Telenav Reports Second Quarter Fiscal 2021 Financial Results

Telenav®, Inc. (NASDAQ:TNAV), a leading provider of connected-car and location-based services, today released its financial results for the second fiscal quarter ended Dec. 31, 2020. In light of the previously announced proposed acquisition of Telenav by V99, Inc., Telenav will not host a conference call to discuss these financial results or provide outlook regarding future operating performance or conditions.

Financial Highlights for the Second Quarter Ended Dec. 31, 2020

  • Total revenue for the second quarter of fiscal 2021 was $65.9 million, compared with $73.9 million in the second quarter of fiscal 2020.
  • Services revenue for the second quarter of fiscal 2021 was $12.4 million, compared with $12.3 million in the second quarter of fiscal 2020.
  • GAAP gross profit for the second quarter of fiscal 2021 was $27.7 million, compared with $40.2 million in the second quarter of fiscal 2020.
  • Billings, a non-GAAP measure, for the second quarter of fiscal 2021 were $60.3 million, compared with $72.7 million in the second quarter of fiscal 2020.
  • GAAP net loss for the second quarter of fiscal 2021 was $(0.1) million, compared with GAAP net income of $13.0 million for the second quarter of fiscal 2020.
  • Adjusted EBITDA, a non-GAAP measure, for the second quarter of fiscal 2021 was $5.0 million, compared with $14.3 million for the second quarter of fiscal 2020.
  • Ending cash, cash equivalents and short-term investments, excluding restricted cash, were $113.0 million as of Dec. 31, 2020. This represented cash, cash equivalents and short-term investments of $2.35 per share, based on 48 million shares of common stock outstanding as of Dec. 31, 2020. Telenav had no debt as of Dec. 31, 2020.

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, change in deferred revenue, change in deferred costs, adjusted EBITDA, 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, may be helpful in understanding Telenav’s underlying operating results. These non-GAAP measures are some of the primary measures Telenav’s management uses for planning and forecasting. These measures are not in accordance with, or an alternative to, GAAP and these non-GAAP measures may not be comparable to information provided by other companies.

To reconcile the historical GAAP results to non-GAAP financial metrics, please refer to the reconciliations in the financial statements included in this earnings release.

Billings equals GAAP revenue recognized plus the change in deferred revenue from the beginning to the end of the applicable period. In connection with its presentation of the change in deferred revenue, Telenav has provided a similar presentation of the change in the related deferred costs. Such deferred costs primarily include costs associated with third party content and certain development costs associated with its customized software solutions whereby customized engineering fees are earned. As the company enters into more hybrid and brought-in navigation programs, deferred revenue and deferred costs become larger components of its operating results, so Telenav believes these metrics are useful in evaluating cash flows.

Telenav considers billings to be a useful metric for management and investors because billings drive revenue and deferred revenue, which is an important indicator of its business. There are a number of limitations related to the use of billings versus revenue calculated in accordance with GAAP. First, billings include amounts that have not yet been recognized as revenue and may require additional services 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. Second, we may calculate billings in a manner that is different from peer companies that report similar financial measures, making comparisons between companies more difficult. Accordingly, when Telenav uses this measure, it attempts to compensate for these limitations by providing specific information regarding billings and how they relate to revenue calculated in accordance with GAAP.

Adjusted EBITDA measures GAAP net loss adjusted for discontinued operations and 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 merger and acquisition expense and legal settlements and contingencies. Stock-based compensation expense relates to equity incentive awards granted to its employees, directors, and consultants. Merger and acquisition expense represents costs associated with the V99 Merger Agreement. 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.

Adjusted EBITDA, while generally a measure of profitability, can also represent a loss. Adjusted EBITDA is a key measure 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 can provide a useful measure for period-to-period comparisons of Telenav’s core business. Accordingly, Telenav believes that adjusted EBITDA generally provides useful information to investors and others in understanding and evaluating our operating results in the same manner as Telenav’s management and board of directors.

Free cash flow is a non-GAAP financial measure Telenav defines as net cash provided by (used in) operating activities, less purchases of property and equipment. Telenav considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash (used in) generated by its business after purchases of property and equipment.

