EX-99.2 3 tnavex992fy19q3investorlet.htm EXHIBIT 99.2 Exhibit


tnavearningsreleasea01a01a19.gif
May 9, 2019
Fellow Stockholders,
Telenav’s strong financial performance in the third quarter was driven primarily by growth in our automotive business. Combined with prudent management of operating expenses, compared with the prior-year quarter, we were able to drive a $7 million reduction in our net loss to $(7.5) million and better-than-expected adjusted cash flow from operations of more than $4 million. Assuming that our actual performance in Q4 FY19 is consistent with our expectations reflected in our guidance, we are on track to achieve our goal of becoming adjusted cash flow from operations positive for fiscal 2019.
Again this quarter, we saw strong take-rates at Ford, and sequential growth at GM where the model launches earlier in the fiscal year have contributed to sequential growth for the past three quarters. Ford was 54% and 55% and GM was 19% and 20% of total revenue and billings, respectively.
We continued making progress on our goal to create the world’s largest network of connected vehicles. Worldwide, more than 1.3 million vehicles capable of connected services were deployed with Telenav software and services in our third fiscal quarter, bringing the cumulative total of connected vehicles to 13.3 million. The cumulative total of all vehicles, connected and non-connected, deployed with Telenav software and services now exceeds 22.7 million.
We continue to develop three domains of our Connected Car Platform: Navigation and In-Car Software and Services; In-Car Commerce and Communication; and Road Intelligence. Our platform is a critical component of Telenav’s business strategy, and we expect it to be a driver of future growth. Our strategy is to continue to deliver more value to our automobile manufacturer customers and end users, grow our connected vehicle network to become the largest in the world, explore ways to generate more revenue from each connected vehicle, and build value for Telenav stockholders.
 
connectedcar1.jpg






Financial Results Overview
Our financial results for the third fiscal quarter are summarized in the table below.
Select Financial Data (unaudited)
Fiscal 2018
Fiscal 2019
Y/Y
$ Growth
(in thousands, except gross margin and direct contribution margin and growth)
Q3
Q3
Total Company
 
 
 
Revenue
$
46,382

$
53,069

$
6,687

Billings*
$
58,704

$
69,116

$
10,412

Gross profit
$
21,715

$
23,442

$
1,727

Gross margin
47
%
44
%
 
Direct contribution from billings*
$
25,948

$
32,595

$
6,647

Direct contribution margin from billings*
44
%
47
%
 
Net loss
$
(14,457
)
$
(7,481
)
$
6,976

Adjusted cash flow from operations*
$
(4,133
)
$
4,172

$
8,305

Automotive
 
 
 
Revenue
$
38,367

$
46,015

$
7,648

Billings*
$
50,664

$
62,087

$
11,423

Gross profit
$
17,304

$
19,386

$
2,082

Gross margin
45
%
42
%
 
Direct contribution from billings*
$
21,512

$
28,564

$
7,052

Direct contribution margin from billings*
42
%
46
%
 
Cumulative Units Deployed to Date**
17,278

22,726

$
5,448

     Y/Y % Growth
42
%
32
%
 
Cumulative Connected Units Deployed to Date**
8,196

13,257

$
5,061

     Y/Y % Growth
71
%
62
%
 
Advertising
 
 
 
Revenue
$
4,811

$
4,529

$
(282
)
Billings*
$
4,811

$
4,529

$
(282
)
Gross profit
$
2,637

$
2,351

$
(286
)
Gross margin
55
%
52
%
 
Mobile Navigation
 
 
 
Revenue
$
3,204

$
2,525

$
(679
)
Billings*
$
3,229

$
2,500

$
(729
)
Gross profit
$
1,774

$
1,705

$
(69
)
Gross margin
55
%
68
%
 
* See "Use of non-GAAP Measures" for definitions and discussion.
 
