- Sequential and Year-over-Year OpEx Reductions Reflect Continued Benefits of Cost Optimization Initiatives-
SALT LAKE CITY, August 15, 2024--(BUSINESS WIRE)--ClearOne (NASDAQ: CLRO), a global provider of audio and visual communication solutions, reported financial results for the three-month period ended June 30, 2024.
Revenue declined 58% sequentially and 39% 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 Q2 2024. 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. Our sales in Q2 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 sales in that region due to the transition."
Operational Highlights
The Company showcased its full line of collaboration and conferencing solutions at Infocomm 2024, including seamless integration with popular collaboration solutions from other companies and a comprehensive portfolio of solutions for various applications and meeting room sizes. The Company captured 60% more sales leads due to in-person visitors during Infocomm USA 2024 compared to Infocomm USA 2023.
The Company introduced the Versa Lite BMA 360D in Q2 2024. This innovative bundle combines ClearOne’s industry-leading BMA 360D Dante? enabled microphone array ceiling tile with the Versa? USB22D Dante? adapter, offering a perfect audio solution for any conferencing space with an easy connection to any computer or room device via USB.
The Company reduced operating expenses by 10.1% sequentially and 9.33% year-over-year.
Graham continued, "During the first half of 2024, our team has been diligently working to win back customers who have defected to competing brands. We believe, although there can be no assurance, those efforts will bear fruit soon. We continue to see strong interest in our innovative products as demonstrated by the 60% increase in visitors at our Infocomm USA booth even though overall Infocomm USA attendance was only up 3% this year."
Financial Summary
The Company uses certain non-GAAP financial measures and reconciles those to GAAP measures in the attached tables.
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Q2 2024 revenue was $2.3 million, compared to $5.5 million in Q2 2023 and $3.6 million in Q1 2024. The 36.1% sequential decrease was driven by reduced demand across all product categories. We believe the flow of sales orders during Q2 2024 was reduced due to the cumulative impact of past product shortages. We believe the revenue decrease 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.
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GAAP gross profit/(loss) in Q2 2024 was $(0.02) million, compared to $1.8 million in Q2 2023 and $1.2 million in Q1 2024. GAAP gross profit margin was- 1% in Q2 2024, compared to 32% in Q1 2024 and 34% in Q2 2023. The large decrease in gross profit margin occurred due to increased inventory scrap costs, increasing the inventory reserve to write down the value for certain items, and an increase in purchase price variance from increasing vendor costs.
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Operating expenses in Q2 2024 improved to $2.9 million, compared to $3.2 million in Q2 2023 and $3.2 million in Q1 2024. Non-GAAP operating expenses in Q2 2024 improved to $2.8 million compared to $3.1 million in Q1 2024 and $3.1 million in Q2 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.
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GAAP net loss in Q2 2024 was $(2.8) million, or $(0.12) per share, compared to a net loss of $(1.0) million, or $(0.04) per share, in Q2 2023 and a net loss of $(1.9) million, or $(0.08) per share, in Q1 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.
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Non-GAAP net loss in Q2 2024 was $(2.7) million, or $(0.11) per share, compared to a Non-GAAP net loss of $(0.9) million, or $(0.04) per share, in Q2 2023 and a Non-GAAP net loss of $(1.8) million, or $(0.07) per share, in Q1 2024. The year-over-year increase in Non-GAAP net loss was driven by the aforementioned decrease in revenue and gross profit partially offset by a decrease in operating expenses.
