ClearOne Inc.

08/15/2024 | Press release | Distributed by Public on 08/15/2024 04:02

ClearOne, Inc. Reports Second Quarter 2024 Financial Results Form 8 K

ClearOne, Inc. Reports Second Quarter 2024 Financial Results

- Sequential and Year-over-Year OpEx Reductions Reflect Continued Benefits of Cost Optimization Initiatives-

SALT LAKE CITY, UTAH - August 14, 2024 - ClearOne (NASDAQ: CLRO), a global provider of audio and visual communication solutions, reported financial results for the three-month period ended June 30, 2024.

Revenue declined 58% sequentially and 39% year over year, primarily due to a significant decrease in revenues from the audio conferencing category, which includes our DSP mixer products. "We believe this revenue decline was primarily due to the cumulative impact of past production shortages," said Derek Graham, CEO of ClearOne. "Historically, we have seen a lag of several months between the time that our professional conferencing products are specified for a project and the date when those products are purchased for installation. Since our product availability was constrained through a significant part of Q4 2023 as a result of delays in the transition of outsourced manufacturing from China to Singapore throughout 2023, we believe our revenue was impacted negatively by these market dynamics through much of Q2 2024. We have also faced sales headwinds from our products' lack of Microsoft Teams certification, despite their longtime functional compatibility with this platform. Our work through early 2024 has focused on mitigating these impacts through maintaining consistent dialogues, product demonstrations, and feedback cycles with end users and channel partners, along with improving our visibility at key industry events.Our sales in Q2 2024 were also impacted by our transition to a new distributor in the Middle East. We anticipate, although there can be no assurance, that our new Middle East distributor will continue our previous history of sales growth in the region, but there was an impact to our sales in that region due to the transition."

Operational Highlights

  • The Company showcased its full line of collaboration and conferencing solutions at Infocomm 2024 including seamless integration with popular collaboration solutions from other companies and a comprehensive portfolio of solutions for various applications and meeting room sizes. The Company captured 60% more sales leads due to in-person visitors during Infocomm USA 2024 compared to Infocomm USA 2023.
  • The Company introduced the Versa Lite BMA 360D in Q2 2024. This innovative bundle combines ClearOne's industry-leading BMA 360D Dante® enabled microphone array ceiling tile with the Versa® USB22D Dante® adapter, offering a perfect audio solution for any conferencing space with an easy connection to any computer or room device via USB
  • The Company reduced operating expenses by 10.1% sequentially and 9.33% year-over-year.

Graham continued, "During the first half of 2024, our team has been diligently working to win back customers who have defected to competing brands. We believe, although there can be no assurance, those efforts will bear fruit soon. We continue to see strong interest in our innovative products as demonstrated by the 60% increase in visitors at our Infocomm USA booth even though overall Infocomm USA attendance was only up 3% this year."

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Financial Summary

The Company uses certain non-GAAP financial measures and reconciles those to GAAP measures in the attached tables.

●
Q22024 revenue was $2.3 million, compared to $5.5 million in Q22023 and $3.6 million in Q12024. The 36.1% sequential decrease was driven by reduced demand across all product categories. We believe the flow of sales orders during Q2 2024 was reduced due to the cumulative impact of past product shortages. We believe the revenue decrease was mainly due to sustained inventory sourcing and order fulfillment challenges for the Company's core audio conferencing and beam forming microphone arrays as a result of delays in the transition of outsourced manufacturing from China to Singapore throughout 2023.



●
GAAP gross profit/(loss) in Q22024 was $(0.02) million, compared to $1.8 million in Q22023 and $1.2 million in Q12024. GAAP gross profit margin was- 1% in Q22024, compared to 32% in Q12024 and 34% in Q22023. The large decrease in gross profit margin occurred due to increased inventory scrap costs, increasing the inventory reserve to write down the value for certain items, and an increase in purchase price variance from increasing vendor costs.



●
Operating expenses in Q22024 improved to $2.9 million, compared to $3.2 million in Q22023 and $3.2 million in Q12024. Non-GAAP operating expenses in Q22024 improved to $2.8 million compared to $3.1 million in Q12024 and $3.1 million in Q22023. The sequential and year-over-year decrease in non-GAAP operating expenses was mainly due to the continued benefits of the cost-cutting measures initiated in 2022.



●
GAAP net loss in Q22024 was $(2.8) million, or $(0.12) per share, compared to a net loss of $(1.0) million, or $(0.04) per share, in Q22023 and a net loss of $(1.9) million, or $(0.08) per share, in Q12024. The year-over-year increase in net loss was primarily due to the aforementioned decrease in revenue and gross profit, partially offset by a decrease in operating expenses.



