Market Overview

ClearOne Reports Third Quarter 2020 Financial Results

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Overall revenue grows by 40% year-over-year
Overall revenue grows by 32% quarter-over-quarter sequentially
Video products and Beamforming Microphone Array Ceiling Tile based solutions drive year-over-year and sequential revenue growth

SALT LAKE CITY, Nov. 16, 2020 (GLOBE NEWSWIRE) -- ClearOne (NASDAQ:CLRO), a global provider of audio and visual communication solutions, reported financial results for the three and nine month periods ended September 30, 2020.

"We achieved outstanding sequential and year-over-year revenue growth thanks to our appealing video products and innovative BMA based solutions. Our revenue growth amidst a global pandemic demonstrates the resilience of our product portfolio. Our wide-ranging suite of audio and video solutions are well suited for traditional offices as well as the burgeoning work-from-home remote offices," said Zee Hakimoglu, CEO and Chair of ClearOne.

"Last month, we introduced the BMA 360, our new flagship Beamforming Microphone Array in ceiling tile format. We believe that it has set an audio performance standard that is unrivalled in the industry and that is far superior to any other BMA solution in the market. The BMA 360 is based on a dramatically new approach to beamforming that provides a new beam topology to easily achieve distortion-free, full 360-degree coverage of any room shape and any seating arrangement using ClearOne Audio Intelligence™. The integrated features in the BMA 360 significantly reduce system design complexity, simplify installation, consume less rack space, and lower system cost," Hakimoglu added.

"On September 1, 2020, the U.S. District Court of the Northern District of Illinois held that ‘Shure has violated the preliminary injunction order and is found in contempt because it designed the MXA910-A in such a way that allows it to be easily installed flush in most ceiling grids.' The Court also opined that, ‘[t]he record is clear and convincing that Shure-through its design choices-violated the injunction order by allowing integrators to install the MXA910-A in the enjoined flush configuration.' Ultimately, the Court ordered that ‘Shure shall no longer manufacture, market, or sell the MXA910-A ... .' Though Shure has filed for appeal, this order of contempt is a significant victory for ClearOne in our resolute effort to hold Shure accountable for its action and to enforce our hard-earned intellectual property rights. Our motion to accuse Shure's MXA910-US of infringing the '806 Patent is still pending with the Court," Hakimoglu concluded.

Financial Summary

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

  • Revenue in Q3 2020 was $8.4 million, compared to $6.0 million in Q3 2019 and million $6.4 in Q2 2020. The increase in year-over-year as well as sequential revenues was mainly due to the increase in revenue from video products, personal audio conferencing products and beamforming microphone array products. Despite this revenue growth in Q3 2020, revenue from our audio conferencing products and microphones are far below the levels prior to infringement of our patents.
  • GAAP gross profit in Q3 2020 was $3.5 million compared to $2.5 million in Q3 2019 and $2.6 million in Q2 2020. GAAP gross profit margin was 41.8% in Q3 2020, compared to 42.3% in Q3 2019 and 41.2% in Q2 2020. Gross profit margin remained fairly consistent through the compared periods.
  • Operating expenses in Q3 2020 were $4.7 million, compared to $4.6 million in Q3 2019 and $4.5 million in Q2 2020. Non-GAAP operating expenses in Q3 2020 were $4.2 million, compared to $4.2 million in Q3 2019 and $4.0 million in Q2 2020. The sequential increase in operating expenses is mainly due to the increase in commissions paid to employees and independent reps.
  • GAAP net loss in Q3 2020 was $1.3 million, or $0.07 per share, compared to net loss of $2.0 million, or $0.12 per share, in Q3 2019 and net loss of $1.9 million, or $0.12 per share, in Q2 2020. The sequential and year-over-year decline in GAAP net loss was primarily due to increase in gross profit attributable to increase in revenue. 


