"Telenav delivered strong top line results for the second quarter of fiscal 2017, with revenue growing 15% year-over-year to
Financial Highlights for the second quarter ended
- Total revenue was
$52.0 million , compared with$45.3 million in the same prior year period. - Billings were
$59.7 million , compared with$48.4 million in the same prior year period. - Automotive revenue was
$38.7 million , compared with$31.8 million in the same prior year period. - Advertising revenue was
$8.2 million , compared with$6.7 million in the same prior year period. - Deferred revenue as of
December 31, 2016 was$36.1 million , compared with$28.4 million as ofSeptember 30, 2016 . - Gross margin was 45%, compared to 46% in the same prior year period.
- Non-GAAP gross margin on billings was 45%, compared to 46% in the same prior year period.
- Operating expenses were
$34.9 million , compared with$27.6 million in the same prior year period. - Net loss was
($11.4) million , or ($0.26 ) per basic and diluted share, compared with($6.6) million , or ($0.16 ) per basic and diluted share, in the same prior year period. - Adjusted EBITDA was a
($2.6) million loss, compared with a($4.1) million loss in the same prior year period. - Adjusted EBITDA on billings was
$1.3 million , compared with a($2.6) million loss in the same prior year period. - As of
December 31, 2016 , ending cash, cash equivalents and short-term investments, excluding restricted cash, were$103.7 million . This represented cash and short-term investments of$2.39 per share, based on 43.3 million shares of common stock outstanding.Telenav had no debt as of quarter end. - Free cash flow was
$2.7 million , compared with($0.9) million in the same prior year period.
Recent Business Highlights
- Settled a patent lawsuit with
Vehicle IP, LLC resolving a patent infringement litigation brought againstTelenav andTelenav's customerAT&T Mobility LLC , resulting in a one-time settlement and license payment of$8.0 million to be made byTelenav . - Announced Scout GPS Link by
Telenav was chosen for select 2018Toyota vehicles equipped with Entune 3.0.
"We are pleased to announce that we expect to enter into an agreement with
Business Outlook
For the quarter ending
- Total revenue is expected to be
$37 to$39 million . -
Billings are expected to be
$60 to$63 million . - Automotive revenue is expected to be 71% to 74% of total revenue.
- Advertising revenue is expected to be approximately 16% of total revenue.
- Gross margin is expected to be approximately 48%.
- Non-GAAP gross margin on billings is expected to be approximately 39%.
- Operating expenses are expected to be
$30 to$31 million . - Net loss is expected to be (
$12 ) to($13) million . - Net loss per share is expected to be (
$0.28 ) to ($0.30 ). - Adjusted EBITDA is expected to be a (
$9.0 ) to($10.0) million loss. - Adjusted EBITDA on billings is expected to be a (
$3.5 ) to($4.5) million loss. - Weighted average shares outstanding are expected to be approximately 43.5 million.
The above information concerning guidance represents Telenav's outlook only as of the date hereof, and is subject to change as a result of amendments to material contracts and other changes in business conditions.
Conference Call
The company will host an investor conference call and live webcast at
Use of Non-GAAP Financial Measures
We have previously provided billings as a non-GAAP metric, and beginning with this quarter we are providing non-GAAP gross profit on billings, non-GAAP gross margin on billings and adjusted EBITDA on billings' metrics. We anticipate providing non-GAAP gross profit on billings, non-GAAP gross margin on billings and adjusted EBITDA on billings over the next two quarters due to the impact on reported GAAP revenue of certain value-added offerings, including Ford MapCare anticipated for SYNC 3 vehicles in the
We anticipate early adopting the FASB's new accounting standard, ASC 606, Revenue from
Contracts with Customers, effective
Billings measure GAAP revenue recognized plus the change in deferred revenue from the beginning to the end of the period. Non-GAAP gross profit on billings reflects GAAP gross profit plus change in deferred revenue less change in deferred costs. Non-GAAP gross margin on billings reflects non-GAAP gross profit on billings divided by billings. We have also provided a breakdown of the calculation of the change in deferred revenue by segment, which is added to revenue in calculating our non-GAAP metric of billings. In connection with our presentation of the change in deferred revenue, we have provided a similar presentation of the change in the related deferred costs. Such 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. As deferred revenue and deferred costs become larger components of our operating results, we believe these metrics are useful in evaluating cash flow.
We consider billings, non-GAAP gross profit on billings and non-GAAP gross margin on billings to be useful metrics for management and investors because billings drive deferred revenue, which is an important indicator of our business. We believe non-GAAP gross profit on billings and non-GAAP gross margin on billings are useful metrics because they reflect the impact of the gross profit to be earned 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, non-GAAP gross profit on billings and non-GAAP gross margin on billings versus revenue, gross profit, and gross margin calculated in accordance with GAAP. First, billings, non-GAAP gross profit on billings, and non-GAAP gross margin on billings include amounts that have not yet been recognized as revenue or cost and may require additional services to be provided over contracted service periods. For example, billings related to certain connected solutions cannot be fully recognized as revenue in a given period due to requirements for ongoing provisioning of services such as hosting, monitoring and customer support. Accordingly, non-GAAP gross profit on billings and non-GAAP gross margin on billings do not include all costs associated with billings. Second, we may calculate billings, non-GAAP gross profit on billings, and non-GAAP gross margin on billings in a manner that is different from peer companies that report similar financial measures, making comparisons between companies more difficult. When we use these measures, we attempt to compensate for these limitations by providing specific information regarding billings, non-GAAP gross profit on billings and non-GAAP gross margin on billings and how they relate to revenue, gross profit, and gross margin calculated in accordance with GAAP.
