ClearOne, Inc. Reports Second Quarter 2024 Financial Results

Rhea-AI Summary

ClearOne (NASDAQ: CLRO) reported Q2 2024 financial results, showing a significant revenue decline of 58% sequentially and 39% year-over-year. The company attributes this decline primarily to past production shortages and lack of Microsoft Teams certification. Key highlights include:

- Revenue: $2.3 million, down from $5.5 million in Q2 2023
- GAAP gross profit: $(0.02) million, compared to $1.8 million in Q2 2023
- GAAP net loss: $(2.8) million, or $(0.12) per share
- Non-GAAP net loss: $(2.7) million, or $(0.11) per share

Despite challenges, ClearOne reduced operating expenses by 10.1% sequentially and 9.33% year-over-year. The company introduced new products and saw increased interest at Infocomm 2024, capturing 60% more sales leads compared to the previous year.

Positive

• Operating expenses reduced by 10.1% sequentially and 9.33% year-over-year
• 60% increase in sales leads captured at Infocomm 2024 compared to 2023
• Introduction of new product: Versa Lite BMA 360D bundle

Negative

• Revenue declined 58% sequentially and 39% year-over-year to $2.3 million
• GAAP gross profit turned negative at $(0.02) million, down from $1.8 million in Q2 2023
• GAAP net loss increased to $(2.8) million from $(1.0) million in Q2 2023
• Non-GAAP net loss widened to $(2.7) million from $(0.9) million in Q2 2023
• Gross profit margin decreased to -1% from 34% in Q2 2023

Insights

Financial Analyst

ClearOne's Q2 2024 results paint a concerning picture. Revenue plummeted 58% sequentially and 39% year-over-year to $2.3 million, primarily due to a significant decrease in audio conferencing product sales. The company attributes this decline to past production shortages and lack of Microsoft Teams certification.

The gross profit margin turned negative at -1%, down from 32% in Q1 2024, due to increased inventory scrap costs and rising vendor expenses. This resulted in a GAAP net loss of $2.8 million, or $0.12 per share, compared to a $1.0 million loss in Q2 2023.

On a positive note, operating expenses decreased by 10.1% sequentially and 9.33% year-over-year, reflecting the company's cost optimization efforts. However, these savings were not enough to offset the revenue decline.

Market Research Analyst

ClearOne's market position appears precarious. The 60% increase in sales leads at Infocomm 2024 is encouraging, but it hasn't translated into immediate revenue growth. The transition to a new distributor in the Middle East has temporarily disrupted sales in that region, adding to the company's challenges.

The lack of Microsoft Teams certification is a significant hurdle in the competitive conferencing market. While ClearOne claims functional compatibility, official certification is often a key decision factor for enterprise customers.

The company's efforts to regain lost customers and maintain dialogues with end-users and channel partners are crucial. However, the effectiveness of these initiatives remains to be seen, especially given the lag between product specification and purchase in the professional conferencing sector.

Tech Expert

ClearOne's product innovation continues despite financial challenges. The introduction of the Versa Lite BMA 360D bundle demonstrates the company's ability to create integrated solutions for modern conferencing spaces. This product combines their advanced beamforming microphone array with a Dante-enabled USB adapter, potentially simplifying installation and improving audio quality for end-users.

However, the company's struggle with production transitions from China to Singapore has severely impacted product availability. This supply chain disruption, coupled with the lack of Microsoft Teams certification, has likely pushed some customers towards competitors. Regaining market share will require not only resolving these issues but also accelerating innovation to differentiate ClearOne's offerings in a crowded market.

- 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 June 30, 2024.

Revenue declined 58% sequentially and 39% year over year, primarily due to a significant decrease in revenues from the audio conferencing category, which includes our DSP mixer products. “We believe this revenue decline was primarily due to the cumulative impact of past production shortages,” said Derek Graham, CEO of ClearOne. “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 for installation. Since our product availability was constrained through a significant part of Q4 2023 as a result of delays in the transition of outsourced manufacturing from China to Singapore throughout 2023, we believe our revenue was impacted negatively by these market dynamics through much of Q2 2024. 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. Our sales in Q2 2024 were also impacted by our transition to a new distributor in the Middle East. We anticipate, although there can be no assurance, that our new Middle East distributor will continue our previous history of sales growth in the region, but there was an impact to our sales in that region due to the transition.”

Operational Highlights

• The Company showcased its full line of collaboration and conferencing solutions at Infocomm 2024, including seamless integration with popular collaboration solutions from other companies and a comprehensive portfolio of solutions for various applications and meeting room sizes. The Company captured 60% more sales leads due to in-person visitors during Infocomm USA 2024 compared to Infocomm USA 2023.
• The Company introduced the Versa Lite BMA 360D in Q2 2024. This innovative bundle combines ClearOne’s industry-leading BMA 360D Dante® enabled microphone array ceiling tile with the Versa® USB22D Dante® adapter, offering a perfect audio solution for any conferencing space with an easy connection to any computer or room device via USB.
• The Company reduced operating expenses by 10.1% sequentially and 9.33% year-over-year.

