Quarterly Report (10-q)

Date : 02/08/2019 @ 11:25AM
Source : Edgar (US Regulatory)
Stock : Telenav, Inc. (TNAV)
Quote : 8.9  -0.22 (-2.41%) @ 12:59AM

Quarterly Report (10-q)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
 
(Mark One)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2018

or  
¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to            
Commission file number: 001-34720
 
TELENAV, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
77-0521800
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification Number)

4655 Great America Parkway, Suite 300
Santa Clara, California 95054
(Address of principal executive offices, including zip code)
(408) 245-3800
(Registrant’s telephone number, including area code)
 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   ý     No   ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes   ý     No   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  
Large accelerated filer
 
¨
 
Accelerated filer
 
ý
 
 
 
 
 
 
 
Non-accelerated filer
 
¨
 
Smaller reporting company
 
¨
 
 
 
 
 
 
 
 
 
 
 
Emerging growth company
 
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   ý
As of December 31, 2018 , there were 45,540,687 shares of the Registrant’s Common Stock outstanding.



TELENAV, INC.
TABLE OF CONTENTS
 
 
 
Page No.
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 6.
 



PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements.

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) See Note 1 for a summary of adjustments.
See accompanying Notes to Condensed Consolidated Financial Statements.

1


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

 
 
 
 
 
 
 
 
 
Stock-based compensation expense included above:
 
 
 
 
 
 
 
 
Cost of revenue
 
$
24

 
$
38

 
$
56

 
$
73

Research and development
 
1,222

 
1,649

 
2,526

 
3,044

Sales and marketing
 
341

 
481

 
667

 
919

General and administrative
 
528

 
720

 
1,135

 
1,332

Total stock-based compensation expense
 
$
2,115

 
$
2,888

 
$
4,384

 
$
5,368

(1) See Note 1 for a summary of adjustments.
See accompanying Notes to Condensed Consolidated Financial Statements.

2


TELENAV, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
(unaudited)


 
 
Three Months Ended
 
Six Months Ended
 
 
December 31,
 
December 31,
 
 
2018
 
2017
As Adjusted (1)
 
2018
 
2017
As Adjusted (1)
 
 
 
 
 
 
 
 
 
Net loss
 
$
(4,581
)
 
$
(8,394
)
 
$
(12,151
)
 
$
(18,912
)
Other comprehensive income (loss):
 
 
 
 
 
 
 
 
Foreign currency translation adjustment, net of tax
 
(131
)
 
209

 
(348
)
 
568

Available-for-sale securities:
 
 
 
 
 
 
 
 
Unrealized gain (loss) on available-for-sale securities, net of tax
 
97

 
(241
)
 
186

 
(213
)
Reclassification adjustments for gain on available-for-sale securities recognized, net of tax
 
5

 
6

 
7

 
6

Net increase (decrease) from available-for-sale securities, net of tax
 
102

 
(235
)
 
193

 
(207
)
Other comprehensive income (loss), net of tax
 
(29
)
 
(26
)
 
(155
)
 
361

Comprehensive loss
 
$
(4,610
)
 
$
(8,420
)
 
$
(12,306
)
 
$
(18,551
)
(1) See Note 1 for a summary of adjustments.
See accompanying Notes to Condensed Consolidated Financial Statements.


3


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 provided by (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) See Note 1 for a summary of adjustments.
See accompanying Notes to Condensed Consolidated Financial Statements.

4


TELENAV, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
1.
Summary of business and significant accounting policies
Description of business
Telenav, Inc., also referred to in this report as “we,” “our” or “us,” was incorporated in September 1999 in the State of Delaware. We are a leading provider of connected car and location-based products and services. We utilize our automotive navigation platform and our advertising delivery platform to deliver these products and services. Our automotive navigation platform allows us to deliver enhanced location-based services to automobile manufacturers, as well as original equipment manufacturers and tier one suppliers, to which we refer collectively as tier ones. Our automotive solutions primarily include navigation systems built into vehicles, or on-board, mobile phone based navigation systems, or brought-in, and advanced navigation solutions that offer on-board functionality combined with cloud functionality, or hybrid. Our advertising delivery platform, which we provide through our Thinknear business unit, delivers highly targeted advertising services leveraging our location expertise. We operate in three segments - automotive, advertising and mobile navigation. Our fiscal year ends on June 30, and in this report we refer to the fiscal year ended June 30, 2018 as “fiscal 2018 ” and the fiscal year ending June 30, 2019 as “fiscal 2019 .”
Basis of presentation
The unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. The condensed consolidated financial statements include the accounts of Telenav, Inc. and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The financial statements include all adjustments (consisting only of normal recurring adjustments) that our management believes are necessary for a fair presentation of the periods presented. These interim financial results are not necessarily indicative of results expected for the full fiscal year or for any subsequent interim period.
Our condensed consolidated financial statements also include the financial results of Shanghai Jitu Software Development Ltd., or Jitu, located in China. Based on our contractual arrangements with the shareholders of Jitu, we have determined that Jitu is a variable interest entity, or VIE, for which we are the primary beneficiary and are required to consolidate in accordance with Accounting Standards Codification, or ASC, subtopic 810-10, or ASC 810-10, Consolidation: Overall . The results of Jitu did not have a material impact on our financial statements for the six months ended December 31, 2018 and 2017 .
The condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for fiscal 2018 , included in our Annual Report on Form 10-K for fiscal 2018 filed with the U.S. Securities and Exchange Commission, or SEC, on September 12, 2018.
Effective July 1, 2018, we adopted the requirements of Accounting Standards Update, or ASU, No. 2014-09,  Revenue from Contracts with Customers  (Topic 606) as discussed in the section titled “ Recently adopted accounting pronouncements ” of this Note 1. All amounts and disclosures set forth in this Form 10-Q have been updated to comply with this standard, as indicated by references to “as adjusted” in these condensed consolidated financial statements and related notes.
With the exception of changes in accounting policies associated with our adoption of the new revenue recognition standard, there have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Form 10-K for fiscal 2018.
Use of estimates
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Significant estimates and assumptions made by us include the determination of revenue recognition and deferred revenue, including estimating and allocating the transaction price of customer contracts, the recoverability of accounts receivable and short-term investments, the determination of acquired intangibles and assessment of goodwill for impairment, the fair value of stock-based awards issued, the determination of income taxes and the recoverability of deferred tax assets. Actual results could differ from those estimates.