Adjusted EBITDA measures our GAAP net loss excluding the impact of stock-based compensation expense, depreciation and amortization, other income (expense), provision (benefit) for income taxes, and other applicable items such as legal settlements and contingencies, restructuring accruals and reversals, and deferred rent reversals due to lease termination, net of tax. Stock-based compensation expense relates to equity incentive awards granted to our employees, directors, and consultants. Legal settlements and contingencies represent settlements and offers made to settle patent litigation cases in which we are defendants and royalty disputes. Deferred rent reversals represent the reversal of our deferred rent liability that is no longer required due to our facility lease termination in fiscal 2016. We believe adjusted EBITDA is a useful measure of profitability before the impact of certain non-cash expenses, interest income, income taxes, and certain other items that management believes affect the comparability of operating results.
Adjusted EBITDA on billings measures adjusted EBITDA plus the effect of changes in deferred revenue and deferred costs. We believe adjusted EBITDA on billings is a useful measure, especially in light of the impact we expect on reported GAAP revenue for certain value-added offerings we provide our customers, including Ford MapCare. Adjusted EBITDA and adjusted EBITDA on billings, while generally measures of profitability, can also represent losses.
Free cash flow is a non-GAAP financial measure we define as net cash provided by (used in) operating activities, less purchases of property and equipment. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash (used in) generated by our business after purchases of property and equipment.
We determined that it would be meaningful to investors to develop a breakout of the operating results of the advertising business beyond the current GAAP segment reporting of revenue, cost of revenue and gross margin, and we are including such presentation in our non-GAAP reporting results. This presentation reflects operating expenses that are directly attributable to the advertising business. We are unable to provide a similar breakout of operating results for the automotive and mobile navigation businesses beyond the current GAAP segment reporting of revenue, cost of revenue and gross margin because these segments share many of the same technologies and resources and as such, have operating expenses which cannot be fully attributable to one versus the other segment. In addition, the reported non-GAAP operating results for the advertising business only include an allocation of certain shared corporate general and administrative costs that directly benefit the business, such as accounting and human resource services.
To reconcile the historical GAAP results to non-GAAP financial metrics, please refer to the reconciliations in the financial statements included in this earnings release.
In this earnings release,
Forward Looking Statements
This press release contains forward-looking statements that are based on
About
Copyright 2017 Telenav, Inc. All Rights Reserved.
TNAV-F
TNAV-C
Condensed Consolidated Balance Sheets | ||||||||
(in thousands, except par value) | ||||||||
2016 | 2016* | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 17,694 | $ | 21,349 | ||||
Short-term investments | 85,988 | 88,277 | ||||||
Accounts receivable, net of allowances of | 47,815 | 42,216 | ||||||
Restricted cash | 4,094 | 5,109 | ||||||
Income taxes receivable | 648 | 687 | ||||||
Deferred costs | 3,919 | 1,784 | ||||||
Prepaid expenses and other current assets | 3,868 | 4,448 | ||||||
Total current assets | 164,026 | 163,870 | ||||||
Property and equipment, net | 4,795 | 5,247 | ||||||
Deferred income taxes, non-current | 435 | 661 | ||||||
35,475 | 35,993 | |||||||
Deferred costs, non-current | 14,861 | 10,292 | ||||||
Other assets | 1,840 | 2,184 | ||||||
Total assets | $ | 221,432 | $ | 218,247 | ||||
Liabilities and stockholders' equity | ||||||||
Current liabilities: | ||||||||
Trade accounts payable | $ | 10,255 | $ | 4,992 | ||||
Accrued expenses | 41,374 | 36,274 | ||||||
Deferred revenue | 8,035 | 4,334 | ||||||
Income taxes payable | 242 | 88 | ||||||
Total current liabilities | 59,906 | 45,688 | ||||||
Deferred rent, non-current | 1,207 | 1,124 | ||||||
Deferred revenue, non-current | 28,062 | 19,035 | ||||||
Other long-term liabilities | 1,323 | 2,715 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity: | ||||||||
Preferred stock, | — | — | ||||||
Common stock, | 43 | 43 | ||||||
Additional paid-in capital | 152,824 | 149,775 | ||||||
Accumulated other comprehensive loss | (2,809 | ) | (1,767 | ) | ||||
Retained earnings (accumulated deficit) | (19,124 | ) | 1,634 | |||||
Total stockholders' equity | 130,934 | 149,685 | ||||||
Total liabilities and stockholders' equity | $ | 221,432 | $ | 218,247 | ||||
