TeleNav 2015 Annual Report Download - page 17

Table of Contents
increased revenue contribution of our advertising business, which has lower gross margins than our automotive and mobile navigation
businesses.
We anticipate that we will incur net operating losses in fiscal 2016, as we anticipate increased expenditures to operate our business. These
expected losses are due in part to the expected continued decline in our higher margin mobile navigation revenue. Furthermore, there will be a
lengthy delay between the time we secured the award of a new contract with GM, and the timing of revenue thereto, as well as a substantial
required upfront investment in research and development resources for this new contract, and continued investments necessary due to the early
nature of our advertising business.
Although we are working to replace the continued decline in wireless carrier revenue, our efforts to develop new services and products and
attract new customers require investments in anticipation of longer term revenue. For example, the design cycle for automotive navigation
products and services is 18 to 24 months and in order to win designs and achieve revenue from this growth area, we typically have to make
investments two to four years before we anticipate receiving revenue, if any. This is the case for our relationship with GM. We intend to make
additional investments in systems and continue to expand our operations to support diversification of our business, but it is likely that these
efforts at diversification will not replace our declining wireless carrier revenue in the short-term, if at all. We also anticipate that as we replace
some of our personnel, we will do so with some employees hired in higher cost geographic areas who have different skills. As a result of these
factors, we believe we will incur a net operating loss and that we will incur net losses at least through fiscal 2016 and we cannot predict when, or
if, we will return to profitability. Our investments and expenditures may not result in the growth that we anticipate. Although we acquired
skobbler and have expended additional internal resources to develop our own OSM-based maps to reduce our mapping costs in the long-term, in
the short-term, those development efforts will have a negative effect on our ability to become profitable.
Our quarterly revenue and operating results have fluctuated in the past and may fluctuate in the future due to a number of factors. As a
result, we may fail to meet or exceed the expectations of securities analysts or investors, which could cause our stock price to decline.
Our quarterly revenue and operating results may vary significantly in the future. Therefore, you should not rely on the results achieved in
any one quarter as an indication of future performance. Period to period comparisons of our revenue and operating results may not be
meaningful. Our quarterly results of operations may fluctuate as a result of a variety of factors, including, but not limited to, those listed below,
many of which are outside of our control:
•
the transition away from paid carrier navigation to freemium offerings for mobile phone based navigation services;
•
the ability of automobile manufacturers to sell automobiles equipped with our products;
• the introduction of competitive in-car platforms and products, such as Apple's CarPlay and Google's auto initiatives, including Open
Automotive Alliance;
•
the seasonality of new vehicle model introductions and consumer buying patterns, as well as the effects of economic uncertainty on
vehicle purchases , particularly outside of the U.S.;
•
the effectiveness of our entry into new business areas, such as advertising;
•
changes made to existing contractual obligations with a customer that may affect the nature and timing of revenue recognition;
•
the loss of our relationship or a change in our revenue model with any particular wireless carrier customer;
• poor reviews of automotive service offerings into which our navigation solutions are integrated resulting in limited uptake of
navigation options by car buyers;
•
loss of subscribers by our wireless carrier customers or a reduction in the number of subscribers to plans that include our services;
•
the timing and quality of information we receive from our customers;
•
our inability to attract new end users;
• the amount and timing of operating costs and capital expenditures related to the expansion of our operations and infrastructure
through acquisitions or organic growth;
•
the timing of expenses related to the development or acquisition of technologies, products or businesses;
•
the timing and success of new service introductions by us or our competitors;
•
the timing and success of marketing expenditures for our products;
•
the extent of any interruption in our services;