** Deployment date is defined as the date upon which title has transferred.
 





Billings Comparison
chart1billingsa02.jpg
Automotive Results
Telenav’s technology has now been deployed in 22.7 million vehicles, including more than 1.3 million added during the third quarter of fiscal 2019.
Automotive revenue for the third quarter of fiscal 2019 was $46.0 million, a 20% increase compared with $38.4 million in the third quarter of fiscal 2018. Gross profit from the automotive business unit increased to $19.4 million in the third quarter of fiscal 2019, compared with $17.3 million in the third quarter of fiscal 2018.
Total automotive billings in the third quarter of fiscal 2019 were $62.1 million, compared with $50.7 million in the third quarter of fiscal 2018, primarily driven by higher units. In the third quarter of fiscal 2019, Ford represented 54% and 55% of our total revenue and billings, respectively, and GM represented 19% and 20% of our total revenue and billings, respectively.
Automotive direct contribution from billings in the third quarter of fiscal 2019 was $28.6 million, compared with $21.5 million in the third quarter of fiscal 2018, a 33% year over year growth, driven by increased units and an increase in customized software development billings. Automotive direct contribution margin from billings in the third quarter of fiscal 2019 was 46%, up 4% from 42% in the third quarter of fiscal 2018. The improvement in direct contribution margin from billings was due primarily to the customized software development billings.
In the third quarter of fiscal 2019, Toyota launched the 2020 Corolla sedan with Telenav’s Scout GPS Link.
 
Advertising Results
Advertising revenue, which includes the delivery of location-based advertising impressions, was $4.5 million in the third quarter of fiscal 2019, compared with $4.8 million in the third quarter of fiscal 2018. Gross profit on advertising services was $2.4 million in the third quarter of fiscal 2019, compared with $2.6 million in the third quarter of fiscal 2018, due to lower revenue. We continue to believe that location-





based advertising is a strategic component of our connected car roadmap, especially as it relates to potential new revenue streams from in-car ads.

Mobile Navigation Results
Mobile navigation revenue for the third quarter of fiscal 2019 was $2.5 million, compared with $3.2 million in the third quarter of fiscal 2018. Gross profit was $1.7 million in the third quarter of fiscal 2019, compared with $1.8 million in the third quarter of fiscal 2018.
 
Total Direct Contribution from Billings and Direct Contribution Margin from Billings
Our direct contribution from billings was $32.6 million in the third quarter of fiscal 2019, compared with $25.9 million in the third quarter of fiscal 2018, a 26% year over year growth, driven by the automotive segment, offset by the mobile navigation and advertising segments. Direct contribution margin from billings for the third quarter of fiscal 2019 was 47% compared with 44% in the third quarter of fiscal 2018.
Direct Contribution from Billings

chart2dircontribbillings.jpg
*Derived from Fiscal Year Ended June 30, 2018 Form 10-K filed on Sept. 21, 2018 with the SEC as reported on an ASC 605 basis.






Direct Contribution Margin from Billings
chart3dircontribmarginbillin.jpg
*Derived from Fiscal Year Ended June 30, 2018 Form 10-K filed on Sept. 21, 2018 with the SEC as reported on an ASC 605 basis.

Total Operating Expenses
Operating expenses in the third quarter of fiscal 2019 were $31.3 million, a decrease of 13% from $36.1 million in the third quarter of fiscal 2018. The decrease in operating expenses was primarily due to a $2.7 million goodwill impairment charge, which was recorded in the prior year, and the allocation to cost of services revenue of certain software maintenance costs previously allocated to research and development expense.
Net Loss
Net loss for the third quarter of fiscal 2019 was $(7.5) million, compared with $(14.5) million for the third 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
Adjusted cash flow from operations (formerly referred to as adjusted EBITDA on billings) in the third quarter of fiscal 2019 was $4.2 million as compared to $(4.1) million in the third quarter of fiscal 2018. The year over year increase is primarily attributable to improved direct contribution margin from the automotive segment.
Free Cash Flow
Free cash flow in the third quarter of fiscal 2019 was a negative $0.1 million compared with a negative $2.2 million in the third quarter of fiscal 2018. The increase was primarily attributable to a lower net loss experienced in the third quarter of fiscal 2019.





Business Outlook
The below 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.