5

TELENAV, INC.
Notes to Condensed Consolidated Financial Statements—(Continued)
(unaudited)

Concentrations of risk and significant customers
Revenue related to products and services provided through Ford Motor Company and affiliated entities, or Ford, comprised 57%  and 70%  of total revenue for the three months ended  December 31, 2018  and  2017 , respectively, and 58%  and 71%  of total revenue for the  six  months ended  December 31, 2018  and  2017 , respectively. As of December 31, 2018 and June 30, 2018 , receivables due from Ford were 47% and 56% of total accounts receivable, respectively.
Revenue related to products and services provided through General Motors Holdings and its affiliates, or GM, comprised 17%  and less than 10%  of total revenue for the three months ended  December 31, 2018  and  2017 , respectively, and  16% and less than 10% of total revenue for the  six  months ended  December 31, 2018  and  2017 , respectively. As of December 31, 2018 and June 30, 2018 , receivables due from GM were 20% and 10% of total accounts receivable, respectively.
Restricted cash
As of December 31, 2018 and June 30, 2018 , we had restricted cash of $2.5 million and $3.0 million , respectively, on our consolidated balance sheets, comprised primarily of prepayments from a customer.
Accumulated other comprehensive loss, net of tax
The components of accumulated other comprehensive loss, net of related taxes, and activity as of December 31, 2018 , were as follows (in thousands):
 
 
Foreign Currency
Translation
Adjustments
 
Unrealized
Gains (Losses) on
Available-for-Sale
Securities
 
Total
Balance, net of tax as of June 30, 2018
 
$
(1,163
)
 
$
(692
)
 
$
(1,855
)
Other comprehensive income (loss) before reclassifications, net of tax
 
(348
)
 
186

 
(162
)
Amount reclassified from accumulated other comprehensive loss, net of tax
 

 
7

 
7

Other comprehensive income (loss), net of tax
 
(348
)
 
193

 
(155
)
Balance, net of tax as of December 31, 2018
 
$
(1,511
)
 
$
(499
)
 
$
(2,010
)

The amount of income tax benefit allocated to each component of accumulated other comprehensive loss was not material for the six months ended December 31, 2018 .
Goodwill
Goodwill represents the excess of the aggregate purchase price paid over the fair value of the net assets acquired. Goodwill is not amortized and is tested for impairment at least annually on April 1 or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
During the three months ended March 31, 2018, certain mobile navigation customer contracts were amended and certain other customers indicated their intent with respect to terminating services in the near term. Based upon a qualitative assessment indicating that it was more likely than not that the fair value of the mobile navigation reporting unit was less than its carrying value, we performed an interim goodwill impairment test for our mobile navigation segment. In assessing its fair value, we made assumptions regarding our estimated future cash flows, weighted average cost of capital and timing over which the cash flows will occur, amongst other factors. Based on the results of our goodwill impairment test, the carrying value of our mobile navigation business exceeded its estimated fair value and, accordingly, during the three months ended March 31, 2018, we recognized a $2.7 million impairment of all of the goodwill associated with our mobile navigation segment.
Recently adopted accounting pronouncements
In November 2016, the Financial Accounting Standards Board, or FASB, issued new guidance to clarify how entities should present restricted cash and restricted cash equivalents in the statement of cash flows. The new guidance requires that restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning and ending total amounts shown in the statement of cash flows. The new standard was effective for us in our first quarter of fiscal 2019 and requires a retrospective method of adoption. We adopted this standard on July 1, 2018 on a retrospective basis,

