ClearOne, Inc. Reports Fourth Quarter and Full Year 2023 Financial Results
- None.
- Slower order flow in the second half of the year due to past production shortages.
- Sales headwinds from lack of Microsoft Teams certification impacting revenue.
- Net loss of $(1.2) million in Q4 2023 compared to net income of $24.0 million in Q4 2022.
- Year-over-year revenue decline of 26% for full year 2023.
- Operating loss of $6.8 million for full year 2023.
Insights
The shift in ClearOne's manufacturing base from China to Singapore, as reported, is a strategic move that aligns with a broader trend of diversifying supply chains. From a market perspective, relocating manufacturing operations to Singapore might offer the company a more stable operating environment, potentially mitigating risks associated with trade tensions and tariffs that have affected China. Additionally, Singapore's strategic location and robust infrastructure could enhance ClearOne's logistical capabilities, thereby improving product availability and reducing lead times for customers.
However, the transition also comes with upfront costs and potential disruptions. While the move has normalized product output, it's important to monitor how the shift affects the company's operational efficiency and cost structure in the long run. The reported backlog reduction is a positive sign, indicating improved supply chain management, but it will be important to see if this trend continues and translates into sustained revenue growth.
The announcement of a special one-time cash dividend of $0.50 per share signals a strong balance sheet, with over $21 million in cash and equivalents. This move can be seen as a return of capital to shareholders, reflecting confidence in the company's financial stability and future cash flows. It's noteworthy that despite the dividend payout, the company aims to maintain a well-capitalized base for future growth.
From a financial analysis perspective, the reported 14% and 21% year-over-year decreases in operating expenses for the fourth quarter and full year, respectively, are indicative of effective cost management. However, the full-year top-line performance shows a slowdown in order flow, which raises questions about demand elasticity and market competitiveness, especially considering the lack of Microsoft Teams certification for their products.
The non-GAAP figures, typically used to provide a clearer picture of operational performance by excluding one-time items and non-cash expenses, show a net loss. This is a critical area for investors as it suggests that despite positive GAAP net income, driven by a legal settlement gain, the core business operations might still be under pressure.
ClearOne's focus on product innovation, such as the introduction of the new DIALOG® 20 USB 2-Channel Wireless Microphone, is essential in the highly competitive audio and visual communication solutions market. The company's emphasis on improving interoperability and ease of use is a response to the increasing demand for versatile and user-friendly technology solutions in the workplace.
However, the lack of Microsoft Teams certification for ClearOne's products could be a significant hurdle, as Teams has become a standard communication platform in many organizations. The company's efforts to mitigate this through customer engagement and visibility at industry events are steps in the right direction, but the long-term impact on sales and market share remains to be seen.
It's also worth noting the company's strategic focus on expanding its presence in the Middle East and India. These regions represent high-growth markets and ClearOne's increased sales and positive product reception there could provide a valuable avenue for revenue diversification and growth.
– Q4 and Full Year 2023 OpEx Decreased
– Completed Outsourced Manufacturing Transition from
“Throughout the fourth quarter, we maintained efforts to expand and accelerate shipments of our award-winning communication solutions, all while driving a leaner, more efficient cost structure,” said Derek Graham, CEO of ClearOne. “In line with our expectations, we completed our outsourced manufacturing transition from
"While our production improvements helped drive a slight year-over-year increase in our fourth quarter revenue, our full-year top-line performance reflects slower order flow in the second half of the year, which we believe stems from 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 customers and distributors, along with improving our visibility at key industry events.
“Reflecting our sustained focus on optimizing costs, we drove
Operational Highlights
-
Completed the transition of the Company’s outsourced manufacturing operations from
China toSingapore in the fourth quarter of 2023, enabling the Company to achieve same-day shipping for its most popular products and restore broader production volumes to pre-transition levels. - Debuted new DIALOG® 20 USB 2-Channel Wireless Microphone at ISE 2024, enabling users to enhance hybrid meetings with local sound reinforcement and less than four milliseconds of audio latency. The DIALOG® UVHF Microphone System also received AV Technology Magazine’s Best in Show Award.
- Exhibited and demonstrated the Company’s complete portfolio of audio conferencing, visual collaboration, BYOD collaboration, professional microphones, network management and AV networking solutions at ISE 2024, including the new DIALOG® 20 USB 2-Channel Wireless Microphone, BMA 360D, Versa® USB22D Dante Adapter, DIALOG® UVHF Microphone System, and Versa® UCS2100 Collaboration Switcher Kit.
