TeleNav 2015 Annual Report Download - page 12

Table of Contents
We have been successful in creating cross border capabilities in China and Romania for high value engineering at lower cost. Our U.S. and
China research and development operations function together to provide service and product development for our automotive and mobile device
customers and extension of our existing services to new mobile phones. Our Romanian development efforts focus on our OSM products and
certain mobile navigation products. Our research and development expenses were $60.3 million , $60.6 million and $68.1 million for fiscal
2013 , 2014 and 2015 , respectively.
Marketing and sales
Automotive Navigation Services
In connection with sales efforts directed at automobile manufacturers and OEMs, we employ a sales team that focuses on targeted
customers and responds to requests for proposal and related sales opportunities.
The design and sales cycle for automotive navigation services and products is substantially longer than those associated with our mobile
navigation services to customers of wireless carriers or our advertising network services. The automotive sales cycle is long and consultative and
requires direct and continuous management of the customer and OEM providers to succeed in securing business. Often the automobile
manufacturer uses the sales process to help them to define the ultimate product that they choose to deliver to their end users. For example, design
wins for vehicles may be awarded 12 to 36 months prior to the anticipated commercial launch of the vehicle. However, once we launch services
with an automotive manufacturer, our application and services are typically bundled with the vehicles for multiple years because of the longer
automotive product cycles.
Advertising Network Services
Marketing . We market our advertising services based upon our location expertise. We are building brand recognition and customer
relationships based upon a consultative relationship with key advertising buyers, primarily advertising agencies. Given the mobile advertising
marketplace is still in its infancy, we believe that we have an opportunity to influence the way buyers understand the advertising opportunity.
Sales . We are highly engaged in direct sales efforts to expand the reach of our mobile advertising solutions. We anticipate continuing to
increase our advertising sales headcount during fiscal 2016; however, individual sales representatives typically take six to nine months to
become fully productive.
Customers
We derive revenue from automobile manufacturers and OEMs, advertisers and advertising agencies, and wireless carriers. We derive our
revenue primarily from automobile manufacturers and OEMs whose vehicles contain our proprietary software and are able to access our
navigation services. We also derive revenue from our partnerships with wireless carriers who sell our navigation services to their subscribers
either as a standalone service or in a bundle with other data or voice services. In addition, we have a growing business in mobile advertising
where our customers are primarily advertising agencies that represent national and regional brands and channel partners that work closely with
local and small business advertisers.
We generate revenue from automobile manufacturers and OEMs for delivery of customized software and royalties from the distribution of
this customized software for on-board and connected automotive navigation solutions. In addition, we earn royalties from brought-
in services for
vehicle applications powered by our location-based services platform. We typically enter into long term supply arrangements with our auto
customers to provide our solutions across multiple car models in multiple regions around the world.
We also generate revenue from advertisers and advertising agencies for the delivery of search and display advertising impressions based on
the specific terms of the advertising contract.
Our revenue from customers located in the United States comprised 92% , 94% and 96% of our total revenue for fiscal 2013 , 2014 and
2015 , respectively.
We are substantially dependent on Ford for our revenue. In fiscal 2013 , 2014 and 2015 , Ford represented 36% , 46% and 61% of our
revenue, respectively. We expect Ford to represent a significant portion of our revenue for the foreseeable future. We expect AT&T to continue
to represent a declining portion of our revenue. In fiscal 2013 , 2014 and 2015 , AT&T represented 28% , 24% and 15% of our revenue,
respectively. In addition, Sprint Nextel Corporation, or Sprint, represented 16% of our revenue in fiscal 2013.
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