Eargo Reports Fourth Quarter and Full Year 2020 Financial Results
Eargo, Inc. (Nasdaq: EAR) reported impressive financial results for Q4 and full year 2020, showing significant growth. Q4 net revenues reached $22.4 million, a 110.8% increase year-over-year, while full year revenues totaled $69.2 million, also up 110.9% from 2019. Gross margin climbed to 70.6% in Q4 and 68.4% for the year. Eargo forecasts 2021 revenue between $87 million and $93 million. The company also highlighted improved operational efficiency, with S&M expenses as a percentage of revenues decreasing significantly.
- Net revenue growth of 110.8% in Q4 2020 and 110.9% for full year 2020.
- Gross margin improved to 70.6% in Q4 2020 and 68.4% for the full year.
- 2021 revenue guidance set between $87 million and $93 million.
- Net loss for Q4 2020 was ($11.8) million, an improvement but still a loss.
- Full year 2020 net loss increased to ($30.0) million.
Provides Full Year 2021 Financial Guidance
Recent Highlights:
- Net revenues of
$22.4 million in the fourth quarter and$69.2 million for the full year of 2020, representing110.8% and110.9% increases, respectively, over the corresponding periods of 2019 - Gross systems shipped of 12,096 in the fourth quarter and 38,243 for the full year of 2020, representing
67.7% and67.8% increases, respectively, over the corresponding periods of 2019 - Return accrual rate of
24.4% in the fourth quarter and25.9% for the full year of 2020, representing a 9.6 and 9.0 percentage point improvement, respectively, over the corresponding periods of 2019 - Gross margin of
70.6% in the fourth quarter and68.4% for the full year of 2020, representing a 15.4 and 16.6 percentage point improvement, respectively, over the corresponding periods of 2019; non-GAAP gross margin of70.8% in the fourth quarter and68.5% for the full year of 2020 representing a 15.5 and 16.6 percentage point improvement, respectively, over the corresponding periods of 2019 - Sales and marketing expense as a percent of net revenues of
69.2% in the fourth quarter and71.6% for the full year of 2020, a 34.7 and 37.4 percentage point improvement, respectively, over the corresponding periods of 2019; non-GAAP sales and marketing expense as a percent of net revenues of64.6% in the fourth quarter and69.3% for the full year of 2020, a 38.8 and 39.1 percentage point improvement, respectively, over the corresponding periods of 2019
SAN JOSE, Calif., Feb. 25, 2021 (GLOBE NEWSWIRE) -- Eargo, Inc. (Nasdaq: EAR), a medical device company on a mission to improve the quality of life of people with hearing loss, today reported its financial results for the fourth quarter and full year ended December 31, 2020.
Christian Gormsen, President and CEO, said, “Our momentum through 2020 continued to accelerate in the fourth quarter with net revenue growth above
Mr. Gormsen continued, “The improved mix of customers contributed to gross margin of
“Our performance in 2020 and the continued consumer acceptance of using telecare to solve for hearing loss gives us a high degree of confidence we can continue to help more people hear better in 2021. This is reflected in our full year 2021 revenue guidance of between
Fourth Quarter 2020 Financial Results
Net revenue was
Gross profit for the fourth quarter of 2020 was
Total operating expenses were
Sales and marketing (S&M) expenses were
Research and development (R&D) expenses were
General and administrative (G&A) expenses were
Excluding stock-based compensation expense, non-GAAP operating expenses were
Net loss attributable to common stockholders for the fourth quarter 2020 was (
Full Year 2020 Financial Results
Net revenue was
Gross profit for the full year of 2020 was
Total operating expenses were
Sales and marketing expenses were
Research and development expenses were
General and administrative expenses were
Excluding stock-based compensation expense, non-GAAP operating expenses were
Net loss attributable to common stockholders for the full year 2020 was (
Cash and cash equivalents were
Full Year 2021 Financial Guidance
- Net revenue of between
$87 million and$93 million - GAAP gross margin of between
68% and71% - Non-GAAP gross margin of between
70% and72%
Conference Call and Web Cast Information
Eargo will host a conference call to discuss the fourth quarter financial results after market close on Thursday, February 25, 2020 at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time. The conference call can be accessed live over the phone at (833) 649-1234 for U.S. callers or (914) 987-7293 for international callers, using conference ID: 3033109. The live webinar can be accessed at ir.eargo.com.