-
Announced a special one-time cash dividend of
$0.50
Graham continued: “Now that we have completed our manufacturing transition, we are putting increased emphasis on innovation and driving new product rollouts and shipments. We rolled out several notable new product launches over the past year, such as the BMA 360D microphone array ceiling tile and DIALOG® UVHF Microphone System. In these early months of 2024, we are continuing to evolve our product portfolio, having recently debuted the DIALOG® 20 USB 2-Channel Wireless Microphone in January at ISE 2024. In fact, we have already begun shipping our latest offering and are seeing good order traction. While the first shipments of the DIALOG® UVHF have been delayed to Q2 2024, we are hearing promising feedback on the beta units we shipped to our partners and sales managers in Q1 2024. Additionally, industry reception and customer feedback on the BMA 360D have been very positive.
“As we drive additional momentum for our audio and visual communication solutions, we are also focused on improving our products’ overall interoperability, ease of use, and global presence. Our newest microphone solutions can be integrated with DSPs from both our own product suite and those of separate third-party manufacturers, offering greater flexibility for customers and prospects. From an international standpoint, we are seeking to expand our footprint in several key regions—such as the
“Moving further into 2024, we are committed to optimizing our cost structure, driving product innovation, and solidifying ClearOne as a preferred partner for current and prospective customers. In conjunction with working to ramp shipments for the BMA 360D and DIALOG® UVHF, we are focused on improving customer experiences within our partner network to support additional customer growth and retention. With a robust balance sheet and improving product demand, we believe ClearOne is well-positioned to drive towards future growth as we work to achieve profitability and expand our market share.”
Financial Summary
The Company uses certain non-GAAP financial measures and reconciles those to GAAP measures in the attached tables.
-
Q4 2023 revenue was
$4.2 million $4.0 million $4.9 million
-
GAAP gross profit in Q4 2023 was
$1.6 million $1.3 million $1.6 million 38% in Q4 2023, compared to31% in Q4 2022 and33% in Q3 2023. Gross profit margin improved by approximately5% sequentially and approximately7% year-over-year.
-
Operating expenses in Q4 2023 were
$3.3 million $3.9 million $3.1 million $3.2 million $2.9 million $3.4 million
-
GAAP net income in Q4 2023 was
$2.6 million $0.11 $24.0 million $0.97 $(1.4) million $(0.06) $4 million $33.6 million $55 million $21.4 million $6.4 million $4.0 million $0.6 million $0.9 million
-
Non-GAAP net loss in Q4 2023 was
$(1.2) million $(0.05) $(2.3) million $(0.09) $(1.2) million $(0.05) $0.6 million $0.5 million
| ($ in 000, except per share) |
|
Three months ended December 31, |
|
|
Year ended December 31, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
Change in % Favorable/(Adverse) |
|
|
2023 |
|
|
2022 |
|
Change in % Favorable/(Adverse) |
|
GAAP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
4,154 |
|
$ |
4,021 |
|
3 |
|
$ |
18,704 |
|
$ |
25,205 |
|
(26 |
) |
Gross profit |
|
1,578 |
|
|
1,264 |
|
25 |
|
6,357 |
|
|
9,457 |
|
(33 |
) |
|
Operating expenses |
|
3,317 |
|
|
3,854 |
|
14 |
|
13,129 |
|
|
16,679 |
|
21 |
||
Operating loss |
|
(1,739 |
) |
|
(2,590 |
) |
33 |
|
(6,772 |
) |
|
(7,222 |
) |
6 |
||
Net income (loss) |
|
2,642 |
|
24,028 |
89 |
|
(560 |
) |
|
20,556 |
103 |
|
||||
Diluted income (loss) per share |
|
0.11 |
|
0.97 |
(89 |
) |
|
0.02 |
|
0.83 |
(102 |
) |
||||
Non-GAAP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating expenses |
|
3,162 |
|
|
3,358 |
|
6 |
|
12,511 |
|
|
14,062 |
|
11 |
||
Non-GAAP operating loss |
|
(1,582 |
) |
|
(2,092 |
) |
24 |
|
(6,147 |
) |
|
(4,597 |
) |
(34 |
) |
|
Non-GAAP net income (loss) |
|
(1,201 |
) |
|
(2,292 |
) |
48 |
|
(5,285 |
) |
|
(5,165 |
) |
(2 |
) |
|
Non-GAAP Adjusted EBITDA |
|
(681 |
) |
|
(2,062 |
) |
67 |
|
(4,076 |
) |
|
(4,383 |
) |
7 |
||
Non-GAAP diluted income (loss) per share |
|
(0.05 |
) |
|
(0.09 |
) |
44 |
|
(0.22 |
) |
|
(0.19 |
) |
(16 |
) |
|
Balance Sheet Highlights
As of December 31, 2023, cash, cash equivalents and investments were
The Company’s 2023 year-end cash balance also reflects a
On March 10, 2024 the Company's Board of Directors declared a special dividend of
About ClearOne
ClearOne is a global market leader enabling conferencing, collaboration, and network streaming solutions. 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 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 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 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-K and the Public Filings.
