Investments During the Quarter Position ClearOne to Drive Sales of Industry-Leading Portfolio
SALT LAKE CITY, UTAH — May 6, 2014
First Quarter 2014 Highlights
• Achieved record first quarter revenue of $12.7 million
• Reported revenue growth of 13%
• Closed acquisition of Sabine
• Added a seasoned video conferencing sales and business development team to drive all-inclusive ClearOne video collaboration portfolio to market
ClearOne (NASDAQ: CLRO), a global provider of audio and visual communication solutions, today reported financial results for the first quarter of 2014. Results include Sabine operations for the period following the acquisition on March 7. The results do not include Spontania operations since the acquisition closed on April 1.
For the 2014 first quarter, revenue increased by 13% to $12.7 million, compared with $11.3 million for the first quarter of 2013. Gross profit for the first quarter was $7.7 million, or 61% of revenue, compared with $7.0 million, or 62% of revenue, for the first quarter of 2013. Non-GAAP net income decreased 14% to $0.83 million, or $0.09 per diluted share, from $0.97 million, or $0.10 per diluted share, for the first quarter of 2013. Non-GAAP adjusted EBITDA for the 2014 first quarter increased 3% to $1.62 million, or $0.17 per diluted share, from $1.57 million, or $0.17 per diluted share, a year ago.
The reduction in GAAP net income for the first quarter of 2014 was caused primarily by acquisition expenses related to Sabine and Spontania acquisitions. Non-GAAP and GAAP net income were also impacted by increased operating costs related to Sabine operations and investments made in the new video collaboration sales and marketing team ahead of expected contributions in revenue from Sabine and Spontania acquisitions for the remainder of 2014. Results also reflect increased tax expense for this quarter as Congress did not extend certain R&D tax credits.
During the quarter, the company acquired the supplier of its complementary professional wireless microphone solutions, Sabine, Inc., securing continued access to products central to ClearOne’s microphones portfolio. In 2014, ClearOne’s full suite of wireless microphone products is expected to achieve revenue between $5.4 million to $6.9 million including the Sabine acquisition, compared to $1.3 million revenue from wireless microphone products in 2013, before Sabine’s acquisition. ClearOne also expects to improve profitability of its wireless microphone products by reducing operating expenses as the integration of the Sabine business moves forward.
On April 1, 2014 ClearOne completed the acquisition of Spontania cloud-based video collaboration solutions from Spain-based Dialcom Networks. In order to effectively grow video collaboration revenue, during the first quarter of 2014 ClearOne made important additions to its video collaboration sales team, led by industry veteran David Moss and consisting of professionals with rich backgrounds including experience working for marquee industry players like Cisco, Polycom, Siemens, and Vidyo. ClearOne intends to further build and broaden the sales channel of the complete portfolio led by Spontania as part of ClearOne’s full range of video collaboration solutions.
“The quarterly results reflect our continued plan of prudently leveraging our profits from current growth to fuel future growth by making complementary and balanced investments in sales and marketing and research and development,” said Zee Hakimoglu, President and Chief Executive Officer. “We expect the acquisitions and the associated investments in sales and marketing capabilities to contribute to higher revenues and increased earnings growth in the following quarters of 2014. We are confident that these timely and essential steps will create increasing value for ClearOne, its partners, and its shareholders.”
Cash, cash equivalents and investments totaled $34.0 million at March 31, 2014, down from $42.7 million on December 31, 2013. The decrease in cash balance reflects the amounts paid for both Sabine and Spontania acquisitions. Cash payment of about $5.0 million was made towards the Spontania acquisition before the end of the first quarter though the transaction closed in April 2014. While the company filed a shelf registration statement with the Securities and Exchange Commission to register the shares of common stock issued as part of the acquisition of Sabine, the company has no plans to issue additional equity or debt.
Non-GAAP Financial Measures
ClearOne provides non-GAAP financial information in the form of non-GAAP net income, non-GAAP EDBITDA and non-GAAP adjusted EBITDA and corresponding earnings per share to investors to supplement GAAP financial information. ClearOne believes that excluding certain items from GAAP results allows ClearOne’s management to better understand ClearOne’s consolidated financial performance from period to period as management does not believe that the excluded items are reflective of underlying operating performance. non-GAAP net income, non-GAAP EDBITDA and non-GAAP adjusted EBITDA and corresponding earnings per share excludes certain costs and expenses, the details of which are provided in the tables below containing the reconciliation between GAAP and non-GAAP financial measures. The exclusion of these items in the non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent, or unusual. ClearOne believes non-GAAP financial measures will provide investors with useful information to help them evaluate ClearOne’s operating results and projections. This non-GAAP financial information is not meant to be considered in isolation or as a substitute for operating income, net income 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. Detailed reconciliation of the non-GAAP measures used in this news release to the corresponding GAAP measures is included with this news release.