Attached files
| file | filename |
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| EX-99.1 - EXHIBIT 99.1 - Telenav, Inc. | tnavex991fy18q3earningsrel.htm |
| 8-K - 8-K - Telenav, Inc. | tnav331188-k.htm |
May 3, 2018
Fellow Stockholders,
Building the largest network of connected cars in the world remains our long-term goal. During our third quarter ended March 31, 2018 (“Q3 Fiscal 2018”), we continued to make progress toward this goal as higher attach rates across more car models and geographies at our key global auto OEM partners resulted in a record 1.4 million Telenav enabled cars being deployed into the market. There are now more than 8.2 million cars in the market capable of being powered by Telenav’s location-based services platform. As a result, total billings for the third quarter were $58.7 million, and direct contribution from billings was $26.1 million.
Select Financial Data (unaudited) | Fiscal 2017 | Fiscal 2018 | |||||||||||||||||||
(in thousands, except gross margin and direct contribution margin) | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | ||||||||||||||
Total Company | |||||||||||||||||||||
Revenue | $ | 42,227 | $ | 52,001 | $ | 35,065 | $ | 40,291 | $ | 36,658 | $ | 39,080 | $ | 13,823 | |||||||
Billings* | $ | 47,269 | $ | 59,687 | $ | 60,152 | $ | 66,508 | $ | 65,789 | $ | 70,145 | $ | 58,703 | |||||||
Y/Y % Growth | (1 | )% | 23 | % | 13 | % | 32 | % | 39 | % | 18 | % | (2 | )% | |||||||
Direct Contribution from Billings* | $ | 20,936 | $ | 27,113 | $ | 25,049 | $ | 26,167 | $ | 24,894 | $ | 27,067 | $ | 26,142 | |||||||
Direct Contribution Margin from Billings* | 44 | % | 45 | % | 42 | % | 39 | % | 38 | % | 39 | % | 45 | % | |||||||
Adjusted EBITDA on Billings* | $ | (4,663 | ) | $ | 1,274 | $ | (2,271 | ) | $ | (404 | ) | $ | (4,386 | ) | $ | (1,801 | ) | $ | (4,133 | ) | |
Automotive | |||||||||||||||||||||
Revenue | $ | 30,267 | $ | 38,744 | $ | 25,476 | $ | 29,297 | $ | 25,304 | $ | 26,838 | $ | 5,808 | |||||||
Billings* | $ | 35,380 | $ | 46,438 | $ | 50,599 | $ | 55,731 | $ | 54,492 | $ | 58,097 | $ | 50,663 | |||||||
Y/Y % Growth | (1 | )% | 32 | % | 21 | % | 40 | % | 54 | % | 25 | % | — | % | |||||||
Direct Contribution from Billings* | $ | 13,978 | $ | 19,153 | $ | 19,051 | $ | 20,026 | $ | 18,559 | $ | 20,914 | $ | 21,706 | |||||||
Direct Contribution Margin from Billings* | 40 | % | 41 | % | 38 | % | 36 | % | 34 | % | 36 | % | 43 | % | |||||||
Cumulative Units Deployed to Date** | 9,819 | 10,953 | 12,182 | 13,323 | 14,476 | 15,830 | 17,278 | ||||||||||||||
Y/Y % Growth | 78 | % | 73 | % | 67 | % | 62 | % | 47 | % | 45 | % | 42 | % | |||||||
Cumulative Connected Units Deployed to Date** | 3,579 | 4,171 | 4,795 | 5,379 | 6,025 | 6,959 | 8,181 | ||||||||||||||
Y/Y % Growth | 113 | % | 105 | % | 98 | % | 91 | % | 68 | % | 67 | % | 71 | % | |||||||
Advertising | |||||||||||||||||||||
Revenue | $ | 6,545 | $ | 8,208 | $ | 5,284 | $ | 6,804 | $ | 7,615 | $ | 8,742 | $ | 4,811 | |||||||
Billings* | $ | 6,545 | $ | 8,208 | $ | 5,284 | $ | 6,804 | $ | 7,615 | $ | 8,742 | $ | 4,811 | |||||||
Y/Y % Growth | 35 | % | 23 | % | 2 | % | 35 | % | 16 | % | 7 | % | (9 | )% | |||||||
Gross Profit | $ | 3,019 | $ | 4,289 | $ | 3,060 | $ | 3,749 | $ | 4,203 | $ | 4,340 | $ | 2,637 | |||||||
Gross Margin | 46 | % | 52 | % | 58 | % | 55 | % | 55 | % | 50 | % | 55 | % | |||||||
Select Financial Data (unaudited) | Fiscal 2017 | Fiscal 2018 | |||||||||||||||||||
(in thousands, except gross margin and direct contribution margin) | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | ||||||||||||||
Mobile Navigation | |||||||||||||||||||||
Revenue | $ | 5,415 | $ | 5,049 | $ | 4,305 | $ | 4,190 | $ | 3,739 | $ | 3,500 | $ | 3,204 | |||||||