($ in 000, except per share)   Three months ended
September 30,
      Nine months ended
September 30,
 
    2020     2019   Change       2020     2019   Change  
GAAP                                  
Revenue $ 8,412   $ 5,992   40 %   $ 20,503   $ 18,717   10 %
Gross profit   3,520     2,537   39 %     8,976     8,180   10 %
Operating expenses   4,680     4,635   1 %     13,726     14,773   -7 %
Operating loss   (1,160 )   (2,098 ) -45 %     (4,750 )   (6,593 ) -28 %
Net loss   (1,260 )   (1,976 ) -36 %     (5,044 )   (6,423 ) -21 %
Diluted loss per share   (0.07 )   (0.12 ) -38 %     (0.30 )   (0.39 ) -22 %
Non-GAAP                                  
Non-GAAP gross profit $ 3,520   $ 2,539   39 %   $ 8,978   $ 8,186   10 %
Non-GAAP operating expenses   4,232     4,235   0 %     12,453     13,548   -8 %
Non-GAAP operating loss   (712 )   (1,696 ) -58 %     (3,475 )   (5,362 ) -35 %
Non-GAAP net loss   (812 )   (1,574 ) -48 %     (3,769 )   (5,192 ) -27 %
Non-GAAP Adjusted EBITDA   (589 )   (1,437 ) 59 %     (3,197 )   (4,752 ) 33 %
Non-GAAP loss per share (diluted)   (0.05 )   (0.09 ) -44 %     (0.22 )   (0.31 ) -28 %

Balance Sheet Highlights

At September 30, 2020, cash, cash equivalents and investments were $8.6 million, as compared with the same amount at December 31, 2019. The Company carries a debt of $5.0 million on account of senior convertible notes issued in December 2019 and a Paycheck Protection Program (PPP) loan in April 2020. The Company intends to use the entire PPP loan amount for qualifying expenses and to apply for forgiveness of the PPP loan. 

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 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 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, 2019 (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.

Contact:
Investor Relations
801-975-7200
investor_relations@clearone.com
http://investors.clearone.com


CLEARONE, INC
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value)

    September
30, 2020
    December
31, 2019
 
ASSETS                
Current assets:                
Cash and cash equivalents   $ 5,583     $ 4,064  
Marketable securities     1,622       3,026  
Receivables, net of allowance for doubtful accounts of $506 and $424, respectively     6,705       5,468  
Inventories, net     7,838       11,441  
Prepaid expenses and other assets     2,183       1,184  
Total current assets     23,931       25,183  
Long-term marketable securities     1,391       1,517  
Long-term inventories, net     6,283       6,284  
Property and equipment, net     995       1,044  
Operating lease - right of use assets, net     2,082       2,459  
Intangibles, net     18,494       14,009  
Other assets     4,596       4,614  
Total assets   $ 57,772     $ 55,110  
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities:                
Accounts payable   $ 4,355     $ 2,871  
Accrued liabilities     3,405       3,205  
Deferred product revenue     159       173  
Short term debt     395        
Total current liabilities     8,314       6,249  
Senior convertible notes     3,474       2,222  
Operating lease liability, net of current     1,623       2,021  
Other long-term liabilities     111       140  
Total liabilities     13,522       10,632  
                 
Shareholders' equity:                
Common stock, par value $0.001, 50,000,000 shares authorized, 18,771,257 and 16,650,725 shares issued and outstanding     19       17  
Additional paid-in capital     63,348       58,520  
Accumulated other comprehensive loss     (190 )     (176 )
Accumulated deficit     (18,927 )     (13,883 )
Total shareholders' equity     44,250       44,478  
Total liabilities and shareholders' equity   $ 57,772     $ 55,110  



CLEARONE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Dollars in thousands, except per share values)

    Three months
ended September 30,
    Nine months
ended September 30,
 
    2020     2019     2020     2019  
Revenue   $ 8,412     $ 5,992     $ 20,503     $ 18,717  
Cost of goods sold     4,892       3,455       11,527       10,537  
Gross profit     3,520       2,537       8,976       8,180  
                                 