Guidance
Q4 Fiscal 2019
(as of May 9, 2019)
(dollars and shares in millions)
Revenue
$51 to $54
Billings*
$64 to $67
Gross margin
45%
Direct contribution margin from billings *
45%
Operating expenses
$31.5 to $32.5
Net loss
$(7.5) to $(8.5)
Adjusted EBITDA loss*
$(5) to $(6)
Adjusted cash flow from operations*
$0 to $1
Automotive revenue
$44 to $47
Advertising revenue
$5
Weighted average diluted shares outstanding
46.5

* See "Use of non-GAAP Measures" for definitions and discussion.

As we look forward to the last quarter of fiscal 2019, we expect to see increased deployment within our automobile manufacturer and tier one partners and inclusion of our products and services on more car models, especially with GM. In addition, 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 automobile manufacturer customers’ transition of their North American passenger car portfolio to trucks, SUVs and CUVs, and assuming no unforeseen impact from macroeconomic changes, we anticipate that adjusted cash flow from operations will be positive for fiscal 2019.
Stock Repurchase Program
As announced in February 2019, Telenav’s Board of Directors authorized a program for the repurchase of up to $20.0 million of our shares of common stock through open market purchases. The term of the program is 18 months. The program is ongoing, and the timing and amount of repurchase transactions under this program will depend on market conditions, cash flow and other considerations. We repurchased 221,333 shares of our common stock in the open market under the program in the third quarter of fiscal 2019 at an average cost of $5.89 per share.


Q3 Fiscal Year 2019 Financial Results Q&A Conference Call, May 9, 2019 at 5:30 p.m. ET.
Management will host an investor conference call and live webcast at 2:30 p.m. PT (5:30 p.m. ET). To access the conference call, dial 888-394-8218 (toll-free, domestic only) or 323-701-0225 (domestic and international toll) and enter pass code 5019653. The webcast will be accessible on Telenav's investor relations website at http://investor.telenav.com.





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.
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 letter.
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 Telenav’s 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 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 and goodwill impairment. Stock-based compensation expense relates to equity incentive awards granted to its employees, directors, and consultants. Goodwill impairment represents the impairment of all of the goodwill associated with our mobile navigation segment. 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 September 2017.
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. 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. 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 generated by (used in) its business after purchases of property and equipment.
In this letter, Telenav has provided guidance for the fourth 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 investor letter contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to our management. Actual events or results may differ materially from those described in this document due to a number of risks and uncertainties. These potential risks and uncertainties include, among others: when and whether we will be profitable; fluctuations in our revenue and operating results; Our 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; our ability to expand into the Chinese automotive navigation market; 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; our success in maintaining and extending our contracts for current and new generation of products with our existing automobile manufacturers and tier ones, particularly Ford and GM; failure to comply with our auto manufacturer and tier one contracts, such as failure to obtain ASPICE certification; our ability to achieve additional design wins and the delivery dates of automobiles including our products; adoption by vehicle purchasers of Scout GPS Link; our dependence on a limited number of automobile manufacturers and tier ones for a substantial portion of our revenue; reductions in demand for automobiles; potential impacts of automobile manufacturers and tier ones including competitive capabilities in their vehicles such as Apple’s CarPlay and Android Auto; our advertising business; our 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 we have 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 our automotive customers, including inventory procurement and fulfillment; possible warranty claims, and the impact on consumer perception of its brand; our 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 we may not be able to realize our deferred tax assets and may have to take a reserve against them; our reliance on our 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. We discuss these risks in greater detail in “Risk Factors” and elsewhere in our Form 10-Q for the fiscal quarter ended December 31, 2018 and other filings with the U.S. Securities and Exchange Commission (“SEC”) including any subsequent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, which are available at the SEC’s website at www.sec.gov. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also,





forward-looking statements represent management’s beliefs and assumptions only as of the date made. You should review our SEC filings carefully and with the understanding that actual future results may be materially different from what we 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 investor letter are the trademarks, service marks or logos of their respective owners. 

