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Table of Contents
TELENAV, INC.
Notes to Consolidated Financial Statements
Description of business
Telenav, Inc., also referred to in this report as “we,” “our” or “us,” was incorporated in September 1999 in the State of Delaware. We are a
leader in personalized mobile navigation. We help on the go people by creating products that (1) provide easily-accessed, relevant, and personalized
information for discovery, traffic, local search, and navigation and (2) are available across multiple platforms and devices, including mobile phones,
tablets, computers and cars. We operate in a single segment. Our fiscal year ends on June 30 and in this report we refer to the fiscal years ended
June 30, 2013 , 2012 and 2011 as fiscal 2013 , fiscal 2012 and fiscal 2011 , respectively.
Basis of presentation
The consolidated financial statements and accompanying notes have been prepared in accordance with U.S. generally accepted accounting
principles, or GAAP. The consolidated financial statements include the accounts of Telenav, Inc. and our wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in consolidation.
Our consolidated financial statements also include the financial results of Shanghai Jitu Software Development Ltd., or Jitu, located in China.
Based on our contractual arrangements with the shareholders of Jitu, we have determined that Jitu is a variable interest entity, or VIE, for which we
are the primary beneficiary and are required to consolidate in accordance with Accounting Standards Codification, or ASC, subtopic 810-10, or ASC
810-10, Consolidation: Overall . Despite our lack of legal ownership, there exists a parent-subsidiary relationship between Telenav, Inc. and Jitu,
whereby through contractual arrangements, the equity holders of Jitu have effectively assigned all of their voting rights underlying their equity
interest in Jitu to us. In addition, through these agreements, we have the ability and intention to absorb all of the expected losses and profits of Jitu.
The results of Jitu did not have a material impact on our overall operating results for fiscal 2013 , fiscal 2012 or fiscal 2011 .
In fiscal 2013, we began presenting revenue and cost of revenue separately for product and services. Product revenue primarily includes
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 primarily includes revenue we derive from our mobile navigation services, mobile advertising and premium
navigation services. Revenue and cost of revenue have been classified separately as product and services for all periods presented.
On April 16, 2013, we completed the sale of our enterprise business to FleetCor Technologies Operating Company, LLC, or FleetCor. The
results of operations of our enterprise business, which were previously presented as a component of our consolidated operating results, have been
classified as discontinued operations in our consolidated statements of income for all periods presented. All information in the following notes to the
consolidated financial statements includes only results from continuing operations for all periods presented, unless otherwise noted. See Note 11 Sale
of Enterprise Business.
Use of estimates
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts
reported in the consolidated financial statements and accompanying notes. Significant estimates and assumptions made by us include the
determination of revenue recognition and deferred revenue, the recoverability of accounts receivable, the determination of acquired intangibles and
an assessment of goodwill impairment, the fair value of stock awards issued, the determination of income taxes and the recoverability of deferred tax
assets. Actual results could differ from those estimates.
Revenue recognition
We generate revenue primarily from service subscriptions, including premium offerings, fixed fee service arrangements, customized
engineering fees and software licenses. We also generate revenue from the delivery of search and display advertising impressions.
We recognize revenue when persuasive evidence of an arrangement exists, delivery of the service or product has occurred, the fee is fixed or
determinable, and collectability is reasonably assured. We have derived our revenue primarily from mobile navigation services, which are generally
provided through our wireless carrier customers that offer our services to their subscribers or through application stores. 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 fee for any number of
F-8
1.
Summary of business and significant accounting policies