-Sequential Revenue increase points to recovery
from prior year impacts-
-Sequential and Year-over-Year OpEx Reductions
Reflect Continued Benefits of Cost Optimization Initiatives-
ClearOne (NASDAQ: CLRO), a global provider of audio and visual
communication solutions, reported financial results for the
three-month period ended September 30, 2024.
Revenue decreased 42% 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 Q3 2024. Our sales in Q3 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 Net
Revenue in Q3 due to the transition. 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. In addition, we
have increased our investments in marketing to increase the
visibility of our products to end users looking for ways to improve
the quality of audio and video for their meetings. Revenue
increased 8.7% sequentially from Q2 2024 to Q3 2024 as the company
is beginning to see recovery from prior year impacts.”
Operational Highlights
- The Company generated a sequential revenue increase of 8.7%
from Q2 2024 to Q3 2024.
- The Company reduced operating expenses by 10.1% sequentially
and 9.33% year-over-year.
- The ClearOne BMA 360 beamforming microphone array was announced
as the winner of the Utah Innovation Awards in the Consumer Product
Category by Utah Business. Utah Business noted the BMA 360's unique
combination of hardware microphone layout, microphone sensor
capability and optimization algorithm.
- The DIALOG® UVHF wireless Microphone system was named a winner
of the 2024 Communications Solutions products of the year
award.
- We recorded a 31% increase in unique visitors at our 2024
Infocomm India trade show booth, while the overall annual increase
of all attendees at that trade show was only 17%.
Graham continued, “Throughout 2024, our team has been diligently
working to win back customers who have defected to competing
brands. We believe the sequential increase in revenue we saw in Q3
indicates that this work is beginning to bear fruit.”
Financial Summary
The Company uses certain non-GAAP financial measures and
reconciles those to GAAP measures in the attached tables.
- Q3 2024 revenue was $2.5 million, compared to $4.9 million in
Q3 2023 and $2.3 million in Q2 2024. We believe the revenue
decrease year over year 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. The 8.7% sequential increase was
driven by increased demand across all product categories. We
believe the flow of sales orders during Q3 2024 increased due to
the start of recovery from the cumulative impact of past product
shortages.
- GAAP gross profit/loss in Q3 2024 was $0.6 million, compared to
$1.6 million in Q3 2023 and $(0.02) million in Q2 2024. GAAP gross
profit margin was 24% in Q3 2024, compared to (1)% in Q2 2024 and
33% in Q3 2023. The large decrease in gross profit margin year over
year occurred due to increased inventory scrap costs, and an
increase in purchase price variance from increasing vendor
costs.
- Operating expenses in Q3 2024 improved to $2.8 million,
compared to $3.1 million in Q3 2023 and $2.9 million in Q2 2024.
Non-GAAP operating expenses in Q3 2024 improved to $2.7 million
compared to $2.8 million in Q2 2024 and $2.9 million in Q3 2023.
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 Q3 2024 was $(2.1) million, or $(0.09) per
share, compared to a net loss of $(1.4) million, or $(0.06) per
share, in Q3 2023 and a net loss of $(2.8) million, or $(0.12) per
share, in Q2 2024. 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 Q3 2024 was $(2.0) million, or $(0.08) per
share, compared to a Non-GAAP net loss of $(1.2) million, or
$(0.05) per share, in Q3 2023 and a Non-GAAP net loss of $(2.7)
million, or $(0.11) per share, in Q2 2024. The year-over-year
increase in Non-GAAP net loss was driven by the aforementioned
decrease in revenue and gross profit partially offset by a decrease
in operating expenses.
($ in 000, except per share)
Three months ended September
30,
Nine months ended September
30,
2024
2023
Change in %
Favorable/(Adverse)
2024
2023
Change in %
Favorable/(Adverse)
GAAP
Revenue
$
2,504
$
4,889
(49
)
$
8,430
$
14,550
(42
)
Gross profit
612
1,616
(62
)
1,743
4,779
(64
)
Operating expenses
2,800
3,105
10
8,933
9,812
9
Operating loss
(2,188
)
(1,489
)
(47
)
(7,190
)
(5,033
)
(43
)
Net loss
(2,062
)
(1,351
)
(53
)
(6,780
)
(3,202
)
(112
)
Diluted loss per share
(0.09
)
(0.06
)
(50
)
(0.28
)
(0.13
)
(115
)
Non-GAAP
Non-GAAP operating expenses
$
2,738
$
2,933
7
$
8,670
$
9,349
7
Non-GAAP operating loss
(2,118
)
(1,315
)
(61
)
(6,908
)
(4,565
)
(51
)
Non-GAAP net loss
(1,992
)
(1,177
)
(69
)
(6,498
)
(4,084
)
(59
)
Non-GAAP Adjusted EBITDA
(1,982
)
(1,006
)
(97
)
(6,597
)
(3,395
)
(94
)
Non-GAAP diluted loss per share
(0.08
)
(0.05
)
(60
)
(0.27
)
(0.17
)
(59
)
Balance Sheet Highlights
As of September 30, 2024, cash, cash equivalents and investments
were $3.0 million, as compared with $22.2 million as of December
31, 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 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 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.
