Telenav Reports Second Quarter Fiscal 2019 Financial Results

Date : 02/07/2019 @ 9:01PM
Source : GlobeNewswire Inc.
Stock : Telenav Inc (TNAV)
Quote : 4.61  0.01 (0.22%) @ 5:46PM

Telenav Reports Second Quarter Fiscal 2019 Financial Results

Telenav (NASDAQ:TNAV)
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Telenav®, Inc. (NASDAQ:TNAV), a leading provider of connected car and location-based services, today released its financial results for the quarter ended Dec. 31, 2018, the second quarter of fiscal 2019. In connection with that announcement, the company also posted a quarterly letter to stockholders on its website. Please visit Telenav’s investor relations website at http://investor.telenav.com to view the financial results and letter to stockholders.

“In the second quarter, we achieved a significant milestone of positive adjusted cash flow from operations, a non-GAAP measure, evidence that the company is improving its financial fundamentals while driving growth,” said HP Jin, Chairman and CEO of Telenav. “We continued to increase our revenue and billings from General Motors, which were approximately 17% and 20% respectively during the second quarter compared to 7% and 7% for revenue and billings in the second quarter of fiscal 2018. Consistent with our mission of making people’s lives less stressful, more productive, and more fun on the go, we are collaborating with Amazon to integrate the Alexa voice interface for in-car navigation, an integration we demonstrated at CES 2019.”

Telenav’s Board of Directors has authorized a program for the repurchase of up to $20.0 million of shares of common stock through open market purchases. The term of the program is 18 months. The timing and amount of repurchase transactions under this program will depend on market conditions, cash flow and other considerations.

Financial highlights for the second quarter ended Dec. 31, 2018

  • Total revenue for the second quarter of fiscal 2019 was $57.2 million, inclusive of $4.1 million related to annual map updates, which are recognized when Telenav provides updated maps, and $1.7 million of customized software development fees, compared with $61.4 million in the second quarter of fiscal 2018, of which $3.0 million was related to periodic map updates, and $0.6 million of customized software development fees. 
  • Billings for the second quarter of fiscal 2019 were $63.6 million, compared with $70.1 million in the second quarter of fiscal 2018. The year over year decline in revenue and billings was due primarily to lower per unit pricing in the company’s automotive business unit resulting from lower third-party content costs charged through to our customers, partially offset by higher unit volume on its automotive solutions, and lower advertising and mobile navigation revenue. Absent the impact on revenue and billings from the lower third-party content costs, both revenue and billings would have grown during the quarter, as illustrated by the growth of gross profit and adjusted cash flow from operations.
  • Gross profit was $25.0 million in the second quarter of fiscal 2019, compared with $23.5 million in the second quarter of fiscal 2018. Automotive gross profit was $19.4 million in the second quarter of fiscal 2019, a 13.2% increase from $17.2 million in the second quarter of fiscal 2018.
  • Net loss for the second quarter of fiscal 2019 was $(4.6) million, compared with $(8.4) million for the second quarter of fiscal 2018. The year over year decrease in loss was due primarily to higher gross profit in the automotive business unit and lower overall operating expenses. 
  • Adjusted cash flow from operations (formerly referred to as adjusted EBITDA on billings) for the second quarter of fiscal 2019 was $2.6 million compared with $(1.8) million in the second quarter of fiscal 2018. 
  • Ending cash, cash equivalents and short-term investments, excluding restricted cash, were $85.9 million as of Dec. 31, 2018 an increase of $4.6 million compared to the September 30, 2018 cash balance of $81.3 million. This total represented cash and short-term investments of $1.89 per share, based on 45.5 million shares of common stock outstanding as of Dec. 31, 2018. Telenav had no debt as of Dec. 31, 2018.

Recent Business Highlights

  • 1.3 million Telenav-equipped vehicles capable of connected services were deployed into the global market during the quarter ended Dec. 31, 2018, bringing the cumulative total to 11.9 million.
  • Telenav surpassed 21 million total auto units shipped with Telenav software and services.
  • GM launched Telenav’s hybrid navigation solution on additional model year 2019 vehicles, including the Chevrolet Blazer and Malibu, and the Cadillac CT6.
  • Toyota launched Telenav’s Scout GPS Link on additional model year 2019 vehicles, including the Toyota RAV4 and the Lexus UX.
  • A contract amendment for the previously announced award of Ford next generation business in North America was executed in December 2018.
  • Telenav announced collaboration with Amazon Alexa to bring conversational voice interface for in-car navigation.

