TeleNav (TNAV) Misses Q2 EPS by 5c, Revenues In-Line; Offers Q3 Outlook

TeleNav (NASDAQ: TNAV) reported Q2 EPS of ($0.35), $0.05 worse than the analyst estimate of ($0.30). Revenue for the quarter came in at $39.08 million versus the consensus estimate of $39.03 million.

• Total revenue for the second quarter of fiscal 2018 was $39.1 million, compared with $52.0 million in the same prior year period.
• Billings for the second quarter of fiscal 2018 were $70.1 million, compared with $59.7 million in the same prior year period.
• GAAP net loss for the second quarter of fiscal 2018 was ($15.7) million, compared with a GAAP net loss of ($11.4) million for the second quarter of fiscal 2017.
• Adjusted EBITDA on billings for the second quarter of fiscal 2018 was a ($1.8) million loss compared with a $1.3 million profit in the second quarter of fiscal 2017.
• Ending cash, cash equivalents and short-term investments, excluding restricted cash, were $90.7 million as of December 31, 2017. This represented cash and short-term investments of $2.03 per share, based on 44.6 million shares of common stock outstanding as of December 31, 2017. Telenav had no debt as of December 31, 2017.

Q3 Fiscal 2018 Business Outlook

Telenav’s amended Ford agreement and related awards specify future deliverables. In conjunction with these changes, under current GAAP, certain revenue which Telenav has been recognizing upon product delivery will prospectively not be recognized until these defined deliverables are met. This will result in a significant decline in revenue and gross profit, commencing in the March 2018 quarter. However, effective July 1, 2018, Telenav will adopt the new revenue recognition standard, ASC 606, resulting in the ability to once again recognize substantial revenue and gross profit from Ford as our product is delivered.

Telenav’s amended Ford agreement also reflects a decrease in pass-through third-party licensed content costs, which will result in a decrease in billings per unit, but an increase in direct contribution margin from billings. The company expects auto unit volumes to increase, which should result in an increase in direct contribution from billings in the automotive business unit. Telenav also expects to record a non-cash impairment of goodwill of approximately $2.7 million related to its declining mobile navigation business during the March 2018 quarter.

For the quarter ending March 31, 2018, Telenav offers the following guidance:

• Total revenue is expected to be $13 to $14 million
• Billings are expected to be $56 to $59 million
• Deferred revenue is expected to increase by approximately $43 to $45 million
• Deferred costs are expected to increase by approximately $23 million
• GAAP gross profit is expected to be approximately $6 million
• GAAP gross margin is expected to be approximately 45 percent
• Direct contribution from billings is expected to be approximately $26 to $28 million
• Direct contribution margin from billings is expected to be approximately 47 percent
• GAAP operating expenses are expected to be $38 to $39 million, and include a $2.7 million goodwill impairment related to Telenav’s mobile navigation business
• GAAP net loss is expected to be $(32) to $(34) million
• Adjusted EBITDA loss is expected to be $(25) to $(27) million
• Adjusted EBITDA loss on billings is expected to be $(4) to $(6) million
• Automotive is expected to be approximately 35 percent of total revenue and 83 percent of billings
• Advertising is expected to be approximately 45 percent of total revenue and 11 percent of billings
• Weighted average diluted shares outstanding are expected to be approximately 44.8 million

For earnings history and earnings-related data on TeleNav (TNAV) click here.

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