents	$	13,956		$	20,757
Short-term investments	76,773			77,598
Accounts receivable, net of allowances of $112 and $75, at December 31, 2017 and June 30, 2017, respectively	52,287			57,834
Restricted cash	3,404			3,401
Income taxes receivable	32			34
Deferred costs	19,545			11,703
Prepaid expenses and other current assets	4,392			3,988
Total current assets	170,389			175,315
Property and equipment, net	7,138			4,658
Deferred income taxes, non-current	958			900
Goodwill and intangible assets, net	34,278			34,844
Deferred costs, non-current	75,362			42,389
Other assets	1,877			1,454
Total assets	$	290,002		$	259,560
Liabilities and stockholders’ equity
Current liabilities:
Trade accounts payable	$	4,676		$	6,151
Accrued expenses	51,350			51,528
Deferred revenue	31,908			20,345
Income taxes payable	138			197
Total current liabilities	88,072			78,221
Deferred rent, non-current	710			996
Deferred revenue, non-current	115,689			67,056
Other long-term liabilities	1,073			1,139
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; 44,552 and 43,946 shares issued and outstanding at December 31, 2017 and June 30, 2017, respectively	45			44
Additional paid-in capital	163,663			159,666
Accumulated other comprehensive loss	(1,576		)	(1,934		)
Accumulated deficit)	(77,674		)	(45,628		)
Total stockholders' equity	84,458			112,148
Total liabilities and stockholders’ equity	$	290,002		$	259,560

*Derived from audited consolidated financial statements as of and for the year ended June 30, 2017.



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


	Three Months Ended December 31,						Six Months Ended December 31,
	2017			2016			2017			2016

Revenue:
Product	$	25,307		$	37,804		$	49,271		$	67,227
Services	13,773			14,197			26,467			27,001
Total revenue	39,080			52,001			75,738			94,228
Cost of revenue:
Product	15,053			22,598			29,727			40,359
Services	7,258			6,129			13,431			11,844
Total cost of revenue	22,311			28,727			43,158			52,203
Gross profit	16,769			23,274			32,580			42,025
Operating expenses:
Research and development	21,903			16,301			42,985			34,319
Sales and marketing	5,136			5,277			10,200			10,545
General and administrative	5,514			6,872			10,725			12,363
Legal settlement and contingencies	60			6,424			310			6,424
Total operating expenses	32,613			34,874			64,220			63,651
Loss from operations	(15,844		)	(11,600		)	(31,640		)	(21,626		)
Other income (expense), net	218			714			171			1,010
Loss before provision for income taxes	(15,626		)	(10,886		)	(31,469		)	(20,616		)
Provision for income taxes	26			537			281			142
Net loss	$	(15,652	)	$	(11,423	)	$	(31,750	)	$	(20,758	)

Net loss per share:
Basic and diluted	$	(0.35	)	$	(0.26	)	$	(0.71	)	$	(0.48	)
Weighted average shares used in computing net loss per share:
Basic and diluted	44,476			43,208			44,495			42,932



Telenav, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
	Six Months Ended December 31,
	2017			2016

Operating activities
Net loss	$	(31,750	)	$	(20,758	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,513			1,260
Deferred rent reversal due to lease termination	(538		)	—
Tenant improvement allowance recognition due to lease termination	(582		)	—
Accretion of net premium on short-term investments	113			237
Stock-based compensation expense	5,368			4,529
(Gain) loss on disposal of property and equipment	6			(2		)
Bad debt expense	37			125
Changes in operating assets and liabilities:
Accounts receivable	5,545			(5,724		)
Deferred income taxes	(23		)	226
Restricted cash	(3		)	1,015
Income taxes receivable	2			39
Deferred costs	(40,815		)	(6,704		)
Prepaid expenses and other current assets	(476		)	580
Other assets	(620		)	98
Trade accounts payable	(1,563		)	5,309
Accrued expenses and other liabilities	(263		)	3,945
Income taxes payable	(61		)	154
Deferred rent	767			44
Deferred revenue	60,196			12,728
Net cash used in operating activities	(3,147		)	(2,899		)

Investing activities
Purchases of property and equipment	(3,350		)	(531		)
Purchases of short-term investments	(32,817		)	(37,788		)
Proceeds from sales and maturities of short-term investments	33,322			39,392
Proceeds from sales of long-term investments	—			246
Net cash provided by investing activities	(2,845		)	1,319

Financing activities
Proceeds from exercise of stock options	235			159
Tax withholdings related to net share settlements of restricted stock units	(1,606		)	(1,638		)
Net cash used in financing activities	(1,371		)	(1,479		)

Effect of exchange rate changes on cash and cash equivalents	562			(596		)
Net decrease in cash and cash equivalents	(6,801		)	(3,655		)
Cash and cash equivalents, at beginning of period	20,757			21,349
Cash and cash equivalents, at end of period	$	13,956		$	17,694

Supplemental disclosure of cash flow information
Income taxes paid, net	$	640		$	1,410



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


	Three Months Ended December 31,						Six Months Ended December 31,
	2017			2016			2017			2016