Q3 Fiscal 2019 Business Outlook

For the third fiscal quarter ending Mar. 31, 2019, Telenav offers the following guidance.

  • Total revenue is expected to be $49 million to $53 million.
  • Billings are expected to be $61 million to $65 million including $2.5 million of customized software development fees.
  • Gross margin is expected to be approximately 45%.
  • Direct contribution margin from billings is expected to be approximately 45%.
  • Operating expenses are expected to be $31 million to $32 million.
  • Net loss is expected to be $(7) million to $(9) million.
  • Adjusted EBITDA loss is expected to be $(5) million to $(6) million. 
  • Adjusted cash flow from operations is expected to be $(1) million to $1 million.
  • Automotive revenue is expected to be $42 million to $45 million.
  • Advertising revenue is expected to be approximately $5 million.
  • Weighted average diluted shares outstanding is expected to be approximately 45.6 million.

Subject to anticipated volumes, take rates and timing of model expansion under Telenav’s various automobile manufacturer and tier one supplier programs, including the potential impact, if any, of our automotive manufacturer customers’ transition of their North American passenger car portfolio to trucks, SUVs and CUVs, and assuming no unforeseen impact from macroeconomic changes, including federal government shutdowns and tariff impacts, Telenav anticipates that adjusted cash flow from operations 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, other changes in business conditions and other factors. Please refer to the disclosures under “Forward-Looking Statements” below. 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

Telenav will host an investor conference call and live webcast on Thursday, Feb. 7, 2019 at 2:30 p.m. Pacific Time (5:30 p.m. Eastern Time). Management has posted its letter to stockholders in combination with this press release on its 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 Telenav’s quarterly commentary, please visit Telenav’s investor relations website at http://investor.telenav.com. Listeners can also access the conference call by dialing 888-394-8218 (toll-free, domestic only) or 323-794-2588 (domestic and international toll) and entering pass code 2400241. A replay of the conference call will be available for two weeks beginning approximately two hours after the call’s 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 2400241.

ASC 606 Implementation

As reported previously, Telenav adopted ASC 606, Revenue from Contracts with Customers, effective July 1, 2018, utilizing the full retrospective transition method. All prior period amounts and disclosures set forth in this earnings release have been adjusted to comply with ASC 606. Under this accounting methodology, certain automotive royalty amounts earned are bifurcated when there exist various underlying obligations. Revenue is recognized upon fulfillment of the underlying obligation. Such various obligations related to earned royalties generally include an onboard navigation component recognized as revenue when each navigation unit is delivered and accepted, a connected services component recognized as revenue over the applicable service period, and a map update component recognized as revenue upon periodic delivery of the applicable map updates.

The adjustments required to transition to ASC 606 on July 1, 2018 resulted in $160.6 million of deferred revenue and $86.9 million of deferred costs originally reported on the company’s balance sheet as of June 30, 2018 being recorded instead as revenue and cost of revenue, respectively, in prior periods as adjusted. In addition, the adoption of ASC 606 required the company to capitalize an additional $4.2 million, net, of deferred development costs on its adjusted June 30, 2018 balance sheet, resulting in a net decrease in deferred costs of $82.7 million. The net impact of the Company’s adoption of ASC 606 as of June 30, 2018 was an adjustment to decrease its accumulated deficit by $77.8 million. All prior period amounts have been adjusted to comply with ASC 606.

Material Weakness in Internal Control over Financial Reporting

During the three months ended Dec. 31, 2018, Telenav management identified certain errors related to its implementation ASC 606 due to the Company’s internal control over financial reporting relating to supervision and review of the financial models supporting Telenav’s revenue recognition accounting and disclosures not operating effectively.  Telenav management concluded that, because this deficiency created a more than remote likelihood of a material misstatement not being prevented or detected on a timely basis, this deficiency constituted a material weakness in internal control over financial reporting.   

A more detailed explanation, together with a description of the remediation plan that we have adopted to address the identified internal control deficiencies, will be included in our Quarterly Report on Form 10-Q for the quarter ended Dec. 31, 2018.

