ClearOne, Inc. Reports First Quarter 2022 Financial Results

May 19, 2022
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  • Quarterly overall Year-over-Year Revenue up by 7%
  • Sequential quarterly revenue up by 5%
  • Strong performance from microphone, core audio conferencing, and personal conferencing products drive revenue growth

SALT LAKE CITY--(BUSINESS WIRE)--May 19, 2022-- ClearOne Inc. (NASDAQ: CLRO), a global provider of audio and visual communication solutions, reported financial results for the three months ended March 31, 2022.

"We are pleased with a strong start to 2022. Notwithstanding the significant challenges posed by the global supply chain crisis that have deeply impacted our industry negatively, ClearOne was able to deliver impressive revenue gains led by our ground-breaking BMA 360 and BMA-CT based solutions and backed by strong performance from traditional ceiling microphones and personal audio conferencing products," said Zee Hakimoglu, CEO of ClearOne.

"Our gross margin continues to be challenged by various factors including the increase in material costs of critical electronic components due to the once-in-a-generation extraordinary global supply chain crisis, as well as burgeoning inflation causing freight, labor, and general cost increases in the production and logistics chain,” Hakimoglu added.

“We are committed to realizing the full potential of our business by focusing on factors that are within our control through timely and decisive strategic planning and decision making. This includes driving our global team to meet our 2022 goals to launch a host of new innovative products that we believe will intercept important new market demands while bringing fresh revenue opportunities to ClearOne, demonstrating the power of our diversified portfolio of products, and aggressively mitigating the impact of inflation and supply chain obstacles. On all fronts, including our litigation against Shure, we look forward to a fruitful year ahead,” Hakimoglu concluded.

Recent Highlights

  • In March 2022, the Company filed motions asking the U.S. District Court of Northern Illinois to schedule trial dates for two key cases that ClearOne filed against Shure in that District Court, which together allege patent infringement of three ClearOne patents and misappropriation of ClearOne’s trade secrets. The Court denied that request without prejudice in April 2022.
  • In January 2022, the Company filed a motion asking the U.S. District Court of Delaware to schedule a trial date on ClearOne’s counterclaims of unfair competition and tortious interference with business relations. Shure opposed that motion and asked the Court to stay proceedings on ClearOne’s counterclaims. The Court has yet to decide on these motions.
  • This week, our BMA 360 was awarded the prestigious Best in Market Award at Integrated Systems Europe (ISE), the world’s largest AV and systems integration show. The microphone was one of only three winners in this year’s program presented by leading industry publication Sound & Video Contractor. The 2022 Best in Market Awards is the BMA 360’s sixth industry accolade since its launch in 2020.
  • Also in May, DIALOG ® 10, the industry’s only pro-quality single-channel wireless USB microphone system won a 2022 Top New Technology (TNT) Award in the Microphone category. TNT Awards recognize new and outstanding products and services in the commercial and residential AV industry and this program is hosted by industry-leading publications CE Pro and Commercial Integrator. This is the second win for DIALOG 10 having won a 2022 NSCA Excellence in Product Innovation Award in February 2022.

Financial Summary

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

  • Revenue in 2022-Q1 was $7.5 million, compared to $7.0 million in 2021-Q1 and $7.2 million in 2021-Q4. The increase in year-over-year revenue was mainly due to a 23% increase in microphones and a 13% increase in audio conferencing products which were partially offset by a 22% decrease in video products. Increase in revenue from microphones and core audio conferencing products continued to be driven by our new solutions incorporating our beamforming BMA-CT and BMA 360 array ceiling tiles and professional audio mixers. Despite this year-over-year revenue growth in microphones and core audio conferencing products, revenue from our audio conferencing products and microphones remain far below levels achieved prior to infringement of our strategic patents.
  • GAAP gross profit in 2022-Q1 was $2.8 million compared to $3.0 million in 2021-Q1 and $2.6 million in 2021-Q4. GAAP gross profit margin was 37.3% in 2022-Q1, compared to 42.7% in 2021-Q1 and 36.6% in 2021-Q4. The gross profit margin was negatively impacted due to increase in material costs due to continuing supply chain constraints, and increased freight and tariff costs, which were partially offset by the absence of inventory obsolescence costs in 2022-Q1.
  • Operating expenses in 2022-Q1 were $4.7 million, compared to $4.5 million in 2021-Q1 and $5.1 million in 2021-Q4. Non-GAAP operating expenses in 2022-Q1 were $4.0 million, compared to $4.0 million in 2021-Q1 and $4.4 million in 2021-Q4.
  • GAAP net loss in 2022-Q1 was $2.0 million, or $0.08 per share, compared to net loss of $1.7 million, or $0.09 per share, in 2021-Q1 and net loss of $2.3 million, or $0.10 per share, in 2021-Q4. Non-GAAP net loss in 2022-Q1 was $1.3 million, or $0.05 per share, compared to net loss of $1.1 million, or $0.06 per share, in 2021-Q1 and net loss of $1.6 million, or $0.07 per share, in 2021-Q4. The year-over-year increase in Non-GAAP was primarily due to reduced gross profit caused by higher cost of goods sold as a percentage of revenue.