Automotive
Revenue	$	26,838		$	38,744		$	52,142		$	69,011
Cost of revenue	16,416			23,438			32,301			41,983
Gross profit	$	10,422		$	15,306		$	19,841		$	27,028
Gross margin	39		%	40		%	38		%	39		%
Advertising
Revenue	$	8,742		$	8,208		$	16,357		$	14,753
Cost of revenue	4,402			3,919			7,814			7,445
Gross profit	$	4,340		$	4,289		$	8,543		$	7,308
Gross margin	50		%	52		%	52		%	50		%
Mobile Navigation
Revenue	$	3,500		$	5,049		$	7,239		$	10,464
Cost of revenue	1,493			1,370			3,043			2,775
Gross profit	$	2,007		$	3,679		$	4,196		$	7,689
Gross margin	57		%	73		%	58		%	73		%
Total
Revenue	$	39,080		$	52,001		$	75,738		$	94,228
Cost of revenue	22,311			28,727			43,158			52,203
Gross profit	$	16,769		$	23,274		$	32,580		$	42,025
Gross margin	43		%	45		%	43		%	45		%



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

Reconciliation of Revenue to Billings

	Three Months Ended December 31,						Six Months Ended December 31,
	2017			2016			2017			2016
Automotive
Revenue	$	26,838		$	38,744		$	52,142		$	69,011
Adjustments:
Change in deferred revenue	31,249			7,694			60,447			12,807
Billings	$	58,087		$	46,438		$	112,589		$	81,818
Advertising
Revenue	$	8,742		$	8,208		$	16,357		$	14,753
Adjustments:
Change in deferred revenue	—			—			—			—
Billings	$	8,742		$	8,208		$	16,357		$	14,753
Mobile Navigation
Revenue	$	3,500		$	5,049		$	7,239		$	10,464
Adjustments:
Change in deferred revenue	(194		)	(8		)	(251		)	(79		)
Billings	$	3,306		$	5,041		$	6,988		$	10,385
Total
Revenue	$	39,080		$	52,001		$	75,738		$	94,228
Adjustments:
Change in deferred revenue	31,055			7,686			60,196			12,728
Billings	$	70,135		$	59,687		$	135,934		$	106,956



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

Reconciliation of Deferred Revenue to Change in Deferred Revenue
Reconciliation of Deferred Costs to Change in Deferred Costs

	Three Months Ended December 31, 2017
	Automotive		Advertising		Mobile Navigation			Total
Deferred revenue, December 31	$	146,964	$	—	$	633		$	147,597
Deferred revenue, September 30	115,715		—		827			116,542
Change in deferred revenue	$	31,249	$	—	$	(194	)	$	31,055

Deferred costs, December 31	$	94,907	$	—	$	—		$	94,907
Deferred costs, September 30	74,140		—		—			74,140
Change in deferred costs	$	20,767	$	—	$	—		$	20,767

	Three Months Ended December 31, 2016
	Automotive		Advertising		Mobile Navigation			Total
Deferred revenue, December 31	$	34,960	$	—	$	1,137		$	36,097
Deferred revenue, September 30	27,266		—		1,145			28,411
Change in deferred revenue	$	7,694	$	—	$	(8	)	$	7,686

Deferred costs, December 31	$	18,780	$	—	$	—		$	18,780
Deferred costs, September 30	14,933		—		—			14,933
Change in deferred costs	$	3,847	$	—	$	—		$	3,847

	Six Months Ended December 31, 2017
	Automotive		Advertising		Mobile Navigation			Total
Deferred revenue, December 31	$	146,964	$	—	$	633		$	147,597
Deferred revenue, June 30	86,517		—		884			87,401
Increase (decrease) in deferred revenue	$	60,447	$	—	$	(251	)	$	60,196

Deferred costs, December 31	$	94,907	$	—	$	—		$	94,907
Deferred costs, June 30	54,092		—		—			54,092
Increase in deferred costs	$	40,815	$	—	$	—		$	40,815

	Six Months Ended December 31, 2016
	Automotive		Advertising		Mobile Navigation			Total
Deferred revenue, December 31	$	34,960	$	—	$	1,137		$	36,097
Deferred revenue, June 30	22,153		—		1,216			23,369
Increase (decrease) in deferred revenue	$	12,807	$	—	$	(79	)	$	12,728

Deferred costs, December 31	$	18,780	$	—	$	—		$	18,780
Deferred costs, June 30	12,076		—		—			12,076
Increase in deferred costs	$	6,704	$	—	$	—		$	6,704



Telenav, Inc.
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands, except percentages)
Reconciliation of Gross Profit to Direct Contribution from Billings