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 cash flow from operations 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.

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.

Billings equals revenue recognized plus the change in deferred revenue from the beginning to the end of the applicable period. Direct contribution from billings reflects gross profit plus change in deferred revenue less change in deferred costs from the beginning to the end of the applicable period. 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 its customized software solutions whereby customized engineering fees are earned. As the company enters into more hybrid and brought-in navigation programs, deferred revenue and deferred costs become larger components of its operating results, so 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 brought-in solutions cannot be fully recognized as revenue in a given period due to requirements for ongoing map updates and provisioning of services such as hosting, monitoring, customer support, map updates and, for certain customers, additional period content and associated technology costs. 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 net loss excluding the impact of stock-based compensation expense, depreciation and amortization, other income (expense) net, 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. Stock-based compensation expense relates to equity incentive awards granted to its employees, directors, and consultants. Legal settlements and contingencies represent settlements, offers made to settle, or loss accruals relating to litigation or other disputes in which Telenav is a party or the indemnitor of a party. 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 the company’s Santa Clara facility sublease and subsequent entry into a new lease agreement with its landlord for this same facility effective Sept. 2017.

Adjusted EBITDA and adjusted cash flow from operations 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 its 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 and adjusted cash flow from operations can provide a useful measure for period-to-period comparisons of Telenav’s core business.

Adjusted cash flow from operations measures adjusted EBITDA plus the effect of changes in deferred revenue and deferred costs. Telenav believes adjusted cash flow from operations is a useful measure, especially in light of the impact it continues to expect on reported revenue for certain value-added offerings the company provides its customers, including map updates and the impact of future deliverables. Adjusted EBITDA and adjusted cash flow from operations, while generally measures of profitability and the generation of cash, can also represent losses and the use of cash, respectively. In addition, adjusted cash flow from operations 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 and employees. Accordingly, Telenav believes that adjusted cash flow from operations 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.

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.

In this press release, Telenav has provided guidance for the third quarter of fiscal 2019 on a non-GAAP basis for billings, direct contribution margin from billings, adjusted EBITDA and adjusted cash flow from operations. Telenav does not provide reconciliations of these forward-looking non-GAAP financial measures 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, 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 net loss per diluted share and tax provision. 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; the impact of Ford’s recent announcement regarding the elimination of various sedans in North America and Europe over the near term and GM’s recent announcement regarding the elimination of various sedans in North America in the near term; the impact of tariffs on sales of automobiles in the United States and other markets; the impact of the anticipated departure of the United Kingdom from the European Union on sales of automobiles in the United Kingdom and automotive supply chains; Telenav’s success in extending its contracts for current and new generation of products with its existing automobile manufacturers and tier ones, 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 automobile manufacturers and tier ones for a substantial portion of its revenue; reductions in demand for automobiles; potential impacts of automobile manufacturers and tier ones including competitive capabilities in their vehicles such as Apple CarPlay and Android Auto; 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; any failure to meet financial performance expectations of securities analysts or investors; 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 automobile 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; 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 fiscal quarter ended September 30, 2018 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 the company’s SEC filings carefully and with the understanding that actual future results may be materially different from what Telenav expect.

ABOUT TELENAV, INC.Telenav is a leading provider of connected car and location-based services, focused on transforming life on the go for people - before, during, and after every drive. Leveraging our location platform, we enable our customers to 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 2019 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 press release are the trademarks, service marks or logos of their respective owners. TNAV-FTNAV-C

Investor Relations:Bishop IRMike Bishop415-894-9633IR@telenav.com

Media:Raphel Finelli408-667-5970raphelf@telenav.com

-- Financial Tables Follow -- 

Telenav, Inc. 
Condensed Consolidated Balance Sheets 
(in thousands, except par value) 
(unaudited) 
  December 31, 2018 June 30, 2018 As Adjusted (1) 
    
