Q4 2019 Earnings Call
Yeah currently on hold for the Telenet fourth quarter fiscal year 2019 financial results Conference call. At this time, we are sampling today's audience and plan to be underway shortly.
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Good day and welcome to the Telenav fourth quarter fiscal year 2019 financial results Conference call.
Today's conference is being recorded at this time I'd like to turn the conference over to Mike Bishop with the company's Investor Relations. Please go ahead Sir.
Thank you Melissa and good afternoon, everyone welcome to telling US conference call to discuss the financial results of the fourth quarter and full year fiscal 2019.
Joining me today are H.P.J., <unk>, President and CEO Hassan Wahla co president automotive and Fuad Ahmad former CFO .
Our new CFO deal Manzoor, who joined the company last month is traveling internationally and is unable to speak on the call.
After the market close today Telenav issued a press release and published the letter to stockholders on the Investor Relations section of its website.
During the course of todays presentation, all our executives will make forward looking statements, including statements regarding among others. The company's expected financial performance for the first quarter of fiscal 2020 anticipated sources and mixes of revenue expected profitability products and business strategies and strategic relationships.
We wish to caution you that such statements are just predictions based on management's current expectations or beliefs and that actual events and results may differ materially.
We refer you to documents, we file with the Securities and Exchange Commission, including our annual report on Form 10-K for the fiscal year ended June 32018, and other periodic filings.
These documents identify important risk factors that could cause our actual results to differ materially from those contained in our forward looking statements.
We assume no duty to confirm update or revise the financial forecast for the quarter or any other forward looking information on this call as a result of new developments or otherwise.
Today, we will be discussing our results on a GAAP as well as non-GAAP basis, we will use.
We use these additional non-GAAP measures as we believe they provide useful operating information in addition to the GAAP results.
There are a number of limitations relating to the use of billings versus revenue calculated in accordance with GAAP. We compensate for these limitations by providing specific information regarding GAAP revenue and evaluating billings together with revenue calculated in accordance with GAAP as well as considering whether we are likely to satisfy the criteria required to recognize revenue.
To convert deferred revenue into revenue and the cost that we will incur overtime to provide the services related to that deferred revenue.
A reconciliation of GAAP to non-GAAP financial statements is available in our press release and on our Investor Relations webpage.
As a reminder, the comparative.
Financial results being reported have been prepared in accordance with HFC six a six revenue from contracts with customers.
And they have not yet been audited.
I will now open the call up for questions operator.
Thank you, ladies and gentlemen, if youd like to ask a question at this time. Please press star one of your telephone keypad.
If you're on a speakerphone. Please make sure that your mute function is turned off the line a signal to the churn equipment. Once again, if youd like to ask a question at this time. Please press star one and we'll pause for just a moment.
Our first question will come from Josh Nichols from B. Riley FBR.
[laughter] yeah. Thanks for taking my question, a few things to kind of hit on with all the news releases today I just want to ask a little bit can you provide some detail about the genesis of this deal with grab for looks like 12 million Bucks half of that's going to come in and revenue and.
Other significant opportunities to.
Do similar deals with other customers you think over the coming year or two.
The numbers slide you can measure so as you correctly pointed out that the deal that graph calls and includes a perpetual license.
Our open Tera platform, which is 12 and over $12 million as well as certain.
Yes.
Master services agreement on top of that.
We will recognize one half of that that 12, and a half million approximately this quarter and the remaining in incoming quarters. So that is.
Yeah Fred.
Cash payment. There is also included in it.
An equity component, where we transfer the IP are open tera platform to them as well as.
Certain head count.
Associated with our.
Development of the open Tara.
We're not able to go into the details of the equity but.
As far as to say the value of the equity as I calculate today is is greater than the cash payment.
And related to the dropped entities.
Go ahead.
No that was exactly what I was going to ask if thank you if you continue.
Yeah. So Hassan do you want to talk about the future opportunities of a similar type of.