CLEARONE, INC UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except par value) |
|||||||
|
December 31,
|
|
December 31,
|
||||
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
17,835 |
|
|
$ |
984 |
|
Marketable securities |
|
3,480 |
|
|
|
— |
|
Legal settlement receivable |
|
4,000 |
|
|
|
55,000 |
|
Receivables, net of allowance for doubtful accounts of |
|
3,279 |
|
|
|
3,603 |
|
Inventories, net |
|
10,625 |
|
|
|
8,961 |
|
Income tax receivable |
|
36 |
|
|
|
1,071 |
|
Prepaid expenses and other assets |
|
4,062 |
|
|
|
7,808 |
|
Total current assets |
|
43,317 |
|
|
|
77,427 |
|
Long-term marketable securities |
|
916 |
|
|
|
— |
|
Long-term inventories, net |
|
3,143 |
|
|
|
2,707 |
|
Property and equipment, net |
|
530 |
|
|
|
383 |
|
Operating lease – right of use assets, net |
|
990 |
|
|
|
1,047 |
|
Intangibles, net |
|
1,689 |
|
|
|
2,071 |
|
Other assets |
|
109 |
|
|
|
115 |
|
Total assets |
$ |
50,694 |
|
|
$ |
83,750 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
$ |
1,945 |
|
|
$ |
1,284 |
|
Accrued liabilities |
|
2,290 |
|
|
|
3,041 |
|
Deferred product revenue |
|
30 |
|
|
|
63 |
|
Short-term debt |
|
— |
|
|
|
3,732 |
|
Total current liabilities |
|
4,265 |
|
|
|
8,120 |
|
Long-term debt |
|
— |
|
|
|
— |
|
Operating lease liability, net of current |
|
665 |
|
|
|
492 |
|
Other long-term liabilities |
|
1,079 |
|
|
|
1,008 |
|
Total liabilities |
|
6,009 |
|
|
|
9,620 |
|
Shareholders’ equity: |
|
|
|
|
|
|
|
Common stock, par value |
|
24 |
|
|
|
24 |
|
Additional paid-in capital |
|
46,047 |
|
|
|
74,910 |
|
Accumulated other comprehensive loss |
|
(310 |
) |
|
|
(288 |
) |
Accumulated deficit |
|
(1,076 |
) |
|
|
(516 |
) |
Total shareholders’ equity |
|
44,685 |
|
|
74,130 |
|
|
Total liabilities and shareholders’ equity |
$ |
50,694 |
|
$ |
83,750 |
|
|
CLEARONE, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Dollars in thousands, except per share amounts) |
||||||||
|
|
Year ended December 31, |
||||||
|
|
2023 |
|
2022 |
||||
Revenue |
|
$ |
18,704 |
|
|
$ |
25,205 |
|
Cost of goods sold |
|
|
12,347 |
|
|
|
15,748 |
|
Gross profit |
|
|
6,357 |
|
|
|
9,457 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
4,897 |
|
|
|
5,517 |
|
Research and product development |
|
|
3,671 |
|
|
|
4,390 |
|
General and administrative |
|
|
4,561 |
|
|
|
6,772 |
|
Total operating expenses |
|
|
13,129 |
|
|
|
16,679 |
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(6,772 |
) |
|
|
(7,222 |
) |
Interest expense |
|
|
(537 |
) |
|
|
(420 |
) |
Other income, net |
|
|
7,183 |
|
|
|
35,102 |
|
Income (loss) before income taxes |
|
|
(126 |
) |
|
|
27,460 |
|
Provision for (benefit from) income taxes |
|
|
434 |
|
|
6,904 |
||
Net income (loss) |
|
$ |
(560 |
) |
|
$ |
20,556 |
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per common share |
|
$ |
(0.02 |
) |
|
$ |
0.86 |
|
Diluted income (loss) per common share |
|
$ |
(0.02 |
) |
|
$ |
0.83 |
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding |
|
|
23,958,154 |
|
|
|
23,937,962 |
|
Diluted weighted average shares outstanding |
|
|
23,958,184 |
|
|
|
25,189,147 |
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss): |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(560 |
) |
|
$ |
20,556 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
