ClearOne Reports Fourth Quarter 2019 Financial Results
- Sequential quarterly revenue up by 5.6%
- Professional audio revenue growth driven by the Beamforming Microphone Array Ceiling Tile
- Q4 Overall revenue down year-over-year by 12%
- Q4 Non-GAAP Operating expenses declined by 10% year-over-year
“We have made great progress executing on our vision for success to rise above the current challenges as we implement our core initiatives - technology innovation, cost savings, and enforcement of our intellectual property. In these unprecedented times where the traditional forms of work collaboration are being tested, our role as a leading provider of solutions for distance conferencing and remote collaboration has become even more relevant. We believe that our innovative technology and solutions will serve not only demands during this crisis but also future needs for travel-free meetings” said
“We are encouraged by the recent increase in demand for our Pro Audio products driven by the Beamforming Microphone Array Ceiling Tile. It validates both our substantial investment in technology and our litigation strategy. But we are not getting the full benefits of the Court’s extraordinary remedy in the form of the preliminary injunction granted against Shure with respect to infringement of our ’806 Patent. Shure chose to play fast and loose with the Court’s preliminary injunction rushing to market with a design, that we believe, still infringes ClearOne’s patent. We have sought a Court order holding Shure in contempt for marketing and selling the design in violation of the preliminary injunction. And with respect to one of our broadest beamforming microphone array patents, the ’553 Patent, last month, the Federal Circuit essentially dealt a knock-out blow to Shure’s desperate and misguided campaign in the PTO to invalidate the patent. It is another significant victory acknowledging the strength of ClearOne’s intellectual property and puts us in even a better position as we prepare for trial,” Hakimoglu added.
“ClearOne has continued to invest in innovation which has been at the heart of its success. Beginning late Q4, we launched several highly strategic pro audio and video collaboration solutions addressing the burgeoning global market needs for a remote workforce and small to medium-sized workspaces. These new, highly differentiated solutions consist of audio-conferencing endpoints and cloud-based video services, each with significant competitive barriers to entry. The new solutions offer exceptional performance, are scaled to meet end-user economics, and provide highly lucrative earning potential for our channel reseller partners.
Importantly, our ongoing effort and success in cutting costs provide us not only short-term cash liquidity but also long-term strategic operational efficiency,” Hakimoglu continued.
“We understand the frustration of our shareholders with the current market capitalization of the company which we believe is a fraction of ClearOne’s inherent worth. But we are confident that as we drive our core initiatives, ClearOne’s true value will be recognized in the marketplace,” Hakimoglu concluded.
Technology Innovation
Recent new introductions now shipping or scheduled to ship in early Q2 2020 include:
COLLABORATE® Versa Pro CT – An innovative new product offering that includes our Huddle DSP mixer and new patented Beamforming Ceiling Tile Microphone Array providing pro-quality audio collaboration in mid-sized rooms. We believe it is a great room solution for Bring Your Own Device (BYOD) collaboration using any cloud-based service such as COLLABORATE Space, Microsoft® Teams, WebEx™, Zoom™, and more.
COLLABORATE Versa Lite CT – A new USB audio-enabled Beamforming Ceiling Tile Microphone Array that brings cost-effective and superb pro-audio conferencing to small meeting rooms with no DSP mixer needed. This great room solution dramatically enhances the audio experience for any cloud-collaboration application such as COLLABORATE Space, Zoom™, Microsoft® Teams, and Webex™.
Wall-Mount Bluetooth Expander – This new module enables Bluetooth audio conferencing and streaming from mobile devices to ClearOne CONVERGE® Pro 2 and Huddle Audio DSP mixers using the efficient ClearOne Architecture. NFC Tap-to-Pair allows fast and simple connectivity with mobile devices, and the Bluetooth pair name can be customized for each conference room.
CONSOLE® AI – A new software tool to design CONVERGE® Pro Audio systems with Audio Intelligence built-in making AV practitioners more efficient by saving time. The AI Workflow Checklist guides designers to make sure that design steps are not missed; and the innovative AI Project Audit checks the design and reports errors and warnings to alert the practitioner of potential design problems. Enhanced visualization dramatically streamlines routing, design, and reviews.
ZOOM Certification of UNITE® Cameras – All ClearOne PTZ professional cameras now Zoom certified for broad adoption.