Billings | $ | 5,344 | $ | 5,041 | $ | 4,269 | $ | 3,973 | $ | 3,682 | $ | 3,306 | $ | 3,229 | |||||||
Y/Y % Growth | (29 | )% | (22 | )% | (32 | )% | (29 | )% | (31 | )% | (34 | )% | (24 | )% | |||||||
Gross Profit | $ | 4,010 | $ | 3,679 | $ | 2,974 | $ | 2,608 | $ | 2,189 | $ | 2,007 | $ | 1,774 | |||||||
Gross Margin | 74 | % | 73 | % | 69 | % | 62 | % | 59 | % | 57 | % | 55 | % | |||||||
* See "Use of non-GAAP Measures" for definitions and discussion. | |||||||||||||||||||||
** Deployment date is defined as the date upon which title has transferred. | |||||||||||||||||||||
Q3 Fiscal 2018 Highlights
• | A record 1.4 million Telenav equipped cars were deployed into the market during the quarter ended March 31, 2018 of which 1.2 million units were capable of connected services |
• | Ford® entered into an agreement to extend Telenav’s offering for SYNC 3 for calendar years 2019 and 2020 for all current geographies |
• | Ford launched our connected services across select model year 2018 SYNC 3 vehicles in Europe and China using its FordPass mobile phone application |
• | Fiat Chrysler Automobiles (FCA) launched Telenav’s embedded navigation solution on Jeep’s 2018 Grand Cherokee, Grand Commander, Wrangler and Grand Voyager models in China |
• | Thinknear® by Telenav launched GeolinkTM, the first self-serve mobile advertising platform that utilizes Thinknear’s proven location-targeting and campaign-optimization technology at scale |
Automotive Results
Automotive revenue for the third quarter was $5.8 million, compared with $25.5 million in the same prior year period. As previously announced, the decline was primarily due to a change in revenue recognition as a result of Ford’s commencement of offering multi-year value-added map services in all major markets, effective January 1, 2018, which results in significant deferral of amounts that would have previously been recognized as revenue when the vehicle is produced. When Telenav adopts ASC 606 as of July 1, 2018, we expect we will be able to recognize substantial revenue from Ford as our products and services are delivered.
Total automotive billings for the third quarter were $50.7 million, essentially flat from the same prior year period due to the combined effect of higher unit growth offset by a significant decrease in lower pass-through third-party content costs. Our year-over-year unit growth reflected volume increases at Ford and Toyota, and to a lesser degree GM’s increase in production of Telenav equipped vehicles.
Automotive direct contribution from billings in the third quarter increased 14% year-over-year to $21.7 million. The third quarter’s automotive direct contribution margin on billings was 43%, up 5 points from 38% in the same prior year period. The improvement in direct contribution margin from billings was primarily due to the lower third-party content costs discussed above.
Our automotive OEM partners continue to expand and extend their offerings of Telenav’s leading navigation solutions to more car models and geographies. In the third quarter, Ford entered into an agreement to extend Telenav’s offering for SYNC3 through calendar year 2020 for all current geographies. In the third quarter, Ford represented 29% and 67% of Telenav’s total revenue and billings, respectively.
Advertising Results
Advertising revenue, which includes the delivery of display, location-based advertising impressions, was $4.8 million in the third quarter, a decrease of $0.5 million from the prior-year period. We continue to believe that our location-based advertising business is a strategic component of our connected car roadmap, especially as it relates to the potential new revenue streams from in-car ads.