And on technologies.
Yes, certainly so I think just.
Right now grab is one of the most exciting companies in southeast Asia.
And not only focus or ride hailing, but food delivery and payment solutions.
And.
The reason why grabber selected to work with the tone out is that the right now they have millions of drivers and they have pro data that comes from all of them.
And they don't have inefficient.
Mechanism for processing all of that.
Pro data to increase road intelligence and wrote intelligence being our third domain that we're focused on.
Not that this is a great proof point for us so by having grab use our platform.
It really shows our Oems as well as other potential Oems.
Or a potential ride hailing companies that the investments that we have made in our open tera platform, including.
Hi, and machine learning.
It has been proven in the market and now.
We are now in a position where we can take this too.
Our automotive Oems and use this to create if you're truly the world's largest.
Ecosystem of connected cars by being able to even share road intelligence across Oems and there is also the new opportunity for us to.
Market this to other ride hailing companies. So overall this is a very very exciting deal for us.
Thank you and then.
You touched on the Companys.
Three kind of.
Platforms that you're looking at and in that vein, if we could talk a little bit about one.
Just a little bit of more detail on the $70 million agreement with the toilet supplier and then you did also mention in the shareholder letter that you are working with Toyota across all three of those domains and there's potential to expand if you could provide some additional color about the opportunities in what you're doing on that front that'd be great.
Our son.
Yes, certainly so we have a a long relationship with Toyota both directly and through its tier one supplier zibo and right now we provide.
There are two different services to Toyota one is where the project our scout application onto the head unit similar to Carplay and Android auto and the other is where we power of cloud search for their embedded navigation platform.
So we continue to work closely with Toyota to explore means too.
Improve both of these services improve and enhance.
By adding additional feature sets as well as in the other domains looking at opportunities around commerce and advertising and certainly when it comes to erode intelligence. There now that we have this proof point in the market.
With crab, we will continue our discussions with Toyota and other Oems on how they can leverage.
Our open platform I think another unique aspect of that grabs partnership is that we are setting up our entire open to our platform in their environment. So they can operate it and run it themselves. So this is added flexibility that we could offer to all of our.
We have.
Partners as they are looking at road intelligence solutions, especially as they want to compete with companies like ways.
Which have a lot of user generated content, but if we look at the number of vehicles that are Oems have especially when they are combined across Oems the.
The data Thats and Thats generated is.
Ken.
Easily dwarf the user input that a company like.
Ways is getting right now from its customer base.
Thanks, and then going through some of the.
The release info good to see.
I noted that you are targeting bean.
EBITDA profitable this year.
But with a little bit different metrics could you want to talk about the trajectory of that because.
I'd, just like a little bit more clarity since you're kind of already guiding to being EBITDA breakeven.
In the first quarter.
Well.
We don't provide guidance past that just one quarter, obviously Q1, we are breakeven too.
Two one and I think beyond that I'd done we at this point to provide guidance.
But for the full year.
As we said in our.
Our press release.
We expect to be.
Adjusted EBIT da positive.
That was.
That is our.
Anadarko and in contrast of last year.
AFFO minus negative 17 million rate last year, yes, I mean, if you look at our numbers at the adjusted EBITDA number for them.
Fiscal.
19 was $18 million negative.
So we.
We expect to make significant strides.
And then.
Last question from me kind of as a follow up to that because I know the company's historically, obviously moving from EBITDA to cash flows really.
Based primarily on the deferred revenue and deferred costs right, so not much interest or taxes or capex and the business model. So.
Could you provide a little bit of color on what you're expecting for the trajectory at least as far as more billings or at least like deferred revenue growth as you continue to expand within primarily.
GM.
I think that the trajectory at the end of the revenue deferred revenue growth will be consistent I think we have entire year of six sell sex accounting under six or six under our belt. So.
I think you should expect a similar trajectory.
The makeup of the billings and the makeup of their.