About Eargo
Eargo is a medical device company dedicated to improving the quality of life of people with hearing loss. Our innovative product and go-to-market approach address the major challenges of traditional hearing aid adoption, including social stigma, accessibility and cost. We believe our Eargo hearing aids are the first and only virtually invisible, rechargeable, completely-in-canal, FDA regulated, exempt Class I or Class II devices for the treatment of hearing loss. Our differentiated, consumer-first solution empowers consumers to take control of their hearing. Consumers can purchase online or over the phone and get personalized and convenient consultation and support from licensed hearing professionals via phone, text, email or video chat. The Eargo solution is offered to consumers at approximately half the cost of competing hearing aids purchased through traditional channels in the United States.
The company’s 4th generation product, the Eargo Neo HiFi, was launched in January 2020 and features improved capabilities across audio fidelity and bandwidth. The Eargo Neo HiFi is available for purchase here.
Related Links
http://eargo.com
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact contained in this presentation are forward-looking statements, including statements regarding our full year 2021 financial guidance. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results and events to differ materially from those anticipated, including, but not limited to, risks, uncertainties and assumptions related to: our expectations concerning additional orders by existing customers; our expectations regarding the potential market size and size of the potential consumer populations for our products and any future products, including our ability to increase insurance coverage of Eargo hearing aids; our ability to release new hearing aids and the anticipated features of any such hearing aids; developments and projections relating to our competitors and our industry, including competing products; our ability to maintain our competitive technological advantages against new entrants in our industry; the pricing of our hearing aids; our expectations regarding the ability to make certain claims related to the performance of our hearing aids relative to competitive products; our expectations with regard to changes in the regulatory landscape for hearing aid devices, including the implementation of the pending over-the-counter hearing aid pathway regulatory framework; and our estimates regarding the COVID-19 pandemic, including but not limited to, its duration and its impact on our business and results of operations. These and other risks are described in greater detail under the section titled “Risk Factors” contained in Eargo’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (SEC) on November 20, 2020 and the company’s other filings with the SEC. Any forward-looking statements in this press release are made pursuant to the Private Securities Litigation Reform Act of 1995, as amended, are based on current expectations, forecasts and assumptions, and speak only as of the date of this press release. Except as required by law, the company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
Use of Non-GAAP Financial Measures
The company may report non-GAAP results for gross profit/loss, gross margin, operating expenses, operating margins, net income/loss, and basic and diluted net income/loss per share in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The company’s financial measures under GAAP include charges such as stock-based compensation, as listed in the itemized reconciliations between GAAP and non-GAAP financial measures included in this press release. Management has excluded the effects of this item in non-GAAP measures to assist investors in analyzing and assessing past and future operating performance. The company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business.