Earlier today, we announced the release of Geolink, a self-serve mobile advertising platform that utilizes Thinknear’s proven location-targeting and campaign-optimization technology at scale. Geolink will allow users to plan their strategy based on real-world consumer data, execute campaigns successfully, and collect meaningful, in-depth reports on those campaigns.
Mobile Navigation Results
Third quarter mobile navigation revenue was $3.2 million, compared with $4.3 million in the same prior year period. During the third quarter, we recognized a non-cash $2.7 million impairment of all of the goodwill associated with our mobile navigation segment based upon our determination that the carrying value of our mobile navigation business exceeded its total estimated fair value.
Operating Expenses
Operating expenses in the third quarter were $36.3 million, up $5.7 million from the same prior year period. The increase in operating expenses was primarily driven by an increase in R&D headcount and the $2.7 million write-off of goodwill associated with the mobile navigation business.
Adjusted EBITDA on Billings
Adjusted EBITDA on billings in the third quarter was a negative $4.1 million as compared to a negative $2.3 million in same period a year ago. Our direct contribution profit from billings increased $1.1 million to $26.1 million from the same prior year period. Direct contribution margin from billings for the third quarter was 45%, compared with 42% from the same prior year period. The improvement in direct contribution margin from billings was primarily driven by the lower third-party content costs we discussed earlier.
Free Cash Flow
Free cash flow in the third quarter was a negative $2.0 million, compared with a negative $8.4 million in the same period a year ago. Fiscal 2017’s third quarter free cash flow included an $8.0 million payment to settle our Vehicle IP, LLC lawsuit and AT&T related indemnification claims.
Business Outlook
Effective July 1, 2018, Telenav will adopt the new revenue recognition standard, ASC 606. We expect that this will enable us to once again recognize substantial revenue and gross profit from our auto OEM partners as our products and services are delivered.
Subject to anticipated volumes, take rates and timing of model expansion under Telenav’s various automotive OEM programs, including the potential impact, if any, from Ford’s recent announcement of its intention to modify its North American passenger car portfolio, Telenav anticipates that adjusted EBITDA on billings will be positive for fiscal 2019.
With the context of these assumptions as a backdrop, Telenav’s guidance for the fourth quarter of fiscal 2018 is as follows:
Guidance | Q4 Fiscal 2018 |
(as of May 3, 2018) | (dollars and shares in millions) |
Revenue | $15 to $16 |
Billings* | $55 to $58 |
Change in Deferred Revenue | $40 to $42 |
Change in Deferred Costs | $19 to $20 |
Gross Profit | $6 |
Gross Margin | 40% |
Direct Contribution from Billings * | $27 to $28 |
Direct Contribution Margin from Billings * | 48% |
Operating Expenses | $34 to $35 |
Net Income (Loss) | $(29) to $(31) |
Adjusted EBITDA on Billings* | $(3.5) to $(5.5) |
Automotive Revenue as % of Total Revenue | 40% to 45% |
Automotive Billings as % of Total Billings* | 85% |
Advertising Revenue as % of Total Revenue | 40% |
Advertising Billings as % of Total Billings* | 11% |
Weighted Average Diluted Shares Outstanding | 45.0 |
* See "Use of non-GAAP Measures" for definitions and discussion. | |
Q3 Fiscal 2018 Financial Results Q&A Conference Call, May 3, 2018 at 5:30 p.m. ET.
Management will host an investor conference call and live webcast at 2:30 p.m. PT (5:30 p.m. ET) on the same day. To access the conference call, dial 866-548-4713 (toll-free, domestic only) or 323-794-2093 (domestic and international toll) and enter pass code 6005339. The webcast will be accessible on Telenav's investor relations website at http://investor.telenav.com.
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. First, 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 or costs 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, deferred rent reversal and tenant improvement allowance recognition due to sublease termination, net of tax and goodwill impairment. 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. Goodwill impairment represents the impairment charge related to Telenav’s mobile navigation segment.
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 letter to stockholders.
