GlobeNewswire Inc | Nov 16, 2020 09:10AM EST

November 16, 2020

? Overall revenue grows by 40% year-over-year? Overall revenue grows by 32% quarter-over-quarter sequentially? Video products and BeamformingMicrophone Array Ceiling Tile based solutions drive year-over-year and sequential revenue growth

SALT LAKE CITY, Nov. 16, 2020 (GLOBE NEWSWIRE) -- ClearOne (NASDAQ: CLRO), a global provider of audio and visual communication solutions, reported financial results for the three and nine month periods ended September 30, 2020.

"We achieved outstanding sequential and year-over-year revenue growth thanks to our appealing video products and innovative BMA based solutions. Our revenue growth amidst a global pandemic demonstrates the resilience of our product portfolio. Our wide-ranging suite of audio and video solutions are well suited for traditional offices as well as the burgeoning work-from-home remote offices," said Zee Hakimoglu, CEO and Chair of ClearOne.

"Last month, we introduced the BMA 360, our new flagship Beamforming Microphone Array in ceiling tile format. We believe that it has set an audio performance standard that is unrivalled in the industry and that is far superior to any other BMA solution in the market. The BMA 360 is based on a dramatically new approach to beamforming that provides a new beam topology to easily achieve distortion-free, full 360-degree coverage of any room shape and any seating arrangement using ClearOne Audio Intelligence. The integrated features in the BMA 360 significantly reduce system design complexity, simplify installation, consume less rack space, and lower system cost,"Hakimoglu added.

"On September 1, 2020, the U.S. District Court of the Northern District of Illinois held that Shure has violated the preliminary injunction order and is found in contempt because it designed the MXA910-A in such a way that allows it to be easily installed flush in most ceiling grids. The Court also opined that, [t]he record is clear and convincing that Shure-through its design choices-violated the injunction order by allowing integrators to install the MXA910-A in the enjoined flush configuration. Ultimately, the Court ordered that Shure shall no longer manufacture, market, or sell the MXA910-A ... . Though Shurehas filed for appeal, this order of contempt is a significant victory for ClearOne in our resolute effort to hold Shure accountable for its action and to enforce our hard-earned intellectual property rights. Our motion to accuse Shures MXA910-US of infringing the 806 Patent is still pending with the Court,"Hakimoglu concluded.

Financial Summary

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

-- Revenue in Q32020was $8.4million, compared to $6.0million inQ32019and million $6.4in Q2 2020. The increase in year-over-year as well as sequential revenues was mainly due to the increase in revenue from video products, personal audio conferencing products and beamformingmicrophone array products. Despite this revenue growth in Q3 2020, revenue from our audio conferencing products and microphones are far below the levels prior to infringement of our patents.

-- GAAP gross profit inQ32020was $3.5million compared to $2.5million inQ32019and $2.6million inQ22020. GAAP gross profit margin was41.8% inQ32020, compared to42.3% inQ32019and41.2% inQ22020. Gross profit margin remained fairly consistent through the compared periods.

-- Operating expenses inQ32020were $4.7million, compared to $4.6million inQ32019and $4.5million inQ22020. Non-GAAP operating expenses inQ32020were $4.2million, compared to $4.2million inQ32019and $4.0million inQ22020. The sequential increase in operating expenses is mainly due to the increase in commissions paid to employees and independent reps.

-- GAAP net loss in Q32020 was $1.3 million, or $0.07 per share, compared to net loss of $2.0 million, or $0.12 per share, in Q32019 and net loss of $1.9 million, or $0.12 per share, in Q22020. The sequential and year-over-year decline in GAAP net loss was primarily due to increase in gross profit attributable to increase in revenue.