	Three Months Ended December 31,						Six Months Ended December 31,
	2017			2016			2017			2016
Automotive
Gross profit	$	10,422		$	15,306		$	19,841		$	27,028
Gross margin	39		%	40		%	38		%	39		%
Adjustments to gross profit:
Change in deferred revenue	$	31,259		$	7,694		$	60,447		$	12,807
Change in deferred costs⁽¹⁾	(20,767		)	(3,847		)	(40,815		)	(6,704		)
Net change	10,492			3,847			19,632			6,103
Direct Contribution from billings⁽¹⁾	$	20,914		$	19,153		$	39,473		$	33,131
Direct Contribution Margin from billings⁽¹⁾	36		%	41		%	35		%	40		%

Advertising
Gross profit	$	4,340		$	4,289		$	8,543		$	7,308
Gross margin	50		%	52		%	52		%	50		%
Adjustments to gross profit:
Change in deferred revenue	$	—		$	—		$	—		$	—
Change in deferred costs⁽¹⁾	—			—			—			—
Net change	—			—			—			—
Direct Contribution from billings⁽¹⁾	$	4,340		$	4,289		$	8,543		$	7,308
Direct Contribution Margin from billings⁽¹⁾	50		%	52		%	52		%	50		%

Mobile Navigation
Gross profit	$	2,007		$	3,679		$	4,196		$	7,689
Gross margin	57		%	73		%	58		%	73		%
Adjustments to gross profit:
Change in deferred revenue	$	(194	)	$	(8	)	$	(251	)	$	(79	)
Change in deferred costs⁽¹⁾	—			—			—			—
Net change	(194		)	(8		)	(251		)	(79		)
Direct Contribution from billings⁽¹⁾	$	1,813		$	3,671		$	3,945		$	7,610
Direct Contribution Margin from billings⁽¹⁾	55		%	73		%	56		%	73		%

Total
Gross profit	$	16,769		$	23,274		$	32,580		$	42,025
Gross margin	43		%	45		%	43		%	45		%
Adjustments to gross profit:
Change in deferred revenue	$	31,065		$	7,686		$	60,196		$	12,728
Change in deferred costs⁽¹⁾	(20,767		)	(3,847		)	(40,815		)	(6,704		)
Net change	10,298			3,839			19,381			6,024
Direct Contribution from billings⁽¹⁾	$	27,067		$	27,113		$	51,961		$	48,049
Direct Contribution Margin from billings⁽¹⁾	39		%	45		%	38		%	45		%

⁽¹⁾ 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. We expect to incur additional costs in the future due to requirements to provide ongoing provisioning of services such as hosting, monitoring and customer support. Accordingly, direct contribution from billings and direct contribution margin from billings do not reflect all costs associated with billings.



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

Reconciliation of Net Loss to Adjusted EBITDA and Adjusted EBITDA on Billings

	Three Months Ended December 31,						Six Months Ended December 31,
	2017			2016			2017			2016

Net loss	$	(15,652	)	$	(11,423	)	$	(31,750	)	$	(20,758	)

Adjustments:
Legal settlement and contingencies	60			6,424			310			6,424
Deferred rent reversal due to lease termination	—			—			(538		)	—
Tenant improvement allowance recognition	(582		)	—
Stock-based compensation expense	2,888			1,988			5,368			4,529
Depreciation and amortization expense	797			623			1,513			1,260
Other income (expense), net	(218		)	(714		)	(171		)	(1,010		)
Provision (benefit) for income taxes	26			537			281			142
Adjusted EBITDA	$	(12,099	)	$	(2,565	)	$	(25,569	)	$	(9,413	)
Change in deferred revenue	31,065			7,686			60,196			12,728
Change in deferred costs⁽¹⁾	(20,767		)	(3,847		)	(40,815		)	(6,704		)
Adjusted EBITDA on billings⁽¹⁾	$	(1,801	)	$	1,274		$	(6,188	)	$	(3,389	)

⁽¹⁾ We expect to incur additional costs in the future due to requirements to provide ongoing provisioning of services such as hosting, monitoring and customer support. Accordingly, adjusted EBITDA on billings does not reflect all costs associated with billings.




Reconciliation of Net Loss to Free Cash Flow

	Three Months Ended December 31,						Six Months Ended December 31,
	2017			2016			2017			2016

Net loss	$	(15,652	)	$	(11,423	)	$	(31,750	)	$	(20,758	)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Change in deferred revenue ⁽¹⁾	31,065			7,686			60,196			12,728
Change in deferred costs ⁽²⁾	(20,767		)	(3,847		)	(40,815		)	(6,704		)
Changes in other operating assets and liabilities	2,259			7,595			3,305			5,686
Other adjustments ⁽³⁾	3,736			2,779			5,917			6,149
Net cash provided by (used in) operating activities	641			2,790			(3,147		)	(2,899		)
Less: Purchases of property and equipment	(1,064		)	(137		)	(3,350		)	(531		)
Free cash flow	$	(423	)	$	2,653		$	(6,497	)	$	(3,430	)

⁽¹⁾ Consists of royalties, customized software development fees, service fees and subscription fees.
⁽²⁾ Consists primarily of third party content costs and customized software development expenses.
⁽³⁾ Consist primarily of depreciation and amortization, stock-based compensation expense and other non-cash items.

Telenav, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - February 1, 2018

Attached files

Telenav, Inc. Reports