CLEARONE, INC
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par
value)
September 30, 2024
December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
1,685
$
17,835
Current marketable securities
1,136
3,480
Patent cross license receivable
—
4,000
Receivables, net of allowance of $325
1,868
3,279
Inventories, net
14,269
10,625
Income tax receivable
27
36
Prepaid expenses and other assets
4,054
4,062
Total current assets
23,039
43,317
Long-term marketable securities
222
916
Long-term inventories, net
2,237
3,143
Property and equipment, net
518
530
Operating lease - right of use assets,
net
718
990
Intangibles, net
1,567
1,689
Other assets
78
109
Total assets
$
28,379
$
50,694
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
1,248
$
1,945
Accrued liabilities
2,057
2,290
Deferred product revenue
22
30
Total current liabilities
3,327
4,265
Operating lease liability, net of
current
472
665
Other long-term liabilities
1,079
1,079
Total liabilities
4,878
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
31,640
46,047
Accumulated other comprehensive loss
(307
)
(310
)
Accumulated deficit
(7,856
)
(1,076
)
Total shareholders' equity
23,501
44,685
Total liabilities and shareholders'
equity
$
28,379
$
50,694
CLEARONE, INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
(Dollars in thousands, except per
share amounts)
Three months ended September
30,
Nine months ended September
30,
2024
2023
2024
2023
Revenue
$
2,504
$
4,889
$
8,430
$
14,550
Cost of goods sold
1,892
3,273
6,687
9,771
Gross profit
612
1,616
1,743
4,779
Operating expenses:
Sales and marketing
1,067
1,119
3,570
3,634
Research and product development
782
889
2,544
2,805
General and administrative
951
1,097
2,819
3,373
Total operating expenses
2,800
3,105
8,933
9,812
Operating loss
(2,188
)
(1,489
)
(7,190
)
(5,033
)
Interest expense
29
(86
)
264
(469
)
Other income, net
113
243
175
2,346
Loss before income taxes
(2,046
)
(1,332
)
(6,751
)
(3,156
)
Provision for income taxes
16
19
29
46
Net loss
$
(2,062
)
$
(1,351
)
$
(6,780
)
$
(3,202
)
Basic weighted average shares
outstanding
23,969,148
23,960,313
23,969,148
23,957,311
Diluted weighted average shares
outstanding
23,969,148
23,960,313
23,969,148
23,957,311
Basic loss per share
$
(0.09
)
$
(0.06
)
$
(0.28
)
$
(0.13
)
Diluted loss per share
$
(0.09
)
$
(0.06
)
$
(0.28
)
$
(0.13
)
Comprehensive loss:
Net loss
$
(2,062
)
$
(1,351
)
$
(6,780
)
$
(3,202
)
Unrealized loss on available-for-sale
securities, net of tax
(1
)
(31
)
18
(17
)
Change in foreign currency translation
adjustment
(12
)
(7
)
(15
)
(3
)
Comprehensive loss
$
(2,075
)
$
(1,389
)
$
(6,777
)
$
(3,222
)
CLEARONE, INC.
UNAUDITED RECONCILIATION OF
GAAP MEASURES TO NON-GAAP MEASURES
(Dollars in thousands, except per
share values)
Three months ended September
30,
Nine months ended September
30,
2024
2023
2024
2023
GAAP operating loss
$
(2,188
)
$
(1,489
)
$
(7,190
)
$
(5,033
)
Stock-based compensation
21
33
73
80
Amortization of intangibles
49
141
209
388
Non-GAAP operating loss
$
(2,118
)
$
(1,315
)
$
(6,908
)
$
(4,565
)
GAAP net loss
$
(2,062
)
$
(1,351
)
(6,780
)
(3,202
)
Stock-based compensation
21
33
73
80
Amortization of intangibles
49
141
209
388
Other income adjustment
—
—
—
(1,350
)
Non-GAAP net loss
$
(1,992
)
$
(1,177
)
$
(6,498
)
$
(4,084
)
GAAP net loss
$
(2,062
)
$
(1,351
)
$
(6,780
)
$
(3,202
)
Number of shares used in computing GAAP
diluted loss per share
23,969,148
23,960,313
23,969,148
23,957,311
GAAP diluted loss per share
$
(0.09
)
$
(0.06
)
$
(0.28
)
$
(0.13
)
Non-GAAP net loss
$
(1,992
)
$
(1,177
)
$
(6,498
)
$
(4,084
)
Number of shares used in computing
Non-GAAP diluted loss per share
23,969,148
23,960,313
23,969,148
23,957,311
Non-GAAP diluted loss per share
$
(0.08
)
$
(0.05
)
$
(0.27
)
$
(0.17
)
GAAP net loss
$
(2,062
)
$
(1,351
)
$
(6,780
)
$
(3,202
)
Stock-based compensation
21
33
73
80
Interest expense
(29
)
86
(264
)
469
Depreciation
110
66
223
174
Amortization of intangibles
49
141
209
388
Other income adjustment
(87
)
—
(87
)
(1,350
)
Provision for income taxes
16
19
29
46
Non-GAAP Adjusted EBITDA
$
(1,982
)
$
(1,006
)
$
(6,597
)
$
(3,395
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241115081723/en/
Investor Relations Contact:
Simon Brewer 385-426-0565 investor_relations@clearone.com
http://investors.clearone.com
ClearOne (NASDAQ:CLRO)
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