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TeleNav (NASDAQ:TNAV)
Q3 2020 Earnings Call
May 07, 2020, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good day, and welcome to the Telenav third-quarter fiscal-year 2020 financial results call. Today's call is being recorded. And at this time, I would like to turn the call over to Mike Bishop, with the company's investor relations. Please go ahead, sir.

Mike Bishop -- Investor Relations

Good afternoon, everyone. I'm Mike Bishop, and I lead investor relations for Telenav. I would like to welcome you to our fiscal 2020 third-quarter earnings conference call to discuss the financial results and the overall business performance during the quarter. Joining me today are HP Jin, president and CEO; Adeel Manzoor, chief financial officer; and Hassan Wahla, chief customer officer.

The format of today's call will be opening remarks from HP and Adeel. We will then open the call to your questions. After the market close today, Telenav issued a press release and published supplemental earnings materials on the Investor Relations section of its website. During the course of today's presentation, our executives will make forward-looking statements, including statements regarding, among others, the company's expected financial performance for the fourth quarter of fiscal 2020, anticipated sources and mixes of revenue, expected profitability, product and business strategies and strategic relationships.

We wish to caution you that such statements are just predictions based on management's current expectations or beliefs and that actual events and results may differ materially. We refer you to documents we file with the Securities and Exchange Commission, including our annual report on Form 10-K for the fiscal year ended June 30, 2019, and other periodic filings. These documents identify important risk factors that could cause our actual results to differ materially from those contained in our forward-looking statements. We assume no duty to confirm, update or revise the financial forecast for the quarter or any other forward-looking information on this call as a result of new developments or otherwise.

Today, we will be discussing our results on a GAAP, as well as non-GAAP basis. We use these additional non-GAAP measures as we believe they provide useful operating information in addition to the GAAP results. There are a number of limitations related to the use of billings versus revenue calculated in accordance with GAAP. We compensate for these limitations by providing specific information regarding GAAP revenue and evaluating billings, together will revenue calculated in accordance with GAAP, as well as considering whether we are likely to satisfy the criteria required to recognize revenue to convert deferred revenue into revenue and the costs that we will incur over time to provide the services related to that deferred revenue.

A reconciliation of GAAP to non-GAAP financial statements is available in our press release and on our Investor Relations webpage. And with that, I would like to turn the call over to HP. Go ahead.

HP Jin -- President and Chief Executive Officer

Thanks, Mike, and welcome, everyone, to the call. We are in the midst of an economic and human crisis. I would like to extend my well wishes to everyone listening to our call. Our overriding priorities during this time are the health and safety of our employees and their families, and those of our partners and customers.

We responded quickly to the crisis to safeguard both our employees and also the larger community in which we live and work. I would like to thank our employees for how they responded and their unwavering commitment in these trying times. Telenav is a global company with a strong technology infrastructure that provides our employees the necessary tools to remain connected and productive while working from home offices around the world. At this time, I am pleased to announce that most of our China employees are back working from the office, despite the sweeping pandemic mandates that have been rolled out across the country and the world, impacting many industries, including automotive.

Telenav executed well in the third quarter, and our revenue grew 33% year over year. With this pandemic impact, the overall industry will be negatively impacted for sure. However, we believe the long-term trend of connectivity into cars and smart software inside cars will continue to grow. As an example, during previous cycles of sales slowdowns in Europe, we saw attach rates and unit increases as automobile manufacturers sought to differentiate and increase margin per vehicle.

We still believe we're in the beginning of the connected-car era and this long-term trend presents significant opportunities for Telenav with an addressable market of potentially hundreds of billions of dollars. Today, we are well-positioned to capture these opportunities with our three-pillar connected-car platform strategy. As a reminder, the three pillars are, one, in-car software and services; two, in-car commerce and communications; three, load intelligence. For our first pillar, in-car software and services, navigation is still the primary application inside the car.