COLLABORATE Space New Feature Enhancements – Two new valuable features have been added to ClearOne’s powerful and secure cloud-based video collaboration solution- webinar hosting and Web RTC. Webinar allows session hosts to conduct video and audio presentations up to 1000 participants in a single meeting. Web RTC enables users to easily join meetings using a browser with no downloads or plug-ins.
COLLABORATE Space and Microsoft Teams Enhancement – Now Offers Seamless Workflows by integrating COLLABORATE Space Cloud-based Video App with MS Teams. Microsoft Teams users can now enjoy a richer experience than that available within the Teams environment today including better video quality, support for multiple cameras, support for multiple displays, and a persistent meeting space where chats, audio and video recordings, documents, meeting minutes, whiteboard sessions, and more can be shared in private or public channels for later access.
We are offering free trial licenses for COLLABORATE Space for users to experience its rich features and capabilities.
Enforcement of our Intellectual Property
In early
Earlier, in late
The Company anticipates going to trial against Shure in early 2021.
Financial Summary
The Company uses certain non-GAAP financial measures and reconciles those to GAAP measures in the attached tables.
- Q4 2019 revenue was
$6.3 million , compared to$7.2 million in Q4 2018 and$6.0 million in Q3 2019. The year-over-year decrease reflects an impact of the on-going harm of infringement of ClearOne’s patents on its audio conferencing products and microphones despite the preliminary injunction granted against Shure as we believe Shure continues to infringe our patents and violates the preliminary injunction. The patent infringement also has negatively impacted directly the revenue from ClearOne’s other products. Sequential growth was largely due to significant increase in revenue from our pro audio products driven by our recently introduced BMA-CT even though the revenue from pro audio products are far below the levels prior to infringement of our patents.
- GAAP gross profit in Q4 2019 was
$3.01 million compared to$3.04 million in Q4 2018 and$2.53 million in Q3 2019. GAAP gross profit margin was 48% in Q4 2019, compared to 42% in Q4 2018 and 42% in Q3 2019. Gross Profit margin increased year over year as well as sequentially mainly due to decreases in overhead costs and inventory adjustments partially offset by increases in inventory obsolescence costs and landed material costs.
- Operating expenses in Q4 2019 were
$5.0 million , compared to$5.6 million in Q4 2018 and$4.6 million in Q3 2019. Non-GAAP operating expenses in Q4 2019 were$4.6 million , compared to$5.1 million in Q4 2018 and$4.2 million in Q3 2019. The majority of the decrease in Q4 2019 operating expenses over Q4 2018 is attributable to decreases in employee-related costs including benefits and commissions and allocations of overhead expenses, partially offset by an increase in demonstration inventory costs. The sequential increase in operating expenses is mainly due to increase in legal expenses.
- GAAP net loss in Q4 2019 was
$2.0 million , or$0.12 per share, compared to net loss of$2.5 million , or$0.23 per share, in Q4 2018 and net loss of$2.0 million , or$0.12 per share, in Q3 2019. The decrease in net loss in Q4 2019 compared to Q4 2018 was mainly due to decrease in operating expenses. Net loss remained almost unchanged between Q3 2019 and Q4 2019.
