SALT LAKE CITY, Aug. 9, 2018 /PRNewswire/ -- ClearOne (NASDAQ:
CLRO), a global provider of audio and visual communication
solutions, reported financial results for the three months and six
months ended June 30, 2018.
"Business conditions we experienced in the first quarter
persisted resulting in another challenging quarter for the
company," said Zee Hakimoglu, President and Chief Executive
Officer. "We have undertaken initiatives to accelerate our pace of
product innovation, the results of which are evident in important
new products shipping this month and our plan to ship significant
new solutions before the end of the year. In addition, the programs
that we have undertaken to cut costs through man-power optimization
and operating facilities reorganization, among other things, are
planned to generate annualized cost savings of approximately
$3.9 million when they are fully
implemented next year. We will also continue our vigorous
litigation efforts to stop continuing harm to our business caused
through infringement of our patents."
Financial Summary
The Company uses certain non-GAAP
financial measures and reconciles those to GAAP measures in the
attached tables.
- Q2 2018 revenue was $7.0 million,
compared to $10.3 million in Q2 2017
and $7.3 million in Q1 2018. The
year-over-year decrease as well as sequential revenue decline
reflect an impact of the on-going harm of infringement of
ClearOne's patents resulting in slower adoption of our next
generation professional audio conferencing platform. The patent
infringement has also negatively impacted revenue from ClearOne's
other products that are sold with professional audio conferencing
systems.
- GAAP gross profit in Q2 2018 was $3.3
million compared to $6.1
million in Q2 2017 and $4.1
million in Q1 2018. GAAP gross profit margin was 47% in Q2
2018, compared to 59% in Q2 2017 and 56% in Q1 2018. Gross profit
margin decrease was primarily due to an increase in inventory
obsolescence costs, a decline in licensing revenues and due to
reduced overhead absorption into inventory. The proportion of
overhead costs absorbed into inventory has declined due to a sharp
decline in our inventory purchasing activity causing increased
amounts of overhead costs to be expensed.
- Operating expenses in Q2 2018 were $6.2
million, compared to $7.2
million in Q2 2017 and $6.5
million in Q1 2018. The majority of the decrease in
operating expenses over Q2 2018 is attributable to reduced legal
expenses, capitalization of legal expenses related to patent
litigation and reduced R&D related project expenses. Non-GAAP
operating expenses in Q2 2018 were $5.8
million, compared to $5.9
million in Q2 2017 and $6.1
million in Q1 2018. The sequential decrease in Non-GAAP
operating expenses was mainly due to reduced sales commissions and
R&D related project costs.
- GAAP net loss in Q2 2018 was $2.2
million, or $0.26 per share,
compared to net loss of $0.8 million,
or $0.09 per share, in Q2 2017 and
net loss of $1.8 million, or
$0.22 per share, in Q1 2018. Net loss
in Q2 2018 was largely caused by the reduction in revenue and
associated gross profit. Non-GAAP net loss was $1.8 million, or $0.22 per share, in Q2 2018, compared to non-GAAP
net loss of $0.1 million in Q2 2017
and net loss of $1.5 million, or
$0.18 per share, in Q1 2018.
Non-GAAP net loss in Q1 2018 was caused by lower revenues and
reduction in associated gross margin.
Financial
Summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in 000, except
per share)
|
|
Three months ended
June 30,
|
|
|
Six months ended
June 30,
|
|
|
2018
|
|
|
2017
|
|
Change
|
|
|
2018
|
|
|
2017
|
|
Change
|
GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
6,971
|
|
$
|
10,311
|
|
-32%
|
|
$
|
14,260
|
|
$
|
21,989
|
|
-35%
|
Gross
Profit
|
|
3,250
|
|
|
6,069
|
|
-46%
|
|
|
7,349
|
|
|
12,747
|
|
-42%
|
Operating
loss
|
|
(2,972)
|
|
|
(1,109)
|
|
-168%
|
|
|
(5,414)
|
|
|
(1,635)
|
|
-231%
|
Net loss
|
|
(2,163)
|
|
|
(820)
|
|
-164%
|
|
|
(4,009)
|
|
|
(1,288)
|
|
-211%
|
Diluted loss per
share
|
|
(0.26)
|
|
|
(0.09)
|
|
-189%
|
|
|
(0.48)
|
|
|
(0.15)
|
|
-220%
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Gross
Profit
|
$
|
3,254
|
|
$
|
6,075
|
|
-46%
|
|
$
|
7,358
|
|
$
|
12,761
|
|
-42%
|
Non-GAAP Operating
Income (Loss)
|
|
(2,558)
|
|
|
136
|
|
-1981%
|
|
|
(4,515)
|
|
|
502
|
|
-999%
|
Non-GAAP Net Income
(Loss)
|
|
(1,837)
|
|
|
(102)
|
|
-1701%
|
|
|
(3,303)
|
|
|
47
|
|
-7128%
|
Non-GAAP Adjusted
EBITDA
|
|
(2,384)
|
|
|
365
|
|
-753%
|
|
|
(4,185)
|
|
|
999
|
|
-519%
|
Non-GAAP Earnings
(Loss) per share (Diluted)
|
|
(0.22)
|
|
|
(0.01)
|
|
-2100%
|
|
|
(0.40)
|
|
|
0.01
|
|
-7465%
|
Balance Sheet Highlights
At March 31, 2018, cash, cash equivalents and
investments were $13.3 million, as
compared with $18.6 million at
December 31, 2017. The Company
continued to have no debt.