Forward Looking Statements

This press release contains forward-looking statements that are based on Telenav management’s beliefs and assumptions and on information currently available to its management. Actual events or results may differ materially from those described in these documents or communications due to a number of risks and uncertainties. These potential risks and uncertainties include, among others: the risk that the proposed transaction with V99, Inc. may not be completed in a timely manner or at all, which may adversely affect Telenav’s business and the price of the common stock of Telenav; the failure to satisfy any of the conditions to the consummation of the proposed transaction, including the adoption of the merger agreement by the stockholders of Telenav and the receipt of required regulatory approvals; the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement; the effect of the announcement or pendency of the proposed transaction on Telenav’s business relationships, operating results and business generally; the risks that the proposed transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the proposed transaction; the risks related to diverting management’s attention from Telenav’s ongoing business operations; the outcome of any legal proceedings against Telenav or the special committee of its independent directors related to the merger agreement or the proposed transaction; unexpected costs, charges or expenses resulting from the proposed transaction; the impact of the COVID-19 pandemic on business activity, including but not limited to reduced consumer demand for new vehicles; whether Ford, GM and other automobile manufacturer partners will be required to suspend production in response to spikes in COVID-19 cases and if so, when and to what extent they will be able to resume full production and the impact the continued period of reduced volume of new vehicles being produced will have on our revenue and operating results; the ensuing economic recession; the Company’s ability to achieve future revenue currently estimated under customer engagements, including the Company’s ability to determine, achieve and accurately recognize revenue under customer engagements; the Company’s ability to develop and implement products for Ford, GM and Toyota and to support Ford, GM and Toyota and their customers; the impact of Ford’s announcement regarding the elimination of various sedans in North America over the near term; the impact of tariffs on sales of automobiles in the United States and other markets; the Company’s success in extending its contracts for current and new generation of products with its existing automobile manufacturers and tier ones, particularly Ford; the impact of Ford’s announcement regarding its partnerships with Garmin and Google Automotive Services; the impact of GM’s announcement regarding Google Automotive Services; the Company’s ability to achieve additional design wins and the delivery dates of automobiles including the Company’s products; adoption by vehicle purchasers of Scout GPS Link; the Company’s dependence on a limited number of automobile manufacturers and tier ones for a substantial portion of its revenue, such as Ford and GM; reductions in demand for automobiles in general and specifically for Ford and GM vehicles; potential impacts of automobile manufacturers and tier ones, in particular Ford and GM, including competitive capabilities in their vehicles such as Apple CarPlay and Android Auto; the Company’s continued reporting of losses and operating expenses in excess of expectations; the timing of new product releases and vehicle production by the Company’s automotive customers, including inventory procurement and fulfillment; possible warranty claims, and the impact on consumer perception of its brand; the Company’s ability to perform under its initiatives with Amazon and Microsoft, and benefit from those initiatives; and the potential that the Company may not be able to realize its deferred tax assets and may have to take a reserve against them. Telenav discusses these risks in greater detail in “Risk Factors” and elsewhere in its Form 10-Q for the fiscal quarter ended September 30, 2020 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 on the SEC’s website at www.sec.gov. Also, forward-looking statements represent management’s beliefs and assumptions only as of the date made. You should review the company’s SEC filings carefully and with the understanding that actual future results may be materially different from what Telenav expects. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

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. 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 2021 Telenav, Inc. All Rights Reserved.

Telenav and the “Telenav” logo are registered trademarks and “VIVID” is a trademark of Telenav, Inc. All rights reserved. Unless otherwise noted, all other trademarks, service marks, and logos used in this press release are the trademarks, service marks or logos of their respective owners.

TNAV-F
TNAV-C

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

December 31,

June 30,

2020

2020

 
Assets
Current assets:
Cash and cash equivalents

$

37,252

$

20,518

Short-term investments

75,739

90,315

Accounts receivable, net of allowances of $34 and $5 at December 31, 2020 and June 30, 2020, respectively

44,026

34,542

Restricted cash

1,539

1,494

Deferred costs

20,697

26,121

Prepaid expenses and other current assets

4,893

4,505

Total current assets

184,146

177,495

Property and equipment, net

3,154

4,319

Operating lease right-of-use assets

8,435

7,067

Deferred income taxes, non-current

1,463

1,515

Goodwill and intangible assets, net

14,255

14,255

Deferred costs, non-current

50,825

54,548

Other assets

43,641

34,552

Total assets

$

305,919

$

293,751

Liabilities and stockholders’ equity
Current liabilities:
Trade accounts payable

$

32,172

$

12,291

Accrued expenses

30,776

36,210

Operating lease liabilities

3,539

2,786

Deferred revenue

32,816

37,973

Income taxes payable

473

715

Total current liabilities

99,776

89,975

Operating lease liabilities, non-current

5,857

5,191

Deferred revenue, non-current

95,182

100,970

Other long-term liabilities

688

645

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; 48,000 and 47,342 shares issued and outstanding at December 31, 2020 and June 30, 2020, respectively

