ClearOne Reports Second Quarter 2020 Financial Results
- Q2 Video revenue increases by 40% year-over-year
- Overall revenue grows by 11% quarter-over-quarter sequentially
- New solutions incorporating the Beamforming Microphone Array Ceiling Tile drive year-over-year and sequential BMA revenue growth despite COVID-19
"We posted solid double-digit sequential revenue growth thanks to our innovative video products and BMA based solutions. Sales performance of our ground-breaking new solutions incorporating our Beamforming Microphone Array Ceiling Tile was impressive given the challenges posed by the COVID-19 environment for global installed audio conferencing market," said
"The versatility of our solutions is highlighted by the success of our video products which are tailor-made for verticals like education and enterprises looking to professionally equip their remote workforce. We believe our outlook for Q3 is very positive as we have already recorded in excess of
"Our continuing investment in advanced technologies has resulted in another significant patent relating to beamforming microphone array technology awarded to us by the
Financial Summary
The Company uses certain non-GAAP financial measures and reconciles those to GAAP measures in the attached tables.
- Q2 2020 revenue was almost the same as revenue in Q2 2019 at $6.4 million, compared to
$5 .7 million in Q1 2020. The sequential increase was mainly due to the increase in revenue from video products, personal audio conferencing products and beamforming microphone array products. Despite the sequential increase in Q2, the revenue from our audio conferencing products and microphones are far below the levels prior to infringement of our patents.
- GAAP gross profit in Q2 2020 was
$2 .6 million compared to$2 .9 million in Q2 2019 and$2 .8 million in Q1 2020. GAAP gross profit margin was 41% in Q2 2020, compared to 46% in Q2 2019 and 49% in Q1 2020. Gross profit margin decreased year over year mainly due to a shift in the revenue mix, increased freight and tariff costs and increased inventory obsolescence costs, partially offset by a decrease in overhead costs. Sequential gross profit margin was negatively impacted by a shift in our revenue mix in addition to factors like higher tariff burden, higher freight costs and increased inventory obsolescence costs.
- Operating expenses in Q2 2020 were
$4 .5 million, compared to$5 .0 million in Q2 2019 and$4 .6 million in Q1 2020. Non-GAAP operating expenses in Q2 2020 were$4 .0 million, compared to$4 .7 million in Q2 2019 and$4 .2 million in Q1 2020. The majority of the sequential decline as well as decrease in Q2 2020 operating expenses over Q2 2019 is attributable to decreases in each of trade-show related expenses, employee travel related expenses, demonstration inventory expenses, and independent rep commissions partially offset by an increase in employee benefits costs.
- GAAP net loss in Q2 2020 was
$1.9 million , or$0.12 per share, compared to net loss of$2.1 million , or$0.13 per share, in Q2 2019 and net loss of$1.8 million , or$0.11 per share, in Q1 2020. The decrease in net loss in Q2 2020 compared to Q2 2019 was primarily due to a decrease in operating costs partially offset by a reduction in gross margin. The net loss in Q2 2020 does not materially vary from the net loss in Q1 2020.