6

TELENAV, INC.
Notes to Condensed Consolidated Financial Statements—(Continued)
(unaudited)

resulting in immaterial changes to our previously reported condensed consolidated statement of cash flows for the six months ended December 31, 2017 .
In August 2016, the FASB issued new guidance which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. The new standard was effective for us in our first quarter of fiscal 2019. We adopted this standard on July 1, 2018, and it did not have a material impact to our condensed consolidated statements of cash flows.
In March 2016, the FASB issued new guidance to clarify the implementation guidance on principal versus agent considerations for reporting revenue gross versus net. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customer. The new standard was effective for us in our first quarter of fiscal 2019. We adopted this standard on July 1, 2018 in connection with our adoption of ASU 2014-09 discussed below, and it did not have a material impact to our condensed consolidated financial statements.
In January 2016, the FASB issued new guidance that amends the accounting and disclosures of financial instruments, including a provision that requires equity investments (except for investments accounted for under the equity method of accounting) to be measured at fair value with changes in fair value recognized in current earnings. A practicality exception applies to those equity investments that do not have a readily determinable fair value. These investments may be measured at cost, adjusted for changes in observable prices minus impairment. The new standard was effective prospectively for us in our first quarter of fiscal 2019 for our equity investments, which were previously accounted for under the cost-method. We adopted this standard on July 1, 2018 and recorded an unrealized gain of $1.3 million on non-marketable equity investments. See Note 5 to these condensed consolidated financial statements.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605,  Revenue Recognition . Under Topic 606, revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. In conjunction with Topic 606, a new subtopic, ASC 340-40, Other Assets and Deferred Costs - Contracts with Customers , was also issued. The updated standard replaces most existing revenue recognition and certain cost guidance under GAAP. Collectively, we refer to Topic 606 and Subtopic 340-40 as “ASC 606.”
We adopted ASC 606 effective July 1, 2018, utilizing the full retrospective transition method. Adoption of ASC 606 resulted in changes to our accounting policies for revenue recognition and deferred costs as detailed below. We applied ASC 606 using a practical expedient where the consideration allocated to the remaining performance obligations or an explanation of when we expect to recognize that amount as revenue for all reporting periods presented before the date of the initial application is not disclosed.
The effect of adopting ASC 606 on fiscal 2018 was material to our statements of operations and balance sheets as a result of its impact on the recognition of revenue and associated third-party content costs for certain of our on-board and brought-in automotive navigation solutions. The adoption of ASC 606 had no significant impact on our advertising and mobile navigation business segments. The adoption of ASC 606 resulted in reductions to deferred costs (asset) and deferred revenue (liability) balances, and accelerated the recognition of revenues and deferred costs in the automotive segment.
With respect to on-board automotive solutions, historically we recognized revenue and associated content costs over the life of our contractual obligations when map updates were included, and we deferred substantially all revenue and associated content costs pending the delivery of future specified upgrades. Instead, as of July 1, 2018, we recognize revenue related to royalties for distinct software and content that has been accepted as transfer of control takes place, with an allocation of the transaction price based on the relative standalone selling price, or SSP, of map updates, specified upgrades, and other services as applicable, which we will recognize with the associated content costs at a point in time or over time as we transfer control of the related performance obligation.
Regarding brought-in automotive solutions, historically we recognized revenue for each royalty over the expected remaining term of the service obligation. Effective July 1, 2018, since these contracts contain variable consideration that does not meet the allocation objective of ASC 606 to recognize the fees in the month in which they are earned because the terms of the variable payments do not relate specifically to the outcome from transferring the distince time increment (month) of service, we will estimate the total transaction price each reporting period, subject to a constraint, and then recognize revenue ratably over the period the services obligation is expected to be fulfilled, as further described in the section titled “ Services revenue ” of this Note 1.

7

TELENAV, INC.
Notes to Condensed Consolidated Financial Statements—(Continued)
(unaudited)

Development costs subject to ASC 340-40 incurred to fulfill future obligations under certain actual or anticipated contracts for automotive solutions are capitalized, provided they are expected to be recovered, and then recognized as control of the related performance obligations is transferred. Historically, such costs were not capitalized until receipt of a signed contract or purchase order for a fixed amount, provided the costs were probable of being recovered. Under ASC 340-40, we are required to capitalize such costs in anticipation of a contract, provided the costs are expected to be recovered; thus, increasing the amount of costs we capitalize under ASC 340-40. For on-board automotive solutions, such capitalized costs represent the customized portion of software development, which will continue to be recognized upon acceptance of the software under ASC 340-40 since acceptance is generally required for control of the software to transfer. For brought-in automotive solutions, such costs will be amortized over the period the services obligation is expected to be fulfilled, since software development does not represent a distinct performance obligation in the case of brought-in automotive solutions. Historically, we recognized such costs for brought-in automotive solutions upon acceptance of the software.
We adjusted our condensed consolidated financial statements from amounts previously reported due to the adoption of ASC 606. Summarized financial information depicting the impact of ASC 606 is presented below. Our historical net cash flows provided by or used in operating, investing and financing activities are not impacted by the adoption of ASC 606. (Amounts in thousands, except per share data):
 
 
As of June 30, 2018
 
 
As Reported Form 10-K
 
Adjustments
 
As Adjusted (1)
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

(1) See Note 2 for an explanation and reconciliation of revisions to As Adjusted amounts at June 30, 2018 previously presented in our Quarterly Report on Form 10-Q for the three months ended September 30, 2018.

