ClearOne, Inc. Reports Second Quarter 2022 Financial Results

  • Overall Q2 revenue declines 5% year-over-year
  • Core audio conferencing solutions post impressive revenue growth
  • Gross Margin increases marginally over Q1.
  • Non-GAAP Operating expenses decrease 14% year-over-year

SALT LAKE CITY, UTAH - August 9, 2022 - ClearOne Inc. (NASDAQ: CLRO), a global provider of audio and visual communication solutions, reported financial results for the three and six months ended June 30, 2022.

"Our core audio conferencing products which include mixers and BMA Ceiling Tile-based solutions posted impressive year over year revenue growth in Q2. Our revenue performance was constrained due to our inability to fully meet the demands of our channel as we continue to fight the raw material shortages caused by the unprecedented global supply chain crisis that hasn't spared our industry," said Derek Graham, ClearOne's Interim CEO.

"We are fully prepared for the current challenges faced by ClearOne and will prioritize returning ClearOne back to profitability, energizing our employees to tap into their full potential, and re-establishing ClearOne as a premium brand in our industry and channels", Graham added.

Recent Highlights

  • On May 25, 2022, ClearOne Board of Directors announced Derek Graham as the Interim CEO, replacing Zee Hakimoglu.
  • On May 27, 2022, the U.S. District Court of the District of Delaware dismissed Shure's tort claims with prejudice. Shure dropped these claims on the eve of the trial that happened in November 2021, in which ClearOne prevailed over Shure's infringement claims. ClearOne argued that the dismissal of Shure's tort claims should be with prejudice but Shure wanted the dismissal to be without prejudice - in other words, Shure wanted to preserve the ability to re-assert the claims later. The court ruled in ClearOne's favor. Our motion seeking fees is still pending with the Court.

Financial Summary

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

  • Revenue in 2022-Q2 was $7.4 million, compared to $7.7 million in 2021-Q2 and $7.5 million in 2022-Q1. The decrease in year-over-year revenue was primarily due to a 31% decline in video products and a 3% decline in microphones, which were partially offset by a 6% increase in audio conferencing. The increase in revenue from core audio conferencing products continued to be driven by solutions incorporating our BMA-CT and BMA 360 beamforming microphone array ceiling tiles and professional audio mixers. Despite this year-over-year revenue growth in core audio conferencing products, revenue from our audio conferencing products and microphones remain far below levels achieved prior to infringement of our strategic patents.
  • GAAP gross profit in 2022-Q2 was $2.8 million compared to $3.4 million in 2021-Q2 and $2.8 million in 2022-Q1. GAAP gross profit margin was 38.1% in 2022-Q2, compared to 44.3% in 2021-Q2 and 37.3% in 2022-Q1. The gross profit margin was negatively impacted due to increase in material costs due to continuing supply chain constraints, which were partially offset by reduced freight and tariff costs and a decrease in inventory obsolescence costs in 2022-Q2

    Operating expenses in 2022-Q2 were $4.5 million, compared to $4.9 million in 2021-Q2 and $4.7 million in 2022-Q1. Non-GAAP operating expenses in 2022-Q2 were $3.7 million, compared to $4.3 million in 2021-Q2 and $4.0 million in 2022-Q1. The year over year decrease in Non-GAAP operating expenses was mainly due to reduction in employee related expenses and consultant expenses caused by a decrease in headcount.

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  • GAAP net loss in 2022-Q2 was $0.3 million, or $0.01 per share, compared to net loss of $1.6 million, or $0.08 per share, in 2021-Q2 and net loss of $2.0 million, or $0.08 per share, in 2022-Q1. The decrease in net loss was mainly due to the recognition of $1.5 million in gain from the forgiveness of CARES Act Paycheck Protection Program Loan.
  • Non-GAAP net loss in 2022-Q2 was $1.1 million, or $0.04 per share, compared to net loss of $1.0 million, or $0.05 per share, in 2021-Q2 and net loss of $1.3 million, or $0.05 per share, in 2022-Q1.