We are the leader and continue to expand our market share. And it is our beachhead into the connected car ecosystem. In addition to navigation, we have continued development of our VIVID platform of full infotainment solutions, including voice assistance, navigation, music, radio and communication. We're excited to announce our partnership with Alpine Electronics to develop an easy low-cost aftermarket solution.

Consumers can easily upgrade existing in-vehicle infotainment system by simply inserting Alpine's infotainment device with Telenav's VIVID infotainment software into a vehicle's USB port. Alpine will lead the go-to-market strategy and is working with various aftermarket channels, including OEMs. The addressable market for this solution is tens of millions of vehicles with a MirrorLink installed. In our second pillar, in-car commerce and communication, the goal is to monetize the fourth screen and the big data generated by cars and drivers.

We are initially focusing on enabling commerce functionality while driving, including purchasing of coffee, gasoline, parking and food with advanced ordering and quick pick-up from restaurants. As we said last quarter, we won a deal with a Japanese OEM to adopt our in-car commerce solution. We expect to launch it in second half of our fiscal year of 2021. We continue to see many more opportunities for in-car commerce and are confident about our ability to secure additional deals.

In order to expand and sustain our leadership position with our differentiated offering, we continue to remain focused on building the ecosystem through organic development, with partnerships and through strategic investments. On our last quarter's call, we announced a strategic investment in SYNC 3, a leading service provider focused on order processing and guest relationships for the restaurant industry with access to thousands of restaurant locations. Today we are pleased to confirm that the transaction was completed in the third quarter. Also in the quarter we increased our investment in Motion Auto, an intelligent usage-based auto insurance provider that we plan to integrate with our VIVID in-car commerce platform.

As you know, auto insurance is a $200 billion-plus market in the U.S. alone. Our solution has the potential to disrupt the industry. In the third pillar of load intelligence, our network of connected car vehicles continued to grow with more than 18.5 million connected to our platform.

The goal for this pillar is to leverage our AI technology to derive useful insights from car sensitive data and serve customers across multiple industries. Now moving to the short-term outlook, the biggest factor is obviously the timing of resumption of automotive manufacturing of our key customers, Ford and GM. Our unit volume at one of our OEM customers has fully recovered in April in China. Based on the latest news, GM will resume North America production starting May 18.

Ford has started production in Europe beginning this week, and we understand it intends to phase in production across plants globally. This timing is obviously subject to change with response to the pandemic. This development gave us some optimism about the level of recovery as OEMs resume production. However, until meaningful production actually resumes, it is difficult for us to foresee how deep and long could be the impact of the COVID-19 on our OEM partners.

One of the potential impacts of the pandemic is that many existing OEM programs will be extended to save money. As a result, while the near-term production falloff will be painful, we believe that the lifetime value of our existing programs globally could actually increase, and in some cases, materially. We believe post pandemic, the shipments of our existing programs with GM will ramp up and eventually return to a strong trend line. There are also opportunities with new programs at GM.

For Ford, our largest customer today, all of the current revenue is coming from existing generations of Ford infotainment program globally. We are aggressively working with Ford on the next-generation navigation solution and Telenav is currently delivering on schedule. I would like to announce another milestone we achieved as a leading software provider for automotive industry. We have achieved automotive SPICE level 2 certification, which means Telenav meets the rigorous global standard for safety and reliability that's critical for developing, deploying and sustaining automotive-grade software.

In summary, we continue to enhance our product portfolio, making progress with our existing customers and winning new OEMs. While we will be very critical about our cash spending during this crisis, we are also taking this time as an opportunity to leverage our strength of our strong cash position to invest into strategic areas to enhance our position in the connected-car industry. We're excited about the future and our success in the area of connected cars. I will now turn the call over to Adeel for a quick overview of the financial results.

Adeel Manzoor -- Chief Financial Officer

Thank you very much, HP. Although I'll be making these comments about the numbers, please refer to the earnings deck and press released for the detailed financial tables as we reference in the slides from our earnings presentation to better highlight our performance in the past quarter. Starting with Slide No. 4, I would like to talk about key highlights for the quarter.

