The following are some of the things I picked out of the S-1. The full document is here if you want to see it yourself.
Nice Financials
TeleNav has hinted at strong revenue growth and the filing backs that up. They've had sequential revenues since FY05 of $7M, $17M, $28M, $48M and $110M in FY09. Income went positive in 2008 and they has $41M EBIT in 2009. Earnings per share were $0.12 in 2009. Pretty impressive numbers.
11M paying subscribers
Subscriber numbers are always a little hard to understand since the business likely consists of annual subscriptions mixed with some short term usage. But $110 revenues on 11M subs sounds like an average of $10/sub/year. And that includes the costs of map data. So I am guessing that a lot of those are short term subscriptions. They are also getting a lot of subscribers through Sprint's bundling program, which would reduce the ASP. Still, a very nice number of subscribers.
Two Big Mobile Operators account for 89% of the revenue
Sprint is 55% and ATT is 34% of revenue. It's a pretty concentrated business model. Five year ago, Sprint was at 90% so they have grown the ATT business well to balance that. 90% of the revenue is from GPS Navigator and only 10% from their MRM product. Not too unexpected.
They talk about expansion into automotive, and the obligatory comments about building business in location based ads, social networks and commerce. Unless there's a lot more happening with WhereAbouts, I haven't seen too much there.
BIG organization
735 people, with 453 of those in China. That's a lot of engineering firepower.
Risks and Competition
Yes, they did amend the S-1 to mention the last weeks announcement of a free navigation service from Google:
"Competition from these free offerings may reduce our revenue and harm our business. "
Yeah, ya think?
They also talk about increased competition from small companies providing similar service via App Stores (FullPower, Skobbler, etc.).
TeleNav has done extremely well and built a very nice business, but the challenge will be to support that business model in a quickly changing environment. The Google threat is pretty obvious and has been well documented. But the challenge from the App Stores is equally serious: freed from the necessity to support multiple handsets and the carrier-managed gauntlet, small engineering teams can launch competitive products for very low prices. And then all those costs to support the carriers become liabilities.
Ultimately, a lot of TeleNav's strategy is based on aligned interests with the carriers. Sprint and AT&T are making a lot of money from these services. They can't be happy about the move to free either. But it's not clear that they will have the capability to provide a compelling alternative.
The next vote on TeleNav's potential will be cast by the capital markets. Be interesting to see.
