Location based-services company Telenav slides after earnings

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Shares of location-based services company Telenav Inc. (NASDAQ: TNAV) have continued a slow drop since Jan. 30., the day after the Sunnyvale-based company announced earnings for its second quarter of fiscal 2014 ended Dec. 31.

Telenav shares had opened at $6.20, landing at $6.50 at the 4 p.m. ET close of trading on the Nasdaq Stock Market. Tuesday, however, shares were down, closing at $5.86.

Telenav helped guide the way to personal navigation services with its popular Scout app for iOS and Android. Now, the company is focusing on getting its products into cars and expanding hyperlocal mobile advertising services in hopes of generating greater profits. But the ride has been rough.

During Telenav’s second fiscal quarter earnings call on Jan. 30, the company reported net loss of $3.9 million, or 10 cents per diluted share, compared to profits of $904,000, or 2 cents per share, for the second quarter of fiscal year 2013. Revenues fell by 21 percent, coming in at $37.2 million this quarter, compared to $47.2 million in the same period a year ago.

Excluding special charges for stock-based compensation, legal settlements, restructuring and other costs, the company reported a loss of $1.2 million or 3 cents per diluted share, compared to profits of $4.2 million, or 10 cents per share, the same quarter a year ago. Earnings beat Wall Street’s 6 cents per share loss expectations.

Changing partnership dynamics with wireless carriers were one factor that affected the company’s overall performance. For example, Telenav is generating significantly less revenue from Sprint than before, since it switched compensation arrangements at the end of September. Instead of compensating Telenav on a fixed fee basis for bundle services, Sprint now issues monthly recurring payments for users subscribing to Telenav’s premium services. Telenav’s revenue was also recently slashed by a decline in users from wireless carriers such as AT&T and T-Mobile.

Telenav executives reported that they will instead focus on investing in automotive navigation and mobile advertising products and services as key areas of growth.

Telenav’s Chief Executive, President and Co-Founder, HP Jin, also announced the company acquired Skobbler GmbH, a privately held European company that offers navigation apps, for $23.8 million: $19.2 million in cash and $4.6 million in company stock.

To bolster leadership for its Scout products, Telenav also recently hired Hossam Bahlool as head of automotive products and Rohan Chandran as the head of consumer products and global services. Before joining Telenav, Bahlool co-founded Jingu Apps after a stint as a director of product management at Blackberry. Chandran previously held senior product roles at Technorati and YP.

“In our vision, there will be hundreds of millions of connected cars in the future, converging with hundreds of millions of smartphones, and gives tremendous opportunity to leverage our unique location-based expertise in technology, and our current position in automotive, advertising and mobile industry to capitalize on this trend,” Jin said on a conference call with analysts.

Brad Erickson, an analyst with Pacific Crest Securities, raised questions during the call about the company’s cash burn rate and when it might slow down.

“…It would appear that maybe the cash burn may still be heading a bit of the wrong direction even earlier in the second half of this fiscal year. I’m just trying to get a sense of … when we can start to see those cash burns come down more meaningfully,” he asked.

Telenav Chief Financial Officer Mike Strambi said the company wouldn’t give specific guidance on cash burn for any given quarter beyond Q2, but that the company’s decline would be offset by growth in their automotive advertising business over time into fiscal year 2015.

(Homepage image courtesy of Telenav)

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