Assets   
Current assets:   
Cash and cash equivalents $  22,405  $  17,117  
Short-term investments  63,544   67,829  
Accounts receivable, net of allowances of $10 and $17 at December 31, 2018 and June 30, 2018, respectively  43,593   46,188  
Restricted cash  2,476   2,982  
Deferred costs  13,950   11,759  
Prepaid expenses and other current assets  3,552   3,867  
Total current assets  149,520   149,742  
Property and equipment, net  6,396   6,987  
Deferred income taxes, non-current  486   867  
Goodwill and intangible assets, net  30,479   31,046  
Deferred costs, non-current  51,515   46,666  
Other assets  3,467   2,372  
Total assets $  241,863  $  237,680  
Liabilities and stockholders’ equity     
Current liabilities:     
Trade accounts payable $  22,991  $  13,008  
Accrued expenses  29,367   38,803  
Deferred revenue  23,715   20,714  
Income taxes payable  258   221  
Total current liabilities  76,331   72,746  
Deferred rent, non-current  1,051   1,112  
Deferred revenue, non-current  64,057   53,824  
Other long-term liabilities  993   1,115  
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; 45,541 and 44,871 shares issued and outstanding at December 31, 2018 and June 30, 2018, respectively  46   45  
Additional paid-in capital  170,747   167,895  
Accumulated other comprehensive loss  (2,010)  (1,855) 
Accumulated deficit  (69,352)  (57,202) 
Total stockholders’ equity  99,431   108,883  
Total liabilities and stockholders’ equity $  241,863  $  237,680  
    
(1) Certain amounts have been adjusted to reflect the retrospective adoption of ASC 606.  Such amounts were further revised during the three months ended December 31, 2018 to correct certain immaterial errors. 
    

 

Telenav, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
         
         
  Three Months Ended Six Months Ended
  December 31, December 31,
   2018  2017 As Adjusted (1)  2018  2017 As Adjusted (1)
         
Revenue:        
Product $  42,397  $  45,907  $  82,327  $  86,299 
Services  14,779   15,492   27,048   29,795 
Total revenue  57,176   61,399   109,375   116,094 
Cost of revenue:        
Product  25,015   30,356   48,603   57,679 
Services  7,176   7,520   14,350   13,902 
Total cost of revenue  32,191   37,876   62,953   71,581 
Gross profit  24,985   23,523   46,422   44,513 
Operating expenses:        
Research and development  19,091   21,399   39,193   42,080 
Sales and marketing  4,455   5,136   8,870   10,200 
General and administrative  5,721   5,514   11,171   10,725 
Legal settlements and contingencies    650     60     650     310 
Total operating expenses  29,917   32,109   59,884   63,315 
Loss from operations  (4,932)  (8,586)  (13,462)  (18,802)
Other income, net  532   218   2,122   171 
Loss before provision for income taxes  (4,400)  (8,368)  (11,340)  (18,631)
Provision for income taxes  181   26   811   281 
Net loss $  (4,581) $  (8,394) $  (12,151) $  (18,912)
         
Net loss per share:        
Basic and diluted $  (0.10) $  (0.19) $  (0.27) $  (0.43)
         
Weighted average shares used in computing net loss per share:        
Basic and diluted  45,443   44,476   45,230   44,495 
         
(1) Certain amounts have been adjusted to reflect the retrospective adoption of ASC 606. 
         

 

Telenav, Inc.  
Condensed Consolidated Statements of Cash Flows  
(in thousands)  
(unaudited)  
       
  Six Months Ended December 31,  
   2018   2017 As Adjusted (1)  
       
Operating activities      
Net loss $  (12,151) $  (18,912)  
Adjustments to reconcile net loss to net cash used in operating activities:      
Depreciation and amortization    2,016     1,513   
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   
Stock-based compensation expense    4,384     5,368   
Unrealized gain on non-marketable equity investments    (1,259)    -    
Loss (gain) on disposal of property and equipment    (8)    6   
Bad debt expense    2     37   
Changes in operating assets and liabilities:      
Accounts receivable    2,578     5,545   
Deferred income taxes    366     (23)  
Income taxes receivable    -      2   
Deferred costs    (7,040)    (13,298)  
Prepaid expenses and other current assets    310     (476)  
Other assets    26     (620)  
Trade accounts payable    10,017     (1,563)  
Accrued expenses and other liabilities    (9,962)    (263)  
Income taxes payable    39     (61)  
Deferred rent    89     767   
Deferred revenue    13,234     19,840   
Net cash provided by (used in) operating activities    2,641     (3,145)  
       