Graham continued, “During the first half of 2024, our team has been diligently working to win back customers who have defected to competing brands. We believe, although there can be no assurance, those efforts will bear fruit soon. We continue to see strong interest in our innovative products as demonstrated by the 60% increase in visitors at our Infocomm USA booth even though overall Infocomm USA attendance was only up 3% this year.”

Financial Summary

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

•		Q2 2024 revenue was $2.3 million, compared to $5.5 million in Q2 2023 and $3.6 million in Q1 2024. The 36.1% sequential decrease was driven by reduced demand across all product categories. We believe the flow of sales orders during Q2 2024 was reduced due to the cumulative impact of past product shortages. We believe the revenue decrease was mainly due to sustained inventory sourcing and order fulfillment challenges for the Company's core audio conferencing and beam forming microphone arrays as a result of delays in the transition of outsourced manufacturing from China to Singapore throughout 2023.
•		GAAP gross profit/(loss) in Q2 2024 was $(0.02) million, compared to $1.8 million in Q2 2023 and $1.2 million in Q1 2024. GAAP gross profit margin was- 1% in Q2 2024, compared to 32% in Q1 2024 and 34% in Q2 2023. The large decrease in gross profit margin occurred due to increased inventory scrap costs, increasing the inventory reserve to write down the value for certain items, and an increase in purchase price variance from increasing vendor costs.
•		Operating expenses in Q2 2024 improved to $2.9 million, compared to $3.2 million in Q2 2023 and $3.2 million in Q1 2024. Non-GAAP operating expenses in Q2 2024 improved to $2.8 million compared to $3.1 million in Q1 2024 and $3.1 million in Q2 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 Q2 2024 was $(2.8) million, or $(0.12) per share, compared to a net loss of $(1.0) million, or $(0.04) per share, in Q2 2023 and a net loss of $(1.9) million, or $(0.08) per share, in Q1 2024. 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.
•		Non-GAAP net loss in Q2 2024 was $(2.7) million, or $(0.11) per share, compared to a Non-GAAP net loss of $(0.9) million, or $(0.04) per share, in Q2 2023 and a Non-GAAP net loss of $(1.8) million, or $(0.07) per share, in Q1 2024. The year-over-year increase in Non-GAAP net loss was driven by the aforementioned decrease in revenue and gross profit partially offset by a decrease in operating expenses.

($ in 000, except per share)		Three months ended June 30,												Six months ended June 30,
			2024				2023			Change in % Favorable/(Adverse)					2024				2023			Change in % Favorable/(Adverse)
GAAP
Revenue		$	2,304			$	5,483			(58	)			$	5,926			$	9,661			(39	)
Gross profit			(20	)			1,848			(101	)				1,131				3,163			(64	)
Operating expenses			2,904				3,203			9					6,133				6,707			9
Operating loss			(2,924	)			(1,355	)		(116	)				(5,002	)			(3,544	)		(41	)
Net loss			(2,820	)			(1,019	)		(177	)				(4,718	)			(1,851	)		(155	)
Diluted loss per share			(0.12	)			(0.04	)		(200	)				(0.20	)			(0.08	)		(150	)
Non-GAAP
Non-GAAP operating expenses		$	2,830			$	3,051			7				$	5,925			$	6,413			8
Non-GAAP operating loss			(2,835	)			(1,201	)		(136	)				(4,777	)			(3,250	)		(47	)
Non-GAAP net loss			(2,731	)			(865	)		(216	)				(4,493	)			(2,907	)		(55	)
Non-GAAP Adjusted EBITDA			(2,660	)			(710	)		(275	)				(4,367	)			(2,389	)		(83	)
Non-GAAP diluted loss per share			(0.11	)			(0.04	)		(175	)				(0.19	)			(0.12	)		(55	)

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)
		June 30, 2024				December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents		$	2,450			$	17,835
Current marketable securities			1,852				3,480
Patent cross license receivable			—				4,000
Receivables, net of allowance of $326			2,574				3,279
Inventories, net			14,599				10,625
Income tax receivable			27				36
Prepaid expenses and other assets			3,855				4,062
Total current assets			25,357				43,317
Long-term marketable securities			621				916
Long-term inventories, net			1,772				3,143
Property and equipment, net			552				530
Operating lease - right of use assets, net			804				990
Intangibles, net			1,582				1,689
Other assets			108				109
Total assets		$	30,796			$	50,694
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	1,901			$	1,945
Accrued liabilities			1,726				2,290
Deferred product revenue			23				30
Total current liabilities			3,650				4,265
Operating lease liability, net of current			515				665
Other long-term liabilities			1,079				1,079
Total liabilities			5,244				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			31,616				46,047
Accumulated other comprehensive loss			(294	)			(310	)
Accumulated deficit			(5,794	)			(1,076	)
Total shareholders' equity			25,552				44,685
Total liabilities and shareholders' equity		$	30,796			$	50,694