●
Non-GAAP net loss in Q22024 was $(2.7) million, or $(0.11) per share, compared to a Non-GAAP net loss of $(0.9) million, or $(0.04) per share, in Q22023 and a Non-GAAP net loss of $(1.8) million, or $(0.07) per share, in Q12024. The year-over-year increase in Non-GAAP net loss was driven by the aforementioned decrease in revenue and gross profit partially offset by a decrease in operating expenses.
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($ in 000, except per share)

Three months ended June 30,



Six months ended June 30,

2024

2023

Change in % Favorable/(Adverse)



2024


2023

Change in % Favorable/(Adverse)

GAAP












Revenue

$

2,304

$

5,483

(58

)
$ 5,926

$ 9,661

(39 )

Gross profit

(20

)

1,848

(101

)

1,131


3,163

(64 )

Operating expenses

2,904

3,203

9



6,133


6,707

9

Operating loss

(2,924

)

(1,355

)

(116

)

(5,002 )

(3,544 )
(41 )

Net loss

(2,820

)

(1,019

)

(177

)

(4,718 )

(1,851 )
(155 )

Diluted loss per share

(0.12

)

(0.04

)

(200

)

(0.20 )

(0.08 )
(150 )

Non-GAAP












Non-GAAP operating expenses

$

2,830

$

3,051

7


$ 5,925

$ 6,413

8

Non-GAAP operating loss

(2,835

)

(1,201

)

(136

)

(4,777 )

(3,250 )
(47 )

Non-GAAP net loss

(2,731

)

(865

)

(216

)

(4,493 )

(2,907 )
(55 )

Non-GAAP Adjusted EBITDA

(2,660

)

(710

)

(275

)

(4,367 )

(2,389 )
(83 )

Non-GAAP diluted loss per share

(0.11

)

(0.04

)

(175

)

(0.19 )

(0.12 )
(55 )

Balance Sheet Highlights

As of June 30, 2024, cash, cash equivalents and investments were $4.9 million, as compared with $22.2 million as of December 31, 2023.

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About ClearOne

ClearOne is a global company that designs, develops, and sells conferencing, collaboration, and network streaming solutions for voice and visual communications. The performance and simplicity of its advanced comprehensive solutions offer unprecedented levels of functionality, reliability, and scalability. Visit ClearOne at www.clearone.com.

Non-GAAP Financial Measures

To supplement our consolidated financial statements presented on a GAAP basis, ClearOne uses non-GAAP measures of gross profit, operating income (loss), net income (loss), adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and net income (loss) per share, which are adjusted to exclude certain costs, expenses, gains and losses we believe appropriate to enhance an overall understanding of our past financial performance from period to period and also our prospects for the future. These adjustments to our current period GAAP results are made with the intent of providing both management and investors a more complete understanding of ClearOne's underlying operational results and trends and our marketplace performance. The non-GAAP results are an indication of our baseline performance before certain gains, losses, or other charges that are considered by management to be outside of our core operating results. In addition, these adjusted non-GAAP results are among the primary indicators management uses as a basis for our planning and forecasting of future periods. The presentation of this additional non-GAAP financial information is not meant to be considered in isolation or as a substitute for gross profit, operating income (loss), net income (loss), income (loss) per share or other financial measures prepared in accordance with GAAP. There are limitations to the use of non-GAAP financial measures. Other companies, including companies in ClearOne's industry, may calculate non-GAAP financial measures differently than ClearOne does, limiting the usefulness of those measures for comparative purposes. A detailed reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is included in this release below.

Forward Looking Statements

This release contains "forward-looking" statements that are based on present circumstances and on ClearOne's predictions with respect to events that have not occurred, that may not occur, or that may occur with different consequences and timing than those now assumed or anticipated. Such forward-looking statements and any statements of the plans and objectives of management for future operations and forecasts of future growth and value are not guarantees of future performance or results and involve risks and uncertainties that could cause actual events or results to differ materially from the events or results described in the forward-looking statements. Such forward-looking statements are made only as of the date of this release and ClearOne assumes no obligation to update forward-looking statements to reflect subsequent events or circumstances. Readers should not place undue reliance on these forward-looking statements. The information in this press release should be read in conjunction with and is modified in its entirety by, the Quarterly Report on Form 10-Q (the "10-Q") filed by the Company for the same period with the Securities and Exchange Commission (the "SEC") and all of the Company's other public filings with the SEC (the "Public Filings").

In particular, the financial information contained herein is subject to and qualified by reference to the financial statements contained in the 10-Q, including the footnotes thereto, as well as the Company's annual report on Form 10-K for the year ended December 31, 2023 (the "10-K"), the footnotes thereto and the limitations set forth therein. Investors may not rely on the press release without reference to the 10-Q, the 10-K, and the Public Filings.