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. More information about the Company can be found 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-K, the footnotes thereto and the limitations
set forth therein. Investors may not rely on the press release
without reference to 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)
|
|
|
|
|
|
|
|
|
|
As
at
|
|
|
June 30,
2018
|
|
December
31,
2017
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
4,079
|
|
$
|
5,571
|
Marketable
securities
|
|
|
2,852
|
|
|
2,689
|
Receivables, net of
allowance for doubtful accounts of $527 and $472,
respectively
|
|
|
5,139
|
|
|
7,794
|
Inventories,
net
|
|
|
14,380
|
|
|
14,415
|
Distributor channel
inventories
|
|
|
-
|
|
|
1,555
|
Prepaid expenses and
other assets
|
|
|
2,339
|
|
|
1,862
|
Total current
assets
|
|
|
28,789
|
|
|
33,886
|
Long-term marketable
securities
|
|
|
6,391
|
|
|
10,349
|
Long-term
inventories, net
|
|
|
8,351
|
|
|
8,708
|
Property and
equipment, net
|
|
|
1,423
|
|
|
1,549
|
Intangibles,
net
|
|
|
8,511
|
|
|
6,543
|
Deferred income
taxes
|
|
|
7,458
|
|
|
6,531
|
Other
assets
|
|
|
318
|
|
|
311
|
Total assets
|
|
$
|
61,241
|
|
$
|
67,877
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
3,528
|
|
$
|
4,122
|
Accrued
liabilities
|
|
|
1,844
|
|
|
1,843
|
Deferred product
revenue
|
|
|
258
|
|
|
4,635
|
Total current
liabilities
|
|
|
5,630
|
|
|
10,600
|
Deferred
rent
|
|
|
138
|
|
|
103
|
Other long-term
liabilities
|
|
|
686
|
|
|
607
|
Total
liabilities
|
|
|
6,454
|
|
|
11,310
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
Common stock, par
value $0.001, 50,000,000 shares authorized, 8,306,935 and 8,319,022
shares issued and outstanding
|
|
|
8
|
|
|
8
|
Additional paid-in
capital
|
|
|
47,750
|
|
|
47,464
|
Accumulated other
comprehensive income (loss)
|
|
|
(174)
|
|
|
(65)
|
Retained
earnings
|
|
|
7,203
|
|
|
9,160
|
Total shareholders'
equity
|
|
|
54,787
|
|
|
56,567
|
Total liabilities and
shareholders' equity
|
|
$
|
61,241
|
|
$
|
67,877
|
|
|
|
|
|
|
|
CLEARONE,
INC.
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Dollars in
thousands, except per share values)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenue
|
|
$
|
6,971
|
|
$
|
10,311
|
|
$
|
14,260
|
|
$
|
21,989
|
Cost of goods
sold
|
|
|
3,721
|
|
|
4,242
|
|
|
6,911
|
|
|
9,242
|
Gross
profit
|
|
|
3,250
|
|
|
6,069
|
|
|
7,349
|
|
|
12,747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and
marketing
|
|
|
2,760
|
|
|
2,646
|
|
|
5,628
|
|
|
5,387
|
Research and product
development
|
|
|
1,920
|
|
|
2,322
|
|
|
3,976
|
|
|
4,679
|
General and
administrative
|
|
|
1,542
|
|
|
2,210
|
|
|
3,159
|
|
|
4,316
|
Total operating
expenses
|
|
|
6,222
|
|
|
7,178
|
|
|
12,763
|
|
|
14,382
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
|
(2,972)
|
|
|
(1,109)
|
|
|
(5,414)
|
|
|
(1,635)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income,
net
|
|
|
49
|
|
|
84
|
|
|
73
|
|
|
186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
|
(2,923)
|
|
|
(1,025)
|
|
|
(5,341)
|
|
|
(1,449)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for
(benefit from) income taxes
|
|
|
(760)
|
|
|
(205)
|
|
|
(1,332)
|
|
|
(161)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(2,163)
|
|
$
|
(820)
|
|
$
|
(4,009)
|
|
$
|
(1,288)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
|
|
8,301,094
|
|
|
8,638,091
|
|
|
8,304,093
|
|
|
8,702,743
|
Diluted weighted
average shares outstanding
|
|
|
8,301,094
|
|
|
8,638,091
|
|
|
8,304,093
|
|
|
8,702,743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per