Unrealized loss on available-for-sale securities, net of tax |
|
|
(15 |
) |
|
|
(2 |
) |
Change in foreign currency translation adjustment |
|
|
(7 |
) |
|
|
(45 |
) |
Comprehensive income (loss) |
|
$ |
(582 |
) |
|
$ |
20,509 |
|
CLEARONE, INC. UNAUDITED RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES (Dollars in thousands, except per share values) |
||||||||||||||||
|
|
Three months ended December 31, |
|
Year ended December 31, |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
GAAP operating loss |
|
$ |
(1,739 |
) |
|
$ |
(2,590 |
) |
|
$ |
(6,772 |
) |
|
$ |
(7,222 |
) |
Stock-based compensation |
|
|
28 |
|
|
24 |
|
|
108 |
|
|
113 |
||||
Amortization of intangibles |
|
|
129 |
|
|
474 |
|
|
517 |
|
|
2,512 |
||||
Non-GAAP operating loss |
|
$ |
(1,582 |
) |
|
$ |
(2,092 |
) |
|
$ |
(6,147 |
) |
|
$ |
(4,597 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
GAAP net income (loss) |
|
$ |
2,642 |
|
$ |
24,028 |
|
$ |
(560 |
) |
|
$ |
20,556 |
|||
Stock-based compensation |
|
|
28 |
|
|
24 |
|
|
108 |
|
|
113 |
||||
Amortization of intangibles |
|
|
129 |
|
|
474 |
|
|
517 |
|
|
2,512 |
||||
Other income adjustment |
(4,000 |
) |
(33,623 |
) |
(5,350 |
) |
(35,151 |
) |
||||||||
Tax effect |
- |
6,805 |
- |
|
|
6,805 |
||||||||||
Non-GAAP net income (loss) |
|
$ |
(1,201 |
) |
|
$ |
(2,292 |
) |
|
$ |
(5,165 |
) |
|
$ |
(5,165 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
GAAP net income (loss) |
|
$ |
2,642 |
|
$ |
24,028 |
|
$ |
(560 |
) |
|
$ |
20,556 |
|||
Number of shares used in computing GAAP diluted income (loss) per share |
|
|
23,960,776 |
|
|
24,947,851 |
|
|
23,958,184 |
|
|
25,189,147 |
||||
GAAP diluted income (loss) per share |
|
$ |
0.11 |
|
$ |
0.97 |
|
$ |
(0.02 |
) |
|
$ |
0.83 |
|||
Non-GAAP net income (loss) |
|
$ |
(1,201 |
) |
|
$ |
(2,292 |
) |
|
$ |
(5,285 |
) |
|
$ |
(5,165 |
) |
Number of shares used in computing Non-GAAP diluted income (loss) per share |
|
|
23,960,776 |
|
|
24,947,851 |
|
|
23,958,184 |
|
|
25,189,147 |
||||
Non-GAAP diluted income (loss) per share |
|
$ |
(0.05 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.19 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
GAAP net income (loss) |
|
$ |
2,642 |
|
$ |
24,028 |
|
$ |
(560 |
) |
|
$ |
20,556 |
|||
Stock-based compensation |
|
|
28 |
|
|
24 |
|
|
108 |
|
|
113 |
||||
Interest expense |
68 |
135 |
537 |
420 |
||||||||||||
Depreciation |
|
|
64 |
|
|
56 |
|
|
238 |
|
|
263 |
||||
Amortization of intangibles |
|
|
129 |
|
|
474 |
|
|
517 |
|
|
2,512 |
||||
Other income adjustment |
(4,000 |
) |
(33,623 |
) |
(5,350 |
) |
(35,151 |
) |
||||||||
Provision for (benefit from) income taxes |
|
|
388 |
|
|
6,844 |
|
|
434 |
|
|
6,904 |
||||
Non-GAAP Adjusted EBITDA |
|
$ |
(681 |
) |
|
$ |
(2,062 |
) |
|
$ |
(4,076 |
) |
|
$ |
(4,383 |
) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240402956125/en/
Derek Graham
801-303-3425
investor_relations@clearone.com
http://investors.clearone.com
Source: ClearOne, Inc.
FAQ
What was ClearOne's (CLRO) Q4 2023 revenue?
What was the year-over-year change in gross profit for Q4 2023?
What was the GAAP net income in Q4 2023?
What was ClearOne's cash, cash equivalents, and investments as of December 31, 2023?
What special dividend did ClearOne announce in March 2024?