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| 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||
| GAAP | |||||||||||||||||
| Revenue | $ | 6,357 | $ | 6,420 | -1 | % | $ | 12,091 | $ | 12,725 | -5 | % | |||||
| Gross profit | 2,618 | 2,939 | -11 | % | 5,456 | 5,643 | -3 | % | |||||||||
| Operating expenses | 4,457 | 5,043 | -12 | % | 9,046 | 10,138 | -11 | % | |||||||||
| Operating loss | (1,839 | ) | (2,104 | ) | -13 | % | (3,590 | ) | (4,495 | ) | -20 | % | |||||
| Net loss | (1,937 | ) | (2,098 | ) | -8 | % | (3,784 | ) | (4,447 | ) | -15 | % | |||||
| Diluted loss per share | (0.12 | ) | (0.13 | ) | -8 | % | (0.23 | ) | (0.27 | ) | -15 | % | |||||
| Non-GAAP | |||||||||||||||||
| Non-GAAP gross profit | $ | 2,618 | $ | 2,941 | -11 | % | $ | 5,458 | $ | 5,647 | -3 | % | |||||
| Non-GAAP operating expenses | 4,034 | 4,654 | -13 | % | 8,220 | 9,313 | -12 | % | |||||||||
| Non-GAAP operating loss | (1,416 | ) | (1,713 | ) | -17 | % | (2,762 | ) | (3,666 | ) | -25 | % | |||||
| Non-GAAP net loss | (1,514 | ) | (1,707 | ) | -11 | % | (2,956 | ) | (3,618 | ) | -18 | % | |||||
| Non-GAAP Adjusted EBITDA | (1,296 | ) | (1,536 | ) | -16 | % | (2,503 | ) | (3,315 | ) | -24 | % | |||||
| Non-GAAP loss per share (diluted) | (0.09 | ) | (0.10 | ) | -10 | % | (0.18 | ) | (0.22 | ) | -18 | % | |||||
Balance Sheet Highlights
At
About
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, 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)
| |
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| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 2,106 | $ | 4,064 | ||||
| Marketable securities | 2,841 | 3,026 | ||||||
| Receivables, net of allowance for doubtful accounts of |
5,792 | 5,468 | ||||||
| Inventories, net | 8,224 | 11,441 | ||||||
| Prepaid expenses and other assets | 957 | 1,184 | ||||||
| Total current assets | 19,920 | 25,183 | ||||||
| Long-term marketable securities | 1,130 | 1,517 | ||||||
| Long-term inventories, net | 6,510 | 6,284 | ||||||
| Property and equipment, net | 1,050 | 1,044 | ||||||
| Operating lease - right of use assets, net | 2,227 | 2,459 | ||||||
| Intangibles, net | 17,141 | 14,009 | ||||||
| Other assets | 4,593 | 4,614 | ||||||
| Total assets | $ | 52,571 | $ | 55,110 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 3,172 | $ | 2,871 | ||||
| Accrued liabilities | 2,782 | 3,205 | ||||||
| Deferred product revenue | 201 | 173 | ||||||
| Total current liabilities | 6,155 | 6,249 | ||||||
| Senior convertible notes | 3,819 | 2,222 | ||||||
| Operating lease liability, net of current | 1,767 | 2,021 | ||||||
| Other long-term liabilities | 111 | 140 | ||||||
| Total liabilities | 11,852 | 10,632 | ||||||
| Shareholders' equity: | ||||||||
| Common stock, par value |
17 | 17 | ||||||
| Additional paid-in capital | 58,580 | 58,520 | ||||||
| Accumulated other comprehensive loss | (211 | ) | (176 | ) | ||||
| Accumulated deficit | (17,667 | ) | (13,883 | ) | ||||
| Total shareholders' equity | 40,719 | 44,478 | ||||||
| Total liabilities and shareholders' equity | $ | 52,571 | $ | 55,110 | ||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Dollars in thousands, except per share values)
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| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Revenue | $ | 6,357 | $ | 6,420 | $ | 12,091 | $ | 12,725 | ||||||||
| Cost of goods sold | 3,739 | 3,481 | 6,635 | 7,082 | ||||||||||||
| Gross profit | 2,618 | 2,939 | 5,456 | 5,643 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing | 1,457 | 2,261 | 3,196 | 4,214 | ||||||||||||
| Research and product development | 1,474 | 1,307 | 2,818 | 2,894 | ||||||||||||