*Derived from audited consolidated financial statements as of and for the year ended | ||||||||
Condensed Consolidated Statements of Operations | |||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||
(unaudited) | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Revenue: | |||||||||||||||||
Product | $ | 37,804 | $ | 31,160 | $ | 67,227 | $ | 62,269 | |||||||||
Services | 14,197 | 14,093 | 27,001 | 27,045 | |||||||||||||
Total revenue | 52,001 | 45,253 | 94,228 | 89,314 | |||||||||||||
Cost of revenue: | |||||||||||||||||
Product | 22,598 | 18,364 | 40,359 | 36,447 | |||||||||||||
Services | 6,129 | 6,168 | 11,844 | 11,472 | |||||||||||||
Total cost of revenue | 28,727 | 24,532 | 52,203 | 47,919 | |||||||||||||
Gross profit | 23,274 | 20,721 | 42,025 | 41,395 | |||||||||||||
Operating expenses: | |||||||||||||||||
Research and development | 16,301 | 16,653 | 34,319 | 34,640 | |||||||||||||
Sales and marketing | 5,277 | 6,524 | 10,545 | 13,522 | |||||||||||||
General and administrative | 6,872 | 5,094 | 12,363 | 11,329 | |||||||||||||
Legal settlement and contingencies | 6,424 | 750 | 6,424 | 750 | |||||||||||||
Restructuring | — | (1,468 | ) | — | (1,468 | ) | |||||||||||
Total operating expenses | 34,874 | 27,553 | 63,651 | 58,773 | |||||||||||||
Loss from operations | (11,600 | ) | (6,832 | ) | (21,626 | ) | (17,378 | ) | |||||||||
Other income (expense), net | 714 | 520 | 1,010 | 333 | |||||||||||||
Loss before provision for income taxes | (10,886 | ) | (6,312 | ) | (20,616 | ) | (17,045 | ) | |||||||||
Provision for income taxes | 537 | 327 | 142 | 440 | |||||||||||||
Net loss | $ | (11,423 | ) | $ | (6,639 | ) | $ | (20,758 | ) | $ | (17,485 | ) | |||||
Net loss per share: | |||||||||||||||||
Basic and diluted | $ | (0.26 | ) | $ | (0.16 | ) | $ | (0.48 | ) | $ | (0.43 | ) | |||||
Weighted average shares used in computing net loss per share: | |||||||||||||||||
Basic and diluted | 43,208 | 41,038 | 42,932 | 40,820 | |||||||||||||
Condensed Consolidated Statements of Cash Flows | |||||||||
(in thousands) | |||||||||
(unaudited) | |||||||||
Six Months Ended | |||||||||
2016 | 2015 | ||||||||
Operating activities | |||||||||
Net loss | $ | (20,758 | ) | $ | (17,485 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||
Depreciation and amortization | 1,260 | 1,916 | |||||||
Accretion of net premium on short-term investments | 237 | 381 | |||||||
Stock-based compensation expense | 4,529 | 6,267 | |||||||
Write-off of long term investments | — | 477 | |||||||
(Gain) loss on disposal of property and equipment | (2 | ) | (4 | ) | |||||
Bad debt expense | 125 | 51 | |||||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable | (5,724 | ) | (1,007 | ) | |||||
Deferred income taxes | 226 | 121 | |||||||
Restricted cash | 1,015 | 199 | |||||||
Income taxes receivable | 39 | 614 | |||||||
Deferred costs | (6,704 | ) | (4,302 | ) | |||||
Prepaid expenses and other current assets | 580 | (239 | ) | ||||||
Other assets | 98 | 908 | |||||||
Trade accounts payable | 5,309 | 80 | |||||||
Accrued expenses and other liabilities | 3,945 | (1,010 | ) | ||||||
Income taxes payable | 154 | 162 | |||||||
Deferred rent | 44 | (814 | ) | ||||||
Deferred revenue | 12,728 | 7,023 | |||||||
Net cash used in operating activities | (2,899 | ) | (6,662 | ) | |||||
Investing activities | |||||||||
Purchases of property and equipment | (531 | ) | (332 | ) | |||||
Purchases of short-term investments | (37,788 | ) | (20,622 | ) | |||||
Proceeds from sales and maturities of short-term investments | 39,392 | 23,009 | |||||||
Proceeds from sales of long-term investments | 246 | — | |||||||
Net cash provided by investing activities | 1,319 | 2,055 | |||||||
Financing activities | |||||||||
Proceeds from exercise of stock options | 159 | 921 | |||||||
Repurchase of common stock | — | (570 | ) | ||||||
Tax withholdings related to net share settlements of restricted stock units | (1,638 | ) | (1,796 | ) | |||||
Net cash used in financing activities | (1,479 | ) | (1,445 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | (596 | ) | (576 | ) | |||||
Net decrease in cash and cash equivalents | (3,655 | ) | (6,628 | ) | |||||
Cash and cash equivalents, at beginning of period | 21,349 | 18,721 | |||||||
Cash and cash equivalents, at end of period | $ | 17,694 | $ | 12,093 | |||||
Supplemental disclosure of cash flow information | |||||||||
Income taxes paid (received), net | $ | 1,410 | $ | (528 | ) | ||||
Condensed Consolidated Segment Summary | ||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Revenue: | ||||||||||||||||
Automotive | $ | 38,744 | $ | 31,846 | $ | 69,011 | $ | 63,589 | ||||||||
Advertising | 8,208 | 6,688 | 14,753 | 11,539 | ||||||||||||
Mobile Navigation | 5,049 | 6,719 | 10,464 | 14,186 | ||||||||||||
Total revenue | 52,001 | 45,253 | 94,228 | 89,314 | ||||||||||||
Cost of revenue: | ||||||||||||||||
Automotive | 23,438 | 18,931 | 41,983 | 37,452 | ||||||||||||
