ClearOne Reports Fourth Quarter 2019 Financial Results
April 16 2019 - 9:10AM
ClearOne (NASDAQ: CLRO), a global provider of audio and visual
communication solutions, reported financial results for the three
months and twelve months ended December 31, 2018.
“We made modest progress on the revenue front
with revenue growing sequentially in Q4 and video products growing
year over year and also sequentially,” said Zee Hakimoglu, CEO and
Chair of ClearOne. “Since ClearOne’s beginning, we have invested
heavily in innovation to provide an unequaled user experience. Our
patents and trade secrets help protect that investment, and we must
take strong legal action when others fail to respect them. We
believe that our recent strategic victory in the PTAB proceedings
against Shure with respect to our foundational ‘553 patent
vindicates our legal strategy. We are encouraged by the results of
the various legal proceedings regarding our patents to date, and we
will continue to vigorously enforce our intellectual property
rights.”
Financial Summary
The Company uses certain non-GAAP financial measures and
reconciles those to GAAP measures in the attached tables.
- Q4 2018 revenue was $7.2 million,
compared to $9.3 million in Q4 2017 and $6.7 million in Q3 2018.
The year-over-year decrease reflects an impact of the on-going harm
of infringement of ClearOne’s patents resulting in slower adoption
of our latest generation professional audio-conferencing platform.
The patent infringement has also negatively impacted revenue from
ClearOne’s other products. Sequential increase in revenue was due
to better performance of video products.
- GAAP gross profit in Q4 2018 was
$3.0 million compared to $4.8 million in Q4 2017 and $3.0 million
in Q3 2018. GAAP gross profit margin was 42% in Q4 2018, compared
to 51% in Q4 2017 and 45% in Q3 2018. The gross profit margin
decrease was primarily due to a decline in professional audio
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 Q4 2018 were
$5.6 million, compared to $5.8 million in Q4 2017 and $5.3 million
in Q3 2018. The majority of the decrease in operating expenses over
Q4 2017 is attributable to decreases in employee related costs, bad
debts, legal expenses, advertising expenses, commissions to
independent reps, amortization of demonstration equipment costs and
R&D project costs, partially offset by increases in
amortization of intangible assets, consultant fees and health care
benefits. Non-GAAP operating expenses in Q4 2018 were $5.1 million,
compared to $6.1 million in Q4 2017 and $4.9 million in Q3 2018.
The sequential increase in GAAP and non-GAAP operating expenses was
mainly due to higher costs related to health care benefits provided
to employees.
- GAAP net loss in Q4 2018 was $2.5
million, or $0.23 per share, compared to net loss of $3.6 million,
or $0.43 per share, in Q4 2017 and net loss of $10.1 million, or
$1.22 per share, in Q3 2018. Net loss in Q4 2018 was largely caused
by operating losses on account of reduction in revenue and
associated gross profit. Net loss in Q4 2018 was lesser than net
loss in Q4 2017 largely due to the absence of a true-up of
provision of $2.6 million for income taxes in Q4 2017. Net loss in
Q3 2018 was largely caused by the non-cash write-off of deferred
tax assets amounting to $7.8 million and reduction in revenue and
associated gross profit. Non-GAAP net loss was $2.0 million, or
$0.18 per share, in Q4 2018, compared to non-GAAP net loss of $2.3
million in Q4 2017 and non-GAAP net loss was $9.6 million, or $1.15
per share, in Q3 2018.
Financial
Summary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in 000,
except per share) |
|
Three months ended December 31, |
|
|
Year ended December 31, |
|
|
2018 |
|
|
|
2017 |
|
|
Change |
|
|
2018 |
|
|
|
2017 |
|
|
Change |
GAAP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
7,213 |
|
|
$ |
9,255 |
|
|
-22 |
% |
|
$ |
28,156 |
|
|
$ |
41,804 |
|
|
-33 |
% |
Gross Profit |
|
3,042 |
|
|
|
4,753 |
|
|
-36 |
% |
|
|
13,371 |
|
|
|
24,009 |
|
|
-44 |
% |
Operating loss |
|
(2,603) |
|
|
|
(1,052) |
|
|
-147 |
% |
|
|
(10,327) |
|
|
|
(16,193) |
|
|
36 |
% |
Net loss |
|
(2,536) |
|
|
|
(3,608) |
|
|
30 |
% |
|
|
(16,687) |
|
|
|
(14,172) |
|
|
-18 |
% |
Diluted loss per
share |
|
(0.23) |
|
|
|
(0.43) |
|
|
47 |
% |
|
|
(1.87) |
|
|
|
(1.65) |
|
|
-13 |
% |
Non-GAAP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP gross
profit |
$ |
3,044 |
|
|
$ |
4,759 |
|
|
-36 |
% |
|
$ |
13,385 |
|
|
$ |
24,036 |
|
|
-44 |
% |
Non-GAAP operating
loss |
|
(2,056) |
|
|
|
(1,337) |
|
|
-54 |
% |
|
|
(8,486) |
|
|
|
(309) |
|
|
-2646 |
% |
Non-GAAP net loss |
|
(1,989) |
|
|
|
(2,297) |
|
|
13 |
% |
|
|
(14,846) |
|
|
|
(1,490) |
|
|
-896 |
% |
Non-GAAP Adjusted
EBITDA |
|
(1,934) |
|
|
|
(1,171) |
|
|
-65 |
% |
|
|
(7,909) |
|
|
|
571 |
|
|
-1485 |
% |
Non-GAAP loss per share
(diluted) |
|
(0.18) |
|
|
|
(0.27) |
|
|
33 |
% |
|
|
(1.66) |
|
|
|
(0.17) |
|
|
-856 |
% |
Balance Sheet Highlights
At December 31, 2018, cash, cash equivalents and
investments were $15.9 million, as compared with $18.6 million at
December 31, 2017.
