ClearOne, Inc. Reports First Quarter 2023 Financial Results

May 16, 2023
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SALT LAKE CITY--(BUSINESS WIRE)--May 16, 2023-- ClearOne (NASDAQ: CLRO), a global provider of audio and visual communication solutions, reported financial results for the three-month period ended March 31, 2023.

“During the first quarter, we maintained our focus on developing unique products that meet our partner and end user needs, supported by a leaner, improved cost structure,” said Derek Graham, CEO of ClearOne. “We have continued to support a growing backlog for our core audio conferencing products, as well as roll out the new CHAT® 150 BT group speakerphone, and UNITE 260 Pro camera products we introduced in January. Though our first quarter revenues remained pressured by the ongoing transition of our outsourced manufacturing from China to Singapore, we expect our revenue performance to improve in the second half of this year. We will continue working to increase our market share and deliver long-term value to our investors in the year ahead.

“The recent announcement of a special dividend by our Board of Directors further signifies our commitment to rewarding our investors. Our strong balance sheet, especially our cash position after paying the special dividend, provides us the necessary ramp to launch our products, build strong teams, and compete effectively in the market."

Recent Highlights

  • On May 8, 2023, the Company announced that the Company’s Board of Directors had declared a special one-time cash dividend of $1.00 per share of the Company’s common stock or eligible warrants, payable on May 31, 2023 to shareholders of record on May 22, 2023. The ex-dividend date for this distribution is June 1, 2023, in accordance with FINRA UPC (Uniform Practice Code) Rule 11140. This dividend distribution is expected to generate cash outflows of approximately $29.0 million.

Financial Summary

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

Q1 2023 revenue was $4.2 million, compared to $7.5 million in Q1 2022 and $4.0 million in Q4 2022. The sequential and year-over-year decrease was mainly due to (a) a decline in revenue from video products due to decline in demand and (b) continued order fulfillment challenges for our core audio conferencing and beamforming microphone arrays as a result of ongoing delays in the transition of our outsourced manufacturing from China to Singapore.

  • Gross profit in Q1 2023 was $1.3 million, compared to $2.8 million in Q1 2022 and $1.3 million in Q4 2022. Gross profit margin was 31% in Q1 2023 and Q4 2022, compared to 37% in Q1 2022. Gross profit margin decreased year-over-year due to increased administration and overhead costs as a percentage of revenue due to significantly reduced revenue.
  • Operating expenses in Q1 2023 were $3.5 million, compared to $4.7 million in Q1 2022 and $3.9 million in Q4 2022. Non-GAAP operating expenses in Q1 2023, as well as Q4 2022, were $3.4 million, compared to $4.0 million in Q1. The decrease in year-over-year non-GAAP operating expenses was mainly due to additional cost-cutting measures initiated in 2022.
  • GAAP net loss in Q1 2023 was $0.8 million, or $0.03 per share, compared to a net loss of $2.0 million, or $0.08 per share, in Q1 2022 and a net income of $24.0 million, or $0.97 per share, in Q4 2022. The year-over-year decrease in net loss was primarily due to the recognition of a $1.35 million gain from a legal settlement in Q1 2023 and the aforementioned reduction in operating expenses, partially offset by the reduction in gross profit. The sequential change from net income to net loss was primarily due to the recognition of a gain of $33.6 million related to the one-time legal settlement receivable of $55 million, partially offset by operating losses and provision for income tax in Q4 2022 .
  • Non-GAAP net loss in Q1 2023 was $2.0 million, or $0.09 per share, compared to a Non-GAAP net loss of $1.3 million, or $0.05 per share, in Q1 2022 and a Non-GAAP net loss of $2.3 million, or $0.09 per share, in Q4 2022. The year-over-year increase in Non-GAAP net loss was due to the reduction in gross margin caused by significant decrease in revenues, partially offset by reduction in operating expenses. The sequential reduction in Non-GAAP net loss was primarily due to the reduction of bonuses in Q1 2023.

($ in 000, except per share)

Three months ended March 31,

 

 

2023

 

 

2022

 

Change in %

Favorable/

(Adverse)

 

GAAP

 

 

 

 

 

 

 

 

Revenue

$

4,178

 

$

7,545

 

(45

)

Gross profit

 

1,315

 

 

2,816

 

(53

)

Operating expenses

 

3,504

 

 

4,669

 

25

Operating loss

 

(2,189

)

 

(1,853

)

(18

)

Net loss

 

(832

)

 

(1,967

)

58

Diluted loss per share

 

(0.03

)

 

(0.08

)

63

Non-GAAP

 

 

 

 

 

 

 

 

Non-GAAP operating expenses

 

3,365

 

 

3,966

 

15

Non-GAAP operating loss

 

(2,048

)

 

(1,148

)

(78

)

Non-GAAP net loss

 

(2,041

)

 

(1,262

)

(62

)

Non-GAAP Adjusted EBITDA

 

(1,678

)

 

(1,069

)

(57

)

Non-GAAP diluted loss per share

 

(0.09

)

 

(0.05

)

(80

)

 

Balance Sheet Highlights

As of March 31, 2023, cash, cash equivalents and investments were $59.0 million, as compared with $1.0 million as of December 31, 2022. As of March 31, 2023, the Company carried an aggregate debt of $1.7 million on account of senior convertible notes issued in December 2019. The Company’s cash position was strengthened by the receipts in excess of $56 million in the first quarter of 2023 pursuant to legal settlements. The Company also repaid the short-term bridge loan in January 2023.