Advertising | 3,919 | 3,755 | 7,445 | 6,750 | ||||||||||||
Mobile Navigation | 1,370 | 1,846 | 2,775 | 3,717 | ||||||||||||
Total cost of revenue | 28,727 | 24,532 | 52,203 | 47,919 | ||||||||||||
Gross profit: | ||||||||||||||||
Automotive | 15,306 | 12,915 | 27,028 | 26,137 | ||||||||||||
Advertising | 4,289 | 2,933 | 7,308 | 4,789 | ||||||||||||
Mobile Navigation | 3,679 | 4,873 | 7,689 | 10,469 | ||||||||||||
Total gross profit | $ | 23,274 | $ | 20,721 | $ | 42,025 | $ | 41,395 | ||||||||
Gross margin: | ||||||||||||||||
Automotive | 40 | % | 41 | % | 39 | % | 41 | % | ||||||||
Advertising | 52 | % | 44 | % | 50 | % | 42 | % | ||||||||
Mobile Navigation | 73 | % | 73 | % | 73 | % | 74 | % | ||||||||
Total gross margin | 45 | % | 46 | % | 45 | % | 46 | % | ||||||||
Unaudited Reconciliation of Non-GAAP Adjustments | ||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||
Reconciliation of Revenue to Billings (Non-GAAP) | ||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
Automotive | Advertising | Mobile Navigation | Total | Automotive | Advertising |
Mobile Navigation | Total | |||||||||||||||||||
Revenue | $ | 38,744 | $ | 8,208 | $ | 5,049 | $ | 52,001 | $ | 69,011 | $ | 14,753 | $ | 10,464 | $ | 94,228 | ||||||||||
Adjustments: | ||||||||||||||||||||||||||
Change in deferred revenue | 7,694 | — | (8 | ) | 7,686 | 12,807 | — | (79 | ) | 12,728 | ||||||||||||||||
Billings (Non-GAAP) | $ | 46,438 | $ | 8,208 | $ | 5,041 | $ | 59,687 | $ | 81,818 | $ | 14,753 | $ | 10,385 | $ | 106,956 | ||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
Automotive | Advertising | Mobile Navigation | Total | Automotive | Advertising | Mobile Navigation | Total | |||||||||||||||||||
Revenue | $ | 31,846 | $ | 6,688 | $ | 6,719 | $ | 45,253 | $ | 63,589 | $ | 11,539 | $ | 14,186 | $ | 89,314 | ||||||||||
Adjustments: | ||||||||||||||||||||||||||
Change in deferred revenue | 3,434 | — | (252 | ) | 3,182 | 7,251 | — | (228 | ) | 7,023 | ||||||||||||||||
Billings (Non-GAAP) | $ | 35,280 | $ | 6,688 | $ | 6,467 | $ | 48,435 | $ | 70,840 | $ | 11,539 | $ | 13,958 | $ | 96,337 | ||||||||||
Unaudited Reconciliation of Non-GAAP Adjustments | |||||||||||||||||
(in thousands) | |||||||||||||||||
Reconciliation of Gross Profit to Non-GAAP Gross Profit on Billings | |||||||||||||||||
Reconciliation of Gross Margin to Non-GAAP Gross Margin on Billings | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Gross profit | $ | 23,274 | $ | 20,721 | $ | 42,025 | $ | 41,395 | |||||||||
Gross margin | 45 | % | 46 | % | 45 | % | 46 | % | |||||||||
Adjustments to gross profit: | |||||||||||||||||
Change in deferred revenue | 7,686 | 3,182 | 12,728 | 7,023 | |||||||||||||
Change in deferred costs(1) | (3,847 | ) | (1,629 | ) | (6,704 | ) | (4,302 | ) | |||||||||
Net change | 3,839 | 1,553 | 6,024 | 2,721 | |||||||||||||
Non-GAAP gross profit on billings(1) | $ | 27,113 | $ | 22,274 | $ | 48,049 | $ | 44,116 | |||||||||
Non-GAAP gross margin on billings(1) | 45 | % | 46 | % | 45 | % | 46 | % | |||||||||
(1) Deferred costs primarily include costs associated with third party content and in connection with certain customized software solutions, the costs incurred to develop those solutions. We expect to incur additional costs in the future due to requirements to provide ongoing provisioning of services such as hosting, monitoring and customer support. Accordingly, non-GAAP gross profit on billings and non-GAAP gross margin on billings do not reflect all costs associated with billings. | |||||||||||||||||
Unaudited Reconciliation of Non-GAAP Adjustments | |||||||||||||
(in thousands) | |||||||||||||
Reconciliation of Deferred Revenue to Increase (Decrease) in Deferred Revenue | |||||||||||||
Reconciliation of Deferred Costs to Increase (Decrease) in Deferred Costs | |||||||||||||
Three Months Ended | |||||||||||||
Automotive | Advertising | Mobile Navigation | Total | ||||||||||
Deferred revenue, | $ | 34,960 | $ | — | $ | 1,137 | $ | 36,097 | |||||
Deferred revenue, |
27,266 | — | 1,145 | 28,411 | |||||||||
Increase (decrease) in deferred revenue | $ | 7,694 | $ | — | $ | (8 | ) | $ | 7,686 | ||||
Deferred costs, | $ | 18,780 | $ | — | $ | — | $ | 18,780 | |||||
Deferred costs, | 14,933 | — | — | 14,933 | |||||||||
Increase in deferred costs | $ | 3,847 | $ | — | $ | — | $ | 3,847 | |||||
Three Months Ended | |||||||||||||
Automotive | Advertising | Mobile Navigation | Total | ||||||||||
Deferred revenue, | $ | 12,443 | $ | — | $ | 1,408 | $ | 13,851 | |||||
Deferred revenue, | 9,009 | — | 1,660 | 10,669 | |||||||||
Increase (decrease) in deferred revenue | $ | 3,434 | $ | — | $ | (252 | ) | $ | 3,182 | ||||
Deferred costs, | $ | 7,443 | $ | — | $ | — | $ | 7,443 | |||||
Deferred costs, | 5,814 | — | — | 5,814 | |||||||||
Increase in deferred costs | $ | 1,629 | $ | — | $ | — | $ | 1,629 | |||||
Six Months Ended | |||||||||||||
Automotive | Advertising | Mobile Navigation | Total | ||||||||||