8

TELENAV, INC.
Notes to Condensed Consolidated Financial Statements—(Continued)
(unaudited)

 
 
Three Months Ended December 31, 2017
 
Six Months Ended December 31, 2017
 
 
As Reported
Dec. 31, 2017 Form 10-Q
 
Adjustments
 
As Adjusted
 
As Reported
Dec. 31, 2017 Form 10-Q
 
Adjustments
 
As Adjusted (1)
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
)
(1) See Note 2 for an explanation and reconciliation of revisions to As Adjusted amounts for the three months ended September 30, 2017 previously presented in our Quarterly Report on Form 10-Q for the three months ended September 30, 2018.
The following accounting policies have been updated to reflect the adoption of ASC 606.
Revenue recognition
The core principle of ASC 606 is to recognize revenue to depict the transfer of products or services to customers in an amount that reflects the consideration we expect to be entitled to in exchange for those products or services. This principle is achieved through applying the following five-step approach:
Identification of the contract, or contracts, with a customer
Identification of the performance obligations in the contract
Determination of the transaction price
Allocation of the transaction price to the performance obligations in the contract
Recognition of revenue when, or as, the company satisfies a performance obligation
We generate revenue primarily from software licenses, service subscriptions and customized software development fees, as well as the delivery of advertising impressions. We evaluate whether it is appropriate to recognize revenue based on the gross amount billed to our customers or the net amount earned as revenue. Since we control the products or services prior to their transfer to the customer, we report our automotive, advertising and mobile navigation revenue on a gross basis. This assessment is based primarily on our ultimate primary responsibility for fulfilling the promises made with respect to the products and services as well as the degree of discretion we have in establishing pricing.
Royalties for on-board navigation solutions are generally earned at various points in time, depending upon the individual customer agreement. We earn each royalty upon either the re-imaging of the software on each individual memory card or the time at which each vehicle is produced. Royalties for brought-in navigation solutions are earned upon vehicle sales reporting or upon initial usage by the end user.
Product revenue
We generate product revenue from the delivery of our on-board automotive navigation solutions, specified map updates and customized software development.

9

TELENAV, INC.
Notes to Condensed Consolidated Financial Statements—(Continued)
(unaudited)

We recognize revenue from on-board automotive navigation solutions upon transfer of control of the customized software and any associated integrated content together forming a distinct performance obligation. Transfer of control generally occurs at a point in time upon acceptance. Any royalties for the use of distinct software combined with integrated content, with an allocation of the transaction price based on the relative SSP of map updates, specified upgrades, and other services as applicable, are recognized at the later of when the royalties are earned or when transfer of control of the related performance obligation has occurred. 
For hybrid automotive solutions, which contain on-board software and cloud functionality, the transaction price allocated to the on-board component is generally recognized as product revenue as described above, and the transaction price allocated to the included cloud functionality based on relative SSP is generally recognized as services revenue. Since the on-board software is still the predominant item in the hybrid solution, the royalties recognition guidance applies as it does for on-board navigation solutions described above. Our brought-in automotive navigation solutions as described below are subject to variable consideration and constraint guidance.
Services revenue
We derive services revenue primarily from our brought-in automotive navigation solutions and, to a lesser extent, from the cloud functionality that is a component of our hybrid automotive navigation solutions as discussed above. Since contracts for our brought-in automotive navigation solutions typically contain a substantial amount of variable consideration that does not meet the allocation objective of ASC 606 and is required to be estimated and included in the transaction price, we include in the transaction price only variable consideration such that it is probable that a risk of significant revenue reversal will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Total variable consideration to be received is estimated at contract inception and updated at each reporting date. We utilize the expected value method and consider expected unit volume combined with a risk-based probability based on factors including, but not limited to: model year cycles, customer history, technology life cycles, nature of competition and other contract-specific factors. Because customers of our brought-in automotive navigation solutions simultaneously receive and consume the benefit from our performance, we recognize revenue ratably over the period the services obligation is expected to be fulfilled, generally 8 to 12 years, as this provides a faithful depiction of the transfer of control.
We also derive services revenue from the delivery of advertising impressions. We recognize revenue when transfer of control of the related advertising services occur based on the specific terms of each advertising contract, which are generally based on the number of ad impressions delivered. Substantially all contracts for advertising services are cancellable within a short period of notice, and we assess whether pricing within such contracts create any material right which could extend the expected term of the contract beyond the cancellable term.
In addition, we derive a declining amount of services revenue from subscriptions to access our mobile navigation services, which are generally provided through our wireless carrier customers that offer our services to their subscribers. Our wireless carrier customers typically pay us based on a revenue sharing arrangement or a monthly subscription fee per end user, which is considered variable consideration. For such variable consideration related to our mobile navigation services, these fees are recognized in the month in which they are earned because the terms of the variable payments relate specifically to the outcome from transferring the distinct time increment (month) of service, which is consistent with the allocation objective when considering all of the performance obligations and payment terms in the contract.
We recognize monthly fees related to our mobile navigation services in the month we provide the services. We defer amounts received or billed in advance of the service being provided and recognize the deferred amounts when the obligation has been fulfilled. Our agreements do not contain general rights of refund once the service has been provided.
In certain instances, due to the nature and timing of monthly revenue and reporting from our customers, we may be required to make estimates of the amount of revenue to recognize from a customer for the current period. Estimates for revenue include our consideration of certain factors and information, including subscriber data, historical subscription and revenue reporting trends, end user subscription data from our internal systems, and data from comparable distribution channels of our other customers. We record any differences between estimated revenue and actual revenue in the reporting period when we determine the actual amounts. To date, actual amounts have not differed materially from our estimates.
Disaggregation of revenue
In order to further depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors, the following table depicts the disaggregation of revenue according to revenue type and pattern of recognition, and is consistent with how we evaluate our financial performance (in thousands):

10

TELENAV, INC.
Notes to Condensed Consolidated Financial Statements—(Continued)
(unaudited)