In this letter to stockholders, Telenav has provided guidance for the fourth 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 letter to stockholders 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; the impact of Ford’s recent announcement regarding the elimination of various sedans in North America over the near term; Telenav's success in extending its contracts for current and new generation of products with its existing OEMs and automotive manufacturers, particularly Ford; Telenav’s ability to achieve 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; 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; Telenav’s reliance on its automotive manufacturers for volume and royalty reporting; 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 December 31, 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.
Copyright 2018 Telenav, Inc. All Rights Reserved.
"Telenav," "Scout," “Thinknear” and the Telenav, Scout and Thinknear logos are registered trademarks of Telenav, Inc. Unless otherwise noted, all other trademarks, service marks, and logos used in this management update are the trademarks, service marks or logos of their respective owners.
TNAV-F
TNAV-C
Contacts
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) | ||||||||
March 31, 2018 | June 30, 2017* | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 17,509 | $ | 20,757 | ||||
Short-term investments | 71,086 | 77,598 | ||||||
Accounts receivable, net of allowances of $73 and $75, at March 31, 2018 and June 30, 2017, respectively | 51,207 | 57,834 | ||||||
Restricted cash | 3,207 | 3,401 | ||||||
Income taxes receivable | 32 | 34 | ||||||
Deferred costs | 23,745 | 11,703 | ||||||
Prepaid expenses and other current assets | 3,742 | 3,988 | ||||||
Total current assets | 170,528 | 175,315 | ||||||
Property and equipment, net | 7,630 | 4,658 | ||||||
Deferred income taxes, non-current | 1,027 | 900 | ||||||
Goodwill and intangible assets, net | 31,329 | 34,844 | ||||||
Deferred costs, non-current | 95,503 | 42,389 | ||||||
Other assets | 1,878 | 1,454 | ||||||
Total assets | $ | 307,895 | $ | 259,560 | ||||
Liabilities and stockholders’ equity | ||||||||
Current liabilities: | ||||||||
Trade accounts payable | $ | 17,578 | $ | 6,151 | ||||
Accrued expenses | 39,577 | 51,528 | ||||||
Deferred revenue | 37,843 | 20,345 | ||||||
Income taxes payable | 266 | 197 | ||||||
Total current liabilities | 95,264 | 78,221 | ||||||
Deferred rent, non-current | 1,074 | 996 | ||||||
Deferred revenue, non-current | 154,634 | 67,056 | ||||||
Other long-term liabilities | 1,116 | 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; 44,744 and 43,946 shares issued and outstanding at March 31, 2018 and June 30, 2017, respectively | 45 | 44 | ||||||
Additional paid-in capital | 165,690 | 159,666 | ||||||
Accumulated other comprehensive loss | (1,491 | ) | (1,934 | ) | ||||
Accumulated deficit | (108,437 | ) | (45,628 | ) | ||||
Total stockholders' equity | 55,807 | 112,148 | ||||||
Total liabilities and stockholders’ equity | $ | 307,895 | $ | 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 March 31, | Nine Months Ended March 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenue: | ||||||||||||||||
Product | $ | 4,014 | $ | 24,426 | $ | 53,285 | $ | 91,653 | ||||||||
Services | 9,809 | 10,639 | 36,276 | 37,640 | ||||||||||||
Total revenue | 13,823 | 35,065 | 89,561 | 129,293 | ||||||||||||
Cost of revenue: | ||||||||||||||||
