Wayfinder Q4 2007: losses but positive cash flow

Sony Ericsson W760 with Indian maps
Sony Ericsson W760 with Indian maps
Mobile navigation provider Wayfinder announced yesterday its financial results for the fourth quarter and the full year 2007. The company revenue was $17.8 million in 2007, including $9.7 million for services, its core business. In the fourth quarter the total revenue was $8.17 million, including $4 million for services.

The user base grew to 1.5 million customers (194%) and the number of paying users rose by 167% to 230,000 (users who have made at least one purchase in the past 18 months).

Gross margin in the fourth quarter amounted to 38%; the relatively high proportion of hardware sales – that explains its lower gross margin - is expected to be temporary. The gross margin during the second half year of 2008 is expected to return to the level Wayfinder enjoyed during the first half of 2007, which means exceeding 60%.

Conservative outlook
Loss after tax for the full year 2007 totalled $8 million; $1.5 million for the fourth quarter. By end of 2007 Wayfinder held $14.7 million in cash and cash equivalents. Between the third quarter and the fourth quarter the cash position grew for about half a million U.S. dollar which is a very positive sign for the company. However, CEO Magnus Nilsson remained very conservative for the 2008 outlook, he did not want to forecast break even in 2008. “it is difficult to predict revenues” he said, “it depends on the launch schedule of handset manufacturers”.

Positive market trends
Nevertheless, we have seen many news that will positively affect Wayfinder’s results in the next quarters. First Wayfinder navigator will be factory-installed in two Sony Ericsson GPS-phones coming out in the second quarter of 2008. Second, it seems Wayfinder launch with Bharti Airtel in India is a real success. Even with a soft launch – six month free navigation for Blackberry users – India has become the biggest country for Wayfinder in term of user base. Third, the large number of GPS-enabled handsets announced at the Mobile World Congress (Nokia, LG, Samsung and many others) will affect the uptake of navigation services sold by Wayfinder via its wireless operators partners.

Thursday, February 21st 2008

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