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 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, 2022 (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 CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except par value)

 

 

 

March 31,

2023

 

December 31,

2022

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

59,006

 

 

$

984

 

Legal settlement receivable

 

 

—

 

 

 

55,000

 

Receivables, net of allowance of $326

 

 

3,541

 

 

 

3,603

 

Inventories, net

 

 

8,395

 

 

 

8,961

 

Income tax receivable

 

 

—

 

 

 

1,071

 

Prepaid expenses and other assets

 

 

3,635

 

 

 

7,808

 

Total current assets

 

 

74,577

 

 

 

77,427

 

Long-term inventories, net

 

 

2,885

 

 

 

2,707

 

Property and equipment, net

 

 

356

 

 

 

383

 

Operating lease - right of use assets, net

 

 

1,259

 

 

 

1,047

 

Intangibles, net

 

 

1,995

 

 

 

2,071

 

Other assets

 

 

112

 

 

 

115

 

Total assets

 

$

81,184

 

 

$

83,750

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,820

 

 

$

1,284

 

Accrued liabilities

 

 

2,454

 

 

 

3,041

 

Deferred product revenue

 

 

71

 

 

 

63

 

Short-term debt

 

 

1,556

 

 

 

3,732

 

Total current liabilities

 

 

5,901

 

 

 

8,120

 

Operating lease liability, net of current

 

 

949

 

 

 

492

 

Other long-term liabilities

 

 

1,008

 

 

 

1,008

 

Total liabilities

 

 

7,858

 

 

 

9,620

 

 

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

Common stock, par value $0.001, 50,000,000 shares authorized, 23,955,767 shares issued and outstanding

 

 

24

 

 

 

24

 

Additional paid-in capital

 

 

74,933

 

 

 

74,910

 

Accumulated other comprehensive loss

 

 

(283

)

 

 

(288

)

Accumulated deficit

 

 

(1,348

)

 

 

(516

)

Total shareholders' equity

 

 

73,326

 

 

 

74,130

 

Total liabilities and shareholders' equity

 

$

81,184

 

 

$

83,750

 

 

CLEARONE, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

(Dollars in thousands, except per share values)

 

 

 

Three months ended

March 31,

 

 

2023

 

2022

Revenue

 

$

4,178

 

 

$

7,545

 

Cost of goods sold

 

 

2,863

 

 

 

4,729

 

Gross profit

 

 

1,315

 

 

 

2,816

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Sales and marketing

 

 

1,192

 

 

 

1,560

 

Research and product development

 

 

1,043

 

 

 

1,353

 

General and administrative

 

 

1,269

 

 

 

1,756

 

Total operating expenses

 

 

3,504

 

 

 

4,669

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(2,189

)

 

 

(1,853

)

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(292

)

 

 

(101

)

Other income, net

 

 

1,666

 

 

3

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

 

(815

)

 

 

(1,951

)

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

17

 

 

 

16

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(832

)

 

$

(1,967

)

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

 

23,955,767

 

 

 

23,897,305

 

Diluted weighted average shares outstanding

 

 

23,955,767

 

 

 

23,897,305

 

 

 

 

 

 

 

 

 

 

Basic loss per share

 

$

(0.03

)

 

$

(0.08

)

Diluted loss per share

 

$

(0.03

)

 

$

(0.08

)

 

 

 

 

 

 

 

 

 

Comprehensive loss:

 

 

 

 

 

 

 

 

Net loss

 

$

(832

)

 

$

(1,967

)

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

 

 

—

 

 

(28

)

Change in foreign currency translation adjustment

 

 

5

 

 

(11

)

Comprehensive loss

 

$

(827

)

 

$

(2,006

)

 

CLEARONE, INC.

UNAUDITED RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES

(Dollars in thousands, except per share values)

 

 

 

Three months ended March 31,

 

 

2023

 

2022

GAAP operating loss

 

$

(2,189

)

 

$

(1,853

)

Stock-based compensation

 

 

23

 

 

35

Amortization of intangibles

 

 

118

 

 

670

Non-GAAP operating loss

 

$

(2,048

)

 

$

(1,148

)

 

 

 

 

 

 

 

GAAP net loss

 

$

(832

)

 

$

(1,967

)

Stock-based compensation

 

 

23

 

 

35

Amortization of intangibles

 

 

118

 

 

670

Other income adjustment

(1,350

)

—

Non-GAAP net loss

 

$

(2,041

)

 

$

(1,262

)

 

 

 

 

 

 

 

GAAP net loss

 

$

(832

)

 

$

(1,967

)

Number of shares used in computing GAAP diluted loss per share

 

 

23,955,767

 

 

23,897,305

GAAP diluted loss per share

 

$

(0.03

)

 

$

(0.08

)

Non-GAAP net loss

 

$

(2,041

)

 

$

(1,262

)

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

 

 

23,955,767

 

 

23,897,305

Non-GAAP diluted loss per share

 

$

(0.09

)

 

$

(0.05

)

 

 

 

 

 

 

 

GAAP net loss

 

$

(832

)

 

$

(1,967

)

Stock-based compensation

 

 

23

 

 

35

Interest expense

292

101

Depreciation

 

 

54

 

 

76

Amortization of intangibles

 

 

118

 

 

670

Other income adjustment

(1,350

)

—

Provision for (benefit from) income taxes

 

 

17

 

 

16

Non-GAAP Adjusted EBITDA

 

$

(1,678

)

 

$

(1,069

)

 

Narsi Narayanan
385-426-0565
investor_relations@clearone.com
http://investors.clearone.com

Source: ClearOne, Inc.