TeleNav 2011 Annual Report Download - page 60

Table of Contents
Comparison of the fiscal years ended June 30, 2011 and 2010
Revenue. Revenue increased 23% from $171.2 million in fiscal 2010 to $210.5 million in fiscal 2011. The increase was due to growth in
the average monthly paying end users from 13.5 million in fiscal 2010 to 21.1 million in fiscal 2011, primarily resulting from the continued
adoption of Sprint’s Simply Everything and Any Mobile, Anytime plans which include our LBS, as well as an increase in end users of AT&T
Navigator and growth through new carrier relationships, including T
-Mobile and U.S. Cellular. We also experienced significant revenue growth
from our automotive navigation partnership with Ford during fiscal 2011, with the launch of Ford MyTouch on certain models in North America.
We calculate average monthly paying end users for a period by averaging the number of paying end users for each month in the period, and
exclude any users that subscribe under daily or annual plans. Generally, we consider a paying end user to be a wireless carrier subscriber for
whom we are paid and for which such subscriber’s mobile device has the capability to access our LBS. Average monthly revenue is calculated
by dividing revenue for the period associated with paying end users by the number of months in the period. ARPU is calculated by dividing
average monthly revenue by average monthly paying end users. We exclude from our ARPU calculation users and revenue associated with our
automotive navigation solutions and advertising. Although our end users increased substantially, our ARPU declined 27% to $0.76 in fiscal 2011
from $1.04 in fiscal 2010. The decline in ARPU was due in large part to the September 2010 amendment to our agreement with Sprint as
discussed below, whereby we now receive a fixed fee from Sprint to provide our services to subscribers to Sprint’
s service bundles (up to certain
thresholds) and we no longer receive additional revenue for additional Sprint bundle subscribers using our services. As a result of the changes to
our agreement with Sprint, and our plans to introduce various paid and free service plans through wireless carriers and open marketplaces,
ARPU will no longer provide a meaningful indicator of the health of our business. We do not intend to use this metric beginning in fiscal 2012,
but will continue to report the number of subscribers for our services.
56
Fiscal Year Ended June 30,
2011
2010
2009
(as a percentage of revenue)
Revenue
100
%
100
%
100
%
Cost of revenue
19
17
18
Gross profit
81
83
82
Operating expenses:
Research and development
27
24
21
Sales and marketing
12
10
15
General and administrative
9
9
8
Total operating expenses
48
43
44
Income from operations
33
40
38
Other income (expense), net
—
—
(
1
)
Income before provision for income taxes
33
40
37
Provision for income taxes
13
16
10
Net income
20
%
24
%
27
%
Fiscal Year Ended June 30,
2011 2010 2009
(in millions, except per user data)
Additional Key Metrics
Average monthly revenue per user (ARPU)
$
0.76
$
1.04
$
1.28
Average monthly paying end users
21.1
13.5
7.1