($ in000, Three months ended Ninemonths endedexcept September 30, September 30, pershare) 2020 2019 Change 2020 2019 Change GAAP Revenue $ 8,412 $ 5,992 40 % $ 20,503 $ 18,717 10 %Gross 3,520 2,537 39 % 8,976 8,180 10 %profitOperating 4,680 4,635 1 % 13,726 14,773 -7 %expensesOperating (1,160 ) (2,098 ) -45 % (4,750 ) (6,593 ) -28 %lossNet loss (1,260 ) (1,976 ) -36 % (5,044 ) (6,423 ) -21 %Dilutedloss per (0.07 ) (0.12 ) -38 % (0.30 ) (0.39 ) -22 %shareNon-GAAP Non-GAAPgross $ 3,520 $ 2,539 39 % $ 8,978 $ 8,186 10 %profitNon-GAAPoperating 4,232 4,235 0 % 12,453 13,548 -8 %expensesNon-GAAPoperating (712 ) (1,696 ) -58 % (3,475 ) (5,362 ) -35 %lossNon-GAAP (812 ) (1,574 ) -48 % (3,769 ) (5,192 ) -27 %net lossNon-GAAPAdjusted (589 ) (1,437 ) 59 % (3,197 ) (4,752 ) 33 %EBITDANon-GAAPloss per (0.05 ) (0.09 ) -44 % (0.22 ) (0.31 ) -28 %share(diluted)

Balance Sheet Highlights

At September 30, 2020, cash, cash equivalents and investments were $8.6million, as compared with the same amount at December 31, 2019. The Company carries a debt of $5.0 million on account of senior convertible notes issued in December 2019 and a Paycheck Protection Program (PPP) loan in April 2020.The Company intends to use the entire PPP loan amount for qualifying expenses and to apply for forgiveness of the PPP loan.

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,ClearOneuses 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 ofClearOnesunderlying 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 inClearOnesindustry, may calculate non-GAAP financial measures differently thanClearOnedoes, 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 with this release below.

Forward Looking Statements

This release contains forward-looking statements that are based on present circumstances and on ClearOnes 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 Annual Report on Form10-K (the 10-K) filed by the Company for the same period with the Securities and Exchange Commission (the SEC) and all of the Companys 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 Companys annual report on Form 10-K for the year ended December 31, 2019 (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.

Contact:Investor Relations801-975-7200investor_relations@clearone.com http://investors.clearone.com

CLEARONE, INCUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS(Dollars in thousands, except par value)

September December 30, 2020 31, 2019ASSETS Current assets: Cash and cash equivalents $ 5,583 $ 4,064 Marketable securities 1,622 3,026 Receivables, net of allowance for doubtful accounts 6,705 5,468 of $506 and$424, respectivelyInventories, net 7,838 11,441 Prepaid expenses and other assets 2,183 1,184 Total current assets 23,931 25,183 Long-term marketable securities 1,391 1,517 Long-term inventories, net 6,283 6,284 Property and equipment, net 995 1,044 Operating lease - right of use assets, net 2,082 2,459 Intangibles, net 18,494 14,009 Other assets 4,596 4,614 Total assets $ 57,772 $ 55,110 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,355 $ 2,871 Accrued liabilities 3,405 3,205 Deferred product revenue 159 173 Short term debt 395 ? Total current liabilities 8,314 6,249 Senior convertible notes 3,474 2,222 Operating lease liability, net of current 1,623 2,021 Other long-term liabilities 111 140 Total liabilities 13,522 10,632 Shareholders' equity: Common stock, par value $0.001, 50,000,000 sharesauthorized, 18,771,257 and 16,650,725 shares issued 19 17 and outstandingAdditional paid-in capital 63,348 58,520 Accumulated other comprehensive loss (190 ) (176 )Accumulated deficit (18,927 ) (13,883 )Total shareholders' equity 44,250 44,478 Total liabilities and shareholders' equity $ 57,772 $ 55,110

CLEARONE, INC.UNAUDITED CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONSAND COMPREHENSIVE LOSS(Dollars in thousands, except per share values)

