ClearOne, Inc. Reports First Quarter 2024 Financial Results

Rhea-AI Summary

ClearOne (NASDAQ: CLRO) announced its Q1 2024 financial results, reporting a 12.8% sequential and 13% year-over-year revenue decline to $3.6 million. This decline was mainly attributed to reduced demand in the audio conferencing category, affecting the USA, Europe, and China. However, microphone revenue increased by 31% year-over-year and 4% sequentially. Revenue from Asia, including India, the Middle East, and Australia, was up 18% year-over-year. Operational expenses decreased by 7.8% year-over-year due to cost optimization measures. GAAP gross profit margin was 32%, down from 38% sequentially but up from 31% year-over-year. GAAP net loss widened to $1.9 million from $0.8 million year-over-year. ClearOne also launched the DIALOG 20 USB wireless microphone system and announced a special cash dividend of $0.50 per share.

Positive

• Microphone revenue increased by 31% year-over-year and 4% sequentially.
• Revenue from Asia, including India, the Middle East, and Australia, increased by 18% year-over-year and 4.6% sequentially.
• Operational expenses decreased by 7.8% year-over-year due to cost optimization measures.
• GAAP gross profit margin improved from 31% year-over-year to 32%.
• Non-GAAP operating expenses decreased by 8% year-over-year.
• The company regained compliance with NASDAQ's minimum bid requirement.
• Special cash dividend of $0.50 per share announced.

Negative

• Overall revenue declined by 13% year-over-year and 12.8% sequentially.
• Revenue from the audio conferencing category, including DSP mixer products, significantly decreased.
• GAAP gross profit margin decreased sequentially from 38% to 32%.
• GAAP net loss widened to $1.9 million from $0.8 million year-over-year.
• Non-GAAP net loss was $1.8 million, compared to $2.0 million year-over-year.
• Product shortages and lack of Microsoft Teams certification negatively impacted sales.
• Future revenue may be negatively impacted due to lag in product availability.

Insights

Financial Analyst

ClearOne's latest financial results reveal a mixed performance with significant regional and product-specific variances. The 31% year-over-year increase in microphone revenue is a positive indicator, suggesting strong demand and potential market share gains in this segment. However, the 12.8% sequential and 13% year-over-year declines in overall revenue highlight substantial challenges, particularly in the audio conferencing category. The company attributes these declines to past production shortages and the lack of Microsoft Teams certification, which could have a lasting impact in a highly competitive market.

From a financial perspective, the 2.7% sequential and 7.8% year-over-year reductions in operating expenses are commendable and reflect effective cost optimization initiatives. Nonetheless, the net loss of $1.9 million compared to a net income in the previous quarter suggests that these cost savings were insufficient to offset the revenue shortfalls and gross profit declines. Investors should monitor whether the company can sustain and extend its growth in the microphone segment while addressing its broader revenue challenges.

The announced special cash dividend of $0.50 per share is a positive for shareholders, but it may also indicate a lack of more attractive reinvestment opportunities within the business. The company's cash reserves are stable at $22.6 million, but this will be a key area to watch as they navigate ongoing revenue and operational challenges.

Market Research Analyst

The performance highlights notable geographical disparities. Revenue from Asia, including India, the Middle East and Australia, increased by 18% year-over-year, contrasting with significant declines in the USA, Europe and China. This geographic shift might indicate emerging market strength and potential for ClearOne in Asia while highlighting vulnerabilities in traditional strongholds.

Industry-wise, the lack of Microsoft Teams certification for its products is a significant limitation, given the widespread use of Teams in corporate environments. This shortfall presents an opportunity cost and a competitive disadvantage. ClearOne's focus on maintaining dialogues and product demonstrations is a strategic move to mitigate these impacts, but certification could be a more definitive solution.

The launch of the DIALOG® 20 USB wireless microphone system and the UVHF Wireless Microphone System's recognition at ISE 2024 are positive developments, underlining the company's innovation capacity. However, these advancements need to translate into substantial revenue growth to offset the challenges in other product categories.

- Microphone revenue up 31% year over year-

-Revenue from Asia including India, the Middle East, and Australia up 18% year over year -

-Sequential and Year-over-Year OpEx Reductions Reflect Continued Benefits of Cost Optimization Initiatives -

SALT LAKE CITY--(BUSINESS WIRE)-- ClearOne (NASDAQ: CLRO), a global provider of audio and visual communication solutions, reported financial results for the three-month period ended March 31, 2024.

“Revenue declined 12.8% sequentially and 13% year over year, primarily due to a significant decrease in revenues from the audio conferencing category, which includes our DSP mixer products. The revenue decline was regionally concentrated, affecting the USA, Europe, and China when compared to 2023-Q1 revenues. We believe this revenue decline was primarily due to the cumulative impact of past production shortages. 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.”

