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Table of Contents
of mobile navigation services, especially from other freemium offerings. In addition, our gross margin will continue to be negatively impacted in
the future by the amortization of developed technology acquired as part of our January 2014 acquisition of skobbler.
Revenue concentrations . In fiscal 2015 and 2014 , revenue from Ford represented 61% and 46% of our total revenue, respectively, and
revenue from AT&T represented 15% and 24% of our total revenue, respectively.
We primarily sell our services in the United States. In fiscal 2015 and 2014 , revenue derived from U.S. sources represented 96% and 94%
of our total revenue, respectively. With respect to revenue we receive from automobile manufacturers and OEMs for sales of vehicles in other
countries, we classify that revenue as being generated in the United States because we provide deliverables to and receive compensation from the
manufacturer's or OEM's United States' entity.
Segments information.
Automotive. Automotive revenue increased 37% to $103.1 million in fiscal 2015 from $75.2 million in fiscal 2014 . The increase was due
primarily to an increase in production royalty revenue of $28.3 million. Automotive revenue included customized software and map content
revenue of $4.7 million and $5.1 million in fiscal 2015 and 2014 , respectively. In addition, during fiscal 2015 , we billed $5.3 million in
royalties earned from new vehicle owner downloads of GM's OnStar RemoteLink® mobile application powered by our location-based services
platform. We record the royalties earned as deferred revenue and recognize this revenue over the estimated service period. Deferred revenue
associated with RemoteLink® as of June 30, 2015 was $5.2 million. Automotive revenue represented 64% and 50% of total revenue in fiscal
2015 and 2014 , respectively.
Cost of automotive revenue increased 52% to $56.3 million in fiscal 2015 from $37.1 million in fiscal 2014 . The increase was due
primarily to an increase in third party content costs of $18.2 million associated with the increased royalty revenue and mix of revenue from Ford
on vehicles sold in Europe and China and increased amortization expense of $0.5 million related to developed technology acquired.
Automotive gross profit increased 23% to $46.8 million in fiscal 2015 from $38.0 million in fiscal 2014 . Automotive gross margin
decreased to 45% in fiscal 2015 from 51% in fiscal 2014 . The decrease in gross margin was due primarily to the higher proportion of revenue
from vehicles sold in Europe and China, which generally has higher associated content costs.
Advertising . Advertising revenue increased 53% to $17.9 million fiscal 2015 from $11.7 million in fiscal 2014 . The increase was due
primarily to an increase in the value of contracted insertion orders along with the number of impressions delivered. Advertising revenue
represented 11% and 8% of total revenue in fiscal 2015 and 2014 , respectively.
Cost of advertising revenue increased 67% to $11.7 million in fiscal 2015 from $7.0 million in fiscal 2014 . The increase was due
primarily to increased third party ad exchange inventory costs of $3.8 million and increased third party hosting service fees of $0.9 million
associated with the increased impressions delivered. Cost of advertising revenue increased at a greater rate than advertising revenue due to
increased effective cost per thousand impressions, or eCPM, for display ad inventory sourced from third party exchanges, as well as enhanced
content costs.
Advertising gross profit increased 33% to $6.2 million in fiscal 2015 from $4.7 million in fiscal 2014
. Advertising gross margin decreased
to 35% in fiscal 2015 from 40% in fiscal 2014 . The decrease in gross margin was due primarily to increased eCPM for display ad inventory
sourced from third party exchanges, as well as enhanced content costs.
Mobile Navigation . Mobile navigation revenue decreased 38% to $39.2 million in fiscal 2015 from $63.5 million in fiscal 2014 . The
decrease was primarily due to lower subscription revenue resulting from decreases in the number of paying subscribers for mobile navigation
services provided through AT&T, T-
Mobile and USCC, the termination of our fixed fee revenue from Sprint for bundled users, and a decrease in
mobile navigation revenue internationally. Accordingly, in fiscal 2015 , services revenue from AT&T, Sprint, T-
Mobile, USCC and international
customers decreased by $24.1 million . The decrease was partially offset by $0.8 million in one-time catch-up revenue reporting from AT&T.
Mobile navigation revenue represented 24% and 42% of total revenue in fiscal 2015 and 2014 , respectively.
Cost of mobile navigation revenue decreased 36% to $10.8 million in fiscal 2015 from $16.7 million in fiscal 2014 . The decrease was due
primarily to decreases in third party content costs of $2.0 million, compensation and benefits expense of $1.0 million, amortization of capitalized
software and recognition of deferred costs of $0.9 million, data center and hosted services costs of $0.8 million, and depreciation and
amortization of $0.6 million.
Mobile navigation gross profit decreased 39% to $28.4 million in fiscal 2015 from $46.8 million in fiscal 2014 . Mobile navigation gross
margin was comparable at 73% and 74% in fiscal 2015 and 2014 , respectively.
50