In order to secure its finance over the next 12 months, the company has entered into financing arrangements in a total amount of $9.4 million guaranteed by the two main shareholders, Medici Holdings Ltd and P-O Söderberg Aktiv AB.
During the first half of the year Wayfinder user-base expanded by 117% to 2,055,000 (949,000 last year) and the number of paying users rose by 161% to 284,000 (109,000 in H1 2007).
The gross margin amounted to 55% during the first half of 2008 against 62% last year. This lower gross margin was due to the delivery of a number of hardware GPS receivers by Wayfinder to a customer, at a low gross margin. But Wayfinder continues to have a good margin of over 65% on its core activity, service and during the latter part of 2008, gross margin is expected to return to above 60% as the sale of hardware disappear from its balance sheet.
Four weeks before the end of the second quarter, Sony Ericsson began selling two mobile handsets with embedded GPS, the W760i and the C702, with factory-installed try and buy Wayfinder Navigation software. These phones have not yet generated significant sales, but Wayfinder has seen an encouraging activation rate: “Early indications from the launch of GPS phones are that Wayfinder navigation activation rates, depending on phone model, operator and geography are ranging between 30%-50%, which is substantially higher than expected”, said Wayfinder. These new phones generate 4,500 new customer accounts per day.
After the close of the period, Wayfinder also received a first order from Hutchison 3G Australia, which will include 12 months navigation in recently launched GPS handsets. This carrier adds up to the range of mobile operators working with Wayfinder: Telefonica, Mobilkom, Si.mobil, Telenor, Tele 2, O2, 3 Italia, 3 Scandinavia, Vodafone, Movistar and India's leading operator, Bharti Airtel.
For the first part of the year Wayfinder has continued to invest heavily (headcount is now 105) but the revenue expected from the growing sale of GPS-enabled handsets is not materializing yet. The number one Wayfinder’s handset partner, Sony Ericsson, has been slow to launch its GPS-enabled products which delayed an important revenue opportunity. However, the fact its number of paid users increase faster than its free users is a good sign of successful up-selling activities.