Deferred revenue, | $ | 34,960 | $ | — | $ | 1,137 | $ | 36,097 | |||||
Deferred revenue, | 22,153 | — | 1,216 | 23,369 | |||||||||
Increase (decrease) in deferred revenue | $ | 12,807 | $ | — | $ | (79 | ) | $ | 12,728 | ||||
Deferred costs, | $ | 18,780 | $ | — | $ | — | $ | 18,780 | |||||
Deferred costs, | 12,076 | — | — | 12,076 | |||||||||
Increase in deferred costs | $ | 6,704 | $ | — | $ | — | $ | 6,704 | |||||
Six Months Ended | |||||||||||||
Automotive | Advertising | Mobile Navigation | Total | ||||||||||
Deferred revenue, | $ | 12,443 | $ | — | $ | 1,408 | $ | 13,851 | |||||
Deferred revenue, | 5,192 | — | 1,636 | 6,828 | |||||||||
Increase (decrease) in deferred revenue | $ | 7,251 | $ | — | $ | (228 | ) | $ | 7,023 | ||||
Deferred costs, | $ | 7,443 | $ | — | $ | — | $ | 7,443 | |||||
Deferred costs, | 3,141 | — | — | 3,141 | |||||||||
Increase in deferred costs | $ | 4,302 | $ | — | $ | — | $ | 4,302 | |||||
Unaudited Reconciliation of Non-GAAP Adjustments | |||||||||||||||||
(in thousands) | |||||||||||||||||
Reconciliation of Net Loss to Adjusted EBITDA and Adjusted EBITDA on Billings | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Net loss | $ | (11,423 | ) | $ | (6,639 | ) | $ | (20,758 | ) | $ | (17,485 | ) | |||||
Adjustments: | |||||||||||||||||
Legal settlement and contingencies | 6,424 | 750 | 6,424 | 750 | |||||||||||||
Restructuring accrual (reversal) | — | (1,468 | ) | — | (1,468 | ) | |||||||||||
Deferred rent reversal due to lease termination | — | (621 | ) | — | (621 | ) | |||||||||||
Stock-based compensation expense | 1,988 | 3,180 | 4,529 | 6,267 | |||||||||||||
Depreciation and amortization expense | 623 | 847 | 1,260 | 1,916 | |||||||||||||
Other income (expense), net | (714 | ) | (520 | ) | (1,010 | ) | (333 | ) | |||||||||
Provision for income taxes | 537 | 327 | 142 | 440 | |||||||||||||
Adjusted EBITDA | $ | (2,565 | ) | $ | (4,144 | ) | $ | (9,413 | ) | $ | (10,534 | ) | |||||
Change in deferred revenue | 7,686 | 3,182 | 12,728 | 7,023 | |||||||||||||
Change in deferred costs(1) | (3,847 | ) | (1,629 | ) | (6,704 | ) | (4,302 | ) | |||||||||
Adjusted EBITDA on billings(1) | $ | 1,274 | $ | (2,591 | ) | $ | (3,389 | ) | $ | (7,813 | ) | ||||||
(1) We expect to incur additional costs in the future due to requirements to provide ongoing provisioning of services such as hosting, monitoring and customer support. Accordingly, adjusted EBITDA on billings does not reflect all costs associated with billings. | |||||||||||||||||
Unaudited Reconciliation of Non-GAAP Adjustments | ||||||||||||||||||
(in thousands) | ||||||||||||||||||
Reconciliation of Net Loss to Free Cash Flow | ||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Net loss | $ | (11,423 | ) | $ | (6,639 | ) | $ | (20,758 | ) | $ | (17,485 | ) | ||||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||||
Increase in deferred revenue (1) | 7,686 | 3,182 | 12,728 | 7,023 | ||||||||||||||
Increase in deferred costs (2) | (3,847 | ) | (1,629 | ) | (6,704 | ) | (4,302 | ) | ||||||||||
Changes in other operating assets and liabilities | 7,595 | 81 | 5,686 | (986 | ) | |||||||||||||
Other adjustments (3) | 2,779 | 4,212 | 6,149 | 9,088 | ||||||||||||||
Net cash used in operating activities | 2,790 | (793 | ) | (2,899 | ) | (6,662 | ) | |||||||||||
Less: Purchases of property and equipment | (137 | ) | (90 | ) | (531 | ) | (332 | ) | ||||||||||
Free cash flow | $ | 2,653 | $ | (883 | ) | $ | (3,430 | ) | $ | (6,994 | ) | |||||||
(1) Consists of royalties, customized software development 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. | ||||||||||||||||||
Unaudited Reconciliation of Non-GAAP Adjustments | |||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||
Non-GAAP metrics for the Advertising segment and the combined Automotive and Mobile Navigation segments | |||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||
GAAP Consolidated | Non-GAAP Consolidated | Non-GAAP Advertising | Automotive (1) | Mobile Navigation (1) | Total Non-GAAP Automotive and Mobile Navigation (1) | ||||||||||||||||||||
Revenue | $ | 52,001 | $ | 8,208 | $ | 38,744 | $ | 5,049 | $ | 43,793 | |||||||||||||||
Cost of revenue | 28,727 | 3,919 | 23,438 | 1,370 | 24,808 | ||||||||||||||||||||
Gross profit | 23,274 | 4,289 | $ | 15,306 | $ | 3,679 | 18,985 | ||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||
Research and development | 16,301 | 1,235 | (2 | ) | 15,066 | ||||||||||||||||||||
Sales and marketing | 5,277 | 2,568 | (2 | ) | 2,709 | ||||||||||||||||||||
General and administrative | 6,872 | 410 | (3 | ) | 6,462 | ||||||||||||||||||||
Legal settlement and contingencies | 6,424 | — | (4 | ) | 6,424 | ||||||||||||||||||||
Total operating expenses | 34,874 | 4,213 | 30,661 | ||||||||||||||||||||||
Income (loss) from operations | (11,600 | ) | 76 | (11,676 | ) | ||||||||||||||||||||
Other income (expense), net | 714 | — | (5 | ) | 714 | ||||||||||||||||||||