Investing activities      
Purchases of property and equipment    (446)    (3,350)  
Purchases of short-term investments    (15,862)    (32,817)  
Proceeds from sales and maturities of short-term investments    20,342     33,322   
Net cash provided by (used in) investing activities    4,034     (2,845)  
       
Financing activities      
Proceeds from exercise of stock options    26     235   
Tax withholdings related to net share settlements of restricted stock units    (1,559)    (1,606)  
Net cash used in financing activities    (1,533)    (1,371)  
       
Effect of exchange rate changes on cash and cash equivalents    (360)    563   
Net increase (decrease) in cash, cash equivalents and restricted cash    4,782     (6,798)  
Cash, cash equivalents and restricted cash, at beginning of period    20,099     24,158   
Cash, cash equivalents and restricted cash, at end of period $  24,881  $  17,360   
       
Supplemental disclosure of cash flow information      
Income taxes paid, net $  586  $  640   
       
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets      
Cash and cash equivalents $  22,405  $  13,956   
Restricted cash    2,476     3,404   
Total cash, cash equivalents and restricted cash $  24,881  $  17,360   
       
(1) Certain amounts have been adjusted to reflect the retrospective adoption of ASC 606. 
       

 

Telenav, Inc.
Condensed Consolidated Segment Summary
(in thousands, except percentages)
(unaudited)
         
  Three Months Ended Six Months Ended
  December 31, December 31,
   2018   2017 As Adjusted (1)  2018   2017 As Adjusted (1)
         
Automotive        
Revenue $  47,522  $  49,157  $  91,004  $  92,498 
Cost of revenue    28,081     31,981     54,698     60,724 
Gross profit $  19,441  $  17,176  $  36,306  $  31,774 
Gross margin  41%   35%   40%   34% 
         
Advertising        
Revenue $  7,016  $  8,742  $  12,963  $  16,357 
Cost of revenue    3,286     4,402     6,506     7,814 
Gross profit $  3,730  $  4,340  $  6,457  $  8,543 
Gross margin  53%   50%   50%   52% 
         
Mobile Navigation        
Revenue $  2,638  $  3,500  $  5,408  $  7,239 
Cost of revenue    824     1,493     1,749     3,043 
Gross profit $  1,814  $  2,007  $  3,659  $  4,196 
Gross margin  69%   57%   68%   58% 
         
Total        
Revenue $  57,176  $  61,399  $  109,375  $  116,094 
Cost of revenue    32,191     37,876     62,953     71,581 
Gross profit $  24,985  $  23,523  $  46,422  $  44,513 
Gross margin  44%   38%   42%   38% 
         
(1) Certain amounts have been adjusted to reflect the retrospective adoption of ASC 606.   
    

 

Telenav, Inc.
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands)
         
Reconciliation of Revenue to Billings
         
         
  Three Months Ended Six Months Ended
  December 31, December 31,
   2018   2017   2018   2017 
Automotive        
Revenue $  47,522  $  49,157  $  91,004  $  92,498 
Adjustments:        
Change in deferred revenue  6,495   8,940   13,324   20,091 
Billings  $  54,017  $  58,097  $  104,328  $  112,589 
         
Advertising        
Revenue $  7,016  $  8,742  $  12,963  $  16,357 
Adjustments:        
Change in deferred revenue    -      -      -      -  
Billings  $  7,016  $  8,742  $  12,963  $  16,357 
         
Mobile Navigation        
Revenue $  2,638  $  3,500  $  5,408  $  7,239 
Adjustments:        
Change in deferred revenue  (103)  (194)  (90)  (251)
Billings  $  2,535  $  3,306  $  5,318  $  6,988 
         
Total        
Revenue $  57,176  $  61,399  $  109,375  $  116,094 
Adjustments:        
Change in deferred revenue  6,392   8,746   13,234   19,840 
Billings  $  63,568  $  70,145  $  122,609  $  135,934 
         

 

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, 2018 
  Automotive Advertising Mobile Navigation Total 
Deferred revenue, December 31 $  87,325 $  -  $  447  $  87,772 
Deferred revenue, September 30    80,830    -     550     81,380 
Change in deferred revenue $  6,495 $  -  $  (103) $  6,392 
          
Deferred costs, December 31 $  65,465 $  -  $  -   $  65,465 
Deferred costs, September 30    62,806    -     -      62,806 
Change in deferred costs $  2,659 $  -  $  -   $  2,659 
          