Investor Contact
Nick Laudico
Vice President of Investor Relations
ir@eargo.com
Media Contact
Brad Sheets
eargo@edelman.com
| Eargo, Inc. | ||||||||
| Consolidated Balance Sheets | ||||||||
| (Unaudited) | ||||||||
| (In thousands, except share and per share amounts) | ||||||||
| December 31, | December 31, | |||||||
| 2020 | 2019 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 212,185 | $ | 13,384 | ||||
| Accounts receivable, net | 3,793 | 2,051 | ||||||
| Inventories | 2,739 | 2,880 | ||||||
| Prepaid expenses and other current assets | 3,740 | 1,598 | ||||||
| Total current assets | 222,457 | 19,913 | ||||||
| Operating lease right-of-use assets | 1,079 | — | ||||||
| Property and equipment, net | 8,034 | 5,400 | ||||||
| Other assets | 1,062 | 1,992 | ||||||
| Total assets | $ | 232,632 | $ | 27,305 | ||||
| LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 6,020 | $ | 5,428 | ||||
| Accrued expenses | 13,909 | 9,939 | ||||||
| Long-term debt, current portion | — | 4,800 | ||||||
| Other current liabilities | 2,448 | 1,717 | ||||||
| Deferred revenue, current | 311 | 406 | ||||||
| Lease liability, current portion | 1,030 | — | ||||||
| Total current liabilities | 23,718 | 22,290 | ||||||
| Lease liability, noncurrent portion | 166 | — | ||||||
| Deferred revenue, noncurrent portion | — | 269 | ||||||
| Long-term debt, noncurrent portion | 14,837 | 7,446 | ||||||
| Convertible preferred stock warrant liability | — | 396 | ||||||
| Other liabilities | — | 127 | ||||||
| Total liabilities | 38,721 | 30,528 | ||||||
| Convertible preferred stock, | — | 152,880 | ||||||
| Stockholders’ equity (deficit): | ||||||||
| Preferred stock, | — | — | ||||||
| Common stock; | 4 | — | ||||||
| Additional paid in capital | 392,965 | 3,100 | ||||||
| Accumulated deficit | (199,058 | ) | (159,203 | ) | ||||
| Total stockholders’ equity (deficit) | 193,911 | (156,103 | ) | |||||
| Total liabilities, convertible preferred stock and stockholders’ equity (deficit) | $ | 232,632 | $ | 27,305 | ||||
| Eargo, Inc. | ||||||||||||||||
| Consolidated Statements of Operations and Comprehensive Loss | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| (In thousands, except share and per share amounts) | ||||||||||||||||
| Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Revenue, net | $ | 22,378 | $ | 10,615 | $ | 69,154 | $ | 32,790 | ||||||||
| Cost of revenue | 6,578 | 4,757 | 21,873 | 15,790 | ||||||||||||
| Gross profit | 15,800 | 5,858 | 47,281 | 17,000 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 4,157 | 4,060 | 12,045 | 12,841 | ||||||||||||
| Sales and marketing | 15,484 | 11,027 | 49,525 | 35,725 | ||||||||||||
| General and administrative | 6,084 | 3,689 | 20,582 | 12,470 | ||||||||||||
| Total operating expenses | 25,725 | 18,776 | 82,152 | 61,036 | ||||||||||||
| Loss from operations | (9,925 | ) | (12,918 | ) | (34,871 | ) | (44,036 | ) | ||||||||
| Other income (expense), net: | ||||||||||||||||
| Interest income | 11 | 72 | 37 | 627 | ||||||||||||
| Interest expense | (498 | ) | (219 | ) | (1,920 | ) | (711 | ) | ||||||||
| Other income (expense), net | (1,387 | ) | (282 | ) | (1,474 | ) | (366 | ) | ||||||||
| Loss on extinguishment of debt | — | — | (1,627 | ) | — | |||||||||||
| Total other income (expense), net | (1,874 | ) | (429 | ) | (4,984 | ) | (450 | ) | ||||||||
| Loss before income taxes | (11,799 | ) | (13,347 | ) | (39,855 | ) | (44,486 | ) | ||||||||
| Income tax provision | — | — | — | — | ||||||||||||
| Net loss and comprehensive loss | $ | (11,799 | ) | $ | (13,347 | ) | $ | (39,855 | ) | $ | (44,486 | ) | ||||
| Net loss attributable to common stockholders, basic and diluted | $ | (11,799 | ) | $ | (13,347 | ) | $ | (30,015 | ) | $ | (44,486 | ) | ||||
| Net loss per share attributable to common stockholders, basic and diluted | $ | (0.39 | ) | $ | (50.44 | ) | $ | (3.80 | ) | $ | (173.47 | ) | ||||
| Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted | 30,450,191 | 264,617 | 7,890,375 | 256,452 | ||||||||||||
| Eargo, Inc. | |||||||||||||||
| Results of Operations – Non-GAAP | |||||||||||||||
| (Unaudited) | |||||||||||||||
| (In thousands, except share and per share amounts) | |||||||||||||||
| Reconciliation between GAAP and non-GAAP net loss per share attributable to common stockholders: | |||||||||||||||
| Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| GAAP net loss per share to common stockholders, basic and diluted | $ | (0.39 | ) | $ | (50.44 | ) | $ | (3.80 | ) | $ | (173.47 | ) | |||
| Stock-based compensation | 0.09 | 1.29 | 0.64 | 5.22 | |||||||||||
| Non-GAAP net loss per share to common stockholders, basic and diluted | $ | (0.30 | ) | $ | (49.15 | ) | $ | (3.16 | ) | $ | (168.25 | ) | |||
| Reconciliation between GAAP and non-GAAP net loss attributable to common stockholders: | |||||||||||||||
| Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| GAAP net loss attributable to common stockholders, basic and diluted | $ | (11,799 | ) | $ | (13,347 | ) | $ | (30,015 | ) | $ | (44,486 | ) | |||
| Stock-based compensation | 2,726 | 342 | 5,089 | 1,339 | |||||||||||
| Non-GAAP net loss attributable to common stockholders, basic and diluted | $ | (9,073 | ) | $ | (13,005 | ) | $ | (24,926 | ) | $ | (43,147 | ) | |||
| Reconciliation between GAAP and non-GAAP results of operations: | |||||||||||||||
| Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| GAAP gross profit | $ | 15,800 | $ | 5,858 | $ | 47,281 | $ | 17,000 | |||||||
| Stock-based compensation | 43 | 9 | 60 | 16 | |||||||||||
| Non-GAAP gross profit | $ | 15,843 | $ | 5,867 | $ | 47,341 | $ | 17,016 | |||||||
| GAAP gross margin | 70.6 | % | 55.2 | % | 68.4 | % | 51.8 | % | |||||||
| Stock-based compensation | 0.2 | % | 0.1 | % | 0.1 | % | 0.0 | % | |||||||
| Non-GAAP gross margin | 70.8 | % | 55.3 | % | 68.5 | % | 51.8 | % | |||||||
| GAAP research and development expense | $ | 4,157 | $ | 4,060 | $ | 12,045 | $ | 12,841 | |||||||
| Stock-based compensation | (272 | ) | (49 | ) | (822 | ) | (232 | ) | |||||||
| Non-GAAP research and development expense | $ | 3,885 | $ | 4,011 | $ | 11,223 | $ | 12,609 | |||||||
| GAAP sales and marketing expense | $ | 15,484 | $ | 11,027 | $ | 49,525 | $ | 35,725 | |||||||
| Stock-based compensation | (1,035 | ) | (62 | ) | (1,629 | ) | (188 | ) | |||||||
| Non-GAAP sales and marketing expense | $ | 14,449 | $ | 10,965 | $ | 47,896 | 35,537 | ||||||||
| GAAP general and administrative expense | $ | 6,084 | $ | 3,689 | $ | 20,582 | $ | 12,470 | |||||||
| Stock-based compensation | (1,376 | ) | (222 | ) | (2,578 | ) | (903 | ) | |||||||
| Non-GAAP general and administrative expense | $ | 4,708 | $ | 3,467 | $ | 18,004 | $ | 11,567 | |||||||
| GAAP total operating expense | $ | 25,725 | $ | 18,776 | $ | 82,152 | $ | 61,036 | |||||||
| Stock-based compensation | (2,683 | ) | (333 | ) | (5,029 | ) | (1,322 | ) | |||||||
| Non-GAAP total operating expense | $ | 23,042 | $ | 18,443 | $ | 77,123 | $ | 59,714 | |||||||
| GAAP operating loss | $ | (9,925 | ) | $ | (12,918 | ) | $ | (34,871 | ) | $ | (44,036 | ) | |||
| Stock-based compensation | 2,726 | 342 | 5,089 | 1,339 | |||||||||||
| Non-GAAP operating loss | $ | (7,199 | ) | $ | (12,576 | ) | $ | (29,782 | ) | $ | (42,697 | ) | |||
| Reconciliation between GAAP and non-GAAP full year 2021 forecasted gross margin | |||||
| Low | High | ||||
| Forecasted 2021 GAAP gross margin | 68 | % | 71 | % | |
| Estimated impact of stock-based compensation | 2.0 | % | 1.0 | % | |
| Forecasted 2021 non-GAAP gross margin | 70 | % | 72 | % | |
FAQ
What were Eargo's Q4 2020 financial results?
What is Eargo's revenue guidance for 2021?
How did Eargo's gross margin perform in 2020?
What was Eargo's net loss in Q4 2020?