TNAV-F
TNAV-C

Contacts
Investor Relations:
Bishop IR
Mike Bishop
415-894-9633
IR@telenav.com

Media:
Raphel Finelli
408-667-5970
raphelf@telenav.com






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

 
March 31,
2019
 
June 30,
2018
As Adjusted(1)
Assets
 

 

Current assets:
 

 

Cash and cash equivalents
 
$
21,254

 
$
17,117

Short-term investments
 
65,210

 
67,829

Accounts receivable, net of allowances of $12 and $17 at March 31, 2019 and June 30, 2018, respectively
 
57,829

 
46,188

Restricted cash
 
1,915

 
2,982

Deferred costs
 
15,385

 
11,759

Prepaid expenses and other current assets
 
3,635

 
3,867

Total current assets
 
165,228

 
149,742

Property and equipment, net
 
5,922

 
6,987

Deferred income taxes, non-current
 
655

 
867

Goodwill and intangible assets, net
 
30,261

 
31,046

Deferred costs, non-current
 
56,974

 
46,666

Other assets
 
3,398

 
2,372

Total assets
 
$
262,438

 
$
237,680

Liabilities and stockholders’ equity
 

 

Current liabilities:
 

 

Trade accounts payable
 
$
25,254

 
$
13,008

Accrued expenses
 
36,672

 
38,803

Deferred revenue
 
28,462

 
20,714

Income taxes payable
 
382

 
221

Total current liabilities
 
90,770

 
72,746

Deferred rent, non-current
 
1,379

 
1,112

Deferred revenue, non-current
 
75,357

 
53,824

Other long-term liabilities
 
1,035

 
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; 45,643 and 44,871 shares issued and outstanding at March 31, 2019 and June 30, 2018, respectively
 
46

 
45

Additional paid-in capital
 
172,997

 
167,895

Accumulated other comprehensive loss
 
(1,723
)
 
(1,855
)
Accumulated deficit
 
(77,423
)
 
(57,202
)
Total stockholders' equity
 
93,897

 
108,883

Total liabilities and stockholders’ equity
 
$
262,438

 
$
237,680

 
 
 
 
 
(1) Certain amounts have been adjusted to reflect the retrospective adoption of ASC 606.






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

 
 
 
 
 
 
 
 

 
Three Months Ended
March 31,
 
Nine Months Ended
March 31,

 
2019
 
2018
As Adjusted
(1)
 
2019
 
2018
As Adjusted
(1)
Revenue:
 
 
 
 
 
 
 
 
Product
 
$
41,723

 
$
34,455

 
$
124,050

 
$
120,754

Services
 
11,346

 
11,927

 
38,394

 
41,722

Total revenue
 
53,069

 
46,382

 
162,444

 
162,476

Cost of revenue:
 
 
 
 
 
 
 
 
Product
 
23,532

 
19,270

 
72,135

 
76,949

Services
 
6,095

 
5,397

 
20,445

 
19,299

Total cost of revenue
 
29,627

 
24,667

 
92,580

 
96,248

Gross profit
 
23,442

 
21,715

 
69,864

 
66,228

Operating expenses:
 
 
 
 
 
 
 
 
Research and development
 
20,508

 
22,018

 
59,701

 
64,098

Sales and marketing
 
5,265

 
5,654

 
14,135

 
15,854

General and administrative
 
5,523

 
5,618

 
16,694

 
16,343

Goodwill impairment
 

 
2,666

 

 
2,666

Legal settlements and contingencies
 

 
115

 
650

 
425

Total operating expenses
 
31,296

 
36,071

 
91,180

 
99,386

Loss from operations
 
(7,854
)
 
(14,356
)
 
(21,316
)
 
(33,158
)
Other income, net
 
581

 
229

 
2,703

 
400

Loss before provision for income taxes
 
(7,273
)
 
(14,127
)
 
(18,613
)
 
(32,758
)
Provision for income taxes
 
208

 
330

 
1,019

 
611

Net loss
 
$
(7,481
)
 
$
(14,457
)
 
$
(19,632
)
 
$
(33,369
)
 
 
 
 
 
 
 
 
 
Net loss per share:
 
 
 
 
 
 
 
 
Basic and diluted
 
$
(0.16
)
 
$
(0.32
)
 
$
(0.43
)
 
$
(0.75
)
Weighted average shares used in computing net loss per share:
 
 
 
 
 
 
 
 
Basic and diluted
 
45,585

 
44,637

 
45,347

 
44,396

 
 
 
 
 
 
 
 
 
(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)

 
Nine Months Ended
March 31,

 
2019
 
2018
As Adjusted
(1)
Operating activities
 

 