          
  Three Months Ended December 31, 2017 
  Automotive Advertising Mobile Navigation Total 
Deferred revenue, December 31 $  58,321 $  -  $  633  $  58,954 
Deferred revenue, September 30    49,381    -     827     50,208 
Change in deferred revenue $  8,940 $  -  $  (194) $  8,746 
          
Deferred costs, December 31 $  48,724 $  -  $  -   $  48,724 
Deferred costs, September 30    43,018    -     -      43,018 
Change in deferred costs $  5,706 $  -  $  -   $  5,706 
          
          
  Six Months Ended December 31, 2018 
  Automotive Advertising Mobile Navigation Total 
Deferred revenue, December 31 $  87,325 $  -  $  447  $  87,772 
Deferred revenue, June 30    74,001    -     537     74,538 
Change in deferred revenue $  13,324 $  -  $  (90) $  13,234 
          
Deferred costs, December 31 $  65,465 $  -  $  -   $  65,465 
Deferred costs, June 30    58,425    -     -      58,425 
Change in deferred costs $  7,040 $  -  $  -   $  7,040 
          
  
  Six Months Ended December 31, 2017 
  Automotive Advertising Mobile Navigation Total 
Deferred revenue, December 31 $  58,321 $  -  $  633  $  58,954 
Deferred revenue, June 30    38,230    -     884     39,114 
Change in deferred revenue $  20,091 $  -  $  (251) $  19,840 
          
Deferred costs, December 31 $  48,724 $  -  $  -   $  48,724 
Deferred costs, June 30    35,426    -     -      35,426 
Change in deferred costs $  13,298 $  -  $  -   $  13,298 
          

 

Telenav, Inc. 
Unaudited Reconciliation of Non-GAAP Adjustments 
(in thousands, except percentages) 
          
Reconciliation of Gross Profit to Direct Contribution from Billings 
     
          
  Three Months Ended Six Months Ended 
  December 31, December 31, 
   2018   2017   2018   2017  
          
Automotive         
Gross profit $  19,441  $  17,176  $  36,306  $  31,774  
Gross margin  41%   35%   40%   34%  
Adjustments to gross profit:         
Change in deferred revenue    6,495     8,940     13,324     20,091  
Change in deferred costs(1)  (2,659)  (5,706)  (7,040)  (13,298) 
Net change  3,836   3,234   6,284   6,793  
Direct contribution from billings (1) $  23,277  $  20,410  $  42,590  $  38,567  
Direct contribution margin from billings (1)  43%   35%   41%   34%  
          
Advertising         
Gross profit $  3,730  $  4,340  $  6,457  $  8,543  
Gross margin  53%   50%   50%   52%  
Adjustments to gross profit:         
Change in deferred revenue    -      -      -      -   
Change in deferred costs    -      -      -      -   
Net change    -      -      -      -   
Direct contribution from billings $  3,730  $  4,340  $  6,457  $  8,543  
Direct contribution margin from billings  53%   50%   50%   52%  
          
Mobile Navigation         
Gross profit $  1,814  $  2,007  $  3,659  $  4,196  
Gross margin  69%   57%   68%   58%  
Adjustments to gross profit:         
Change in deferred revenue    (103)    (194)    (90)    (251) 
Change in deferred costs    -      -      -      -   
Net change  (103)  (194)  (90)  (251) 
Direct contribution from billings $  1,711  $  1,813  $  3,569  $  3,945  
Direct contribution margin from billings  67%   55%   67%   56%  
          
Total         
Gross profit $  24,985  $  23,523  $  46,422  $  44,513  
Gross margin  44%   38%   42%   38%  
Adjustments to gross profit:         
Change in deferred revenue    6,392     8,746     13,234     19,840  
Change in deferred costs(1)  (2,659)  (5,706)  (7,040)  (13,298) 
Net change  3,733   3,040   6,194   6,542  
Direct contribution from billings (1) $  28,718  $  26,563  $  52,616  $  51,055  
Direct contribution margin from billings (1)  45%   38%   43%   38%  
          
          
(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 map updates and provisioning of services such as hosting, monitoring, customer support and, for certain customers, additional prepaid content and associated technology costs.  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 Cash Flow from Operations
         