($ in 000, except per share)
Three months ended June 30,
Six months ended June 30,
2024
2023
Change in % Favorable/(Adverse)
2024
2023
Change in % Favorable/(Adverse)
GAAP
Revenue
$
2,304
$
5,483
(58
)
$
5,926
$
9,661
(39
)
Gross profit
(20
)
1,848
(101
)
1,131
3,163
(64
)
Operating expenses
2,904
3,203
9
6,133
6,707
9
Operating loss
(2,924
)
(1,355
)
(116
)
(5,002
)
(3,544
)
(41
)
Net loss
(2,820
)
(1,019
)
(177
)
(4,718
)
(1,851
)
(155
)
Diluted loss per share
(0.12
)
(0.04
)
(200
)
(0.20
)
(0.08
)
(150
)
Non-GAAP
Non-GAAP operating expenses
$
2,830
$
3,051
7
$
5,925
$
6,413
8
Non-GAAP operating loss
(2,835
)
(1,201
)
(136
)
(4,777
)
(3,250
)
(47
)
Non-GAAP net loss
(2,731
)
(865
)
(216
)
(4,493
)
(2,907
)
(55
)
Non-GAAP Adjusted EBITDA
(2,660
)
(710
)
(275
)
(4,367
)
(2,389
)
(83
)
Non-GAAP diluted loss per share
(0.11
)
(0.04
)
(175
)
(0.19
)
(0.12
)
(55
)
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 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, 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)
June 30, 2024
December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
2,450
$
17,835
Current marketable securities
1,852
3,480
Patent cross license receivable
—
4,000
Receivables, net of allowance of $326
2,574
3,279
Inventories, net
14,599
10,625
Income tax receivable
27
36
Prepaid expenses and other assets
3,855
4,062
Total current assets
25,357
43,317
Long-term marketable securities
621
916
Long-term inventories, net
1,772
3,143
Property and equipment, net
552
530
Operating lease - right of use assets, net
804
990
Intangibles, net
1,582
1,689
Other assets
108
109
Total assets
$
30,796
$
50,694
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
1,901
$
1,945
Accrued liabilities
1,726
2,290
Deferred product revenue
23
30
Total current liabilities
3,650
4,265
Operating lease liability, net of current
515
665
Other long-term liabilities
1,079
1,079
Total liabilities
5,244
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
31,616
46,047
Accumulated other comprehensive loss
(294
)
(310
)
Accumulated deficit
(5,794
)
(1,076
)
Total shareholders' equity
25,552
44,685
Total liabilities and shareholders' equity
$
30,796
$
50,694
CLEARONE, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Dollars in thousands, except per share amounts)
Three months ended June 30,
Six months ended June 30,
2024
2023
2024
2023
Revenue
$
2,304
$
5,483
$
5,926
$
9,661
Cost of goods sold
2,324
3,635
4,795
6,498
Gross profit
(20
)
1,848
1,131
3,163
Operating expenses:
Sales and marketing
1,191
1,323
2,503
2,515
Research and product development
868
873
1,762
1,916
General and administrative
845
1,007
1,868
2,276
Total operating expenses
2,904
3,203
6,133
6,707
Operating loss
(2,924
)
(1,355
)
(5,002
)
(3,544
)
Interest expense
—
(91
)
—
(383
)
Other income, net
119
437
297
2,103
Loss before income taxes
(2,805
)
(1,009
)
(4,705
)
(1,824
)
Provision for income taxes
15
10
13
27
Net loss
$
(2,820
)
$
(1,019
)
$
(4,718
)
$
(1,851
)
Basic weighted average shares outstanding
23,969,148
23,955,802
23,969,148
23,955,785
Diluted weighted average shares outstanding
23,969,148
23,955,802
23,969,148
23,955,785
Basic loss per share
$
(0.12
)
$
(0.04
)
$
(0.20
)
$
(0.08
)
Diluted loss per share
$
(0.12
)
$
(0.04
)
$
(0.20
)
$
(0.08
)
Comprehensive loss:
Net loss
$
(2,820
)
$
(1,019
)
$
(4,718
)
$
(1,851
)
Unrealized loss on available-for-sale securities, net of tax
(3
)
14
19
14
Change in foreign currency translation adjustment
(1
)
(1
)
(3
)
4
Comprehensive loss
$
(2,824
)
$
(1,006
)
$
(4,702
)
$
(1,833
)
CLEARONE, INC. UNAUDITED RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES (Dollars in thousands, except per share values)
Three months ended June 30,
Six months ended June 30,
GAAP operating loss
$
(2,924
)
$
(1,355
)
$
(5,002
)
$
(3,544
)
Stock-based compensation
39
25
65
47
Amortization of intangibles
50
129
160
247
Non-GAAP operating loss
$
(2,835
)
$
(1,201
)
$
(4,777
)
$
(3,250
)
GAAP net loss
$
(2,820
)
$
(1,019
)
(4,718
)
(1,851
)
Stock-based compensation
39
25
65
47
Amortization of intangibles
50
129
160
247
Other income adjustment
—
—
—
(1,350
)
Non-GAAP net loss
$
(2,731
)
$
(865
)
$
(4,493
)
$
(2,907
)
GAAP net loss
$
(2,820
)
$
(1,019
)
$
(4,718
)
$
(1,851
)
Number of shares used in computing GAAP diluted loss per share
23,969,148
23,955,802
23,969,148
23,955,785
GAAP diluted loss per share
$
(0.12
)
$
(0.04
)
$
(0.20
)
$
(0.08
)
Non-GAAP net loss
$
(2,731
)
$
(865
)
$
(4,493
)
$
(2,907
)
Number of shares used in computing Non-GAAP diluted loss per share