“In the first quarter, although overall revenue declined, there were some bright spots.” said Derek Graham, CEO of ClearOne. Revenue from our microphone products was up 4% sequentially and 31% year over year. Revenue from Asia, including India, the Middle East, and Australia was up 4.6% sequentially and 18% year over year. We also continued to make steady progress with our cost optimization efforts, reducing operating expenses by 2.7% sequentially and 7.8% year-over-year.”

Operational Highlights

• Launched the DIALOG® 20 USB wireless microphone system at Integrated Systems Europe (ISE) 2024, a major global audiovisual expo. ClearOne’s booth at ISE 2024 recorded a 319% increase in unique visitors compared to the number of unique visitors the Company’s booth recorded in 2023. The DIALOG® UVHF Wireless Microphone System also received AV Technology Magazine’s Best in Show award at ISE 2024, having previously garnered other notable industry awards in 2023.
• Announced a one-time special cash dividend of $0.50 per share of ClearOne common stock, payable on April 10, 2024 to shareholders of record on April 2, 2024.
• Regained compliance with NASDAQ’s minimum bid requirement.

Graham continued: “Moving into the second quarter, we are working to build on the revenue growth we have experienced in Asia including India and the Middle East, while working to win back our customers in other global regions, including the Americas, who have defected to competing audio conferencing brands due to our lack of product availability throughout much of 2023. 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 and installed. Since our product availability was constrained through a significant part of Q4 2023, we believe our revenue could be impacted negatively by these market dynamics through much of Q2 2024.”

Financial Summary

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

●		Q1 2024 revenue was $3.6 million, compared to $4.2 million in Q1 2023 and $4.2 million in Q4 2023. The 0% sequential decrease was driven by reduced demand all product categories except our cameras. We believe the flow of sales orders at the end of Q3 2023 slowed down considerably due to the cumulative impact of past product shortages. The year-over-year decrease was mainly due to sustained inventory sourcing and order fulfillment challenges for the Company’s core audio conferencing and beamforming microphone arrays as a result of delays in the transition of outsourced manufacturing from China to Singapore.
●		GAAP gross profit in Q1 2024 was $1.2 million, compared to $1.3 million in Q1 2023 and $1.6 million in Q4 2023. GAAP gross profit margin was 32% in Q1 2024, compared to 38% in Q4 2023 and 31% in Q1 2023. Gross profit margin improved by approximately 1% year-over-year due to reduced inventory obsolescence costs. Gross profit margin decreased by 13% sequentially due to increased administration and overhead costs as a percentage of revenue and change in the revenue mix of the products.
●		Operating expenses in Q1 2024 improved to $3.2 million, compared to $3.5 million in Q1 2023 and $3.3 million in Q4 2023. Non-GAAP operating expenses in Q1 2024 improved to $3.1 million compared to $3.2 million in Q4 2023 and $3.4 million in Q1 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.
●		GAAP net loss in Q1 2024 was $(1.9) million, or $(0.08) per share, compared to a net loss of $(0.8) million, or $(0.03) per share, in Q1 2023 and a net income of $2.6 million, or $0.11 per share, in Q4 2023. 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 and increase in interest income. The sequential decrease in net loss was primarily due to one time receipt of cross licensing agreement.
●		Non-GAAP net loss in Q1 2024 was $(1.8) million, or $(0.07) per share, compared to a Non-GAAP net loss of $(2.0) million, or $(0.09) per share, in Q1 2023 and a Non-GAAP net loss of $(1.2) million, or $(0.05) per share, in Q4 2023. The year-over-year decrease in Non-GAAP net loss was driven by the aforementioned decrease in revenue and gross profit partially offset by a decrease in operating expenses and increase in interest income. The sequential increase in Non-GAAP net loss was primarily due to receipt of tax refund in Q4 2023.

($ in 000, except per share)		Three months ended March 31,
		2024				2023			Change in % Favorable/(Adverse)
GAAP
Revenue	$	3,622			$	4,178			(13	)
Gross profit		1,151				1,315			(12	)
Operating expenses		3,229				3,504			8
Operating loss		(2,078	)			(2,189	)		5
Net loss		(1,898	)			(832	)		(128	)
Diluted loss per share		(0.08	)			(0.03	)		(167	)
Non-GAAP
Non-GAAP operating expenses	$	3,095			$	3,365			8
Non-GAAP operating loss		(1,942	)			(2,048	)		5
Non-GAAP net loss		(1,762	)			(2,041	)		14
Non-GAAP Adjusted EBITDA		(1,764	)			(1,678	)		(5	)
Non-GAAP diluted loss per share		(0.07	)			(0.09	)		22

Balance Sheet Highlights

As of March 31, 2024, cash, cash equivalents and investments were $22.6 million, as compared with $22.2 million as of December 31, 2023.