 
 
Three Months Ended
December 31,
 
Six Months Ended
December 31,
 
 
2018
 
2017
 
2018
 
2017
Product
 
 
 
 
 
 
 
 
On-board automotive navigation solutions (point in time) (1)
 
$
42,397

 
$
45,907

 
$
82,327

 
$
86,299

Total product revenue
 
42,397

 
45,907

 
82,327

 
86,299

Services
 
 
 
 
 
 
 
 
Brought-in automotive navigation solutions (over time) (2)
 
4,480

 
3,242

 
8,022

 
6,184

Automotive maintenance and support (over time)
 
645

 
8

 
655

 
15

Advertising services (point in time)
 
7,016

 
8,742

 
12,963

 
16,357

Mobile navigation services (over time)
 
2,638

 
3,500

 
5,408

 
7,239

Total services revenue
 
14,779

 
15,492

 
27,048

 
29,795

Total revenue
 
$
57,176

 
$
61,399

 
$
109,375

 
$
116,094

(1) Includes i) royalties earned and recognized at the point in time usage occurs, ii) map updates and iii) customized software development fees.
(2) Includes royalties earned and recognized over time from the allocation of transaction price to service obligations for hybrid automotive solutions.
Contracts with multiple performance obligations
Some of our contracts with customers contain multiple performance obligations. For these contracts, we account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative SSP basis. We determine SSP based on, if available, observable prices for those related products and services when sold separately. When observable prices are not available, we determine SSP based on our overall pricing trends and objectives, taking into consideration market conditions and other factors, including the value of the contracts, the products and services sold, and stated prices for renewal. In such instances, we apply the expected cost plus margin method and the residual method in cases where we have not yet established a price and the product or service has not previously been sold on a standalone basis.
We have used the practical expedient to reflect the aggregate effect of all contract modifications that occurred before our earliest reporting period, fiscal 2017, when i) determining the satisfied and unsatisfied performance obligations, ii) determining the transaction price, and iii) allocating the transaction price to the satisfied and unsatisfied performance obligations.
Contract assets
Contract assets relate to our rights to consideration for performance obligations satisfied but not billed at the reporting date. As of  December 31, 2018  and  June 30, 2018 , we had no contract assets.
Deferred revenue
Deferred revenue consists primarily of amounts that have been invoiced, and for which we have the right to bill, in advance of performance obligations being satisfied and revenue being recognized under our contracts with customers. Deferred revenue associated with performance obligations that are anticipated to be satisfied during the succeeding 12 months is recorded as current deferred revenue, and the remaining portion is recorded as non-current deferred revenue in our condensed consolidated balance sheets.
In instances where the timing of revenue recognition differs from the timing of invoicing, we do not adjust consideration for the effects of a significant financing portion for periods of one year or less, for example, in the case of customized software development fees paid in advance of acceptance of the software. Substantially all brought-in automotive navigation solutions contain consideration paid significantly in advance of our provision of the services. In these cases, we have determined such contracts do not include a significant financing component, since neither we nor the applicable automobile manufacturer or tier one is substantially in control of such consideration, as revenue from these contracts is driven by future sales demand of a particular vehicle.
Cost of revenue
Our cost of revenue consists primarily of the cost of third-party royalty based content, such as map, points of interest, or POI, traffic, gas price and weather data, and voice recognition technology that we use in providing our personalized navigation

11

TELENAV, INC.
Notes to Condensed Consolidated Financial Statements—(Continued)
(unaudited)

services. Our cost of revenue also includes the cost of third-party exchange ad inventory as well as expenses associated with outsourced hosting services, data center operations, customer support, the amortization of capitalized software, recognition of deferred customized software development costs, stock-based compensation and amortization of acquired developed technology.
Deferred costs
We capitalize and defer recognition of certain third-party royalty-based content costs associated with the fulfillment of future automotive product and services obligations, and we recognize these deferred content costs as cost of revenue as we transfer control of the related performance obligation. Deferred costs are classified as current or non-current consistent with the periods over which the performance obligations are anticipated to be satisfied.
Deferred costs also include the cost of customized software we develop for customers. We begin deferring development costs when they relate directly to a contract or specific anticipated contract and such costs are incurred to satisfy performance obligations in the future, provided they are expected to be recovered. We recognize these deferred software development costs as cost of revenue upon transfer of control of the associated performance obligation. We evaluate contract cost deferrals for impairment on a quarterly basis or whenever events or changes in circumstances indicate that a project may require recognition of a contract loss. We did not record any impairment losses during the three months ended December 31, 2018 and 2017 .
In connection with our usage of licensed third-party content, our contracts with certain licensors include minimum guaranteed royalty payments, which are payable regardless of the ultimate volume of revenue derived from the number of paying end users. These contracts contain obligations for the licensor to provide ongoing services and, accordingly, we record any minimum guaranteed royalty payments as an asset when paid and amortize the amount to cost of revenue over the applicable period. Any additional royalties due based on actual usage are expensed monthly as incurred.
Changes in the balance of total deferred costs (current and non-current) during the six months ended December 31, 2018 are as follows (in thousands):
 
 
Deferred Costs
 
 
Content
 
Development
 
Total
Balance, June 30, 2018 (as adjusted)
 
$
48,946

 
$
9,479

 
$
58,425

Content licensing costs incurred
 
58,167

 