share
|
|
$
|
(0.26)
|
|
$
|
(0.09)
|
|
$
|
(0.48)
|
|
$
|
(0.15)
|
Diluted loss per
share
|
|
$
|
(0.26)
|
|
$
|
(0.09)
|
|
$
|
(0.48)
|
|
$
|
(0.15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(2,163)
|
|
|
(820)
|
|
|
(4,009)
|
|
|
(1,288)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on available-for-sale securities, net of
tax
|
|
|
(1)
|
|
|
20
|
|
|
(71)
|
|
|
58
|
Change
in foreign currency translation adjustment
|
|
|
(60)
|
|
|
52
|
|
|
(38)
|
|
|
64
|
Comprehensive
loss
|
|
|
(2,224)
|
|
|
(748)
|
|
|
(4,118)
|
|
|
(1,166)
|
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,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
GAAP gross
profit
|
|
$
|
3,250
|
|
$
|
6,069
|
|
$
|
7,349
|
|
$
|
12,747
|
Stock-based
compensation
|
|
|
4
|
|
|
6
|
|
|
9
|
|
|
14
|
Non-GAAP gross
profit
|
|
$
|
3,254
|
|
$
|
6,075
|
|
$
|
7,358
|
|
$
|
12,761
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
income (loss)
|
|
$
|
(2,972)
|
|
$
|
(1,109)
|
|
$
|
(5,414)
|
|
$
|
(1,635)
|
Stock-based
compensation
|
|
|
130
|
|
|
169
|
|
|
267
|
|
|
340
|
Amortization of
intangibles
|
|
|
265
|
|
|
231
|
|
|
513
|
|
|
468
|
Legal expenses,
acquisition expenses, restructuring expenses, etc. not related to
regular operations
|
|
|
19
|
|
|
845
|
|
|
119
|
|
|
1,329
|
Non-GAAP operating
income (loss)
|
|
$
|
(2,558)
|
|
$
|
136
|
|
$
|
(4,515)
|
|
$
|
502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss)
|
|
$
|
(2,163)
|
|
$
|
(820)
|
|
$
|
(4,009)
|
|
$
|
(1,288)
|
Stock-based
compensation
|
|
|
130
|
|
|
169
|
|
|
267
|
|
|
340
|
Amortization of
intangibles
|
|
|
265
|
|
|
231
|
|
|
513
|
|
|
468
|
Legal expenses,
acquisition expenses, restructuring expenses, etc. not related to
regular operations
|
|
|
19
|
|
|
845
|
|
|
119
|
|
|
1,329
|
Tax effect of
non-GAAP adjustments
|
|
|
(88)
|
|
|
(527)
|
|
|
(193)
|
|
|
(802)
|
Non-GAAP net
income (loss)
|
|
$
|
(1,837)
|
|
$
|
(102)
|
|
$
|
(3,303)
|
|
$
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss)
|
|
$
|
(2,163)
|
|
$
|
(820)
|
|
$
|
(4,009)
|
|
$
|
(1,288)
|
Number of shares used
in computing GAAP income per share (diluted)
|
|
|
8,301,094
|
|
|
8,638,091
|
|
|
8,304,093
|
|
|
8,702,743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP income (loss)
per share (diluted)
|
|
$
|
(0.26)
|
|
$
|
(0.09)
|
|
$
|
(0.48)
|
|
$
|
(0.15)
|
Non-GAAP net income
(loss)
|
|
$
|
(1,837)
|
|
$
|
(102)
|
|
$
|
(3,303)
|
|
$
|
47
|
Number of shares used
in computing Non-GAAP income per share (diluted)
|
|
|
8,301,094
|
|
|
8,638,091
|
|
|
8,304,093
|
|
|
8,702,743
|
Non-GAAP income
(loss) per share (diluted)
|
|
$
|
(0.22)
|
|
$
|
(0.01)
|
|
$
|
(0.40)
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP total net
income (loss)
|
|
$
|
(2,163)
|
|
$
|
(820)
|
|
$
|
(4,009)
|
|
$
|
(1,288)
|
Stock-based
compensation
|
|
|
130
|
|
|
169
|
|
|
267
|
|
|
340
|
Depreciation
|
|
|
125
|
|
|
145
|
|
|
257
|
|
|
311
|
Amortization of
intangibles
|
|
|
265
|
|
|
231
|
|
|
513
|
|
|
468
|
Legal expenses,
acquisition expenses, restructuring expenses, etc. not related to
regular operations
|
|
|
19
|
|
|
845
|
|
|
119
|
|
|
1,329
|
Provision for
(benefit from) income taxes
|
|
|
(760)
|
|
|
(205)
|
|
|
(1,332)
|
|
|
(161)
|
Non-GAAP Adjusted
EBITDA
|
|
$
|
(2,384)
|
|
$
|
365
|
|
$
|
(4,185)
|
|
$
|
999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View original content with
multimedia:http://www.prnewswire.com/news-releases/clearone-reports-second-quarter-2018-financial-results-300695285.html
SOURCE ClearOne