48

47

Additional paid-in capital

196,796

192,170

Accumulated other comprehensive loss

(330

)

(477

)

Accumulated deficit

(92,098

)

(94,770

)

Total stockholders’ equity

104,416

96,970

Total liabilities and stockholders’ equity

$

305,919

$

293,751

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

Three Months Ended

Six Months Ended

December 31,

December 31,

2020

2019

2020

2019

 
Revenue:
Product

$

53,449

$

61,543

$

110,258

$

117,533

Services

12,405

12,332

25,192

22,971

Total revenue

65,854

73,875

135,450

140,504

Cost of revenue:
Product

31,098

26,434

63,628

58,423

Services

7,030

7,288

14,583

12,150

Total cost of revenue

38,128

33,722

78,211

70,573

Gross profit

27,726

40,153

57,239

69,931

Operating expenses:
Research and development

18,528

19,717

37,514

40,380

Sales and marketing

1,677

2,134

3,673

4,080

General and administrative

9,448

6,428

15,960

13,715

Total operating expenses

29,653

28,279

57,147

58,175

Income (loss) from operations

(1,927

)

11,874

92

11,756

Other income, net

521

596

1,235

1,157

Income (loss) from continuing operations before provision (benefit) for income taxes

(1,406

)

12,470

1,327

12,913

Provision (benefit) for income taxes

(67

)

205

(53

)

616

Equity in net (income) of equity method investees

(1,279

)

(797

)

(1,895

)

(797

)

Income (loss) from continuing operations

(60

)

13,062

3,275

13,094

Loss on discontinued operations

-

(56

)

-

(4,042

)

Net income (loss)

$

(60

)

$

13,006

$

3,275

$

9,052

 
Basic income (loss) per share:
Income (loss) from continuing operations

$

(0.00

)

$

0.27

$

0.07

$

0.27

Loss on discontinued operations

-

-

-

(0.08

)

Net income (loss)

$

(0.00

)

$

0.27

$

0.07

$

0.19

Diluted income (loss) per share:
Income (loss) from continuing operations

$

(0.00

)

$

0.27

$

0.07

$

0.27

Loss on discontinued operations

-

-

-

(0.08

)

Net income (loss)

$

(0.00

)

$

0.27

$

0.07

$

0.18

Weighted average shares used in computing income (loss) per share
Basic

47,825

48,475

47,526

48,127

Diluted

47,825

48,821

48,151

49,257

Telenav, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
Six Months Ended
December 31,

2020

2019

Operating activities
Net income

$

3,275

$

9,052

Loss on discontinued operations

-

4,042

Income from continuing operations

3,275

13,094

Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Stock-based compensation expense

5,497

3,230

Depreciation and amortization

1,426

1,856

Operating lease amortization, net of accretion

1,727

1,321

Accretion of net premium on short-term investments

170

75

Unrealized gain on non-marketable equity investments

-

(62

)

Equity in net (income) of equity method investees

(1,895

)

(797

)

Other

(346

)

(1

)

Changes in operating assets and liabilities:
Accounts receivable

(9,160

)

25,835

Deferred income taxes

154

(409

)

Deferred costs

9,280

(1,961

)

Prepaid expenses and other current assets

(514

)

(3,992

)

Other assets

(406

)

21

Trade accounts payable

19,874

(15,054

)

Accrued expenses and other liabilities

(5,755

)

3,945

Income taxes payable

(258

)

130

Operating lease liabilities

(1,673

)

(1,754

)

Deferred revenue

(11,449

)

9,036

Net cash provided by operating activities

9,947

34,513

Investing activities
Purchases of property and equipment

(155

)

(1,078

)

Purchases of short-term investments

(10,703

)

(54,439

)

Purchases of long-term investments

(6,733

)

(3,500

)

Proceeds from sale of long-term investments

447

-

Proceeds from sales and maturities of short-term investments

24,550

24,067

Net cash provided by (used in) investing activities

7,406

(34,950

)

Financing activities
Proceeds from exercise of stock options

67

8,306

Tax withholdings related to net share settlements of restricted stock units

(1,114

)