 
58,167

Customized software development costs incurred
 

 
1,038

 
1,038

Less: cost of revenue recognized
 
(50,234
)
 
(1,931
)
 
(52,165
)
Balance, December 31, 2018
 
$
56,879

 
$
8,586

 
$
65,465

Recent accounting pronouncements
In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract , or ASU 2018-15, which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to defer and recognize as an asset. This guidance is effective for us in our first quarter of fiscal 2021. Early adoption is permitted and the guidance allows for a retrospective or prospective application. We are evaluating the impact of the adoption of this standard on our consolidated financial statements.
With the exception of the recently adopted and new accounting pronouncements discussed above, there have been no other changes in accounting pronouncements during the six months ended December 31, 2018 , as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for fiscal 2018, that are of significance or potential significance to us.
2.
Adjustment of prior period financial statements for immaterial errors
In connection with the preparation of our condensed consolidated financial statements for the three months ended December 31, 2018, we identified certain errors related to the recognition of revenue and costs for certain customer contracts. Specifically, the errors related primarily to the timing of the transfer of control of certain performance obligations related to future deliverables under ASC 606. In accordance with Staff Accounting Bulletin, or SAB, Topic 1.M, Materiality, and SAB Topic 1.N, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements, we evaluated the errors and determined that the related impact was not material to our results of operations or financial position for any prior interim period. However, we have elected to correct these errors for all prior periods presented by adjusting the condensed consolidated financial statements.
Summarized financial information depicting the impact of these errors to amounts we previously presented in our Quarterly Report on Form 10-Q for the three months ended September 30, 2018 is presented below (amounts in thousands):
 
 
As of June 30, 2018
 
As of September 30, 2018
 
 
As Reported
Sept. 30, 2018 Form 10-Q
 
Adjustments
 
As Adjusted
 
As Reported
Sept. 30, 2018 Form 10-Q
 
Adjustments
 
As Adjusted
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Deferred costs
 
$
9,906

 
$
1,853

 
$
11,759

 
$
13,842

 
$
2,989

 
$
16,831

Deferred costs, noncurrent
 
46,363

 
303

 
46,666

 
46,466

 
(491
)
 
45,975

Total assets
 
235,524

 
2,156

 
237,680

 
236,100

 
2,498

 
238,598

Liabilities and stockholders’ equity
 
 
 
 
 
 
 
 
 
 
 
 
Deferred revenue
 
18,195

 
2,519

 
20,714

 
21,892

 
3,198

 
25,090

Deferred revenue, noncurrent
 
53,855

 
(31
)
 
53,824

 
57,031

 
(741
)
 
56,290

Accumulated deficit
 
(56,870
)
 
(332
)
 
(57,202
)
 
(64,813
)
 
41

 
(64,772
)
Total liabilities and stockholders’ equity
 
235,524

 
2,156

 
237,680

 
236,100

 
2,498

 
238,598


 
 
Three Months Ended September 30, 2017
 
Three Months Ended September 30, 2018
 
 
As Reported
Sept. 30, 2018 Form 10-Q
 
Adjustments
 
As Adjusted
 
As Reported
Sept. 30, 2018 Form 10-Q
 
Adjustments
 
As Adjusted
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
Product
 
$
42,659

 
$
(2,267
)
 
$
40,392

 
$
40,471

 
$
(541
)
 
$
39,930

Services
 
14,303

 

 
14,303

 
11,697

 
572

 
12,269

Total revenue
 
56,962

 
(2,267
)
 
54,695

 
52,168

 
31

 
52,199

Cost of revenue:
 
 
 
 
 
 
 
 
 
 
 
 
Product
 
29,441

 
(2,118
)
 
27,323

 
23,930

 
(342
)
 
23,588

Services
 
6,382

 

 
6,382

 
7,174

 

 
7,174

Total cost of revenue
 
35,823

 
(2,118
)
 
33,705

 
31,104

 
(342
)
 
30,762

Gross profit
 
21,139

 
(149
)
 
20,990

 
21,064

 
373

 
21,437

Loss from operations
 
(10,067
)
 
(149
)
 
(10,216
)
 
(8,903
)
 
373

 
(8,530
)
Net loss
 
(10,369
)
 
(149
)
 
(10,518
)
 
(7,943
)
 
373

 
(7,570
)
Net loss per share, basic and diluted
 
$
(0.24
)
 
$

 
$
(0.24
)
 
$
(0.18
)
 
$
0.01

 
$
(0.17
)
3.
Net income (loss) per share
Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding for the period. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding for the period, including potential dilutive common shares assuming the dilutive effect of outstanding stock options and restricted stock units using the treasury-stock method.
The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share amounts):
 

12

TELENAV, INC.
Notes to Condensed Consolidated Financial Statements—(Continued)
(unaudited)

 
 
Three Months Ended
December 31,
 
Six Months Ended
December 31,
 
 
2018
 
2017
 
2018
 
2017
Net loss
 
$
(4,581
)
 
$
(8,394
)
 
$
(12,151
)
 
$
(18,912
)
Weighted average common shares used in computing net loss per share, basic and diluted
 
45,443

 
44,476

 
45,230

 
44,495

Net loss per share, basic and diluted
 
$
(0.10
)
 
$
(0.19
)
 
$
(0.27
)
 
$
(0.43
)