The main points are number one, we delivered another solid quarter and the main focus on creating value for our shareholders. In Q3 '20, we had another quarter of double-digit revenue growth and positive non-GAAP adjusted EBITDA for the third consecutive quarter, that, too, on the heels of COVID-19 and factory closures. We grew revenue by 33% while expanding gross margins by 1.5 points year over year. Non-GAAP adjusted EBITDA of $1.6 million, up $5 million year over year.

Second, we exited the quarter with a strong cash position of $124 million in cash, cash equivalents and short-term investments. This is net of $11 million we spent on share repurchases and equity investments we made in the quarter. Our current cash balance at the end of the quarter represented approximately 60% of Telenav's market cap. This does not include the $32 million we have in equity investments in multiple companies which make up another 15% of market cap.

This would mean the remaining 25% of the market cap is attributable to $1 billion backlog we reported last quarter. As HP stated in his opening remarks, while the current situation presents challenges for us, it also brings us opportunities which could extend and expand our OEM partnerships and continue to drive the value of our backlog up. Third, we continue to make progress on our strategy, evident from some major wins and milestones we ended up hitting in the past quarter, namely completed investment in SYNC 3 to get access to thousands of restaurants, made additional investments in Motion Auto as we continue to work on differentiated insurer solution and closed VIVID aftermarket deal with Alpine in Europe. Finally, concerning the COVID-19 impact on Telenav, the outlook remains uncertain in the immediate to short term mainly due to lack of clarity from major OEMs as to when they will resume production globally and how quickly they ramp up volumes.

In the past quarter, our top priority remained meeting customer commitments, the health and safety of our employees, operational discipline and cash preservation. Looking at Slide No. 6, in Q3 '20, our revenue increased 33% year over year to $64.5 million from $48.5 million a year ago. This is a significant increase year over year.

The main drivers of our remarkable performance year over year and relative to guidance are trending around within GM and broad-based strength across OEMs. Total non-GAAP billings in the third quarter of fiscal 2020 were $63.5 million, a slight decrease year over year compared to $64.6 million in the third quarter of fiscal 2019, primarily driven by a loss of approximately 10 days of production in the March quarter. Account-level mix is trending as we expected, as GM continues to ramp up in Q3. Ford was 48% of our revenue and GM was 39% of our revenue.

GAAP gross margin as a percent of revenue for the third quarter of fiscal 2020 was 45% compared to 44% in the third quarter of fiscal 2019. Gross profit increased to $29 million in the third quarter of fiscal 2020, a 37% increase compared with $21.1 million in the third quarter of fiscal 2019. The improvement in gross margin rate was primarily due to Ford NRE in the quarter. Moving on to operating expenses.

Total GAAP operating expense in the third quarter of fiscal 2020 were $30.2 million compared with $27 million in the third quarter of fiscal 2019, down nine points year over year as a percent of revenue but up 12% year over year in absolute dollars mainly due to investments in the strategic projects and an increase in compensation and benefits. Loss from operations for the third quarter of fiscal 2020 was $1.2 million compared with a loss of $5.9 million in the third quarter of fiscal 2019. The year-over-year improvement in the operating profit was primarily due to the increased revenue and strong gross margin. Net loss in the third quarter of fiscal 2020 was $0.7 million compared with net loss of $7.5 million for the third quarter of fiscal 2019.

The year-over-year improvement was primarily due to the increased revenue, gross margin profit and other income and expense. We, again, achieved positive adjusted EBITDA, a non-GAAP measure, of $1.6 million for the third quarter of fiscal 2020, compared with a loss of $3.3 million for the third quarter of fiscal 2019. Cash continued to be strong in the quarter. In the third quarter of fiscal 2020, we generated a non-GAAP free cash flow of $7 million.