Net loss
 
$
(19,632
)
 
$
(33,369
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 

 

Depreciation and amortization
 
2,982

 
2,476

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
 
(15
)
 
156

Stock-based compensation expense
 
6,291

 
7,614

Goodwill impairment
 

 
2,666

Unrealized gain on non-marketable equity investments
 
(1,260
)
 

Loss (gain) on disposal of property and equipment
 
(4
)
 
13

Bad debt expense
 
4

 
(17
)
Changes in operating assets and liabilities:
 

 

Accounts receivable
 
(11,645
)
 
6,706

Deferred income taxes
 
195

 
(68
)
Income taxes receivable
 

 
2

Deferred costs
 
(13,934
)
 
(21,387
)
Prepaid expenses and other current assets
 
230

 
177

Other assets
 
36

 
(614
)
Trade accounts payable
 
12,290

 
11,398

Accrued expenses and other liabilities
 
(2,426
)
 
(12,082
)
Income taxes payable
 
160

 
64

Deferred rent
 
483

 
1,145

Deferred revenue
 
29,281

 
32,162

Net cash provided by (used in) operating activities
 
3,036

 
(4,078
)
Investing activities
 

 

Purchases of property and equipment
 
(957
)
 
(4,572
)
Purchases of short-term investments
 
(31,044
)
 
(42,849
)
Proceeds from sales and maturities of short-term investments
 
34,214

 
48,690

Net cash provided by investing activities
 
2,213

 
1,269

Financing activities
 

 

Proceeds from exercise of stock options
 
1,356

 
463

Tax withholdings related to net share settlements of restricted stock units
 
(1,831
)
 
(2,052
)
Repurchase of common stock
 
(1,303
)
 

Net cash used in financing activities
 
(1,778
)
 
(1,589
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
 
(401
)
 
956

Net increase (decrease) in cash, cash equivalents and restricted cash
 
3,070

 
(3,442
)
Cash, cash equivalents and restricted cash, at beginning of period
 
20,099

 
24,158

Cash, cash equivalents and restricted cash, at end of period
 
$
23,169

 
$
20,716

Supplemental disclosure of cash flow information
 

 

Income taxes paid, net
 
$
730

 
$
803

Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets
 
 
 
 
Cash and cash equivalents
 
$
21,254

 
$
17,509

Restricted cash
 
1,915

 
3,207

Total cash, cash equivalents and restricted cash
 
$
23,169

 
$
20,716

 
 
 
 
 
(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
March 31,
 
Nine Months Ended
March 31,

 
2019
 
2018
As Adjusted
(1)
 
2019
 
2018
As Adjusted
(1)
Automotive
 
 
 
 
 
 
 
 
Revenue
 
$
46,015

 
$
38,367

 
$
137,019

 
$
130,865

Cost of revenue
 
26,629

 
21,063

 
81,327

 
81,787

Gross profit
 
$
19,386

 
$
17,304

 
$
55,692

 
$
49,078

Gross margin
 
42
%
 
45
%
 
41
%
 
38
%
Advertising
 
 
 
 
 
 
 
 
Revenue
 
$
4,529

 
$
4,811

 
$
17,492

 
$
21,168

Cost of revenue
 
2,178

 
2,174

 
8,684

 
9,988

Gross profit
 
$
2,351

 
$
2,637

 
$
8,808

 
$
11,180

Gross margin
 
52
%
 
55
%
 
50
%
 
53
%
Mobile Navigation
 
 
 
 
 
 
 
 
Revenue
 
$
2,525

 
$
3,204

 
$
7,933

 
$
10,443

Cost of revenue
 
820

 
1,430

 
2,569

 
4,473

Gross profit
 
$
1,705

 
$
1,774

 
$
5,364

 
$
5,970

Gross margin
 
68
%
 
55
%
 
68
%
 
57
%
Total
 
 
 
 
 
 
 
 
Revenue
 
$
53,069

 
$
46,382

 
$
162,444

 
$
162,476

Cost of revenue
 
29,627

 
24,667

 
92,580

 
96,248

Gross profit
 
$
23,442

 
$
21,715

 
$
69,864

 
$
66,228

Gross margin
 
44
%
 
47
%
 
43
%
 
41
%
(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
March 31,
 
Nine Months Ended
March 31,
 
 
2019
 
2018
 
2019
 
2018
Automotive
 
 
 