On December 4, 2018, the Company closed a
subscription rights offering (the “Rights Offering”) in which the
Company raised $10.0 million in gross proceeds. In the Rights
Offering, the Company issued one subscription right to each of
Company’s shareholders for each share of Company’s common stock
that they held. Each subscription right entitled the shareholder to
purchase one share of Company’s common stock at a purchase price of
$1.20 per share. At the closing, the Company sold 8,306,535 shares
of the Company’s common stock and returned subscriptions for
754,868 shares that were oversubscribed after allocating
oversubscribed shares on a pro-rata basis.
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. 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-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
Relations801-975-7200investor_relations@clearone.comhttp://investors.clearone.com
CLEARONE,
INCCONSOLIDATED BALANCE SHEETS(Dollars in
thousands, except par value)
|
|
As at |
|
|
December 31, 2018 |
|
December 31, 2017 |
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
11,211 |
|
|
$ |
5,571 |
|
Marketable
securities |
|
|
951 |
|
|
|
2,689 |
|
Receivables, net of
allowance for doubtful accounts of $631 and $472,
respectively |
|
|
6,782 |
|
|
|
7,794 |
|
Inventories, net |
|
|
13,228 |
|
|
|
14,415 |
|
|
|
|
|
|
|
|
|
|
Distributor channel
inventories |
|
|
— |
|
|
|
1,555 |
|
Prepaid expenses and
other assets |
|
|
2,199 |
|
|
|
1,862 |
|
Total current
assets |
|
|
34,371 |
|
|
|
33,886 |
|
Long-term marketable
securities |
|
|
3,764 |
|
|
|
10,349 |
|
|
|
|
|
|
|
|
|
|
Long-term inventories,
net |
|
|
8,953 |
|
|
|
8,708 |
|
Property and equipment,
net |
|
|
1,388 |
|
|
|
1,549 |
|
Intangibles, net |
|
|
10,249 |
|
|
|
6,543 |
|
|
|
|
|
|
|
|
|
|
Deferred income
taxes |
|
|
— |
|
|
|
6,531 |
|
Other assets |
|
|
196 |
|
|
|
311 |
|
Total
assets |
|
$ |
58,921 |
|
|
$ |
67,877 |
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
3,729 |
|
|
$ |
4,122 |
|
Accrued
liabilities |
|
|
1,996 |
|
|
|
1,843 |
|
Deferred product
revenue |
|
|
283 |
|
|
|
4,635 |
|
Total
current liabilities |
|
|
6,008 |
|
|
|
10,600 |
|
Deferred rent |
|
|
135 |
|
|
|
103 |
|
Other long-term
liabilities |
|
|
646 |
|
|
|
607 |
|
Total
liabilities |
|
|
6,789 |
|
|
|
11,310 |
|
|
|
|
|
|
|
|
Shareholders'
equity: |
|
|
|
|
|
|
Common stock, par value
$0.001, 50,000,000 shares authorized, 16,630,597 and 8,319,022
shares issued and outstanding |
|
|
17 |
|
|
|
8 |
|
Additional paid-in
capital |
|
|
57,840 |
|
|
|
47,464 |
|
Accumulated other
comprehensive loss |
|
|
(181) |
|
|
|
(65) |
|
Retained
earnings/(accumulated deficit) |
|
|
(5,544) |
|
|
|
9,160 |
|
Total
shareholders' equity |
|
|
52,132 |
|
|
|
56,567 |
|
Total
liabilities and shareholders' equity |
|
$ |
58,921 |
|
|
$ |
67,877 |
|
|
|
|
|
|
|
|
|
|
CLEARONE,
INC.CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS(Dollars in thousands, except per share
values)
|
|
Three months ended December 31, |
|
Year ended December 31, |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Revenue |
|
$ |
7,213 |
|
|
$ |
9,255 |
|
|
$ |
28,156 |
|
|
$ |
41,804 |
|