Product | 3,105 | 13,174 | 32,832 | 53,533 | ||||||||||||
Services | 5,115 | 4,493 | 18,546 | 16,337 | ||||||||||||
Total cost of revenue | 8,220 | 17,667 | 51,378 | 69,870 | ||||||||||||
Gross profit | 5,603 | 17,398 | 38,183 | 59,423 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 22,212 | 19,106 | 65,197 | 53,425 | ||||||||||||
Sales and marketing | 5,654 | 5,980 | 15,854 | 16,525 | ||||||||||||
General and administrative | 5,618 | 5,485 | 16,343 | 17,848 | ||||||||||||
Goodwill impairment | 2,666 | — | 2,666 | — | ||||||||||||
Legal settlement and contingencies | 115 | — | 425 | 6,424 | ||||||||||||
Total operating expenses | 36,265 | 30,571 | 100,485 | 94,222 | ||||||||||||
Loss from operations | (30,662 | ) | (13,173 | ) | (62,302 | ) | (34,799 | ) | ||||||||
Other income, net | 229 | 142 | 400 | 1,152 | ||||||||||||
Loss before provision for income taxes | (30,433 | ) | (13,031 | ) | (61,902 | ) | (33,647 | ) | ||||||||
Provision for income taxes | 330 | 663 | 611 | 805 | ||||||||||||
Net loss | $ | (30,763 | ) | $ | (13,694 | ) | $ | (62,513 | ) | $ | (34,452 | ) | ||||
Net loss per share: | ||||||||||||||||
Basic and diluted | $ | (0.69 | ) | $ | (0.31 | ) | $ | (1.41 | ) | $ | (0.80 | ) | ||||
Weighted average shares used in computing net loss per share: | ||||||||||||||||
Basic and diluted | 44,637 | 43,528 | 44,396 | 43,189 | ||||||||||||
Telenav, Inc. | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
(in thousands) | ||||||||
(unaudited) | ||||||||
Nine Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Operating activities | ||||||||
Net loss | $ | (62,513 | ) | $ | (34,452 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 2,476 | 1,886 | ||||||
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 | 156 | 326 | ||||||
Stock-based compensation expense | 7,614 | 7,154 | ||||||
Goodwill impairment | 2,666 | — | ||||||
Loss (gain) on disposal of property and equipment | 13 | (3 | ) | |||||
Bad debt expense | (17 | ) | 149 | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 6,706 | (6,227 | ) | |||||
Deferred income taxes | (68 | ) | 219 | |||||
Restricted cash | 194 | 1,184 | ||||||
Income taxes receivable | 2 | 41 | ||||||
Deferred costs | (65,156 | ) | (24,140 | ) | ||||
Prepaid expenses and other current assets | 177 | 1,090 | ||||||
Other assets | (614 | ) | 386 | |||||
Trade accounts payable | 11,398 | 5,774 | ||||||
Accrued expenses and other liabilities | (12,079 | ) | (2,369 | ) | ||||
Income taxes payable | 64 | 200 | ||||||
Deferred rent | 1,145 | 49 | ||||||
Deferred revenue | 105,076 | 37,815 | ||||||
Net cash used in operating activities | (3,880 | ) | (10,918 | ) | ||||
Investing activities | ||||||||
Purchases of property and equipment | (4,572 | ) | (867 | ) | ||||
Purchases of short-term investments | (42,849 | ) | (51,258 | ) | ||||
Proceeds from sales and maturities of short-term investments | 48,690 | 62,468 | ||||||
Proceeds from sales of long-term investments | — | 246 | ||||||
Net cash provided by investing activities | 1,269 | 10,589 | ||||||
Financing activities | ||||||||
Proceeds from exercise of stock options | 463 | 2,354 | ||||||
Tax withholdings related to net share settlements of restricted stock units | (2,052 | ) | (2,163 | ) | ||||
Net cash provided by (used in) financing activities | (1,589 | ) | 191 | |||||
Effect of exchange rate changes on cash and cash equivalents | 952 | (448 | ) | |||||
Net decrease in cash and cash equivalents | (3,248 | ) | (586 | ) | ||||