Overall, cash and cash equivalent position remained strong at $124 million as of March 31, 2020, a drop of $5 million versus the $129 million reported in the second quarter of fiscal 2020, and an increase of $24 million from $99.5 million on June 30, 2019. This quarter cash balance of approximately $124 million was net approximately $5.3 million in cash that we used to repurchase 926,000 shares and cash we used to make strategic investments within the quarter. Given the uncertainty caused by the global pandemic, we have suspended our share repurchase program. Resumption of the repurchase plan will depend on the macroeconomic situation in general, and auto industry in particular.

We continued to expand our footprint of connected cars. Our total connected cars installed based increased to approximately 19 million, up 40% year over year. And we shipped 1.2 million connected cars within the quarter. Our overall installed base increased to more than 28 million cars, up 25% year over year.

This large installed base provides yet another significant opportunity for us to explore. Looking at Slide No. 7 now, we saw encouraging momentum in both products and services revenue in the third quarter, up 25% and 82%, respectively year over year. Services represented 19% of our total revenue mix versus 14% in the prior year.

Services revenues is a standard component of our contracts with OEMs and we expect it to continue to be a healthy portion of our revenue going forward. Year to date, services has been 17% of our revenue mix. Services is area of focus for us, and we intend to grow it over the next three years to further increase the stable and recurring revenue stream. Looking forward in this environment, we are taking prudent measures and a highly conservative approach until we see the situation improve.

While we do not have a reduction plan in place for workforce, we will restrict external hiring and contractor renewals. In addition, we will be scrutinizing all discretionary spending. We are continuing to become more operationally rigorous and in the quarter we worked toward the deployment of key managerial IT infrastructure, including upgrading our financial reporting systems to NetSuite and implementing OpenAir for operational and R&D efficiency and productivity management, and finally the implementation of Workday for performance management and HR functions. I am pleased with our overall execution and operational discipline in the past quarter and we see the following six opportunities in the short to medium term: number one, win new OEMs across the globe; number two is increase our share of wallet within our existing customer engagements, be it Ford or GM; VIVID as an embedded platform within the OEMs, allowing them the flexibility to customize, entertain, customer data and relationships; number four, in-car commerce.

It's a huge opportunity and we are just getting starting with our first customer win and we will continue to build the ecosystem. Number five is aftermarket with all-in-one VIVID solution to cater to the untapped millions of cars in the aftermarket channel and Alpine is just the first win in this space. Number six, last but not the least, Telenav's large and growing installed base, an opportunity to monetize it with creative solutions such as offering insurance offerings; with our expanded position in Motion Auto, now we are well placed to capitalize on the $200 billion-plus insurance market in the U.S. alone.

Looking at the fourth quarter and Slide No. 11, we remain optimistic about a near-term recovery, given the trend we are seeing in the China market. However, at this point it is unclear how quickly and how aggressively OEMs open up plants across the globe, and how quickly they ramp up their unit volume. Until we see more definitive plans from the OEMs related to the plant reopening, it is prudent that we do not provide guidance at this point in time.

With that, I will open up the call to your questions and hand it back to Mike.

Questions & Answers:


Operator

Thank you. [Operator instructions] And we'll take our first question from Josh Nichols B. Riley FBR. Please go ahead.

Unknown speaker

Hey, guys. Thanks for taking my question. This is Aman jumping in for Josh. The first question I wanted to ask, the IHS is projecting U.S.

auto sales could be down 26% this year. But navigation take rates are also typically increasing. How should we think about overall demand for looking up solutions given those two factors?

HP Jin -- President and Chief Executive Officer

Hassan, do you want to take the call? Hassan?

Hassan Wahla -- Chief Customer Officer

Yes, certainly, HP. I can do that. So there isn't a specific formula that we can show that I share with you. But typically, we have seen in the past, whenever there has been a sales decline like we saw in Europe a year ago, the OEMs do make their vehicles much more full-feature in order to further differentiate and drive demand.

And that does help us with our overall take rates. So I think the important thing here a decline in sales volumes does not have a one-to-one correlation with the impact on navigation units.