($ in 000, except per share)

 

Three months ended March 31,

 

 

 

2022

 

 

 

2021

 

 

Change in %

Favorable/(Adverse)

 

GAAP

 

 

 

 

 

 

 

 

 

 

Revenue

$

7,545

 

 

$

7,038

 

 

7

 

Gross profit

 

2,816

 

 

 

3,003

 

 

(6

)

Operating expenses

 

4,669

 

 

 

4,527

 

 

(3

)

Operating loss

 

(1,853

)

 

 

(1,524

)

 

(22

)

Net loss

 

(1,967

)

 

 

(1,655

)

 

(19

)

Diluted loss per share

 

(0.08

)

 

 

(0.09

)

 

11

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

Non-GAAP gross profit

$

2,818

 

 

$

3,006

 

 

(6

)

Non-GAAP operating expenses

 

3,966

  

 

 

3,988

 

 

1

 

Non-GAAP operating loss

 

(1,148

)

 

 

(982

)

 

(17

)

Non-GAAP net loss

 

(1,262

)

 

 

(1,113

)

 

(13

)

Non-GAAP Adjusted EBITDA

 

(1,069

)

 

 

(886

)

 

(21

)

Non-GAAP loss per share (diluted)

 

(0.05

)

 

 

(0.06

)

 

17

 

Balance Sheet Highlights

As of March 31, 2022, cash, cash equivalents and investments were $2.4 million, compared to $4.1 million as of December 31, 2021. As of March 31, 2022, the Company carried a debt of $3.0 million on account of senior convertible notes issued in December 2020 and a Paycheck Protection Program (PPP) loan obtained in April 2020. The PPP Loan was forgiven in April 2022.

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 with 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 and the possible outcomes of litigation, 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 Annual Report on Form 10-K (the “10-K”) 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, 2021 (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.

CLEARONE, INC

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except par value)
         

 

 

March 31, 2022

 

December 31, 2021

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

1,422

 

 

$

1,071

 

Marketable securities

 

 

398

 

 

 

1,790

 

Receivables, net of allowance for doubtful accounts of $326 and $326, respectively

 

 

5,077

 

 

 

4,991

 

Inventories, net

 

 

9,865

 

 

 

10,033

 

Income tax receivable

 

 

7,540

 

 

 

7,535

 

Prepaid expenses and other assets

 

 

3,370

 

 

 

4,021

 

Total current assets

 

 

27,672

 

 

 

29,441

 

Long-term marketable securities

 

 

542

 

 

 

1,220

 

Long-term inventories, net

 

 

3,210

 

 

 

3,567

 

Property and equipment, net

 

 

676

 

 

 

744

 

Operating lease - right of use assets, net

 

 

1,383

 

 

 

1,537

 

Intangibles, net

 

 

24,675

 

 

 

25,086

 

Other assets

 

 

4,596

 

 

 

4,597

 

Total assets

 

$

62,754

 

 

$

66,192

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

4,125

 

 

$

5,388

 

Accrued liabilities

 

 

2,826

 

 

 

2,549

 

Deferred product revenue

 

 

46

 

 

 

54

 

Short-term debt

 

 

1,336

 

 

 

3,481

 

Total current liabilities

 

 

8,333

 

 

 

11,472

 

Long-term debt, net

 

 

1,359

 

 

 

1,535

 

Operating lease liability, net of current

 

 

871

 

 

 

1,026

 

Other long-term liabilities

 

 

655

 

 

 

655

 

Total liabilities

 

 

11,218

 

 

 

14,688

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

Common stock, par value $0.001, 50,000,000 shares authorized, 23,948,587 and 22,410,126 shares issued and outstanding, respectively

 

 

24

 

 

 

22

 

Additional paid-in capital

 

 

74,831

 

 

 