The deferred revenue and what's recognized immediately into revenue what goes on the balance sheet isn't expected to change. So we expect that to remain more or less consistent with what we experienced in.
In fiscal 19.
And same with the deferred cost as well.
Except that.
What six six.
More of the revenue more of the billings is recognized into revenue.
So you will see.
Our deferred revenue playing a smaller role.
In how we define profitability, hence the reason why we've opted to go to adjusted EBITDA to be more consistent with GAAP more consistently what.
Marketing and the buy side has a lot to sell side is used to seeing companies.
When they look at their profitability. So that we have opted to go to a more traditional gap like measure.
Great. Thank you very much.
Thank you.
Ladies and gentlemen, once again, if youd like to ask a question at this time. Please press star one and if you're on a speaker phone. Please make sure that your mute function is turned off to like a signal that to start one for question.
Our next question will come from Steve Dyer with Craig Hallum.
Thank you good afternoon.
Just want to make sure I understand the contribution from grab to both.
Revenue and billings here in the first quarter. So I mean is that this simple as the $70 million to $72 million in billings.
Absent that deal would be something like 58 to 60 am I thinking about that right.
In terms of building that is correct.
So I guess im looking at that I mean, thats essentially flat year over year, and so I guess I'm just trying to figure out maybe where some of the headwind is coming from us. It's just kind of global auto demand. If yes. If GM is just ramping perhaps a little bit slower than than anticipated or why you wouldnt see sort of more growth.
As you have the last few quarters and the billings line.
So year over year Q1 of <unk>.
19 were 59 million, but just be mindful of the fact that.
That included almost $6 million of advertising revenue.
So you have to subtract.
That's because as as you've seen in our earnings there and have you seen or not guide we are no longer providing.
Guidance in the AD business, given the transaction that we consummated with end market. So you have to subtract that.
From the equation and you also have to.
Account for the fact that the mobile and that business has been in a historical decline.
And now it's more than that business was.
Approximately $2.8 million in.
Q1 of 19, and it's down to.
Less than $2 million in.
In in Q4, so you have to account for that.
The headwinds from those two.
But if you look at it just on the auto side.
We are showing a fairly.
Year over year, a substantial increase in billings.
The auto.
Which is a primary focus.
Yes, yes, that's very helpful and consider those two things I appreciate that.
And then I guess just.
Assuming sort of GM is one of the primary drivers throughout this year any help sort of I know you don't give guidance for the easier, but what the cadence as to when we could expect that to roll on assets at a particular model year launch or if it's fairly ratably or front end loaded back end loaded any help there would be good.
Excellent.
Okay, and you want to talk about it.
Yes, certainly so while we are on many GM models now across all its brands.
No. We haven't had the full year effect. This past year. So that will be one thing that will help us and this fiscal year and there are still several key vehicles in the GM lineup that are on the older platform to help and migrated yet. These include some with their premium as few bees across or Chevy GMC as well as the Cadillac brands. So as even though these are not the highest volume cars. They are premium vehicles. So once these vehicles come online.
Come on line with our with the new platform that we are powering that will also have a.
Significant increase to our overall GM revenue.
And is it safe to say that I guess would it be by maybe halfway through fiscal 20 that sort of everything thats coming on from GM will be on or not necessarily.
Not necessarily.
Keep in mind.
Now most Oems not just GM do have new new model launches throughout the year. It used to be that everything was launched around August timeframe, but that has changed.
So we are expecting with GM that.
At different times of.
This coming fiscal year, and even beyond they will continue to launch us on new.
On new models.
Got it okay. Thanks, guys.
Okay. Thank you.
And once again Thats star one for any questions at this time.
That does conclude our question and answer session. At this time I would like to turn the conference back to Mike Bishop for closing remarks.
Thank you everyone and thank you for your support.
We look forward to updating you on telling as progress on the first quarter conference call and with that that concludes today's conference. Thanks again.
Once again that does conclude our conference for today. Thank you for your participation.