(1,148

)

Proceeds from issuance of common stock under employee stock purchase plan

1,204

-

Repurchase of common stock

(1,630

)

(4,019

)

Net cash provided by (used in) financing activities

(1,473

)

3,139

Effect of exchange rate changes on cash, cash equivalents and restricted cash

899

(85

)

Net increase in cash, cash equivalents and restricted cash, continuing operations

16,779

2,617

Net cash used in discontinued operations

-

(3,975

)

Cash, cash equivalents and restricted cash, beginning of period

22,012

29,225

Cash, cash equivalents and restricted cash, end of period

$

38,791

$

27,867

Supplemental disclosure of cash flow information
Income taxes paid, net

$

503

$

1,279

Non-cash investing: Investment in inMarket Media, LLC acquired in exchange for sale of Advertising business

$

-

$

15,600

Cash flow from discontinued operations:
Net cash used in operating activities

$

-

$

(3,569

)

Net cash used in financing activities

-

(406

)

Net cash transferred from continuing operations

-

3,975

Cash and cash equivalents of discontinued operations, end of period

$

-

$

-

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

$

37,252

$

26,347

Restricted cash

1,539

1,520

Total cash, cash equivalents and restricted cash

$

38,791

$

27,867

Telenav, Inc.
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands)
Reconciliation of Revenue to Billings
 
 
Three Months EndedSix Months Ended
December 31,December 31,

2020

2019

2020

2019

 
Revenue

$

65,854

$

73,875

$

135,450

$

140,504

Adjustments:
Change in deferred revenue

(5,532

)

(1,210

)

(10,945

)

9,036

Billings

$

60,322

$

72,665

$

124,505

$

149,540

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 EndedSix Months Ended
December 31,December 31,

2020

2019

2020

2019

Deferred revenue, end of period

$

127,998

$

144,171

$

127,998

$

144,171

Deferred revenue, beginning of period

133,530

145,381

138,943

135,135

Change in deferred revenue

$

(5,532

)

$

(1,210

)

$

(10,945

)

$

9,036

 
Deferred costs, end of period

$

71,522

$

81,763

$

71,522

$

81,763

Deferred costs, beginning of period

76,041

77,795

80,669

79,802

Change in deferred costs(1)

$

(4,519

)

$

3,968

$

(9,147

)

$

1,961

 
 
(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.
Telenav, Inc.
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands)
Reconciliation of Net Income (Loss) to Adjusted EBITDA
 
Three Months EndedSix Months Ended
December 31,December 31,

2020

2019

2020

2019

 
Net income (loss)

$

(60

)

$

13,006

$

3,275

$

9,052

Loss on discontinued operations

-

56

-

4,042

Income (loss) from continuing operations

(60

)

13,062

3,275

13,094

 
Adjustments:
Merger and acquisition expense

3,603

-

3,603

-

Stock-based compensation expense

2,640

1,478

5,497

3,230

Depreciation and amortization expense

666

934

1,426

1,856

Other income, net

(521

)

(596

)

(1,235

)

(1,157

)

Provision (benefit) for income taxes

(67

)

205

(53

)

616

Equity in net (income) of equity method investees

(1,279

)

(797

)

(1,895

)

(797

)

Adjusted EBITDA

$

4,982

$

14,286

$

10,618

$

16,842

Telenav, Inc.
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands)
Reconciliation of Net Income (Loss) to Free Cash Flow
 
Three Months EndedSix Months Ended
December 31,December 31,

2020

2019

2020

2019

 
Net income (loss)

$

(60

)

$

13,006

$

3,275

$

9,052

Loss on discontinued operations

-

56

-

4,042

Income (loss) from continuing operations

(60

)

13,062

3,275

13,094

 
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities:
Change in deferred revenue (1)

(5,793

)

(1,309

)

(11,449

)

9,036

Change in deferred costs (2)

4,586

(3,940

)

9,280

(1,961

)

Changes in other operating assets and liabilities

13,088

2,240

2,262

8,722

Other adjustments (3)

3,134

2,291

6,579

5,622

Net cash provided by operating activities

14,955

12,344

9,947

34,513

Less: Purchases of property and equipment

(88

)

(617

)

(155

)

(1,078

)

Free cash flow

$

14,867

$

11,727

$

9,792

$

33,435

 
 
(1) Consists of product royalties, customized software development fees, service fees and subscription fees.
(2) Consist 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.

Contacts:

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

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