The following potential shares outstanding as of December 31, 2018 and 2017 were excluded from the computation of diluted net loss per share for the periods presented because including them would have had an antidilutive effect (in thousands):

 
 
December 31,

 
2018
 
2017
Stock options
 
5,114

 
5,556

Restricted stock units
 
2,918

 
3,596

Total
 
8,032

 
9,152


4.
Cash, cash equivalents and short-term investments
Cash and cash equivalents consist of highly liquid fixed-income investments with original maturities of three months or less at the time of purchase, including money market funds. Short-term investments consist of readily marketable securities with a remaining maturity of more than three months from the date of purchase. Short-term investments are classified as current assets, even though maturities may extend beyond one year, because they represent investments of cash available for operations. We classify all cash equivalents and short-term investments as “available for sale,” as these investments are free of trading restrictions. These marketable securities are carried at fair value, with the unrealized gains and losses, net of tax, reported as accumulated other comprehensive income (loss) and included as a separate component of stockholders’ equity. Gains and losses are recognized when realized. When we have determined that an other-than-temporary decline in fair value has occurred, the amount of the decline that is related to a credit loss is recognized in earnings. Gains and losses are determined using the specific identification method. We had no material realized gains or losses in the six months ended December 31, 2018 and 2017 .

13

TELENAV, INC.
Notes to Condensed Consolidated Financial Statements—(Continued)
(unaudited)

Cash, cash equivalents and short-term investments consisted of the following as of December 31, 2018 (in thousands):
 
Description
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Estimated
Fair Value
Cash
 
$
15,279

 
$

 
$

 
$
15,279

Cash equivalents:
 
 
 
 
 
 
 
 
Money market mutual funds
 
1,763

 

 

 
1,763

U.S. treasury securities
 
1,523

 

 

 
1,523

Commercial paper
 
3,840

 

 

 
3,840

Total cash equivalents
 
7,126

 

 

 
7,126

Total cash and cash equivalents
 
22,405

 

 

 
22,405

Short-term investments:
 
 
 
 
 
 
 
 
U.S. treasury securities
 
5,240

 

 
(26
)
 
5,214

U.S. agency securities
 
1,609

 
4

 
(9
)
 
1,604

Asset-backed securities
 
7,257

 
3

 
(49
)
 
7,211

Municipal securities
 
3,370

 

 
(1
)
 
3,369

Commercial paper
 
999

 

 

 
999

Corporate bonds
 
45,430

 
18

 
(301
)
 
45,147

Total short-term investments
 
63,905

 
25

 
(386
)
 
63,544

Cash, cash equivalents and short-term investments
 
$
86,310

 
$
25

 
$
(386
)
 
$
85,949


Cash, cash equivalents and short-term investments consisted of the following as of June 30, 2018 (in thousands):
 
Description
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Estimated
Fair Value
Cash
 
$
10,202

 
$

 
$

 
$
10,202

Cash equivalents:
 
 
 
 
 
 
 
 
Money market mutual funds
 
3,751

 

 

 
3,751

U.S. treasury securities
 
498

 

 

 
498

Commercial paper
 
2,666

 

 

 
2,666

Total cash equivalents
 
6,915

 

 

 
6,915

Total cash and cash equivalents
 
17,117

 

 

 
17,117

Short-term investments:
 
 
 
 
 
 
 
 
U.S. treasury securities
 
4,737

 

 
(34
)
 
4,703

U.S. agency securities
 
2,424

 

 
(16
)
 
2,408

Asset-backed securities
 
8,040

 
1

 
(72
)
 
7,969

Municipal securities
 
2,220

 

 
(4
)
 
2,216

Commercial paper
 
1,249

 

 

 
1,249

Corporate bonds
 
49,717

 
2

 
(435
)
 
49,284

Total short-term investments
 
68,387

 
3

 
(561
)
 
67,829

Cash, cash equivalents and short-term investments
 
$
85,504

 
$
3

 
$
(561
)
 
$
84,946



The following table summarizes the fair value and gross unrealized losses related to available-for-sale securities, aggregated by investment category, that have been in an unrealized loss position for less than 12 months or a continuous unrealized loss position for 12 months or greater, as of  December 31, 2018  and  June 30, 2018  (in thousands):


14

TELENAV, INC.
Notes to Condensed Consolidated Financial Statements—(Continued)
(unaudited)

 
 
December 31, 2018
 
 
Less than 12 Months
 
12 Months or Greater
 
Total
 
 
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
U.S. treasury securities
 
$
1,495

 
$
(2
)
 
$
2,969

 
$
(24
)
 
$
4,464

 
$
(26
)
U.S. agency securities
 

 

 
991

 
(9
)
 
991

 
(9
)
Asset-backed securities
 
688

 
(2
)
 
4,472

 
(47
)
 
5,160

 
(49
)
Municipal securities
 
1,499

 
(1
)
 
500

 

 
1,999

 
(1
)
Corporate bonds
 
11,019

 
(39
)
 
29,570

 
(262
)
 
40,589

 
(301
)
Total
 
$
14,701

 
$
(44
)
 
$
38,502

 
$
(342
)
 
$
53,203

 
$
(386
)

 
 
June 30, 2018
 
 
Less than 12 Months
 
12 Months or Greater
 
Total
 
 
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
U.S. treasury securities
 
$
4,703

 
$
(34
)
 