Cash and cash equivalents, at beginning of period | 20,757 | 21,349 | ||||||
Cash and cash equivalents, at end of period | $ | 17,509 | $ | 20,763 | ||||
Supplemental disclosure of cash flow information | ||||||||
Income taxes paid, net | $ | 803 | $ | 1,861 | ||||
Telenav, Inc. | ||||||||||||||||
Condensed Consolidated Segment Summary | ||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Automotive | ||||||||||||||||
Revenue | $ | 5,808 | $ | 25,476 | $ | 57,950 | $ | 94,487 | ||||||||
Cost of revenue | 4,616 | 14,112 | 36,917 | 56,095 | ||||||||||||
Gross profit | $ | 1,192 | $ | 11,364 | $ | 21,033 | $ | 38,392 | ||||||||
Gross margin | 21 | % | 45 | % | 36 | % | 41 | % | ||||||||
Advertising | ||||||||||||||||
Revenue | $ | 4,811 | $ | 5,284 | $ | 21,168 | $ | 20,037 | ||||||||
Cost of revenue | 2,174 | 2,224 | 9,988 | 9,669 | ||||||||||||
Gross profit | $ | 2,637 | $ | 3,060 | $ | 11,180 | $ | 10,368 | ||||||||
Gross margin | 55 | % | 58 | % | 53 | % | 52 | % | ||||||||
Mobile Navigation | ||||||||||||||||
Revenue | $ | 3,204 | $ | 4,305 | $ | 10,443 | $ | 14,769 | ||||||||
Cost of revenue | 1,430 | 1,331 | 4,473 | 4,106 | ||||||||||||
Gross profit | $ | 1,774 | $ | 2,974 | $ | 5,970 | $ | 10,663 | ||||||||
Gross margin | 55 | % | 69 | % | 57 | % | 72 | % | ||||||||
Total | ||||||||||||||||
Revenue | $ | 13,823 | $ | 35,065 | $ | 89,561 | $ | 129,293 | ||||||||
Cost of revenue | 8,220 | 17,667 | 51,378 | 69,870 | ||||||||||||
Gross profit | $ | 5,603 | $ | 17,398 | $ | 38,183 | $ | 59,423 | ||||||||
Gross margin | 41 | % | 50 | % | 43 | % | 46 | % | ||||||||
Telenav, Inc. | ||||||||||||||||
Unaudited Reconciliation of Non-GAAP Adjustments | ||||||||||||||||
(in thousands) | ||||||||||||||||
Reconciliation of Revenue to Billings | ||||||||||||||||
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Automotive | ||||||||||||||||
Revenue | $ | 5,808 | $ | 25,476 | $ | 57,950 | $ | 94,487 | ||||||||
Adjustments: | ||||||||||||||||
Change in deferred revenue | 44,855 | 25,123 | 105,302 | 37,930 | ||||||||||||
Billings | $ | 50,663 | $ | 50,599 | $ | 163,252 | $ | 132,417 | ||||||||
Advertising | ||||||||||||||||
Revenue | $ | 4,811 | $ | 5,284 | $ | 21,168 | $ | 20,037 | ||||||||
Adjustments: | ||||||||||||||||
Change in deferred revenue | — | — | — | — | ||||||||||||
Billings | $ | 4,811 | $ | 5,284 | $ | 21,168 | $ | 20,037 | ||||||||
Mobile Navigation | ||||||||||||||||
Revenue | $ | 3,204 | $ | 4,305 | $ | 10,443 | $ | 14,769 | ||||||||
Adjustments: | ||||||||||||||||
Change in deferred revenue | 25 | (36 | ) | (226 | ) | (115 | ) | |||||||||
Billings | $ | 3,229 | $ | 4,269 | $ | 10,217 | $ | 14,654 | ||||||||
Total | ||||||||||||||||
Revenue | $ | 13,823 | $ | 35,065 | $ | 89,561 | $ | 129,293 | ||||||||
Adjustments: | ||||||||||||||||
Change in deferred revenue | 44,880 | 25,087 | 105,076 | 37,815 | ||||||||||||
Billings | $ | 58,703 | $ | 60,152 | $ | 194,637 | $ | 167,108 | ||||||||
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 March 31, 2018 | ||||||||||||||||
Automotive | Advertising | Mobile Navigation | Total | |||||||||||||
Deferred revenue, March 31 | $ | 191,819 | $ | — | $ | 658 | $ | 192,477 | ||||||||
Deferred revenue, December 31 | 146,964 | — | 633 | 147,597 | ||||||||||||
Change in deferred revenue | $ | 44,855 | $ | — | $ | 25 | $ | 44,880 | ||||||||
Deferred costs, March 31 | $ | 119,248 | $ | — | $ | — | $ | 119,248 | ||||||||
Deferred costs, December 31 | 94,907 | — | — | 94,907 | ||||||||||||
