TeleNav 2015 Annual Report Download - page 60

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Table of Contents
Segments information. The information below is organized in accordance with our three reportable business segments (dollars in
thousands):
Comparison of the fiscal years ended June 30, 2015 and 2014
Revenue, cost of revenue and gross profit .
Consolidated overview . 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. Product revenue increased 39% to
$100.8 million
in fiscal 2015 from $72.7 million in fiscal 2014 . The increase in product revenue was due primarily to an increase in royalty revenue from
automotive navigation solutions we provide for our automotive customers, primarily Ford, offset by a slight decrease in customized software
revenue. Services revenue consists primarily of revenue we derive from our mobile navigation services and advertising. Services revenue
decreased 23% to $59.5 million in fiscal 2015 from $77.6 million in fiscal 2014 . The decrease in services revenue was due primarily to lower
subscription fees resulting from decreases in the number of paying subscribers for mobile navigation services, partially offset by an increase in
advertising revenue.
Our cost of product revenue increased 50% to $55.3 million in fiscal 2015 from $36.8 million in fiscal 2014 . The increase was due
primarily to an increase in third party content costs associated with the increased royalty revenue from automotive navigation solutions. Our cost
of services revenue decreased 2% to $23.5 million in fiscal 2015 from $24.1 million in fiscal 2014 . The decrease was due primarily to a
decrease in cost of mobile navigation revenue associated with the decline in such revenue, partially offset by an increase in cost of advertising
revenue resulting from increases in third party ad exchange inventory costs and hosting services associated with the increased impressions
delivered.
Our gross profit decreased to $81.5 million in fiscal 2015 from $89.5 million in fiscal 2014 . Our gross margin decreased to 51% in fiscal
2015 from 60% in fiscal 2014 . The decrease in gross margin was primarily due to lower services revenue and the increased proportion of
product revenue contributed from our on-board automotive navigation solutions provided to our automotive customers, which generally has
higher associated content costs and resulting lower gross margins than our mobile navigation services provided through our wireless carrier
customers. We expect our overall gross margin to continue to decline as the percentage of our revenue from automotive offerings increases, and
as a result of increased competition on our offering
49
Fiscal Year Ended June 30,
2015
2014
2013
Revenue
Automotive
$
103,100
$
75,153
$
71,476
Advertising
17,941
11,699
3,935
Mobile Navigation
39,198
63,461
116,389
Total revenue
160,239
150,313
191,800
Cost of revenue
Automotive
56,319
37,135
38,247
Advertising
11,710
7,012
2,506
Mobile Navigation
10,755
16,694
28,360
Total cost of revenue
78,784
60,841
69,113
Gross profit
Automotive
46,781
38,018
33,229
Advertising
6,231
4,687
1,429
Mobile Navigation
28,443
46,767
88,029
Total gross profit
$
81,455
$
89,472
$
122,687
Gross margin
Automotive
45
%
51
%
46
%
Advertising
35
%
40
%
36
%
Mobile Navigation
73
%
74
%
76
%
Total gross margin
51
%
60
%
64
%