| General and administrative | 1,526 | 1,475 | 3,032 | 3,030 | ||||||||||||
| Total operating expenses | 4,457 | 5,043 | 9,046 | 10,138 | ||||||||||||
| Operating loss | (1,839 | ) | (2,104 | ) | (3,590 | ) | (4,495 | ) | ||||||||
| Interest expense | (109 | ) | — | (217 | ) | — | ||||||||||
| Other income, net | 16 | 51 | 51 | 93 | ||||||||||||
| Loss before income taxes | (1,932 | ) | (2,053 | ) | (3,756 | ) | (4,402 | ) | ||||||||
| Provision for income taxes | 5 | 45 | 28 | 45 | ||||||||||||
| Net loss | $ | (1,937 | ) | $ | (2,098 | ) | $ | (3,784 | ) | $ | (4,447 | ) | ||||
| Basic weighted average shares outstanding | 16,650,774 | 16,630,770 | 16,650,750 | 16,630,684 | ||||||||||||
| Diluted weighted average shares outstanding | 16,650,774 | 16,630,770 | 16,650,750 | 16,630,684 | ||||||||||||
| Basic loss per share | $ | (0.12 | ) | $ | (0.13 | ) | $ | (0.23 | ) | $ | (0.27 | ) | ||||
| Diluted loss per share | $ | (0.12 | ) | $ | (0.13 | ) | $ | (0.23 | ) | $ | (0.27 | ) | ||||
| Comprehensive loss: | ||||||||||||||||
| Net loss | (1,937 | ) | (2,098 | ) | (3,784 | ) | (4,447 | ) | ||||||||
| Unrealized gain on available-for-sale securities, net of tax | 30 | 84 | 7 | 154 | ||||||||||||
| Change in foreign currency translation adjustment | (8 | ) | 9 | (42 | ) | (17 | ) | |||||||||
| Comprehensive loss | (1,915 | ) | (2,005 | ) | (3,819 | ) | (4,310 | ) | ||||||||
UNAUDITED RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(Dollars in thousands, except per share values)
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| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| GAAP gross profit | $ | 2,618 | $ | 2,939 | $ | 5,456 | $ | 5,643 | ||||||||
| Stock-based compensation | — | 2 | 2 | 4 | ||||||||||||
| Non-GAAP gross profit | $ | 2,618 | $ | 2,941 | $ | 5,458 | $ | 5,647 | ||||||||
| GAAP operating loss | $ | (1,839 | ) | $ | (2,104 | ) | $ | (3,590 | ) | $ | (4,495 | ) | ||||
| Stock-based compensation | 17 | 55 | 54 | 129 | ||||||||||||
| Amortization of intangibles | 406 | 336 | 774 | 700 | ||||||||||||
| Non-GAAP operating loss | $ | (1,416 | ) | $ | (1,713 | ) | $ | (2,762 | ) | $ | (3,666 | ) | ||||
| GAAP net loss | $ | (1,937 | ) | $ | (2,098 | ) | $ | (3,784 | ) | $ | (4,447 | ) | ||||
| Stock-based compensation | 17 | 55 | 54 | 129 | ||||||||||||
| Amortization of intangibles | 406 | 336 | 774 | 700 | ||||||||||||
| Non-GAAP net loss | $ | (1,514 | ) | $ | (1,707 | ) | $ | (2,956 | ) | $ | (3,618 | ) | ||||
| GAAP net loss | $ | (1,937 | ) | $ | (2,098 | ) | $ | (3,784 | ) | $ | (4,447 | ) | ||||
| Number of shares used in computing GAAP loss per share (diluted) | 16,650,774 | 16,630,770 | 16,650,750 | 16,630,684 | ||||||||||||
| GAAP loss per share (diluted) | $ | (0.12 | ) | $ | (0.13 | ) | $ | (0.23 | ) | $ | (0.27 | ) | ||||
| Non-GAAP net loss | $ | (1,514 | ) | $ | (1,707 | ) | $ | (2,956 | ) | $ | (3,618 | ) | ||||
| Number of shares used in computing Non-GAAP loss per share (diluted) | 16,650,774 | 16,630,770 | 16,650,750 | 16,630,684 | ||||||||||||
| Non-GAAP loss per share (diluted) | $ | (0.09 | ) | $ | (0.10 | ) | $ | (0.18 | ) | $ | (0.22 | ) | ||||
| GAAP net loss | $ | (1,937 | ) | $ | (2,098 | ) | $ | (3,784 | ) | $ | (4,447 | ) | ||||
| Stock-based compensation | 17 | 55 | 54 | 129 | ||||||||||||
| Depreciation | 104 | 126 | 208 | 258 | ||||||||||||
| Amortization of intangibles | 406 | 336 | 774 | 700 | ||||||||||||
| Interest expense | 109 | — | 217 | — | ||||||||||||
| Provision for (benefit from) income taxes | 5 | 45 | 28 | 45 | ||||||||||||
| Non-GAAP Adjusted EBITDA | $ | (1,296 | ) | $ | (1,536 | ) | $ | (2,503 | ) | $ | (3,315 | ) | ||||
Source: ClearOne, Inc.