 
 
 
 
 
Revenue
 
$
46,015

 
$
38,367

 
$
137,019

 
$
130,865

Adjustments:
 
 
 
 
 
 
 
 
Change in deferred revenue
 
16,072

 
12,297

 
29,396

 
32,388

Billings
 
$
62,087

 
$
50,664

 
$
166,415

 
$
163,253

Advertising
 
 
 
 
 
 
 
 
Revenue
 
$
4,529

 
$
4,811

 
$
17,492

 
$
21,168

Adjustments:
 
 
 
 
 
 
 
 
Change in deferred revenue
 

 

 

 

Billings
 
$
4,529

 
$
4,811

 
$
17,492

 
$
21,168

Mobile Navigation
 
 
 
 
 
 
 
 
Revenue
 
$
2,525

 
$
3,204

 
$
7,933

 
$
10,443

Adjustments:
 
 
 
 
 
 
 
 
Change in deferred revenue
 
(25
)
 
25

 
(115
)
 
(226
)
Billings
 
$
2,500

 
$
3,229

 
$
7,818

 
$
10,217

Total
 
 
 
 
 
 
 
 
Revenue
 
$
53,069

 
$
46,382

 
$
162,444

 
$
162,476

Adjustments:
 
 
 
 
 
 
 
 
Change in deferred revenue
 
16,047

 
12,322

 
29,281

 
32,162

Billings
 
$
69,116

 
$
58,704

 
$
191,725

 
$
194,638

 
 
 
 
 
 
 
 
 





Telenav, Inc.
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands)
 
Reconciliation of Deferred Revenue to Change in Deferred Revenue
Reconciliation of Deferred Costs to Change in Deferred Costs
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2019
 
 
Automotive
 
Advertising
 
Mobile Navigation
 
Total
Deferred revenue, March 31
 
$
103,397

 
$

 
$
422

 
$
103,819

Deferred revenue, December 31
 
87,325

 

 
447

 
87,772

Change in deferred revenue
 
$
16,072

 
$

 
$
(25
)
 
$
16,047

 
 
 
 
 
 
 
 
 
Deferred costs, March 31
 
$
72,359

 
$

 
$

 
$
72,359

Deferred costs, December 31
 
65,465

 

 

 
65,465

Change in deferred costs
 
$
6,894

 
$

 
$

 
$
6,894

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2018
 
 
Automotive
 
Advertising
 
Mobile Navigation
 
Total
Deferred revenue, March 31
 
$
70,618

 
$

 
$
658

 
$
71,276

Deferred revenue, December 31
 
58,321

 

 
633

 
58,954

Change in deferred revenue
 
$
12,297

 
$

 
$
25

 
$
12,322

 
 
 
 
 
 
 
 
 
Deferred costs, March 31
 
$
56,813

 
$

 
$

 
$
56,813

Deferred costs, December 31
 
48,724

 

 

 
48,724

Change in deferred costs
 
$
8,089

 
$

 
$

 
$
8,089

 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended March 31, 2019
 
 
Automotive
 
Advertising
 
Mobile Navigation
 
Total
Deferred revenue, March 31
 
$
103,397

 
$

 
$
422

 
$
103,819

Deferred revenue, June 30
 
74,001

 

 
537

 
74,538

Change in deferred revenue
 
$
29,396

 
$

 
$
(115
)
 
$
29,281

 
 
 
 
 
 
 
 
 
Deferred costs, March 31
 
$
72,359

 
$

 
$

 
$
72,359

Deferred costs, June 30
 
58,425

 

 

 
58,425

Change in deferred costs
 
$
13,934

 
$

 
$

 
$
13,934

 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended March 31, 2018
 
 
Automotive
 
Advertising
 
Mobile Navigation
 
Total
Deferred revenue, March 31
 
$
70,618

 
$

 
$
658

 
$
71,276

Deferred revenue, June 30
 
38,230

 