Income (loss) before provision for income taxes | (10,886 | ) | 76 | (10,962 | ) | ||||||||||||||||||||
Provision for income taxes | 537 | — | (6 | ) | 537 | ||||||||||||||||||||
Net income (loss) | $ | (11,423 | ) | $ | (11,423 | ) | $ | 76 | $ | (11,499 | ) | ||||||||||||||
Adjustments: | |||||||||||||||||||||||||
Legal settlement and contingencies | 6,424 | — | (4 | ) | 6,424 | ||||||||||||||||||||
Stock-based compensation expense | 1,988 | 286 | (2 | ) | 1,702 | ||||||||||||||||||||
Depreciation and amortization expense | 623 | 51 | (2 | ) | 572 | ||||||||||||||||||||
Other income (expense), net | (714 | ) | — | (5 | ) | (714 | ) | ||||||||||||||||||
Provision for income taxes | 537 | — | (6 | ) | 537 | ||||||||||||||||||||
Adjusted EBITDA | $ | (2,565 | ) | $ | 413 | $ | (2,978 | ) | |||||||||||||||||
Change in deferred revenue | 7,686 | — | 7,686 | ||||||||||||||||||||||
Change in deferred costs(7) | (3,847 | ) | — | (3,847 | ) | ||||||||||||||||||||
Adjusted EBITDA on billings(7) | $ | 1,274 | $ | 413 | $ | 861 | |||||||||||||||||||
(1) Automotive and mobile navigation segments share many of the same technologies and resources. Accordingly, we are unable to fully attribute the operating expenses, other income (expense), net and provision (benefit) for income taxes to one segment versus the other. | |||||||||||||||||||||||||
For purposes of calculating the Non-GAAP net loss attributable to the advertising segment: | |||||||||||||||||||||||||
(2) These expenses represent costs directly attributable to the advertising segment. | |||||||||||||||||||||||||
(3) These expenses represent actual general and administrative costs directly attributable to the advertising segment as well as an allocation of certain shared corporate costs that directly benefit the advertising segment, such as accounting and human resources. | |||||||||||||||||||||||||
(4) Legal settlement and contingencies are not related to the advertising segment. | |||||||||||||||||||||||||
(5) Expenses or income cannot be directly allocated to the advertising segment. | |||||||||||||||||||||||||
(6) Income taxes are primarily from foreign operations which support the automotive and mobile navigation segments. | |||||||||||||||||||||||||
(7) We expect to incur additional costs in the future due to requirements to provide ongoing provisioning of services such as hosting, monitoring and customer support. Accordingly, adjusted EBITDA on billings does not reflect all costs associated with billings. | |||||||||||||||||||||||||
Unaudited Reconciliation of Non-GAAP Adjustments | |||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||
Non-GAAP metrics for the Advertising segment and the combined Automotive and Mobile Navigation segments | |||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||
GAAP Consolidated | Non-GAAP Consolidated | Non-GAAP Advertising | Automotive (1) | Mobile Navigation (1) | Total Non-GAAP Automotive and Mobile Navigation (1) | ||||||||||||||||||||
Revenue | $ | 45,253 | $ | 6,688 | $ | 31,846 | $ | 6,719 | $ | 38,565 | |||||||||||||||
Cost of revenue | 24,532 | 3,755 | 18,931 | 1,846 | 20,777 | ||||||||||||||||||||
Gross profit | 20,721 | 2,933 | $ | 12,915 | $ | 4,873 | 17,788 | ||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||
Research and development | 16,653 | 1,051 | (2 | ) | 15,602 | ||||||||||||||||||||
Sales and marketing | 6,524 | 3,661 | (2 | ) | 2,863 | ||||||||||||||||||||
General and administrative | 5,094 | 503 | (3 | ) | 4,591 | ||||||||||||||||||||
Legal settlement and contingencies | 750 | — | (4 | ) | 750 | ||||||||||||||||||||
Restructuring | (1,468 | ) | (375 | ) | (2 | ) | (1,093 | ) | |||||||||||||||||
Total operating expenses | 27,553 | 4,840 | 22,713 | ||||||||||||||||||||||
Loss from operations | (6,832 | ) | (1,907 | ) | (4,925 | ) | |||||||||||||||||||
Other income (expense), net | 520 | — | (5 | ) | 520 | ||||||||||||||||||||
Loss before provision for income taxes | (6,312 | ) | (1,907 | ) | (4,405 | ) | |||||||||||||||||||
Provision for income taxes | 327 | — | (6 | ) | 327 | ||||||||||||||||||||
Net loss | $ | (6,639 | ) | $ | (6,639 | ) | $ | (1,907 | ) | $ | (4,732 | ) | |||||||||||||
Adjustments: | |||||||||||||||||||||||||
Legal settlement and contingencies | 750 | — | (4 | ) | 750 | ||||||||||||||||||||
Stock-based compensation expense | 3,180 | 337 | (2 | ) | 2,843 | ||||||||||||||||||||
Restructuring | (1,468 | ) | (375 | ) | (2 | ) | (1,093 | ) | |||||||||||||||||
Deferred rent reversal due to lease termination | (621 | ) | (159 | ) | (2 | ) | (462 | ) | |||||||||||||||||
Depreciation and amortization expense | 847 | 203 | (2 | ) | 644 | ||||||||||||||||||||
Other income (expense), net | (520 | ) | — | (5 | ) | (520 | ) | ||||||||||||||||||
Provision for income taxes | 327 | — | (6 | ) | 327 | ||||||||||||||||||||
Adjusted EBITDA | $ | (4,144 | ) | $ | (1,901 | ) | $ | (2,243 | ) | ||||||||||||||||