Change in deferred costs | $ | 24,341 | $ | — | $ | — | $ | 24,341 | ||||||||
Three Months Ended March 31, 2017 | ||||||||||||||||
Automotive | Advertising | Mobile Navigation | Total | |||||||||||||
Deferred revenue, March 31 | $ | 60,083 | $ | — | $ | 1,101 | $ | 61,184 | ||||||||
Deferred revenue, December 31 | 34,960 | — | 1,137 | 36,097 | ||||||||||||
Change in deferred revenue | $ | 25,123 | $ | — | $ | (36 | ) | $ | 25,087 | |||||||
Deferred costs, March 31 | $ | 36,216 | $ | — | $ | — | $ | 36,216 | ||||||||
Deferred costs, December 31 | 18,780 | — | — | 18,780 | ||||||||||||
Change in deferred costs | $ | 17,436 | $ | — | $ | — | $ | 17,436 | ||||||||
Nine Months Ended March 31, 2018 | ||||||||||||||||
Automotive | Advertising | Mobile Navigation | Total | |||||||||||||
Deferred revenue, March 31 | $ | 191,819 | $ | — | $ | 658 | $ | 192,477 | ||||||||
Deferred revenue, June 30 | 86,517 | — | 884 | 87,401 | ||||||||||||
Change in deferred revenue | $ | 105,302 | $ | — | $ | (226 | ) | $ | 105,076 | |||||||
Deferred costs, March 31 | $ | 119,248 | $ | — | $ | — | $ | 119,248 | ||||||||
Deferred costs, June 30 | 54,092 | — | — | 54,092 | ||||||||||||
Change in deferred costs | $ | 65,156 | $ | — | $ | — | $ | 65,156 | ||||||||
Nine Months Ended March 31, 2017 | ||||||||||||||||
Automotive | Advertising | Mobile Navigation | Total | |||||||||||||
Deferred revenue, March 31 | $ | 60,083 | $ | — | $ | 1,101 | $ | 61,184 | ||||||||
Deferred revenue, June 30 | 22,153 | — | 1,216 | 23,369 | ||||||||||||
Change in deferred revenue | $ | 37,930 | $ | — | $ | (115 | ) | $ | 37,815 | |||||||
Deferred costs, March 31 | $ | 36,216 | $ | — | $ | — | $ | 36,216 | ||||||||
Deferred costs, June 30 | 12,076 | — | — | 12,076 | ||||||||||||
Change in deferred costs | $ | 24,140 | $ | — | $ | — | $ | 24,140 | ||||||||
Telenav, Inc. | ||||||||||||||||
Unaudited Reconciliation of Non-GAAP Adjustments | ||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Reconciliation of Gross Profit to Direct Contribution from Billings | ||||||||||||||||
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Automotive | ||||||||||||||||
Gross profit | $ | 1,192 | $ | 11,364 | $ | 21,033 | $ | 38,392 | ||||||||
Gross margin | 21 | % | 45 | % | 36 | % | 41 | % | ||||||||
Adjustments to gross profit: | ||||||||||||||||
Change in deferred revenue | $ | 44,855 | $ | 25,123 | $ | 105,302 | $ | 37,930 | ||||||||
Change in deferred costs(1) | (24,341 | ) | (17,436 | ) | (65,156 | ) | (24,140 | ) | ||||||||
Net change | 20,514 | 7,687 | 40,146 | 13,790 | ||||||||||||
Direct contribution from billings(1) | $ | 21,706 | $ | 19,051 | $ | 61,179 | $ | 52,182 | ||||||||
Direct contribution margin from billings(1) | 43 | % | 38 | % | 37 | % | 39 | % | ||||||||
Advertising | ||||||||||||||||
Gross profit | $ | 2,637 | $ | 3,060 | $ | 11,180 | $ | 10,368 | ||||||||
Gross margin | 55 | % | 58 | % | 53 | % | 52 | % | ||||||||
Adjustments to gross profit: | ||||||||||||||||
Change in deferred revenue | $ | — | $ | — | $ | — | $ | — | ||||||||
Change in deferred costs(1) | — | — | — | — | ||||||||||||
Net change | — | — | — | — | ||||||||||||
Direct contribution from billings(1) | $ | 2,637 | $ | 3,060 | $ | 11,180 | $ | 10,368 | ||||||||
Direct contribution margin from billings(1) | 55 | % | 58 | % | 53 | % | 52 | % | ||||||||
Mobile Navigation | ||||||||||||||||
Gross profit | $ | 1,774 | $ | 2,974 | $ | 5,970 | $ | 10,663 | ||||||||
