Eargo Reports Third Quarter 2020 Financial Results
Eargo reported strong performance for Q3 2020, with net revenues of $18.2 million, a 135.3% increase year-over-year. The company shipped 10,077 systems, up 91.7%, achieving a gross margin of 70.1%, a 16.5 percentage point improvement. Loss from operations narrowed to ($7.6) million compared to ($12.0) million in Q3 2019. The company completed its IPO on October 20, 2020, raising approximately $148 million. Eargo expects full year 2020 revenues of $64.5 million, indicating a projected 97% growth.
- Net revenues increased by 135.3% year-over-year to $18.2 million.
- Gross margin improved to 70.1%, a 16.5 percentage points increase.
- Loss from operations reduced to ($7.6) million compared to ($12.0) million in Q3 2019.
- Successfully completed IPO, raising approximately $148 million.
- Full year 2020 revenue guidance of $64.5 million indicates 97% growth.
- Loss from operations persists despite improvements.
- -
Third Quarter and Recent Highlights:
- Net revenues of
$18.2 million , up135.3% year-over-year - Gross systems shipped of 10,077, up
91.7% year-over-year - Return accrual rate of
25.2% , a 10.1 percentage point improvement year-over-year - Gross margin of
70.1% , up 16.5 percentage points year-over-year - Sales and marketing expense as a percent of net revenues of
67.9% , a 52.3 percentage point improvement year-over-year - Loss from operations of (
$7.6) million , compared to ($12.0) million in the third quarter of 2019 - Completed initial public offering of 9,029,629 shares of common stock on October 20, 2020, raising approximately
$148 million in net proceeds
SAN JOSE, Calif., Nov. 19, 2020 (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 third quarter ended September 30, 2020.
Christian Gormsen, President and CEO, said, “By all financial and operational measures, our performance in the third quarter of 2020 was very strong. Most importantly, we are helping more people hear better by offering both a revolutionary product and customer experience. Consumers continued to rapidly adopt our virtually invisible, rechargeable, completely-in-canal solution for hearing loss and our differentiated telecare model, which provides education, purchase and clinical support from the comfort and safety of home.”
“During the third quarter, we executed our strategy of efficient revenue growth through multi-channel marketing targeted at a diverse mix of consumers across cash pay, insurance and repeat customers. We expanded our national TV advertising, which built increased consumer awareness of Eargo while complementing our digital marketing to drive
“We were also pleased to see hearing aid volumes sold through traditional brick and mortar clinics return to year-over-year growth in the third quarter, but even more pleased to see continued acceleration in our year-over-year gross systems shipped growth even as the clinics’ operations began to recover. We expect strong demand for Eargo as we head into the fourth quarter and holiday buying season, driving our expectation of approximately
According to data collected by the Hearing Industries Association (HIA), private/commercial sector hearing aid unit sales in the third quarter of 2020 increased by
Third Quarter 2020 Financial Results
Net revenue was
Gross profit for the third quarter of 2020 was
Total operating expenses were
Sales and marketing expenses were
Research and development expenses were
General and administrative expenses were
Total stock-based compensation expenses were
Loss from operations was (
Cash and cash equivalents were
Initial Public Offering
Eargo closed its initial public offering of 9,029,629 shares of its common stock at a public offering price of
Full Year 2020 Financial Guidance
Eargo expects revenue for the full year 2020 of approximately
Conference Call and Web Cast Information
Eargo will host a conference call to discuss the third quarter financial results after market close on Thursday, November 19, 2020 at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time. The conference call can be accessed live over the phone (833) 649-1234 for U.S. callers or (914) 987-7293 for international callers, using conference ID: 2826509. 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 device 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 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 (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “positioned,” “potential,” “predict,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. All statements other than statements of historical fact contained in this press release are forward-looking statements. These forward-looking statements include, but are not limited to, statements about: our 2020 revenue guidance; consumer adoption of our hearing loss solution and telecare model; the continued scalability of our business; expectations regarding strong demand for Eargo during the fourth quarter and holiday buying season; and the size of the hearing loss market and our ability to penetrate the market. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results and events to differ materially from those anticipated, including, but not limited to, risks and uncertainties 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 prospectus filed with the Securities and Exchange Commission (SEC) on October 19, 2020 pursuant to Rule 424(b) under the Securities Act 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, 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.
Investor Contact
Nick Laudico
Vice President of Investor Relations
ir@eargo.com
Media Contact
Brad Sheets
eargo@edelman.com
| Eargo, Inc. | |||||||||||||||||
| Condensed Consolidated Statements of Operations and Comprehensive Loss | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| (In thousands, except share and per share amounts) | |||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||
| Revenue, net | $ | 18,186 | $ | 7,730 | $ | 46,776 | $ | 22,175 | |||||||||
| Cost of revenue | 5,434 | 3,583 | 15,295 | 11,033 | |||||||||||||
| Gross profit | 12,752 | 4,147 | 31,481 | 11,142 | |||||||||||||
| Operating expenses: | |||||||||||||||||
| Research and development | 2,871 | 3,219 | 7,888 | 8,781 | |||||||||||||
| Sales and marketing | 12,354 | 9,290 | 34,041 | 24,698 | |||||||||||||
| General and administrative | 5,163 | 3,683 | 14,498 | 8,781 | |||||||||||||
| Total operating expenses | 20,388 | 16,192 | 56,427 | 42,260 | |||||||||||||
| Loss from operations | (7,636 | ) | (12,045 | ) | (24,946 | ) | (31,118 | ) | |||||||||
| Other income (expense), net: | |||||||||||||||||
| Interest income | 3 | 136 | 26 | 555 | |||||||||||||
| Interest expense | (279 | ) | (218 | ) | (1,422 | ) | (492 | ) | |||||||||
| Other income (expense), net | (187 | ) | (30 | ) | (87 | ) | (84 | ) | |||||||||
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FAQ
What were Eargo's Q3 2020 financial results?
Eargo reported net revenues of $18.2 million for Q3 2020, a 135.3% increase from the previous year.
How many systems did Eargo ship in Q3 2020?
Eargo shipped 10,077 systems in Q3 2020, up 91.7% year-over-year.
What is Eargo's gross margin for Q3 2020?
Eargo achieved a gross margin of 70.1% for Q3 2020, which represents a 16.5 percentage point improvement.
What is Eargo's revenue guidance for the full year 2020?
Eargo expects approximately $64.5 million in revenue for the full year 2020, indicating about 97% growth.
When did Eargo complete its IPO?
Eargo completed its initial public offering on October 20, 2020, raising approximately $148 million.
Eargo, Inc.
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