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CLEARONE, INC

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except par value)

June 30, 2024

December 31, 2023

ASSETS

Current assets:

Cash and cash equivalents

$

2,450

$

17,835

Current marketable securities

1,852

3,480

Patent cross license receivable

-

4,000

Receivables, net of allowance of $326

2,574

3,279

Inventories, net

14,599

10,625

Income tax receivable

27

36

Prepaid expenses and other assets

3,855

4,062

Total current assets

25,357

43,317

Long-term marketable securities

621

916

Long-term inventories, net

1,772

3,143

Property and equipment, net

552

530

Operating lease - right of use assets, net

804

990

Intangibles, net

1,582

1,689

Other assets

108

109

Total assets

$

30,796

$

50,694

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

1,901

$

1,945

Accrued liabilities

1,726

2,290

Deferred product revenue

23

30

Total current liabilities

3,650

4,265

Operating lease liability, net of current

515

665

Other long-term liabilities

1,079

1,079

Total liabilities

5,244

6,009

Shareholders' equity:

Common stock, par value $0.001, 50,000,000 shares authorized, 23,969,148 shares issued and outstanding

24

24

Additional paid-in capital

31,616

46,047

Accumulated other comprehensive loss

(294

)

(310

)

Accumulated deficit

(5,794

)

(1,076

)

Total shareholders' equity

25,552

44,685

Total liabilities and shareholders' equity

$

30,796

$

50,694

5

CLEARONE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE LOSS

(Dollars in thousands, except per share amounts)

Three months ended June 30,


Six months ended June 30,

2024

2023


2024

2023

Revenue

$

2,304

$

5,483


$ 5,926

$ 9,661

Cost of goods sold

2,324

3,635



4,795


6,498

Gross profit

(20

)

1,848



1,131


3,163








Operating expenses:









Sales and marketing

1,191

1,323



2,503


2,515

Research and product development

868

873



1,762


1,916

General and administrative

845

1,007



1,868


2,276

Total operating expenses

2,904

3,203



6,133


6,707








Operating loss

(2,924

)

(1,355

)



(5,002 )

(3,544 )








Interest expense

-

(91

)



-


(383 )

Other income, net

119

437



297


2,103








Loss before income taxes

(2,805

)

(1,009

)



(4,705 )

(1,824 )








Provision for income taxes

15

10



13


27








Net loss

$

(2,820

)

$

(1,019

)


$ (4,718 )
$ (1,851 )








Basic weighted average shares outstanding

23,969,148

23,955,802



23,969,148


23,955,785

Diluted weighted average shares outstanding

23,969,148

23,955,802



23,969,148


23,955,785








Basic loss per share

$

(0.12

)

$

(0.04

)


$ (0.20 )
$ (0.08 )

Diluted loss per share

$

(0.12

)

$

(0.04

)


$ (0.20 )
$ (0.08 )








Comprehensive loss:









Net loss

$

(2,820

)

$

(1,019

)


$ (4,718 )
$ (1,851 )

Unrealized loss on available-for-sale securities, net of tax

(3

)

14



19


14

Change in foreign currency translation adjustment

(1)

(1

)

(3)


4

Comprehensive loss

$

(2,824

)

$

(1,006

)


$ (4,702 )
$ (1,833 )
6

CLEARONE, INC.

UNAUDITED RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES

(Dollars in thousands, except per share values)

Three months ended June 30,


Six months ended June 30,

2024

2023


2024

2023

GAAP operating loss

$

(2,924

)

$

(1,355

)
$ (5,002 )
$ (3,544 )

Stock-based compensation

39

25



65


47

Amortization of intangibles

50

129



160


247

Non-GAAP operating loss

$

(2,835

)

$

(1,201

)
$ (4,777 )
$ (3,250 )








GAAP net loss

$

(2,820

)

$

(1,019

)



(4,718 )

(1,851 )

Stock-based compensation

39

25



65


47

Amortization of intangibles

50

129



160


247

Other income adjustment

-

-



-


(1,350 )

Non-GAAP net loss

$

(2,731

)

$

(865

)


$ (4,493 )
$ (2,907 )








GAAP net loss

$

(2,820

)

$

(1,019

)


$ (4,718 )
$ (1,851 )

Number of shares used in computing GAAP diluted loss per share

23,969,148

23,955,802



23,969,148


23,955,785

GAAP diluted loss per share

$

(0.12

)

$

(0.04

)


$ (0.20 )
$ (0.08 )

Non-GAAP net loss

$

(2,731

)

$

(865

)


$ (4,493 )
$ (2,907 )

Number of shares used in computing Non-GAAP diluted loss per share

23,969,148

23,955,802



23,969,148


23,955,785

Non-GAAP diluted loss per share

$

(0.11

)

$

(0.04

)


$ (0.19 )
$ (0.12 )








GAAP net loss

$

(2,820

)

$

(1,019

)


$ (4,718 )
$ (1,851 )

Stock-based compensation

39

25



65


47

Interest expense

-

91



-


383

Depreciation

56

54



113


108

Amortization of intangibles

50

129



160


247

Other income adjustment

-

-



-


(1,350 )

Provision for income taxes

15

10



13


27

Non-GAAP Adjusted EBITDA

$

(2,660

)

$

(710

)
$ (4,367 )
$ (2,389 )

Investor Relations Contact:

Simon Brewer

385-426-0565

[email protected]

http://investors.clearone.com

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