 
884

 
39,114

Change in deferred revenue
 
$
32,388

 
$

 
$
(226
)
 
$
32,162

 
 
 
 
 
 
 
 
 
Deferred costs, March 31
 
$
56,813

 
$

 
$

 
$
56,813

Deferred costs, June 30
 
35,426

 

 

 
35,426

Change in deferred costs
 
$
21,387

 
$

 
$

 
$
21,387







Telenav, Inc.
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands, except percentages)
Reconciliation of Gross Profit to Direct Contribution from Billings
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
March 31,
 
Nine Months Ended
March 31,
 
 
2019
 
2018
 
2019
 
2018
Automotive
 
 
 
 
 
 
 
 
Gross profit
 
$
19,386

 
$
17,304

 
$
55,692

 
$
49,078

Gross margin
 
42
%
 
45
%
 
41
%
 
38
%
Adjustments to gross profit:
 
 
 
 
 
 
 
 
Change in deferred revenue
 
16,072

 
12,297

 
29,396

 
32,388

Change in deferred costs(1)
 
(6,894
)
 
(8,089
)
 
(13,934
)
 
(21,387
)
Net change
 
9,178

 
4,208

 
15,462

 
11,001

Direct contribution from billings(1)
 
$
28,564

 
$
21,512

 
$
71,154

 
$
60,079

Direct contribution margin from billings(1)
 
46
%
 
42
%
 
43
%
 
37
%
 
 
 
 
 
 
 
 
 
Advertising
 
 
 
 
 
 
 
 
Gross profit
 
$
2,351

 
$
2,637

 
$
8,808

 
$
11,180

Gross margin
 
52
%
 
55
%
 
50
%
 
53
%
Adjustments to gross profit:
 
 
 
 
 
 
 
 
Change in deferred revenue
 

 

 

 

Change in deferred costs
 

 

 

 

Net change
 

 

 

 

Direct contribution from billings
 
$
2,351

 
$
2,637

 
$
8,808

 
$
11,180

Direct contribution margin from billings
 
52
%
 
55
%
 
50
%
 
53
%
 
 
 
 
 
 
 
 
 
Mobile Navigation
 
 
 
 
 
 
 
 
Gross profit
 
$
1,705

 
$
1,774

 
$
5,364

 
$
5,970

Gross margin
 
68
%
 
55
%
 
68
%
 
57
%
Adjustments to gross profit:
 
 
 
 
 
 
 
 
Change in deferred revenue
 
(25
)
 
25

 
(115
)
 
(226
)
Change in deferred costs
 

 

 

 

Net change
 
(25
)
 
25

 
(115
)
 
(226
)
Direct contribution from billings
 
$
1,680

 
$
1,799

 
$
5,249

 
$
5,744

Direct contribution margin from billings
 
67
%
 
56
%
 
67
%
 
56
%
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
 
 
 
Gross profit
 
$
23,442

 
$
21,715

 
$
69,864

 
$
66,228

Gross margin
 
44
%
 
47
%
 
43
%
 
41
%
Adjustments to gross profit:
 
 
 
 
 
 
 
 
Change in deferred revenue
 
16,047

 
12,322

 
29,281

 
32,162

Change in deferred costs(1)
 
(6,894
)
 
(8,089
)
 
(13,934
)
 
(21,387
)
Net change
 
9,153

 
4,233

 
15,347

 
10,775

Direct contribution from billings(1)
 
$
32,595

 
$
25,948

 
$
85,211

 
$
77,003

Direct contribution margin from billings(1)
 
47
%
 
44
%
 
44
%
 
40
%
 
 
 
 
 
 
 
 
 
(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 period 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
March 31,
 
Nine Months Ended
March 31,

 
2019
 
2018
 
2019
 
2018
Net loss
 
$
(7,481
)
 
$
(14,457
)
 
$
(19,632
)
 
$
(33,369
)
Adjustments:
 

 

 
 
 
 
Goodwill impairment
 

 
2,666

 

 
2,666

Legal settlements and contingencies
 

 
115

 
650

 
425

Deferred rent reversal due to lease termination
 

 

 

 
(538
)
Tenant improvement allowance recognition due to lease termination
 

 

 