Unknown speaker

Got it. Thank you. And are there any significant near-term opportunities beyond the traditional navigation offerings with Ford and GM that you could discuss some specifics maybe in a bit more detail?

HP Jin -- President and Chief Executive Officer

Hassan, go ahead.

Hassan Wahla -- Chief Customer Officer

Yes. So we certainly can't go into detail on specific opportunities. But as Adeel has pointed out in his presentation, we are looking at new OEMs and we're also going beyond navigation with our VIVID platform, which does give a full infotainment platform system to OEMs with Alpine being the first one. On the in-car commerce side, we did share last time we have our first OEM, which is a Japanese OEM, and we are working with them.

And of course, we continue to look into new Road Intelligence customers after our success with ground.

Unknown speaker

Got it. Thank you.

Adeel Manzoor -- Chief Financial Officer

Sorry, just to add on top of what Hassan said, as you're thinking about the near term and then probably midterm and as you're trying to model out Q4, just to build off on top of what Hassan said, also keep in mind a decent portion of our revenue, it's basically related to the services business, which is really servicing the existing installed base. It's not really tied to the new units or volumes that we will ship or get produced. So that's a big one to comprehend and understand. In the past quarter, Q3 that we just finished, our services mix was about 19% of total revenue.

And year to date for the last nine months, it's about 17%, so I think that's a big one to comprehend in your model as you try to build it up. The second thing you ought to keep in mind is China, as we said, has already recovered, and in April, basically, we're seeing the units revert to full capacity and, in fact, coming in better than what we thought. And then if you look at Europe, Ford Europe has opened up plants as of May 4. So if you look back at Telenav and the mix of our revenue, international versus in the U.S., in the current quarter, roughly 72% of our revenue came from U.S.

In the last nine months, it's about 82%, so there's a good 18% to 20% of revenue that comes from international. So you ought to think about beyond just IHS in the U.S., but also think about China and Europe. So those are the two comments that I would just layer on top of what Hassan has said.

Unknown speaker

OK. And just talking about China, you talked about announcing embedded navigation solutions with Chrysler in China. Do you think this can be a material part of the business in fiscal '21?

HP Jin -- President and Chief Executive Officer

We cannot comment on that level of details of that business right now. So today, still Ford and GM are the two largest ones, over 10%, but Chrysler is still way under 10%.

Unknown speaker

OK. Last question from me. Where is the company in terms of penetration rates with GM today? And is mid-30s take rate achievable?

HP Jin -- President and Chief Executive Officer

Hassan, do you want to comment on this one?

Hassan Wahla -- Chief Customer Officer

Yes, certainly. So I think in general with OEMs, we are seeing a 30% to 40% range as average, and at certain OEMs, we are seeing the take rates to be well over 50%. We can't comment on any specific OEM. But at GM, we do still see opportunity for us to grow, both from new vehicles being launched, as well as the penetration rate increasing with existing vehicles.

And as far as new vehicles being launched, I think the most notable ones are the large SUVs which GM has announced are still on track to be launched this year. This includes the Tahoe, the Yukon, as well as the Escalade. And these three vehicle lines combined do have very high attach rates just given their price point and target audience.

Unknown speaker

Thank you.

Operator

[Operator instructions] We'll take our next question from Ryan Sigdhal with Craig-Hallum Capital Group.

Unknown speaker

Hi, guys. This is Matt on for Ryan. Thanks for taking our questions, and congrats on the first VIVID award.

HP Jin -- President and Chief Executive Officer

Thank you.

Unknown speaker

Good to hear that. And so I guess starting with VIVID, anything else you can sort of talk about with the award, potential for geographic expansion from Europe where it sounds like it's just starting out, anything -- economics on the deal? And is it just for a customer? Is it just something that is purchased one-off from Amazon or any other retailer?

HP Jin -- President and Chief Executive Officer

Hassan, you want to comment on this one?

