TeleNav 2015 Annual Report Download - page 48

Table of Contents
Gross margin is our gross profit, or total revenue less cost of revenue, expressed as a percentage of our total revenue. Our gross margin has
been and will continue to be impacted by the increasing percentage of our revenue base derived from automotive navigation solutions and
advertising network services, which generally have higher associated third party content costs and third party display ad inventory costs,
respectively, than our navigation offerings provided through wireless carriers.
Non-GAAP gross margin measures our GAAP gross margin, excluding the impact of stock-based compensation expense and capitalized
software and developed technology amortization expenses. Non-GAAP income (loss) from continuing operations, net of tax, measures GAAP
net income (loss) from continuing operations, net of tax, excluding the impact of stock-based compensation expense, capitalized software and
developed technology amortization expenses, and other items such as legal settlements, valuation allowances against certain deferred tax assets,
and restructuring costs, net of taxes. Stock-based compensation expense relates to equity incentive awards granted to our employees, directors,
and consultants. Stock-based compensation expense has been and will continue to be a significant recurring non-cash expense for us. While we
include the dilutive impact of such equity awards in weighted average shares outstanding, the expense associated with stock-based awards
reflects a non-cash charge that we exclude from non-GAAP income (loss) from continuing operations, net of tax, non-GAAP income (loss) from
continuing operations, net of tax, per share, and adjusted EBITDA from continuing operations. Capitalized software amortization expense
represents internal software costs that are previously capitalized and charged to expense as the software is used in our operations. Developed
technology amortization expense relates to the amortization of acquired intangible assets. Legal settlements represent settlements from patent
litigation cases in which we are defendants and royalty disputes. Changes in valuation allowance on deferred tax assets represented changes in
the realization of the underlying assets. Benefit for income taxes represented the impact from change in tax accounting method and amended tax
returns. Restructuring costs represent recognition of the estimated amount of costs associated with restructuring activities. Our non-GAAP tax
rate from continuing operations differs from the GAAP tax rate from continuing operations due to the elimination of any tax effect of the GAAP
stock-based compensation expenses, legal settlements, restructuring costs, and other items that are being eliminated to arrive at the non-GAAP
income (loss) from continuing operations, net of tax.
Adjusted EBITDA from continuing operations measures our GAAP income (loss) excluding the impact of stock-based compensation
expense, depreciation, amortization, interest income, other income (expense), provision (benefit) for income taxes, and other items such as legal
settlements and restructuring costs, net of tax. Adjusted EBITDA, while generally a measure of profitability, can also represent a loss.
Non-GAAP gross margin, non-GAAP income (loss) from continuing operations, net of tax, and adjusted EBITDA from continuing
operations are key measures used by our management and board of directors to understand and evaluate our core operating performance and
trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, we believe that the
exclusion of the expenses eliminated in calculating non-GAAP gross margin, non-GAAP income (loss) from continuing operations, net of tax,
and adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. In addition, adjusted EBITDA is a
key financial measure used by the compensation committee of our board of directors in connection with the development of incentive-based
compensation for our executive officers. Accordingly, we believe that non-GAAP gross margin, non-GAAP income (loss) from continuing
operations, net of
37
Fiscal Year Ended June 30,
2015 2014 2013
(in thousands, except percentages and per share amounts)
Revenue
$
160,239
$
150,313
$
191,800
Gross margin
51
%
60
%
64
%
Non-GAAP gross margin
53
%
62
%
65
%
Automotive gross margin
45
%
51
%
46
%
Automotive non-GAAP gross margin
46
%
51
%
46
%
Advertising gross margin
35
%
40
%
36
%
Advertising non-GAAP gross margin
44
%
55
%
5
%
Mobile navigation gross margin
73
%
74
%
76
%
Mobile navigation non-GAAP gross margin
74
%
76
%
73
%
Income (loss) from continuing operations, net of tax
$
(23,063
)
$
(29,524
)
$
5,581
Non-GAAP income (loss) from continuing operations, net of tax
$
(12,889
)
$
(6,839
)
$
18,183
Adjusted EBITDA from continuing operations
$
(20,519
)
$
(12,121
)
$
25,493
Diluted income (loss) from continuing operations, net of tax, per share
$
(0.58
)
$
(0.76
)
$
0.13
Diluted non-GAAP income (loss) from continuing operations, net of tax, per
share
$
(0.32
)
$
(0.18
)
$
0.43