Change in deferred revenue | 3,182 | — | 3,182 | ||||||||||||||||||||||
Change in deferred costs(7) | (1,629 | ) | — | (1,629 | ) | ||||||||||||||||||||
Adjusted EBITDA on billings(7) | $ | (2,591 | ) | $ | (1,901 | ) | $ | (690 | ) | ||||||||||||||||
(1) Automotive and mobile navigation segments share many of the same technologies and resources. Accordingly, we are unable to fully attribute the operating expenses, other income (expense), net and provision (benefit) for income taxes to one segment versus the other. | |||||||||||||||||||||||||
For purposes of calculating the Non-GAAP net loss attributable to the advertising segment: | |||||||||||||||||||||||||
(2) These expenses represent costs directly attributable to the advertising segment. | |||||||||||||||||||||||||
(3) These expenses represent actual general and administrative costs directly attributable to the advertising segment as well as an allocation of certain shared corporate costs that directly benefit the advertising segment, such as accounting and human resources. | |||||||||||||||||||||||||
(4) Legal settlement and contingencies are not related to the advertising segment. | |||||||||||||||||||||||||
(5) Expenses or income cannot be directly allocated to the advertising segment. | |||||||||||||||||||||||||
(6) Income taxes are primarily from foreign operations which support the automotive and mobile navigation segments. | |||||||||||||||||||||||||
(7) We expect to incur additional costs in the future due to requirements to provide ongoing provisioning of services such as hosting, monitoring and customer support. Accordingly, adjusted EBITDA on billings does not reflect all costs associated with billings. | |||||||||||||||||||||||||
Unaudited Reconciliation of Non-GAAP Adjustments | |||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||
Non-GAAP metrics for the Advertising segment and the combined Automotive and Mobile Navigation segments | |||||||||||||||||||||||||
Six Months Ended | |||||||||||||||||||||||||
GAAP Consolidated | Non-GAAP Consolidated | Non-GAAP Advertising | Automotive (1) | Mobile Navigation (1) | Total Non-GAAP Automotive and Mobile Navigation (1) | ||||||||||||||||||||
Revenue | $ | 94,228 | $ | 14,753 | $ | 69,011 | $ | 10,464 | $ | 79,475 | |||||||||||||||
Cost of revenue | 52,203 | 7,445 | 41,983 | 2,775 | 44,758 | ||||||||||||||||||||
Gross profit | 42,025 | 7,308 | $ | 27,028 | $ | 7,689 | 34,717 | ||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||
Research and development | 34,319 | 2,408 | (2 | ) | 31,911 | ||||||||||||||||||||
Sales and marketing | 10,545 | 5,038 | (2 | ) | 5,507 | ||||||||||||||||||||
General and administrative | 12,363 | 873 | (3 | ) | 11,490 | ||||||||||||||||||||
Legal settlement and contingencies | 6,424 | — | (4 | ) | 6,424 | ||||||||||||||||||||
Total operating expenses | 63,651 | 8,319 | 55,332 | ||||||||||||||||||||||
Loss from operations | (21,626 | ) | (1,011 | ) | (20,615 | ) | |||||||||||||||||||
Other income (expense), net | 1,010 | — | (5 | ) | 1,010 | ||||||||||||||||||||
Loss before provision for income taxes | (20,616 | ) | (1,011 | ) | (19,605 | ) | |||||||||||||||||||
Provision for income taxes | 142 | — | (6 | ) | 142 | ||||||||||||||||||||
Net loss | $ | (20,758 | ) | $ | (20,758 | ) | $ | (1,011 | ) | $ | (19,747 | ) | |||||||||||||
Adjustments: | |||||||||||||||||||||||||
Legal settlement and contingencies | 6,424 | — | (4 | ) | 6,424 | ||||||||||||||||||||
Stock-based compensation expense | 4,529 | 485 | (2 | ) | 4,044 | ||||||||||||||||||||
Depreciation and amortization expense | 1,260 | 103 | (2 | ) | 1,157 | ||||||||||||||||||||
Other income (expense), net | (1,010 | ) | — | (5 | ) | (1,010 | ) | ||||||||||||||||||
Provision for income taxes | 142 | — | (6 | ) | 142 | ||||||||||||||||||||
Adjusted EBITDA | $ | (9,413 | ) | $ | (423 | ) | $ | (8,990 | ) | ||||||||||||||||
Change in deferred revenue | 12,728 | — | 12,728 | ||||||||||||||||||||||
Change in deferred costs(7) | (6,704 | ) | — | (6,704 | ) | ||||||||||||||||||||
Adjusted EBITDA on billings(7) | $ | (3,389 | ) | $ | (423 | ) | $ | (2,966 | ) | ||||||||||||||||
(1) Automotive and mobile navigation segments share many of the same technologies and resources. Accordingly, we are unable to fully attribute the operating expenses, other income (expense), net and provision (benefit) for income taxes to one segment versus the other. | |||||||||||||||||||||||||
For purposes of calculating the Non-GAAP net loss attributable to the advertising segment: | |||||||||||||||||||||||||
(2) These expenses represent costs directly attributable to the advertising segment. | |||||||||||||||||||||||||
(3) These expenses represent actual general and administrative costs directly attributable to the advertising segment as well as an allocation of certain shared corporate costs that directly benefit the advertising segment, such as accounting and human resources. | |||||||||||||||||||||||||