Hassan Wahla -- Chief Customer Officer

Yes, certainly. So the Alpine deal that we have, it is very unique, as HP mentioned during his comments. Basically, this will allow a small device manufactured by Alpine which could be plugged into your vehicle and it will give you a brand-new infotainment system, which is our VIVID system running on Alpine hardware. And our target initially is Europe because that's where there is the largest penetration of vehicles that support MirrorLink.

There are tens of millions of vehicles in Europe right now that support MirrorLink, and this includes vehicles from OEMs like Volkswagen, Daimler, Jaguar Land Rover. So that's why we have selected Europe as our leading market. And it won't be sold just through Amazon. I'm not even sure that's one of the channels which Alpine will use, but Alpine is planning to distribute this through the aftermarket channel, which could potentially include the OEM aftermarket channels.

So imagine you take your car in for servicing and you're given the option to upgrade your whole new infotainment system rather than taking out the old system, which can be very costly and having a profession person install it. It's a matter of plugging something in, taking a couple of steps, and now you have a brand-new experience, which also includes our hybrid navigation solution. So Europe will make sense as the first market, but it's certainly -- we are looking at expanding beyond Europe, depending on how the customers react in the European marketplace.

Adeel Manzoor -- Chief Financial Officer

Sorry, Matt. This is Adeel, just to help you with the modeling on Alpine. So if you're trying to size Alpine, so certainly, there's a geographical dimension that Hassan has kind of alluded to. So starting with Europe, and then we'll go beyond Europe, but on top of that, you also think about the opportunity within, for example, in Europe a number of cars that could be installed.

So any car there has MirrorLink or that supports MirrorLink. That would become kind of our addressable automobile. And as HP said in his remarks, there are tens of millions of cars that would support MirrorLink, including Volkswagen, Mercedes Benz, Honda, KIA, just to name a few. So just from a sizing point of view, that's the piece to keep in mind.

Unknown speaker

Right. That makes sense. So is MirrorLink the -- is the technology related to MirrorLink, is that the only way that you can integrate VIVID onto the Alpine system? I mean, what are the other technologies that system would be integrated in, say, in the U.S.? And would that be essentially closed off to this Alpine system?

Hassan Wahla -- Chief Customer Officer

So for Alpine, for our current deployment, it does leverage MirrorLink, but of course, the VIVID platform is not limited to MirrorLink. And MirrorLink does have penetration in North America also, but this was our fastest approach to market. So from the turner side, there are no limitations to using on MirrorLink. But again, since it's easy for us to upgrade the system using MirrorLink, this will be the decision that we made in working with Alpine.

HP Jin -- President and Chief Executive Officer

And we're also developing aftermarket VIVID products in the U.S. right now and China. So we are planning, and we have been working on that for a long time, and we have shown that demo at the CES last year even. So this year we are going to test with customers in the near future, both in China and U.S.

Unknown speaker

Great. And then so last one on VIVID. How might the economics differ between kind of an OEM integration versus this aftermarket angle?

Hassan Wahla -- Chief Customer Officer

So the economics are quite similar, where there is NRE component and a license component and a service component. It is a very similar solution from an economics perspective to our OEM deals.

Unknown speaker

OK. So it sounds like, obviously, limited visibility with OEM production is the big reason for lack of certainty and just the no guidance next quarter. But have you heard anything specifically for them? Or is there any insight you have into what the production ramp looks like? I mean, clearly, the OEMs have been working at this for a while, trying to figure out a time line. Have they been in any communication with you guys?

Hassan Wahla -- Chief Customer Officer

Yes, so I can take that. Yes, we are in close communication with our OEM partners, and they have shared with us their plans. But of course, these are confidential, and these plans are always subject to change based on what happens once the plants first initiate. But we are very much in close communication with our key customers.

And we understand what their current plant record is in terms of not just opening up the plants, but starting with one shift, going to multiple shifts and when will it have full ramp-up. But one of the reasons we still have uncertainty is that once the plants start up, really, we have to see and make sure that everyone is still in good health and that there aren't any new mandates from states or at the federal level that change the plans for the OEMs.