  Three Months Ended Six Months Ended
  December 31, December 31,
   2018   2017   2018   2017 
         
Net loss $  (4,581) $  (8,394) $  (12,151) $  (18,912)
         
Adjustments:        
Legal settlements and contingencies    650     60     650     310 
Deferred rent reversal due to lease termination    -      -      -      (538)
Tenant improvement allowance recognition due to lease termination    -      -      -      (582)
Stock-based compensation expense    2,115     2,888     4,384     5,368 
Depreciation and amortization expense    1,006     797     2,016     1,513 
Other income, net    (532)    (218)    (2,122)    (171)
Provision for income taxes    181     26     811     281 
Adjusted EBITDA    (1,161)    (4,841)    (6,412)    (12,731)
Change in deferred revenue    6,392     8,746     13,234     19,840 
Change in deferred costs(1)    (2,659)    (5,706)    (7,040)    (13,298)
Adjusted cash flow from operations(1) $  2,572  $  (1,801) $  (218) $  (6,189)
         
         
(1) We expect to incur additional costs in the future due to requirements to provide ongoing map updates and provisioning of services such as hosting, monitoring, customer support and, for certain customers, additional prepaid content and associated technology costs.  Accordingly, adjusted cash flow from operations 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 Six Months Ended
  December 31, December 31,
   2018   2017   2018   2017 
         
Net loss $  (4,581) $  (8,394) $  (12,151) $  (18,912)
         
Adjustments to reconcile net loss to net cash used in operating activities:        
Change in deferred revenue (1)  6,392   8,746   13,234   19,840 
Change in deferred costs (2)  (2,659)  (5,706)  (7,040)  (13,298)
Changes in other operating assets and liabilities  2,672   2,260   3,463   3,308 
Other adjustments (3)  3,110   3,736   5,135   5,917 
Net cash provided by (used in) operating activities  4,934   642   2,641   (3,145)
Less: Purchases of property and equipment  (346)  (1,064)  (446)  (3,350)
Free cash flow $  4,588  $  (422) $  2,195  $  (6,495)
         
         
(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) Consists primarily of depreciation and amortization, stock-based compensation expense and other non-cash items. 
    

 

Telenav, Inc.
Summarized Financial Information Depicting the Impact of ASC 606
(in thousands, except per share amounts)
(unaudited)
       
  As of June 30, 2018  
  As Reported (ASC 605) Adjustments As Adjusted (ASC 606)      
Assets            
Deferred costs $  31,888  $  (20,129) $  11,759       
Deferred costs, noncurrent    109,269     (62,603)    46,666       
Total assets    320,412     (82,732)    237,680       
Liabilities and stockholders' equity            
Deferred revenue    52,871     (32,157)    20,714       
Deferred revenue, noncurrent    182,236     (128,412)    53,824       
Accumulated deficit    (135,042)    77,840     (57,202)      
Total liabilities and stockholders' equity    320,412     (82,732)    237,680       
             
       
             
  Three Months Ended December 31, 2017 Six Months Ended December 31, 2017
  As Reported (ASC 605) Adjustments As Adjusted (ASC 606) As Reported (ASC 605) Adjustments As Adjusted (ASC 606)
Revenue            
Product $  25,307  $  20,600  $  45,907  $  49,271  $  37,028  $  86,299 
Services    13,773     1,719     15,492     26,467     3,328     29,795 
Total revenue    39,080     22,319     61,399     75,738     40,356     116,094 
Cost of revenue            
Product    15,053     15,303     30,356     29,727     27,952     57,679 
Services    7,258     262     7,520     13,431     471     13,902 
Total cost of revenue    22,311     15,565     37,876     43,158     28,423     71,581 
Gross profit    16,769     6,754     23,523     32,580     11,933     44,513 
Operating expenses            
Research and development    21,903     (504)    21,399     42,985     (905)    42,080 
Total operating expenses    32,613     (504)    32,109     64,220     (905)    63,315 
Loss from operations    (15,844)    7,258     (8,586)    (31,640)    12,838     (18,802)
Net loss    (15,652)    7,258     (8,394)    (31,750)    12,838     (18,912)
Net loss per share, basic and diluted $  (0.35) $  0.16  $  (0.19) $  (0.71) $  0.28  $  (0.43)
             

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