(4) Legal settlement and contingencies are not related to the advertising segment. | |||||||||||||||||||||||||
(5) Expenses or income cannot be directly allocated to the advertising segment. | |||||||||||||||||||||||||
(6) Income taxes are primarily from foreign operations which support the automotive and mobile navigation segments. | |||||||||||||||||||||||||
(7) We expect to incur additional costs in the future due to requirements to provide ongoing provisioning of services such as hosting, monitoring and customer support. Accordingly, adjusted EBITDA on billings does not reflect all costs associated with billings. | |||||||||||||||||||||||||
Unaudited Reconciliation of Non-GAAP Adjustments | |||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||
Non-GAAP metrics for the Advertising segment and the combined Automotive and Mobile Navigation segments | |||||||||||||||||||||||||
Six Months Ended | |||||||||||||||||||||||||
GAAP Consolidated | Non-GAAP Consolidated | Non-GAAP Advertising | Automotive (1) | Mobile Navigation (1) | Total Non-GAAP Automotive and Mobile Navigation (1) | ||||||||||||||||||||
Revenue | $ | 89,314 | $ | 11,539 | $ | 63,589 | $ | 14,186 | $ | 77,775 | |||||||||||||||
Cost of revenue | 47,919 | 6,750 | 37,452 | 3,717 | 41,169 | ||||||||||||||||||||
Gross profit | 41,395 | 4,789 | $ | 26,137 | $ | 10,469 | 36,606 | ||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||
Research and development | 34,640 | 2,530 | (2 | ) | 32,110 | ||||||||||||||||||||
Sales and marketing | 13,522 | 7,491 | (2 | ) | 6,031 | ||||||||||||||||||||
General and administrative | 11,329 | 1,044 | (3 | ) | 10,285 | ||||||||||||||||||||
Legal settlement and contingencies | 750 | — | (4 | ) | 750 | ||||||||||||||||||||
Restructuring | (1,468 | ) | (375 | ) | (2 | ) | (1,093 | ) | |||||||||||||||||
Total operating expenses | 58,773 | 10,690 | 48,083 | ||||||||||||||||||||||
Loss from operations | (17,378 | ) | (5,901 | ) | (11,477 | ) | 160 | ||||||||||||||||||
Other income (expense), net | 333 | — | (5 | ) | 333 | ||||||||||||||||||||
Loss before provision for income taxes | (17,045 | ) | (5,901 | ) | (11,144 | ) | |||||||||||||||||||
Provision for income taxes | 440 | — | (6 | ) | 440 | ||||||||||||||||||||
Net loss | $ | (17,485 | ) | $ | (17,485 | ) | $ | (5,901 | ) | $ | (11,584 | ) | |||||||||||||
Adjustments: | |||||||||||||||||||||||||
Legal settlement and contingencies | 750 | — | (4 | ) | 750 | ||||||||||||||||||||
Stock-based compensation expense | 6,267 | 659 | (2 | ) | 5,608 | ||||||||||||||||||||
Restructuring | (1,468 | ) | (375 | ) | (2 | ) | (1,093 | ) | |||||||||||||||||
Deferred rent reversal due to lease termination | (621 | ) | (159 | ) | (2 | ) | (462 | ) | |||||||||||||||||
Depreciation and amortization expense | 1,916 | 656 | (2 | ) | 1,260 | ||||||||||||||||||||
Other income (expense), net | (333 | ) | — | (5 | ) | (333 | ) | ||||||||||||||||||
Provision for income taxes | 440 | — | (6 | ) | 440 | ||||||||||||||||||||
Adjusted EBITDA | $ | (10,534 | ) | $ | (5,120 | ) | $ | (5,414 | ) | ||||||||||||||||
Change in deferred revenue | 7,023 | — | 7,023 | ||||||||||||||||||||||
Change in deferred costs(7) | (4,302 | ) | — | (4,302 | ) | ||||||||||||||||||||
Adjusted EBITDA on billings (7) | $ | (7,813 | ) | $ | (5,120 | ) | $ | (2,693 | ) | ||||||||||||||||
(1) Automotive and mobile navigation segments share many of the same technologies and resources. Accordingly, we are unable to fully attribute the operating expenses, other income (expense), net and provision (benefit) for income taxes to one segment versus the other. | |||||||||||||||||||||||||
For purposes of calculating the Non-GAAP net loss attributable to the advertising segment: | |||||||||||||||||||||||||
(2) These expenses represent costs directly attributable to the advertising segment. | |||||||||||||||||||||||||
(3) These expenses represent actual general and administrative costs directly attributable to the advertising segment as well as an allocation of certain shared corporate costs that directly benefit the advertising segment, such as accounting and human resources. | |||||||||||||||||||||||||
(4) Legal settlement and contingencies are not related to the advertising segment. | |||||||||||||||||||||||||
(5) Expenses or income cannot be directly allocated to the advertising segment. | |||||||||||||||||||||||||
(6) Income taxes are primarily from foreign operations which support the automotive and mobile navigation segments. | |||||||||||||||||||||||||
(7) We expect to incur additional costs in the future due to requirements to provide ongoing provisioning of services such as hosting, monitoring and customer support. Accordingly, adjusted EBITDA on billings does not reflect all costs associated with billings. |
Investor Relations Contact:Source:Mike Look ,Telenav, Inc. 408-990-1265 IR@telenav.com
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