| ($ in 000, except per share) | Three months ended |
Year ended |
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| 2019 | 2018 | Change | 2019 | 2018 | Change | |||||||||||||||||
| GAAP | ||||||||||||||||||||||
| Revenue | $ | 6,325 | $ | 7,213 | -12% | $ | 25,042 | $ | 28,156 | -11% | ||||||||||||
| Gross profit | 3,013 | 3,042 | -1% | 11,193 | 13,371 | -16% | ||||||||||||||||
| Operating expenses | 4,982 | 5,645 | 12% | 19,755 | 23,698 | 17% | ||||||||||||||||
| Operating loss | (1,969) | (2,603) | 24% | (8,562) | (10,327) | 17% | ||||||||||||||||
| Net loss | (1,985) | (2,536) | 22% | (8,408) | (16,687) | 50% | ||||||||||||||||
| Diluted loss per share | (0.12) | (0.23) | 48% | (0.51) | (1.87) | 73% | ||||||||||||||||
| Non-GAAP | ||||||||||||||||||||||
| Non-GAAP gross profit | $ | 3,015 | $ | 3,044 | -1% | $ | 11,201 | $ | 13,385 | -16% | ||||||||||||
| Non-GAAP operating expenses | 4,597 | 5,100 | 10% | 18,144 | 21,871 | 17% | ||||||||||||||||
| Non-GAAP operating loss | (1,582) | (2,217) | 29% | (6,943) | (8,647) | 20% | ||||||||||||||||
| Non-GAAP net loss | (1,598) | (2,150) | 26% | (6,789) | (15,007) | 55% | ||||||||||||||||
| Non-GAAP Adjusted EBITDA | (1,471) | (2,095) | 30% | (6,222) | (8,070) | 23% | ||||||||||||||||
| Non-GAAP loss per share (diluted) | (0.10) | (0.20) | 50% | (0.41) | (1.68) | 76% | ||||||||||||||||
Balance Sheet Highlights
At
About
Non-GAAP Financial Measures
To supplement our consolidated financial statements presented on a GAAP basis,
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
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
Contact:
Investor Relations
801-975-7200
investor_relations@clearone.com
http://investors.clearone.com
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value)
2019 |
December 31, 2018 |
|||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 4,064 | $ | 11,211 | ||||
| Marketable securities | 3,026 | 951 | ||||||
| Receivables, net of allowance for doubtful accounts of |
5,468 | 6,782 | ||||||
| Inventories, net | 11,441 | 13,228 | ||||||
| Prepaid expenses and other assets | 1,184 | 2,193 | ||||||
| Total current assets | 25,183 | 34,365 | ||||||
| Long-term marketable securities | 1,517 | 3,764 | ||||||
| Long-term inventories, net | 6,284 | 8,953 | ||||||
| Property and equipment, net | 1,044 | 1,388 | ||||||
| Operating lease - right of use assets, net | 2,459 | — | ||||||
| Intangibles, net | 14,009 | 10,249 | ||||||
| Other assets | 4,614 | 196 | ||||||
| Total assets | $ | 55,110 | $ | 58,915 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,871 | $ | 3,729 | ||||
| Accrued liabilities | 3,205 | 1,996 | ||||||
| Deferred product revenue | 173 | 283 | ||||||
| Total current liabilities | 6,249 | 6,008 | ||||||
| Senior convertible notes | 2,222 | |||||||
| Deferred rent | — | 135 | ||||||
| Operating lease liability | 2,021 | — | ||||||
| Other long-term liabilities | 140 | 571 | ||||||
| Total liabilities | 10,632 | 6,714 | ||||||
| Shareholders' equity: | ||||||||
| Common stock, par value |
17 | 17 | ||||||
| Additional paid-in capital | 58,520 | 57,840 | ||||||
| Accumulated other comprehensive loss | (176) | (181) | ||||||
| Accumulated deficit | (13,883) | (5,475) | ||||||
| Total shareholders' equity | 44,478 | 52,201 | ||||||
| Total liabilities and shareholders' equity | $ | 55,110 | $ | 58,915 | ||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Dollars in thousands, except per share values)
| Three months ended |
Year ended |
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| 2019 |
2018 |
2019 |
2018 |
|||||||||||||
| Revenue | $ | 6,325 | $ | 7,213 | $ | 25,042 | $ | 28,156 | ||||||||
| Cost of goods sold | 3,312 | 4,171 | 13,849 | 14,785 | ||||||||||||
| Gross profit | 3,013 | 3,042 | 11,193 | 13,371 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing | 1,814 | 2,112 | 7,935 | 9,908 | ||||||||||||
| Research and product development | 1,453 | 2,083 | 5,775 | 7,840 | ||||||||||||
