Summary of business and significant accounting policies | Summary of business and significant accounting policies 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 leading provider of connected car and location-based products and services. We utilize our automotive navigation platform to deliver these products and services. Our automotive navigation platform allows us to deliver enhanced location-based services to automobile manufacturers, as well as original equipment manufacturers and tier one suppliers, to which we refer collectively as tier ones. Our automotive solutions primarily include navigation systems built into vehicles, or on-board, mobile phone based navigation systems, or brought-in, and advanced navigation solutions that offer on-board functionality combined with cloud functionality, or hybrid. Our fiscal year ends on June 30, and in this report we refer to the fiscal year ended June 30, 2019 as “fiscal 2019 ” and the fiscal year ending June 30, 2020 as “fiscal 2020 .” Commencing July 1, 2019, we operate in a single segment, automotive. Through June 30, 2019 , we operated in three segments - automotive, advertising and mobile navigation. In August 2019, we completed the disposition of our digital advertising operations (the "Ads Business") and have presented the results of operations for the Ads Business as discontinued operations for all prior periods presented. See Note 13. Our mobile navigation services business represented less than 5% of total revenue for the three months ended September 30, 2019 and we expect the business to continue to decline. Our CEO, the chief operating decision maker, does not review mobile navigation revenue and cost of revenue separately. As a result, we have combined the mobile navigation business with the automotive business in a single segment. Basis of presentation The unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. The condensed consolidated financial statements include the accounts of Telenav, Inc. and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The financial statements include all adjustments (consisting only of normal recurring adjustments) that our management believes are necessary for a fair presentation of the periods presented. These interim financial results are not necessarily indicative of results expected for the full fiscal year or for any subsequent interim period. Our condensed 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 . The results of Jitu did not have a material impact on our financial statements for the three months ended September 30, 2019 and 2018 . The condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for fiscal 2019 , included in our Annual Report on Form 10-K for fiscal 2019 filed with the U.S. Securities and Exchange Commission, or SEC, on August 22, 2019, which we refer to as the Form 10-K. Effective July 1, 2019, we adopted the requirements of Accounting Standards Update, or ASU, No. 2016-02, Leases (ASC 842) as discussed in the section titled “ Recently adopted accounting pronouncements ” of this Note 1. All amounts and disclosures set forth in this Form 10-Q have been updated to comply with this standard. Certain prior period balances have been reclassified to conform to the current period presentation of discontinued operations. Significant accounting policies With the exception of changes in accounting policies associated with our adoption of the new lease accounting standard, there have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Form 10-K. 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 condensed consolidated financial statements and accompanying notes. Significant estimates and assumptions made by us include the determination of revenue recognition and deferred revenue, including estimating and allocating the transaction price of customer contracts, the recoverability of accounts receivable and short-term investments, the determination of acquired intangibles and assessment of goodwill for impairment, the fair value of stock-based awards issued, the determination of income taxes and the recoverability of deferred tax assets. Actual results could differ from those estimates. Disaggregation of revenue (restated, see Note 2) In order to further depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors, the following table depicts the disaggregation of revenue according to revenue type and pattern of recognition (in thousands): Three Months Ended September 30, 2019 2018 Product On-board automotive navigation solutions (point in time) (1) $ 55,990 $ 39,930 Total product revenue 55,990 39,930 Services Brought-in automotive navigation solutions (over time) (2) 6,222 3,542 Automotive maintenance and support and other (over time) 1,669 10 Mobile navigation services (over time) 2,748 2,770 Total services revenue 10,639 6,322 Total revenue $ 66,629 $ 46,252 (1) Includes i) royalties earned and recognized at the point in time usage occurs, ii) map updates and iii) customized software development fees. (2) Includes royalties earned and recognized over time from the allocation of transaction price to service obligations for hybrid automotive solutions. Contract assets Contract assets relate to our rights to consideration for performance obligations satisfied but not billed at the reporting date. As of September 30, 2019 and June 30, 2019 , we had no contract assets. Deferred costs Changes in the balance of total deferred costs (current and non-current) during the three months ended September 30, 2019 were as follows (in thousands): Deferred Costs Content Development Total Balance, June 30, 2019 $ 71,466 $ 8,336 $ 79,802 Content licensing costs incurred 31,257 — 31,257 Customized software development costs incurred — 1,215 1,215 Less: cost of revenue recognized (33,304 ) (1,175 ) (34,479 ) Balance, September 30, 2019 $ 69,419 $ 8,376 $ 77,795 Concentrations of risk and significant customers Revenue related to products and services provided through Ford Motor Company and affiliated entities, or Ford, comprised 52% and 67% of total revenue for the three months ended September 30, 2019 and 2018 , respectively. As of September 30, 2019 and June 30, 2019 , receivables due from Ford were 42% and 33% of total accounts receivable, respectively. Revenue related to products and services provided through General Motors Holdings and its affiliates, or GM, comprised 25% and 16% of total revenue for the three months ended September 30, 2019 and 2018 , respectively. As of September 30, 2019 and June 30, 2019 , receivables due from GM were 23% and 15% of total accounts receivable, respectively. Revenue related to products and services provided to affiliates of Grab Holdings, Inc., which, collectively with certain of its affiliates, we refer to as Grab, comprised 10% of total revenue for the three months ended September 30, 2019 . Receivables due from Xevo, Inc. were 13% and 29% of total accounts receivable as of September 30, 2019 and June 30, 2019 , respectively. Restricted cash As of September 30, 2019 and June 30, 2019 , we had restricted cash of $2.5 million and $2.0 million , respectively, on our consolidated balance sheets, comprised primarily of prepayments from a customer. Accumulated other comprehensive loss, net of tax The components of accumulated other comprehensive loss, net of related taxes, and activity as of September 30, 2019 , were as follows (in thousands): Foreign Currency Unrealized Total Balance, net of tax as of June 30, 2019 $ (1,623 ) $ 146 $ (1,477 ) Other comprehensive income (loss) before reclassifications, net of tax (310 ) 59 (251 ) Amount reclassified from accumulated other comprehensive loss, net of tax — (1 ) (1 ) Other comprehensive income (loss), net of tax (310 ) 58 (252 ) Balance, net of tax as of September 30, 2019 $ (1,933 ) $ 204 $ (1,729 ) The amount of income tax benefit allocated to each component of accumulated other comprehensive loss was not material for the three months ended September 30, 2019 . Recently adopted accounting pronouncements In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract , or ASU 2018-15, which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to defer and recognize as an asset. We early adopted ASU 2018-15 on July 1, 2019 on a prospective basis, and it did not have a material impact on our financial position or results of operations. In February 2016, the FASB issued ASU No. 2016-02, Leases (ASC 842) which supersedes the guidance in topic ASC 840, Leases. The new standard, including subsequent amendments, requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. We adopted ASC 842 effective July 1, 2019. We adopted the standard using the modified retrospective transition approach applying the new standard to all leases existing at the date of initial application and not restating comparative periods. The most significant impact was the recognition of right-of-use (ROU) assets and lease liabilities for operating leases that were not previously recorded. For information regarding the impact of ASC 842 adoption, see Leases and Note 5. Leases On July 1, 2019, we adopted ASC 842 using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application. Results and disclosure requirements for reporting periods beginning after July 1, 2019 are presented under ASC 842, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting. We elected the package of practical expedients permitted under the transition guidance, which allowed us to carry forward our historical lease classification, our assessment on whether a contract was or contains a lease, and our initial direct costs for any leases that existed prior to July 1, 2019. We also elected to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the consolidated statements of income on a straight-line basis over the lease term. Upon adoption, we recognized total ROU assets of $11.7 million , with corresponding liabilities of $13.0 million on the condensed consolidated balance sheets. The adoption did not impact our beginning retained earnings, or our prior year condensed consolidated statements of operations and statements of cash flows. We recognize operating lease ROU assets and operating lease liabilities at the commencement date based on the present value of the future minimum lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. We include operating leases in operating lease right-of-use assets, operating lease liabilities and operating lease liabilities, non-current on our condensed consolidated balance sheets. Recent accounting pronouncements With the exception of the recently adopted accounting pronouncements discussed above, there have been no other changes in accounting pronouncements during the three months ended September 30, 2019 , as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for fiscal 2019, that are of significance or potential significance to us. |