Operating expenses:                                
Sales and marketing     1,736       1,907       4,932       6,121  
Research and product development     1,501       1,428       4,319       4,322  
General and administrative     1,443       1,300       4,475       4,330  
Total operating expenses     4,680       4,635       13,726       14,773  
                                 
Operating loss     (1,160 )     (2,098 )     (4,750 )     (6,593 )
                                 
Interest expense     (108 )           (325 )      
Other income, net     19       142       70       235  
                                 
Loss before income taxes     (1,249 )     (1,956 )     (5,005 )     (6,358 )
                                 
Provision for income taxes     11       20       39       65  
                                 
Net loss   $ (1,260 )   $ (1,976 )   $ (5,044 )   $ (6,423 )
                                 
Basic weighted average shares outstanding     17,000,215       16,646,323       16,768,088       16,635,954  
Diluted weighted average shares outstanding     17,000,215       16,646,323       16,768,088       16,635,954  
                                 
Basic loss per share   $ (0.07 )   $ (0.12 )   $ (0.30 )   $ (0.39 )
Diluted loss per share   $ (0.07 )   $ (0.12 )   $ (0.30 )   $ (0.39 )
                                 
Comprehensive loss:                                
Net loss     (1,260 )     (1,976 )     (5,044 )     (6,423 )
Unrealized gain (loss) on available-for-sale securities, net of tax     4       (78 )     11       76  
Change in foreign currency translation adjustment     17       (50 )     (25 )     (67 )
Comprehensive loss     (1,239 )     (2,104 )     (5,058 )     (6,414 )



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,
 
    2020     2019       2020       2019  
GAAP gross profit    $ 3,520     $ 2,537     $ 8,976     $ 8,180  
Stock-based compensation           2       2       6  
Non-GAAP gross profit   $ 3,520     $ 2,539     $ 8,978     $ 8,186  
                                 
GAAP operating loss   $ (1,160 )   $ (2,098 )   $ (4,750 )   $ (6,593 )
Stock-based compensation     2       48       55       177  
Amortization of intangibles     446       354       1,220       1,054  
Non-GAAP operating loss   $ (712 )   $ (1,696 )   $ (3,475 )   $ (5,362 )
                                 
GAAP net loss   $ (1,260 )   $ (1,976 )   $ (5,044 )   $ (6,423 )
Stock-based compensation     2       48       55       177  
Amortization of intangibles     446       354       1,220       1,054  
Non-GAAP net loss   $ (812 )   $ (1,574 )   $ (3,769 )   $ (5,192 )
                                 
GAAP net loss   $ (1,260 )   $ (1,976 )   $ (5,044 )   $ (6,423 )
Number of shares used in computing GAAP loss per share (diluted)     17,000,215       16,646,323       16,768,088       16,635,954  
GAAP loss per share (diluted)   $ (0.07 )   $ (0.12 )   $ (0.30 )   $ (0.39 )
Non-GAAP net loss   $ (812 )   $ (1,574 )   $ (3,769 )   $ (5,192 )
Number of shares used in computing Non-GAAP loss per share (diluted)     17,000,215       16,646,323       16,768,088       16,635,954  
Non-GAAP loss per share (diluted)   $ (0.05 )   $ (0.09 )   $ (0.22 )   $ (0.31 )
                                 
GAAP net loss   $ (1,260 )   $ (1,976 )   $ (5,044 )   $ (6,423 )
Stock-based compensation     2       48       55       177  
Depreciation     104       117       208       375  
Amortization of intangibles     446       354       1,220       1,054  
Interest expense     108             325        
Provision for (benefit from) income taxes     11       20       39       65  
Non-GAAP Adjusted EBITDA   $ (589 )   $ (1,437 )   $ (3,197 )   $ (4,752 )

 


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