Unknown speaker

Got it. And then could you basically begin shipping or recognizing revenue sort of the day they fire up the lines again?

HP Jin -- President and Chief Executive Officer

Yes. Essentially, yes.

Adeel Manzoor -- Chief Financial Officer

So Matt, one thing to think about in the near term, right, also think about slightly longer term also. Certainly, there's a lot of uncertainty in the short term or immediate term, and then when the plants come back to life, certainly, we'll start recognizing revenue as they announce they start production. But the other thing about longer term, the year out, the two-year out, three-year out, while we do believe there on the one side, that COVID brings a lot of challenges, as HP said and I think I also tried to point that in my opening remarks, but you also have to think about what will be the impact on our backlog. What we do believe at this point in time is as a result of this challenging situation, OEMs will be more cost sensitive and they may not be willing to switch from Program A to Program B.

And as a result, we believe that some of our existing OEM engagements may get extended. So their life will be extended, and as a result, the lifetime value of those contracts will go up, which will definitely improve our backlog position as we reported last quarter.

Hassan Wahla -- Chief Customer Officer

So just on that now, back to the opportunities, while typically, whenever there's a downturn in automotive, the auto OEMs do start to open up more to outsource a lot more of the work, so we are right now actively looking at going beyond navigation. What could be other opportunities where OEMs might want to outsource them? This could include everything from design services, as well as our whole VIVID platform. Because we firmly believe that our VIVID platform does offer a fully integrated infotainment system which not only offers a great customer experience for the end user but can also help OEMs lower their overall cost.

Unknown speaker

Right. Makes sense. OK. Moving on to just my next one, the SPICE level 2 certification, anything else you can comment on that or if that is something that you guys got to receive any incremental next-generation technology awards, anything like that?

HP Jin -- President and Chief Executive Officer

So a SPICE level 2 is a standard for software to be used in cars. So we have passed level 2 just to prove to kind of to OEM customers that we have consistent, reliable software delivery to meet auto grade software. It's not related to any new program or not. Of course, that will help us, I think, in terms of strengthening our position as a solid provider, as a qualified provider for OEMs across the globe.

Unknown speaker

Right. That makes sense. And I think the press release had noted that it was in Europe. Is there anything in the U.S.

that you may be needing to be certified or anything like that on the horizon for you, guys?

HP Jin -- President and Chief Executive Officer

No. This certification happened to be the consulting firm to certify that is in Europe. But this is a global software development team, including Europe, China, U.S. altogether certifies level 2.

Unknown speaker

Sounds good. And then last one from me, and I'll turn it back in queue, just kind of a housekeeping one. I think you had mentioned there was Ford NRE in the quarter that contributed to revenue. Any way to quantify that?

Adeel Manzoor -- Chief Financial Officer

So Matt, you know that we don't really discuss that level of detail. But NRE was one of the components. It depends on what you're trying bridge to me, and if you're thinking about year-over-year performance, then NRE was not the main driver. The main driver was really the GM ramp.

But I can help you understand the year over year, quarter over quarter for some guidance, but unfortunately, we can't really disclose the size of the NRE.

Unknown speaker

OK. Sounds good. I'll hop back in queue. Thank you.

Operator

[Operator instructions] And it appears there are no further questions at this time. I would like to turn the conference back over to management for any additional or closing remarks.

Mike Bishop -- Investor Relations

Thank you. I would like to thank everyone for participating in today's third-quarter fiscal 2020 financial results call. We appreciate your continued support. This concludes today's presentation.

Thank you.

Operator

[Operator signoff]

Duration: 46 minutes

Call participants:

Mike Bishop -- Investor Relations

HP Jin -- President and Chief Executive Officer

Adeel Manzoor -- Chief Financial Officer

Unknown speaker

Hassan Wahla -- Chief Customer Officer

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