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)

		March 31, 2024				December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents		$	18,544			$	17,835
Current marketable securities			2,809				3,480
Patent cross license receivable			—				4,000
Receivables, net of allowance of $326			2,794				3,279
Inventories, net			11,434				10,625
Income tax receivable			27				36
Prepaid expenses and other assets			4,001				4,062
Total current assets			39,609				43,317
Long-term marketable securities			1,278				916
Long-term inventories, net			4,161				3,143
Property and equipment, net			542				530
Operating lease - right of use assets, net			898				990
Intangibles, net			1,615				1,689
Other assets			108				109
Total assets		$	48,211			$	50,694
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	1,733			$	1,945
Dividends payable			14,496				—
Accrued liabilities			1,959				2,290
Deferred product revenue			26				30
Total current liabilities			18,214				4,265
Operating lease liability, net of current			574				665
Other long-term liabilities			1,079				1,079
Total liabilities			19,867				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			31,584				46,047
Accumulated other comprehensive loss			(290	)			(310	)
Accumulated deficit			(2,974	)			(1,076	)
Total shareholders' equity			28,344				44,685
Total liabilities and shareholders' equity		$	48,211			$	50,694

CLEARONE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
(Dollars in thousands, except per share amounts)

		Three months ended March 31,
		2024				2023
Revenue		$	3,622			$	4,178
Cost of goods sold			2,471				2,863
Gross profit			1,151				1,315
Operating expenses:
Sales and marketing			1,312				1,192
Research and product development			894				1,043
General and administrative			1,023				1,269
Total operating expenses			3,229				3,504
Operating loss			(2,078	)			(2,189	)
Interest expense			—				(292	)
Other income, net			178				1,666
Loss before income taxes			(1,900	)			(815	)
Provision for income taxes			(2	)			17
Net loss		$	(1,898	)		$	(832	)
Basic weighted average shares outstanding			23,969,148				23,955,767
Diluted weighted average shares outstanding			23,969,148				23,955,767
Basic loss per share		$	(0.08	)		$	(0.03	)
Diluted loss per share		$	(0.08	)		$	(0.03	)
Comprehensive loss:
Net loss		$	(1,898	)		$	(832	)
Unrealized loss on available-for-sale securities, net of tax			22				—
Change in foreign currency translation adjustment			(2	)			5
Comprehensive loss		$	(1,878	)		$	(827	)

CLEARONE, INC.
UNAUDITED RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(Dollars in thousands, except per share values)

		Three months ended March 31,
		2024				2023
GAAP operating loss		$	(2,078	)		$	(2,189	)
Stock-based compensation			26				23
Amortization of intangibles			110				118
Non-GAAP operating loss		$	(1,942	)		$	(2,048	)
GAAP net loss		$	(1,898	)		$	(832	)
Stock-based compensation			26				23
Amortization of intangibles			110				118
Other income adjustment			—				(1,350	)
Non-GAAP net loss		$	(1,762	)		$	(2,041	)
GAAP net loss		$	(1,898	)		$	(832	)
Number of shares used in computing GAAP diluted loss per share			23,969,148				23,955,767
GAAP diluted loss per share		$	(0.08	)		$	(0.03	)
Non-GAAP net loss		$	(1,762	)		$	(2,041	)
Number of shares used in computing Non-GAAP diluted loss per share			23,969,148				23,955,767
Non-GAAP diluted loss per share		$	(0.07	)		$	(0.09	)
GAAP net loss		$	(1,898	)		$	(832	)
Stock-based compensation			26				23
Interest expense			—				292
Depreciation			—				54
Amortization of intangibles			110				118
Other income adjustment			—				(1,350	)
Provision for (benefit from) income taxes			(2	)			17
Non-GAAP Adjusted EBITDA		$	(1,764	)		$	(1,678	)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240520984276/en/

Investor Relations Contact:

Simon Brewer

385-426-0565

investor_relations@clearone.com

http://investors.clearone.com

Source: ClearOne, Inc.

FAQ

What were ClearOne's Q1 2024 revenue and how did it compare year-over-year?

ClearOne's Q1 2024 revenue was $3.6 million, down 13% year-over-year from $4.2 million.

How did ClearOne's microphone revenue perform in Q1 2024?

Microphone revenue increased by 31% year-over-year and 4% sequentially in Q1 2024.

What was the sequential change in ClearOne's GAAP gross profit margin for Q1 2024?

ClearOne's GAAP gross profit margin decreased sequentially from 38% in Q4 2023 to 32% in Q1 2024.

Did ClearOne experience any regional revenue growth in Q1 2024?

Yes, revenue from Asia, including India, the Middle East, and Australia, increased by 18% year-over-year and 4.6% sequentially.

What was ClearOne's GAAP net loss for Q1 2024?

ClearOne's GAAP net loss for Q1 2024 was $1.9 million, compared to a net loss of $0.8 million in Q1 2023.

What special dividend did ClearOne announce for 2024?

ClearOne announced a one-time special cash dividend of $0.50 per share, payable on April 10, 2024.

Why did ClearOne's revenue decline in Q1 2024?

The revenue decline was primarily due to reduced demand in the audio conferencing category and sales headwinds from the lack of Microsoft Teams certification.

What operational expense changes did ClearOne report for Q1 2024?

ClearOne's operational expenses decreased by 7.8% year-over-year and 2.7% sequentially due to cost optimization initiatives.