Cost of goods sold |
|
|
4,171 |
|
|
|
4,502 |
|
|
|
14,785 |
|
|
|
17,795 |
|
Gross profit |
|
|
3,042 |
|
|
|
4,753 |
|
|
|
13,371 |
|
|
|
24,009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Sales and
marketing |
|
|
2,112 |
|
|
|
2,603 |
|
|
|
9,908 |
|
|
|
10,996 |
|
Research and product
development |
|
|
2,083 |
|
|
|
2,395 |
|
|
|
7,840 |
|
|
|
9,342 |
|
General and
administrative |
|
|
1,450 |
|
|
|
1,564 |
|
|
|
5,950 |
|
|
|
7,161 |
|
Impairment of
intangibles |
|
|
— |
|
|
|
33 |
|
|
|
— |
|
|
|
769 |
|
Impairment of
goodwill |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,724 |
|
Legal settlement
proceeds, net |
|
|
— |
|
|
|
(790) |
|
|
|
— |
|
|
|
(790) |
|
Total operating
expenses |
|
|
5,645 |
|
|
|
5,805 |
|
|
|
23,698 |
|
|
|
40,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(2,603) |
|
|
|
(1,052) |
|
|
|
(10,327) |
|
|
|
(16,193) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net |
|
|
2 |
|
|
|
36 |
|
|
|
80 |
|
|
|
300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes |
|
|
(2,601) |
|
|
|
(1,016) |
|
|
|
(10,247) |
|
|
|
(15,893) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (benefit
from) income taxes |
|
|
(65) |
|
|
|
2,592 |
|
|
|
6,440 |
|
|
|
(1,721) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(2,536) |
|
|
$ |
(3,608) |
|
|
$ |
(16,687) |
|
|
$ |
(14,172) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average
shares outstanding |
|
|
10,834,801 |
|
|
|
8,384,938 |
|
|
|
8,942,629 |
|
|
|
8,576,588 |
|
Diluted weighted
average shares outstanding |
|
|
10,834,801 |
|
|
|
8,384,938 |
|
|
|
8,942,629 |
|
|
|
8,576,588 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per
share |
|
$ |
(0.23) |
|
|
$ |
(0.43) |
|
|
$ |
(1.87) |
|
|
$ |
(1.65) |
|
Diluted loss per
share |
|
$ |
(0.23) |
|
|
$ |
(0.43) |
|
|
$ |
(1.87) |
|
|
$ |
(1.65) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(2,536) |
|
|
|
(3,608) |
|
|
|
(16,687) |
|
|
|
(14,172) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss: |
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on available-for-sale securities, net of
tax |
|
|
55 |
|
|
|
(32) |
|
|
|
(38) |
|
|
|
36 |
|
Change in
foreign currency translation adjustment |
|
|
(27) |
|
|
|
16 |
|
|
|
(78) |
|
|
|
104 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
|
(2,508) |
|
|
|
(3,624) |
|
|
|
(16,803) |
|
|
|
(14,032) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CLEARONE, INC.UNAUDITED
RECONCILIATION OF GAAP MEASURES TO NON-GAAP
MEASURES(Dollars in thousands, except per share
values)
|
|
Three months ended December
31, |
|
Year endedDecember
31, |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
GAAP gross
profit |
|
$ |
3,042 |
|
|
$ |
4,753 |
|
|
$ |
13,371 |
|
|
$ |
24,009 |
|
Stock-based
compensation |
|
|
2 |
|
|
|
6 |
|
|
|
14 |
|
|
|
27 |
|
Non-GAAP gross
profit |
|
$ |
3,044 |
|
|
$ |
4,759 |
|
|
$ |
13,385 |
|
|
$ |
24,036 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
loss |
|
$ |
(2,603) |
|
|
$ |
(1,052) |
|
|
$ |
(10,327) |
|
|
$ |
(16,193) |
|
Stock-based
compensation |
|
|
85 |
|
|
|
150 |
|
|
|
464 |
|
|
|
665 |
|
Amortization of
intangibles |
|
|
301 |
|
|
|
258 |
|
|
|
1,093 |
|
|