| General and administrative | 1,715 | 1,450 | 6,045 | 5,950 | ||||||||||||
| Total operating expenses | 4,982 | 5,645 | 19,755 | 23,698 | ||||||||||||
| Operating loss | (1,969) | (2,603) | (8,562) | (10,327) | ||||||||||||
| Other income, net | (25) | 2 | 210 | 80 | ||||||||||||
| Loss before income taxes | (1,994) | (2,601) | (8,352) | (10,247) | ||||||||||||
| Provision for (benefit from) income taxes | (9) | (65) | 56 | 6,440 | ||||||||||||
| Net loss | $ | (1,985) | $ | (2,536) | $ | (8,408) | $ | (16,687) | ||||||||
| Basic weighted average shares outstanding | 16,646,371 | 10,834,801 | 16,638,580 | 8,942,629 | ||||||||||||
| Diluted weighted average shares outstanding | 16,646,371 | 10,834,801 | 16,638,580 | 8,942,629 | ||||||||||||
| Basic loss per share | $ | (0.12) | $ | (0.23) | $ | (0.51) | $ | (1.87) | ||||||||
| Diluted loss per share | $ | (0.12) | $ | (0.23) | $ | (0.51) | $ | (1.87) | ||||||||
| Comprehensive loss: | ||||||||||||||||
| Net loss | (1,985) | (2,536) | (8,408) | (16,687) | ||||||||||||
| Unrealized gain (loss) on available-for-sale securities, net of tax | (8) | 55 | 68 | (38) | ||||||||||||
| Change in foreign currency translation adjustment | 5 | (27) | (63) | (78) | ||||||||||||
| Comprehensive loss | (1,988) | (2,508) | (8,403) | (16,803) | ||||||||||||
UNAUDITED RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(Dollars in thousands, except per share values)
| Three months ended |
Year ended |
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| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| GAAP gross profit | $ | 3,013 | $ | 3,042 | $ | 11,193 | $ | 13,371 | ||||||||
| Stock-based compensation | 2 | 2 | 8 | 14 | ||||||||||||
| Non-GAAP gross profit | $ | 3,015 | $ | 3,044 | $ | 11,201 | $ | 13,385 | ||||||||
| GAAP operating loss | $ | (1,969) | $ | (2,603) | $ | (8,562) | $ | (10,327) | ||||||||
| Stock-based compensation | 40 | 85 | 217 | 464 | ||||||||||||
| Amortization of intangibles | 347 | 301 | 1,402 | 1,093 | ||||||||||||
| Legal expenses, acquisition expenses, restructuring expenses, etc. not related to regular operations | — | — | — | 123 | ||||||||||||
| Non-GAAP operating loss | $ | (1,582) | $ | (2,217) | $ | (6,943) | $ | (8,647) | ||||||||
| GAAP net loss | $ | (1,985) | $ | (2,536) | $ | (8,408) | $ | (16,687) | ||||||||
| Stock-based compensation | 40 | 85 | 217 | 464 | ||||||||||||
| Amortization of intangibles | 347 | 301 | 1,402 | 1,093 | ||||||||||||
| Legal expenses, acquisition expenses, restructuring expenses, etc. not related to regular operations | — | — | — | 123 | ||||||||||||
| Non-GAAP net loss | $ | (1,598) | $ | (2,150) | $ | (6,789) | $ | (15,007) | ||||||||
| GAAP net loss | $ | (1,985) | $ | (2,536) | $ | (8,408) | $ | (16,687) | ||||||||
| Number of shares used in computing GAAP loss per share (diluted) | 16,646,371 | 10,834,801 | 16,638,580 | 8,942,629 | ||||||||||||
| GAAP loss per share (diluted) | $ | (0.12) | $ | (0.23) | $ | (0.51) | $ | (1.87) | ||||||||
| Non-GAAP net loss | $ | (1,598) | $ | (2,150) | $ | (6,789) | $ | (15,007) | ||||||||
| Number of shares used in computing Non-GAAP loss per share (diluted) | 16,646,371 | 10,834,801 | 16,638,580 | 8,942,629 | ||||||||||||
| Non-GAAP loss per share (diluted) | $ | (0.10) | $ | (0.20) | $ | (0.41) | $ | (1.68) | ||||||||
| GAAP net loss | $ | (1,985) | $ | (2,536) | $ | (8,408) | $ | (16,687) | ||||||||
| Stock-based compensation | 40 | 85 | 217 | 464 | ||||||||||||
| Depreciation | 136 | 120 | 511 | 497 | ||||||||||||
| Amortization of intangibles | 347 | 301 | 1,402 | 1,093 | ||||||||||||
| Legal expenses, acquisition expenses, restructuring expenses, etc. not related to regular operations | — | — | — | 123 | ||||||||||||
| Provision for (benefit from) income taxes | (9) | (65) | 56 | 6,440 | ||||||||||||
| Non-GAAP Adjusted EBITDA | $ | (1,471) | $ | (2,095) | $ | (6,222) | $ | (8,070) | ||||||||
Source: ClearOne, Inc.