Three months Nine months endedSeptember 30, endedSeptember 30, 2020 2019 2020 2019 Revenue $ 8,412 $ 5,992 $ 20,503 $ 18,717 Cost of goods sold 4,892 3,455 11,527 10,537 Gross profit 3,520 2,537 8,976 8,180 Operating expenses:Sales and 1,736 1,907 4,932 6,121 marketingResearch andproduct 1,501 1,428 4,319 4,322 developmentGeneral and 1,443 1,300 4,475 4,330 administrativeTotal operating 4,680 4,635 13,726 14,773 expenses Operating loss (1,160 ) (2,098 ) (4,750 ) (6,593 ) Interest expense (108 ) ? (325 ) ? Other income, net 19 142 70 235 Loss before income (1,249 ) (1,956 ) (5,005 ) (6,358 )taxes Provision for 11 20 39 65 income taxes Net loss $ (1,260 ) $ (1,976 ) $ (5,044 ) $ (6,423 ) Basic weightedaverage shares 17,000,215 16,646,323 16,768,088 16,635,954 outstandingDiluted weightedaverage shares 17,000,215 16,646,323 16,768,088 16,635,954 outstanding Basic loss per $ (0.07 ) $ (0.12 ) $ (0.30 ) $ (0.39 )shareDiluted loss per $ (0.07 ) $ (0.12 ) $ (0.30 ) $ (0.39 )share Comprehensive loss:Net loss (1,260 ) (1,976 ) (5,044 ) (6,423 )Unrealized gain(loss) onavailable-for-sale 4 (78 ) 11 76 securities, net oftaxChange in foreigncurrency 17 (50 ) (25 ) (67 )translationadjustmentComprehensive loss (1,239 ) (2,104 ) (5,058 ) (6,414 )

CLEARONE, INC.UNAUDITED RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES(Dollars in thousands, except per share values)

Three months ended Nine months ended September 30, September 30, 2020 2019 2020 2019 GAAP gross $ 3,520 $ 2,537 $ 8,976 $ 8,180 profitStock-based ? 2 2 6 compensationNon-GAAP $ 3,520 $ 2,539 $ 8,978 $ 8,186 gross profit GAAPoperating $ (1,160 ) $ (2,098 ) $ (4,750 ) $ (6,593 )lossStock-based 2 48 55 177 compensationAmortizationof 446 354 1,220 1,054 intangiblesNon-GAAPoperating $ (712 ) $ (1,696 ) $ (3,475 ) $ (5,362 )loss GAAP net $ (1,260 ) $ (1,976 ) $ (5,044 ) $ (6,423 )lossStock-based 2 48 55 177 compensationAmortizationof 446 354 1,220 1,054 intangiblesNon-GAAP net $ (812 ) $ (1,574 ) $ (3,769 ) $ (5,192 )loss GAAP net $ (1,260 ) $ (1,976 ) $ (5,044 ) $ (6,423 )lossNumber ofshares usedin computing 17,000,215 16,646,323 16,768,088 16,635,954 GAAP lossper share(diluted)GAAP lossper share $ (0.07 ) $ (0.12 ) $ (0.30 ) $ (0.39 )(diluted)Non-GAAP net $ (812 ) $ (1,574 ) $ (3,769 ) $ (5,192 )lossNumber ofshares usedin computingNon-GAAP 17,000,215 16,646,323 16,768,088 16,635,954 loss pershare(diluted)Non-GAAPloss per $ (0.05 ) $ (0.09 ) $ (0.22 ) $ (0.31 )share(diluted) GAAP net $ (1,260 ) $ (1,976 ) $ (5,044 ) $ (6,423 )lossStock-based 2 48 55 177 compensationDepreciation 104 117 208 375 Amortizationof 446 354 1,220 1,054 intangiblesInterest 108 ? 325 ? expenseProvisionfor (benefit 11 20 39 65 from) incometaxesNon-GAAPAdjusted $ (589 ) $ (1,437 ) $ (3,197 ) $ (4,752 )EBITDA