CLEARONE, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Dollars in thousands, except per share amounts)
		Three months ended June 30,										Six months ended June 30,
		2024					2023					2024					2023
Revenue		$	2,304				$	5,483				$	5,926				$	9,661
Cost of goods sold			2,324					3,635					4,795					6,498
Gross profit			(20		)			1,848					1,131					3,163
Operating expenses:
Sales and marketing			1,191					1,323					2,503					2,515
Research and product development			868					873					1,762					1,916
General and administrative			845					1,007					1,868					2,276
Total operating expenses			2,904					3,203					6,133					6,707
Operating loss			(2,924		)			(1,355		)			(5,002		)			(3,544		)
Interest expense			—					(91		)			—					(383		)
Other income, net			119					437					297					2,103
Loss before income taxes			(2,805		)			(1,009		)			(4,705		)			(1,824		)
Provision for income taxes			15					10					13					27
Net loss		$	(2,820		)		$	(1,019		)		$	(4,718		)		$	(1,851		)
Basic weighted average shares outstanding			23,969,148					23,955,802					23,969,148					23,955,785
Diluted weighted average shares outstanding			23,969,148					23,955,802					23,969,148					23,955,785
Basic loss per share		$	(0.12		)		$	(0.04		)		$	(0.20		)		$	(0.08		)
Diluted loss per share		$	(0.12		)		$	(0.04		)		$	(0.20		)		$	(0.08		)
Comprehensive loss:
Net loss		$	(2,820		)		$	(1,019		)		$	(4,718		)		$	(1,851		)
Unrealized loss on available-for-sale securities, net of tax			(3		)			14					19					14
Change in foreign currency translation adjustment			(1		)			(1		)			(3		)			4
Comprehensive loss		$	(2,824		)		$	(1,006		)		$	(4,702		)		$	(1,833		)

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,
GAAP operating loss		$	(2,924		)		$	(1,355		)		$	(5,002		)		$	(3,544		)
Stock-based compensation			39					25					65					47
Amortization of intangibles			50					129					160					247
Non-GAAP operating loss		$	(2,835		)		$	(1,201		)		$	(4,777		)		$	(3,250		)
GAAP net loss		$	(2,820		)		$	(1,019		)			(4,718		)			(1,851		)
Stock-based compensation			39					25					65					47
Amortization of intangibles			50					129					160					247
Other income adjustment			—					—					—					(1,350		)
Non-GAAP net loss		$	(2,731		)		$	(865		)		$	(4,493		)		$	(2,907		)
GAAP net loss		$	(2,820		)		$	(1,019		)		$	(4,718		)		$	(1,851		)
Number of shares used in computing GAAP diluted loss per share			23,969,148					23,955,802					23,969,148					23,955,785
GAAP diluted loss per share		$	(0.12		)		$	(0.04		)		$	(0.20		)		$	(0.08		)
Non-GAAP net loss		$	(2,731		)		$	(865		)		$	(4,493		)		$	(2,907		)
Number of shares used in computing Non-GAAP diluted loss per share			23,969,148					23,955,802					23,969,148					23,955,785
Non-GAAP diluted loss per share		$	(0.11		)		$	(0.04		)		$	(0.19		)		$	(0.12		)
GAAP net loss		$	(2,820		)		$	(1,019		)		$	(4,718		)		$	(1,851		)
Stock-based compensation			39					25					65					47
Interest expense			—					91					—					383
Depreciation			56					54					113					108
Amortization of intangibles			50					129					160					247
Other income adjustment			—					—					—					(1,350		)
Provision for income taxes			15					10					13					27
Non-GAAP Adjusted EBITDA		$	(2,660		)		$	(710		)		$	(4,367		)		$	(2,389		)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240815414420/en/

Investor Relations Contact:

Simon Brewer

385-426-0565

investor_relations@clearone.com

http://investors.clearone.com

Source: ClearOne, Inc.

FAQ

What was ClearOne's (CLRO) revenue for Q2 2024?

ClearOne's revenue for Q2 2024 was $2.3 million, down 58% sequentially and 39% year-over-year from $5.5 million in Q2 2023.

How did ClearOne (CLRO) perform at Infocomm 2024?

ClearOne captured 60% more sales leads at Infocomm 2024 compared to Infocomm 2023, despite overall event attendance only increasing by 3%.

What new product did ClearOne (CLRO) introduce in Q2 2024?

ClearOne introduced the Versa Lite BMA 360D, a bundle combining their BMA 360D Dante-enabled microphone array ceiling tile with the Versa USB22D Dante adapter.

How did ClearOne's (CLRO) operating expenses change in Q2 2024?

ClearOne reduced operating expenses by 10.1% sequentially and 9.33% year-over-year in Q2 2024, reflecting continued benefits from cost optimization initiatives.