TeleNav 2012 Annual Report Download - page 46

Download and view the complete annual report

Please find page 46 of the 2012 TeleNav annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 146

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146

Table of Contents
We offer voice-guided, real time, turn by turn, mobile navigation service under several brand names including Scout by Telenav and Telenav
GPS as well as under wireless carrier brands (or “white label” brands) including Sprint Navigation, AT&T Navigator and Your Navigator Deluxe.
Our technology also powers automotive navigation solutions that provide accurate, easy to use navigation services to drivers, including search, POI
and traffic services. We have introduced other navigation services solutions with new business models and distribution channels in our current
market and adjacent markets, including premium navigation services. While we have already introduced certain components or initial versions of
several of these navigation services solutions, the scope and timing of broader and more commercially viable offerings is uncertain. The ultimate
scope and timing of any future releases are dependent on many factors, including adoption by wireless carrier customers, automobile manufacturers
and OEMs of our navigation services; end user adoption and preferences; the quality, features and timing of our product offerings; the impact of
competition; and market acceptance of mobile advertising. We believe our cash, cash equivalents and short-term investments and anticipated cash
flows from operations will be sufficient to cover the costs of these anticipated efforts for the foreseeable future.
We offer our mobile navigation services to customers in a number of ways. Currently, we primarily derive our revenue from our wireless
carrier customers for their end users' subscriptions to our mobile navigation services, as well as from activation fees for certain of our services. Our
wireless carrier customers pay us based on several different revenue models, including (1) a revenue sharing arrangement that may include a
minimum fee per end user, (2) a fixed annual fee for any number of subscribers (up to specified thresholds) receiving our services as part of bundles
with other voice and data services, (3) a monthly or annual subscription fee per end user, or (4) based on usage. Certain of our contracts provide our
wireless carrier customers with discounts based on the number of end users paying for our services in a given month. In general, our wireless carrier
customers pay us a lower monthly fee per end user if an end user subscribes to our mobile navigation services as part of a bundle of mobile data or
voice services than if an end user subscribes to our mobile navigation services on a standalone basis. The majority of our end users receive access to
our navigation application through bundled offerings. We also offer our applications directly to end users through application stores such as the
Apple App Store and the Google Play marketplace. Finally, we have implemented revenue models based on free versions of our services which can
generate fees through advertising supported arrangements, and subscriber upgrades to more premium versions for a fee.
We derive revenue from the delivery of customized software products and royalties from the distribution of these software products in certain
automotive navigation applications. We also derive revenue from advertising network services through the delivery of search and display advertising
impressions based on the specific terms of the advertising contract, which we began to offer in the three months ended December 31, 2012 with our
acquisition of ThinkNear. In the future, we may have other revenue models. We classify our revenue as either product or services revenue. Product
revenue consists primarily of revenue we receive from the delivery of customized software and royalties from the distribution of this customized
software in certain automotive navigation applications; services revenue consists primarily of revenue we derive from our mobile navigation services,
off-board automotive navigation services, mobile advertising and premium navigation services.
For services that our subscribers purchase through our wireless carriers, our wireless carrier customers are responsible for billing and collecting
the fees they charge their subscribers for the right to use our navigation services. With respect to Sprint, through September 30, 2013, we will receive
a guaranteed fixed fee from Sprint for navigation applications provided to subscribers in bundles with other Sprint services. We recognize revenue
for the aggregate fees monthly on a straight-line basis over the term of the agreement. When we are paid on a revenue sharing basis with our wireless
carrier customers, the amount we receive varies depending on several factors, including the revenue share rate negotiated with the wireless carrier
customer, the price charged to the subscriber by the wireless carrier customer, the specific sales channel of the wireless carrier customer in which the
service is offered and the features and capability of the service. As a result of these factors, the amount we receive for a subscriber may vary
considerably and is subject to change over time.
In addition, the amount we are paid per end user in our revenue sharing arrangements may also vary depending upon the metric used to
determine the amount of the payment, including the number of end users at any time during a month, the average monthly paying end users, the
number and timing of end user billing cycles and end user activity. Although our wireless carrier customers generally have sole discretion about how
to price our mobile navigation services to their subscribers, our revenue sharing arrangements generally include monthly minimum fees per end user.
To a much lesser extent, we also sell our services directly to consumers through application stores.
Ford represented 36% , 13% and 6% of our revenue in fiscal 2013 , 2012 and 2011, respectively. We provide both on-board and off-board
connected navigation solutions to Ford. Our on-board solution consists of software, map and POI data loaded in the vehicle that provides voice-
guided turn by turn navigation displayed on the vehicle screen. We recognize revenue from our on-
board solutions as the related customized software
is delivered to, and accepted by our customers. In addition, we recognize royalties earned from our on-board solutions generally as the software is
reproduced for installation in vehicles. Our off-board connected solution enables a mobile device that is paired with the vehicle to activate in-vehicle
text-based and voice-guided
40