72,795

 

Accumulated other comprehensive loss

 

 

(280

)

 

 

(241

)

Accumulated deficit

 

 

(23,039

)

 

 

(21,072

)

Total shareholders' equity

 

 

51,536

 

 

 

51,504

 

Total liabilities and shareholders' equity

 

$

62,754

 

 

$

66,192

 

CLEARONE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Dollars in thousands, except per share values)
     

 

 

Three months ended March 31,

 

 

2022

 

2021

Revenue

 

$

7,545

 

 

$

7,038

 

Cost of goods sold

 

 

4,729

 

 

 

4,035

 

Gross profit

 

 

2,816

 

 

 

3,003

 

 

 

 

 

 

Operating expenses:

 

 

 

 

Sales and marketing

 

 

1,560

 

 

 

1,573

 

Research and product development

 

 

1,353

 

 

 

1,274

 

General and administrative

 

 

1,756

 

 

 

1,680

 

Total operating expenses

 

 

4,669

 

 

 

4,527

 

 

 

 

 

 

Operating loss

 

 

(1,853

)

 

 

(1,524

)

 

 

 

 

 

Interest expense

 

 

(101

)

 

 

(112

)

Other income, net

 

 

3

 

 

 

(5

)

 

 

 

 

 

Loss before income taxes

 

 

(1,951

)

 

 

(1,641

)

 

 

 

 

 

Provision for income taxes

 

 

16

 

 

 

14

 

 

 

 

 

 

Net loss

 

$

(1,967

)

 

$

(1,655

)

 

 

 

 

 

Basic weighted average shares outstanding

 

 

23,897,305

 

 

 

18,775,773

 

Diluted weighted average shares outstanding

 

 

23,897,305

 

 

 

18,775,773

 

 

 

 

 

 

Basic loss per share

 

$

(0.08

)

 

$

(0.09

)

Diluted loss per share

 

$

(0.08

)

 

$

(0.09

)

 

 

 

 

 

Comprehensive loss:

 

 

 

 

Net loss

 

 

(1,967

)

 

 

(1,655

)

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

 

 

(28

)

 

 

(2

)

Change in foreign currency translation adjustment

 

 

(11

)

 

 

(12

)

Comprehensive loss

 

 

(2,006

)

 

 

(1,669

)

CLEARONE, INC.

UNAUDITED RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES

(Dollars in thousands, except per share values)
     

 

 

Three months ended March 31,

 

 

2022

 

2021

GAAP gross profit

 

$

2,816

 

 

$

3,003

 

Stock-based compensation

 

 

2

 

 

 

3

 

Non-GAAP gross profit

 

$

2,818

 

 

$

3,006

 

 

 

 

 

 

GAAP operating loss

 

$

(1,853

)

 

$

(1,524

)

Stock-based compensation

 

 

35

 

 

 

31

 

Amortization of intangibles

 

 

670

 

 

 

511

 

Non-GAAP operating loss

 

$

(1,148

)

 

$

(982

)

 

 

 

 

 

GAAP net loss

 

$

(1,967

)

 

$

(1,655

)

Stock-based compensation

 

 

35

 

 

 

31

 

Amortization of intangibles

 

 

670

 

 

 

511

 

Non-GAAP net loss

 

$

(1,262

)

 

$

(1,113

)

 

 

 

 

 

GAAP net loss

 

$

(1,967

)

 

$

(1,655

)

Number of shares used in computing GAAP loss per share (diluted)

 

 

23,897,305

 

 

 

18,775,773

 

GAAP loss per share (diluted)

 

$

(0.08

)

 

$

(0.09

)

Non-GAAP net loss

 

$

(1,262

)

 

$

(1,113

)

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

 

 

23,897,305

 

 

 

18,775,773

 

Non-GAAP loss per share (diluted)

 

$

(0.05

)

 

$

(0.06

)

 

 

 

 

 

GAAP net loss

 

$

(1,967

)

 

$

(1,655

)

Stock-based compensation

 

 

35

 

 

 

31

 

Depreciation

 

 

76

 

 

 

101

 

Amortization of intangibles

 

 

670

 

 

 

511

 

Interest expense

 

 

101

 

 

 

112

 

Provision for income taxes

 

 

16

 

 

 

14

 

Non-GAAP Adjusted EBITDA

 

$

(1,069

)

 

$

(886

)

 

Bob Griffin
801-975-7200
investor_relations@clearone.com
http://investors.clearone.com

Source: ClearOne Inc.