$

 
$

 
$
4,703

 
$
(34
)
U.S. agency securities
 
1,118

 
(6
)
 
1,290

 
(10
)
 
2,408

 
(16
)
Asset-backed securities
 
5,368

 
(69
)
 
1,562

 
(3
)
 
6,930

 
(72
)
Municipal securities
 
1,716

 
(4
)
 

 

 
1,716

 
(4
)
Commercial paper
 
1,249

 

 

 

 
1,249

 

Corporate bonds
 
34,982

 
(318
)
 
10,880

 
(117
)
 
45,862

 
(435
)
Total
 
$
49,136

 
$
(431
)
 
$
13,732

 
$
(130
)
 
$
62,868

 
$
(561
)

There were  40  securities and  111  securities in an unrealized loss position for less than 12 months at  December 31, 2018  and at  June 30, 2018 , respectively, and 86  securities and  25  securities in an unrealized loss position for 12 months or greater at  December 31, 2018  and at  June 30, 2018 , respectively.

The following table summarizes the cost and estimated fair value of short-term fixed income securities classified as short-term investments based on stated maturities as of December 31, 2018 (in thousands):
 
 
 
Amortized
Cost
 
Estimated
Fair Value
Due within one year
 
$
37,114

 
$
36,953

Due between one and two years
 
19,568

 
19,377

Due between two and three years
 
7,223

 
7,214

Total
 
$
63,905

 
$
63,544


Declines in fair value judged to be other-than-temporary on securities available for sale are included as a component of other income (expense), net. In order to determine whether a decline in value is other-than-temporary, we evaluate, among other factors: the duration and extent to which the fair value has been less than the carrying value and our intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair market value. As of December 31, 2018 , we did not consider any of our short-term investments to be other-than-temporarily impaired.
5.
Fair value of financial instruments
Cash equivalents and short-term investments
We measure certain financial instruments at fair value on a recurring basis. We utilize a hierarchy, which consists of three levels, for disclosure of the inputs used to determine the fair value of our financial instruments.
Level 1 valuations are based on quoted prices in active markets for identical assets or liabilities.

15

TELENAV, INC.
Notes to Condensed Consolidated Financial Statements—(Continued)
(unaudited)

Level 2 valuations are based on inputs that are observable, either directly or indirectly, other than quoted prices included within Level 1. Such inputs used in determining fair value for Level 2 valuations include quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 valuations are based upon information that is unobservable and significant to the overall fair value measurement.
Where applicable, we use quoted prices in active markets for similar assets to determine fair value of Level 2 short-term investments. If quoted prices in active markets for identical assets are not available to determine fair value, we use quoted prices for similar assets and liabilities or inputs that are observable either directly or indirectly. If quoted prices for identical or similar assets are not available, we use third-party valuations utilizing underlying assets assumptions.
All of our cash equivalents and short-term investments are classified within Level 1 or Level 2. As of December 31, 2018 and June 30, 2018 , we did not have any short-term investments that require Level 3 valuations. The fair values of these financial instruments were determined using the following inputs at December 31, 2018 (in thousands):

 
 
 
Fair Value Measurements at December 31, 2018 Using
 
 
 
 
Quoted Prices
in Active
Markets for
Identical
Assets
 
Significant
Other
Observable
Inputs
 
Significant
Unobservable
Inputs
Description
 
Total
 
(Level 1)
 
(Level 2)
 
(Level 3)
Cash equivalents:
 
 
 
 
 
 
 
 
Money market mutual funds
 
$
1,763

 
$
1,763

 
$

 
$

U.S. treasury securities
 
1,523

 
1,523

 

 

Commercial paper
 
3,840

 

 
3,840

 

Total cash equivalents
 
7,126

 
3,286

 
3,840

 

Short-term investments:
 
 
 
 
 
 
 
 
U.S. treasury securities
 
5,214

 
5,214

 

 

U.S. agency securities
 
1,604

 

 
1,604

 

Asset-backed securities
 
7,211

 

 
7,211

 

Municipal securities
 
3,369

 

 
3,369

 

Commercial paper
 
999

 

 
999

 

Corporate bonds
 
45,147

 

 
45,147

 

Total short-term investments
 
63,544

 
5,214

 
58,330

 

Cash equivalents and short-term investments
 
$
70,670

 
$
8,500

 
$
62,170

 
$


16

TELENAV, INC.
Notes to Condensed Consolidated Financial Statements—(Continued)
(unaudited)

The fair values of our financial instruments were determined using the following inputs at June 30, 2018 (in thousands):
 
 
 
Fair Value Measurements at June 30, 2018 Using
 
 
 
 
Quoted Prices
in Active
Markets for
Identical
Assets
 
Significant
Other
Observable
Inputs
 
Significant
Unobservable
Inputs
Description
 
Total
 
(Level 1)
 
(Level 2)
 
(Level 3)
Cash equivalents:
 
 
 
 
 
 
 
 
Money market mutual funds
 
$
3,751

 
$
3,751

 
$

 
$

U.S. treasury securities
 
498

 
498

 

 

Commercial paper
 
2,666

 

 
2,666

 

Total cash equivalents
 
6,915

 
4,249

 
2,666

 

Short-term investments:
 
 
 
 
 
 
 
 
U.S. treasury securities
 
4,703

 
4,703

 

 

U.S. agency securities
 
2,408

 

 
2,408