|
964 |
|
Impairment of intangible
asset |
|
|
— |
|
|
|
33 |
|
|
|
— |
|
|
|
769 |
|
Impairment of
goodwill |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,724 |
|
Impairment of other
assets |
|
|
161 |
|
|
|
— |
|
|
|
161 |
|
|
|
— |
|
Legal settlement proceeds,
net |
|
|
— |
|
|
|
(910) |
|
|
|
— |
|
|
|
(910) |
|
Legal expenses unrelated
to regular operations |
|
|
— |
|
|
|
184 |
|
|
|
123 |
|
|
|
1,672 |
|
Non-GAAP operating
loss |
|
$ |
(2,056) |
|
|
$ |
(1,337) |
|
|
$ |
(8,486) |
|
|
$ |
(309) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net
loss |
|
$ |
(2,536) |
|
|
$ |
(3,608) |
|
|
$ |
(16,687) |
|
|
$ |
(14,172) |
|
Stock-based
compensation |
|
|
85 |
|
|
|
150 |
|
|
|
464 |
|
|
|
665 |
|
Amortization of
intangibles |
|
|
301 |
|
|
|
258 |
|
|
|
1,093 |
|
|
|
964 |
|
Impairment of intangible
asset |
|
|
— |
|
|
|
33 |
|
|
|
— |
|
|
|
769 |
|
Impairment of
goodwill |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,724 |
|
Impairment of other
assets |
|
|
161 |
|
|
|
— |
|
|
|
161 |
|
|
|
— |
|
Legal settlement proceeds,
net |
|
|
— |
|
|
|
(910) |
|
|
|
— |
|
|
|
(910) |
|
Legal expenses unrelated
to regular operations |
|
|
— |
|
|
|
184 |
|
|
|
123 |
|
|
|
1,672 |
|
Tax effect of non-GAAP
adjustments |
|
|
— |
|
|
|
1,596 |
|
|
|
— |
|
|
|
(3,202) |
|
Non-GAAP net
loss |
|
$ |
(1,989) |
|
|
$ |
(2,297) |
|
|
$ |
(14,846) |
|
|
$ |
(1,490) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net
loss |
|
$ |
(2,536) |
|
|
$ |
(3,608) |
|
|
$ |
(16,687) |
|
|
$ |
(14,172) |
|
Number of shares used in
computing GAAP loss per share (diluted) |
|
|
10,834,801 |
|
|
|
8,384,938 |
|
|
|
8,942,629 |
|
|
|
8,576,588 |
|
GAAP loss per
share (diluted) |
|
$ |
(0.23) |
|
|
$ |
(0.43) |
|
|
$ |
(1.87) |
|
|
$ |
(1.65) |
|
Non-GAAP net loss |
|
$ |
(1,989) |
|
|
$ |
(2,297) |
|
|
$ |
(14,846) |
|
|
$ |
(1,490) |
|
Number of shares used in
computing Non-GAAP loss per share (diluted) |
|
|
10,834,801 |
|
|
|
8,384,938 |
|
|
|
8,942,629 |
|
|
|
8,576,588 |
|
Non-GAAP loss per
share (diluted) |
|
$ |
(0.18) |
|
|
$ |
(0.27) |
|
|
$ |
(1.66) |
|
|
$ |
(0.17) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net
loss |
|
$ |
(2,536) |
|
|
$ |
(3,608) |
|
|
$ |
(16,687) |
|
|
$ |
(14,172) |
|
Stock-based
compensation |
|
|
85 |
|
|
|
150 |
|
|
|
464 |
|
|
|
665 |
|
Depreciation |
|
|
120 |
|
|
|
130 |
|
|
|
497 |
|
|
|
580 |
|
Amortization of
intangibles |
|
|
301 |
|
|
|
258 |
|
|
|
1,093 |
|
|
|
964 |
|
Impairment of intangible
asset |
|
|
— |
|
|
|
33 |
|
|
|
— |
|
|
|
769 |
|
Impairment of
goodwill |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,724 |
|
Impairment of other
assets |
|
|
161 |
|
|
|
— |
|
|
|
161 |
|
|
|
— |
|
Legal settlement proceeds,
net |
|
|
— |
|
|
|
(910) |
|
|
|
— |
|
|
|
(910) |
|
Legal expenses unrelated
to regular operations |
|
|
— |
|
|
|
184 |
|
|
|
123 |
|
|
|
1,672 |
|
Provision for (benefit
from) income taxes |
|
|
(65) |
|
|
|
2,592 |
|
|
|
6,440 |
|
|
|
(1,721) |
|
Non-GAAP Adjusted
EBITDA |
|
$ |
(1,934) |
|
|
$ |
(1,171) |
|
|
$ |
(7,909) |
|
|
$ |
571 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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