($ in 000, except per share)

Three months ended June 30,

Six months ended June 30,

2022


2021


Change in %

Favorable/(Adverse)


2022


2021

Change in % Favorable/(Adverse)

GAAP













Revenue

$

7,375



$

7,735



(5

) $ 14,920

$ 14,773
$ 1

Gross profit

2,807


3,424


(18

)
5,623


6,427

(13 )

Operating expenses

4,456


4,910


9


9,125


9,437

3

Operating loss

(1,649

)

(1,486

)

(11

)
(3,502 )

(3,010 )
(16 )

Net loss

(257

)

(1,586

)

84


(2,224 )

(3,241 )
31

Diluted loss per share

(0.01

)

(0.08

)

88


(0.09 )

(0.17 )
47

Non-GAAP













Non-GAAP gross profit

$

2,809


$

3,426


(18

) $ 5,627

$ 6,432
$ (13 )

Non-GAAP operating expenses

3,746


4,336


14


7,712


8,324

(7 )

Non-GAAP operating loss

(937

)

(910

)

(3

)
(2,085 )

(1,892 )
(10 )

Non-GAAP net loss

(1,073

)

(1,010

)

(6

)
(2,335 )

(2,123 )
(10 )

Non-GAAP Adjusted EBITDA

(892

)

(802

)

(11

)
(1,961 )

(1,688 )
(16 )

Non-GAAP loss per share (diluted)

(0.04

)

(0.05

)

20


(0.10 )

(0.11 )
14

Balance Sheet Highlights

As of June 30, 2022, cash, cash equivalents and investments were $1.2 million, compared to $4.1 million as of December 31, 2021. As of June 30, 2022, the Company carried $2.3 million in debt on account of senior convertible notes issued in December 2019.

2

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 inClearOne'sindustry, may calculate non-GAAP financial measures differently thanClearOnedoes, 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 and the possible outcomes of litigation, 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 Form10-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, 2021 (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.

3

CLEARONE, INC

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except par value)

June 30, 2022


December 31, 2021


ASSETS



Current assets:



Cash and cash equivalents

$

1,203


$

1,071


Marketable securities

-


1,790


Receivables, net of allowance for doubtful accounts of $326 and $326, respectively

4,112


4,991


Inventories, net

9,858


10,033


Income tax receivable


7,535


7,535

Prepaid expenses and other assets

2,924


4,021


Total current assets

25,632


29,441


Long-term marketable securities

-


1,220


Long-term inventories, net

2,985


3,567


Property and equipment, net

614


744


Operating lease - right of use assets, net

1,237


1,537


Intangibles, net

24,289


25,086


Other assets

4,592


4,597


Total assets

$

59,349


$

66,192


LIABILITIES AND SHAREHOLDERS' EQUITY



Current liabilities:



Accounts payable

$

2,047


$

5,388


Accrued liabilities

2,570


2,549


Deferred product revenue

43


54

Short-term debt

810


3,481


Total current liabilities

5,470


11,472


Long-term debt, net

1,184


1,535


Operating lease liability, net of current

717


1,026


Other long-term liabilities

655


655


Total liabilities


8,026


14,688




Shareholders' equity:



Common stock, par value $0.001, 50,000,000 shares authorized, 23,952,555 and 22,410,126 shares issued and outstanding, respectively

24


22


Additional paid-in capital

74,861


72,795


Accumulated other comprehensive loss

(266

)

(241

)

Accumulated deficit

(23,296

)

(21,072

)

Total shareholders' equity

51,323


51,504


Total liabilities and shareholders' equity

$

59,349


$

66,192


4

CLEARONE, INC.