 
(582
)
Stock-based compensation expense
 
1,907

 
2,246

 
6,291

 
7,614

Depreciation and amortization expense
 
966

 
963

 
2,982

 
2,476

Other income, net
 
(581
)
 
(229
)
 
(2,703
)
 
(400
)
Provision for income taxes
 
208

 
330

 
1,019

 
611

Adjusted EBITDA
 
(4,981
)
 
(8,366
)
 
(11,393
)
 
(21,097
)
Change in deferred revenue
 
16,047

 
12,322

 
29,281

 
32,162

Change in deferred costs(1)
 
(6,894
)
 
(8,089
)
 
(13,934
)
 
(21,387
)
Adjusted cash flow from operations(1)
 
$
4,172

 
$
(4,133
)
 
$
3,954

 
$
(10,322
)
 
 
 
 
 
 
 
 
 
(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 period 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
March 31,
 
Nine Months Ended
March 31,
 
 
2019
 
2018
 
2019
 
2018
Net loss
 
$
(7,481
)
 
$
(14,457
)
 
$
(19,632
)
 
$
(33,369
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
 
Change in deferred revenue (1)
 
16,047

 
12,322

 
29,281

 
32,162

Change in deferred costs (2)
 
(6,894
)
 
(8,089
)
 
(13,934
)
 
(21,387
)
Changes in other operating assets and liabilities
 
(4,140
)
 
3,420

 
(677
)
 
6,728

Other adjustments (3)
 
2,863

 
5,871

 
7,998

 
11,788

Net cash provided by (used in) operating activities
 
395

 
(933
)
 
3,036

 
(4,078
)
Less: Purchases of property and equipment
 
(511
)
 
(1,222
)
 
(957
)
 
(4,572
)
Free cash flow
 
$
(116
)
 
$
(2,155
)
 
$
2,079

 
$
(8,650
)
 
 
 
 
 
 
 
 
 
(1) Consists of product royalties, customized software development fees, service fees and subscription fees.
(2) Consists primarily of third party content costs and customized software development expenses.
(3) Consist primarily of depreciation and amortization, stock-based compensation expense and other non-cash items.






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
Form 10-K
 
Adjustments
 
As Adjusted
Assets
 
 
 
 
 
 
Deferred costs
 
$
31,888

 
$
(20,129
)
 
$
11,759

Deferred costs, non-current
 
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, non-current
 
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 March 31, 2018
 
Nine Months Ended March 31, 2018
 
 
As Reported
Mar. 31, 2018 Form 10-Q
 
Adjustments
 
As Adjusted
 
As Reported
Mar. 31, 2018 Form 10-Q
 
Adjustments
 
As Adjusted
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
Product
 
$
4,014

 
$
30,441

 
$
34,455

 
$
53,285

 
$
67,469

 
$
120,754

Services
 
9,809

 
2,118

 
11,927

 
36,276

 
5,446

 
41,722

Total revenue
 
13,823

 
32,559

 
46,382

 
89,561

 
72,915

 
162,476

Cost of revenue
 
 
 
 
 
 
 
 
 
 
 
 
Product
 
3,105

 
16,165

 
19,270

 
32,832

 
44,117

 
76,949

Services
 
5,115

 
282

 
5,397

 
18,546

 
753

 
19,299

Total cost of revenue
 
8,220

 
16,447

 
24,667

 
51,378

 
44,870

 
96,248

Gross profit
 
5,603

 
16,112

 
21,715

 
38,183

 
28,045

 
66,228

Operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
Research and development
 
22,212

 
(194
)
 
22,018

 
65,197

 
(1,099
)
 
64,098

Total operating expenses
 
36,265

 
(194
)
 
36,071

 
100,485

 
(1,099
)
 
99,386

Loss from operations
 
(30,662
)
 
16,306

 
(14,356
)
 
(62,302
)
 
29,144

 
(33,158
)
Net loss
 
(30,763
)
 
16,306

 
(14,457
)
 
(62,513
)
 
29,144

 
(33,369
)
Net loss per share, basic and diluted
 
$
(0.69
)
 
$
0.37

 
$
(0.32
)
 
$
(1.41
)
 
$
0.66

 
$
(0.75
)