Gross margin | 55 | % | 69 | % | 57 | % | 72 | % | ||||||||
Adjustments to gross profit: | ||||||||||||||||
Change in deferred revenue | $ | 25 | $ | (36 | ) | $ | (226 | ) | $ | (115 | ) | |||||
Change in deferred costs(1) | — | — | — | — | ||||||||||||
Net change | 25 | (36 | ) | (226 | ) | (115 | ) | |||||||||
Direct contribution from billings(1) | $ | 1,799 | $ | 2,938 | $ | 5,744 | $ | 10,548 | ||||||||
Direct contribution margin from billings(1) | 56 | % | 69 | % | 56 | % | 72 | % | ||||||||
Total | ||||||||||||||||
Gross profit | $ | 5,603 | $ | 17,398 | $ | 38,183 | $ | 59,423 | ||||||||
Gross margin | 41 | % | 50 | % | 43 | % | 46 | % | ||||||||
Adjustments to gross profit: | ||||||||||||||||
Change in deferred revenue | $ | 44,880 | $ | 25,087 | $ | 105,076 | $ | 37,815 | ||||||||
Change in deferred costs(1) | (24,341 | ) | (17,436 | ) | (65,156 | ) | (24,140 | ) | ||||||||
Net change | 20,539 | 7,651 | 39,920 | 13,675 | ||||||||||||
Direct contribution from billings(1) | $ | 26,142 | $ | 25,049 | $ | 78,103 | $ | 73,098 | ||||||||
Direct contribution margin from billings(1) | 45 | % | 42 | % | 40 | % | 44 | % | ||||||||
(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 March 31, | Nine Months Ended March 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net loss | $ | (30,763 | ) | $ | (13,694 | ) | $ | (62,513 | ) | $ | (34,452 | ) | ||||
Adjustments: | ||||||||||||||||
Goodwill impairment | 2,666 | — | 2,666 | — | ||||||||||||
Legal settlement and contingencies | 115 | — | 425 | 6,424 | ||||||||||||
Deferred rent reversal due to lease termination | — | — | (538 | ) | — | |||||||||||
Tenant improvement allowance recognition due to lease termination | — | — | (582 | ) | — | |||||||||||
Stock-based compensation expense | 2,246 | 2,625 | 7,614 | 7,154 | ||||||||||||
Depreciation and amortization expense | 963 | 626 | 2,476 | 1,886 | ||||||||||||
Other income (expense), net | (229 | ) | (142 | ) | (400 | ) | (1,152 | ) | ||||||||
Provision for income taxes | 330 | 663 | 611 | 805 | ||||||||||||
Adjusted EBITDA | $ | (24,672 | ) | $ | (9,922 | ) | $ | (50,241 | ) | $ | (19,335 | ) | ||||
Change in deferred revenue | 44,880 | 25,087 | 105,076 | 37,815 | ||||||||||||
Change in deferred costs(1) | (24,341 | ) | (17,436 | ) | (65,156 | ) | (24,140 | ) | ||||||||
Adjusted EBITDA on billings(1) | $ | (4,133 | ) | $ | (2,271 | ) | $ | (10,321 | ) | $ | (5,660 | ) | ||||
(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. | ||||||||||||||||
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, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net loss | $ | (30,763 | ) | $ | (13,694 | ) | $ | (62,513 | ) | $ | (34,452 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||
Change in deferred revenue (1) | 44,880 | 25,087 | 105,076 | 37,815 | ||||||||||||
Change in deferred costs (2) | (24,341 | ) | (17,436 | ) | (65,156 | ) | (24,140 | ) | ||||||||
Changes in other operating assets and liabilities | 3,620 | (5,339 | ) | 6,925 | 347 | |||||||||||
Other adjustments (3) | 5,871 | 3,363 | 11,788 | 9,512 | ||||||||||||
Net cash used in operating activities | (733 | ) | (8,019 | ) | (3,880 | ) | (10,918 | ) | ||||||||
Less: Purchases of property and equipment | (1,222 | ) | (336 | ) | (4,572 | ) | (867 | ) | ||||||||
Free cash flow | $ | (1,955 | ) | $ | (8,355 | ) | $ | (8,452 | ) | $ | (11,785 | ) | ||||
(1) Consists of product 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. | ||||||||||||||||