UNAUDITED CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONSAND COMPREHENSIVE LOSS

(Dollars in thousands, except per share values)

Three months ended June 30,



Six months ended June 30,

2022


2021



2022

2021

Revenue

$

7,375


$

7,735



$ 14,920

$ 14,773

Cost of goods sold

4,568


4,311




9,297


8,346

Gross profit

2,807


3,424




5,623


6,427










Operating expenses:











Sales and marketing

1,562


1,755




3,122


3,328

Research and product development

1,177


1,487




2,530


2,761

General and administrative

1,717


1,668




3,473


3,348

Total operating expenses

4,456


4,910




9,125


9,437














Operating loss

(1,649

)

(1,486

)

(3,502 )

(3,010 )

















Interest expense

(94

)

(107

)

(195 )

(219 )

Other income, net

1,505

15



1,508


10











Loss before income taxes

(238

)

(1,578

)

(2,189 )

(3,219 )










Provision for income taxes

19


8




35


22










Net loss

$

(257

)

$

(1,586

)
$ (2,224 )

(3,241 )










Basic weighted average shares outstanding

23,948,631


18,775,817




23,923,110


18,775,795

Diluted weighted average shares outstanding

23,948,631


18,775,817




23,923,110


18,775,795












Basic loss per share

$

(0.01

)

$

(0.08

)
$ (0.09 )
$ (0.17 )

Diluted loss per share

$

(0.01

)

$

(0.08

)
$ (0.09 )
$ (0.17 )










Comprehensive loss:











Net loss



(257

)

(1,586

)

(2,224 )

(3,241 )

Unrealized gain (loss) on available-for-sale securities, net of tax

26

(3

)

(2 )

(5 )

Change in foreign currency translation adjustment

(12

)

(10

)

(23 )

(22 )

Comprehensive loss

(243

)

(1,599

)

(2,249 )

(3,268 )
5


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,

2022


2021



2022

2021

GAAP gross profit

$

2,807


$

3,424



$ 5,623

$ 6,427

Stock-based compensation

2


2




4


5

Non-GAAP gross profit

$

2,809


$

3,426



$ 5,627

$ 6,432










GAAP operating loss

$

(1,649

)

$

(1,486

)
$ (3,502 )

(3,010 )

Stock-based compensation

30


33




65


64

Amortization of intangibles

682


543




1,352


1,054

Non-GAAP operating loss

$

(937

)

$

(910

)
$ (2,085 )
$ (1,892 )










GAAP net loss

$

(257

)

$

(1,586

)
$ (2,224 )

(3,241 )

Stock-based compensation

30


33




65


64

Amortization of intangibles

682


543




1,352


1,054

CARES Act PPP loan forgiveness

(1,528 ) -


(1,528 )

-

Non-GAAP net loss

$

(1,073

)

$

(1,010

)
$ (2,335 )
$ (2,123 )










GAAP net loss

$

(257

)

$

(1,586

)
$ (2,224 )
$ (3,241 )

Number of shares used in computing GAAP loss per share (diluted)

23,948,631


18,775,817




23,923,110


18,775,795

GAAP loss per share (diluted)

$

(0.01

)

$

(0.08

)
$ (0.09 )
$ (0.17 )

Non-GAAP net loss

$

(1,073

)

$

(1,010

)
$ (2,335 )
$ (2,123 )

Number of shares used in computing Non-GAAP loss per share (diluted)

23,948,631


18,775,817




23,923,110


18,775,795

Non-GAAP loss per share (diluted)

$

(0.04

)

$

(0.05

)
$ (0.10 )

(0.11 )










GAAP net loss

$

(257

)

$

(1,586

)
$ (2,224 )
$ (3,241 )

Stock-based compensation

30


33




65


64

Depreciation

68


93




144


194

Amortization of intangibles

682


543




1,352


1,054
Interest expense

94




107




195


219

CARES Act PPP loan forgiveness

(1,528 ) -


(1,528 )

-

Provision for income taxes

19


8




35


22

Non-GAAP Adjusted EBITDA

$

(892

)

$

(802

)
$ (1,961 )
$ (1,688 )

Contact:

Bob Griffin

801-975-7200

investor_relations@clearone.com

http://investors.clearone.com

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Disclaimer

ClearOne Inc. published this content on 10 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 August 2022 21:30:05 UTC.