GlobeNewswire Inc | Aug 14, 2020 09:10AM EDT

August 14, 2020

-- Q2 Video revenue increases by 40% year-over-year -- Overall revenue grows by 11% quarter-over-quarter sequentially -- New solutions incorporating the BeamformingMicrophone Array Ceiling Tile drive year-over-year and sequential BMA revenue growth despite COVID-19

SALT LAKE CITY, Aug. 14, 2020 (GLOBE NEWSWIRE) -- ClearOne (NASDAQ: CLRO), a global provider of audio and visual communication solutions, reported financial results for the three and six month periods ended June 30, 2020.

"We posted solid double-digit sequential revenue growth thanks to our innovative video products and BMA based solutions. Sales performance of our ground-breaking new solutions incorporating our BeamformingMicrophone Array Ceiling Tile was impressive given the challenges posed by the COVID-19 environment for global installed audio conferencing market," said Zee Hakimoglu, CEO and Chair of ClearOne.

"The versatility of our solutions is highlighted by the success of our video products which are tailor-made for verticals like education and enterprises looking to professionally equip their remote workforce. We believe our outlook for Q3 is very positive as we have already recorded in excess of $5 million in bookings that include shipped revenue and backlog, most of which we expect to fulfill this quarter,"Hakimoglu added.

"Our continuing investment in advanced technologies has resulted in another significantpatent relating to beamforming microphone array technology awarded to us by the US Patent and Trademark Office. This important patent describes a ceiling tile microphone that includes beamforming, acoustic echo cancellation, and adaptive acoustic processing that automatically adjusts to a room configuration. There is no language in the claims of the new patent limiting its scope to flush-mounted ceiling tile beamforming microphone arrays, as opposed to non-flush mounted ceiling tile beamforming microphone arrays," Hakimogluconcluded.

Financial Summary

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

-- Q22020revenue was almost the same as revenue inQ22019at$6.4million, compared to $5.7million inQ12020. The sequential increase was mainly due to the increase in revenue from video products, personal audio conferencing products and beamformingmicrophone array products. Despite the sequential increase in Q2, the revenue from our audio conferencing products and microphones are far below the levels prior to infringement of our patents.

-- GAAP gross profit inQ22020was $2.6million compared to $2.9million inQ22019and $2.8million inQ12020. GAAP gross profit margin was41% inQ22020, compared to46% inQ22019and49% inQ12020. Gross profit margin decreased year over year mainly due to a shift in the revenue mix, increased freight and tariff costs and increased inventory obsolescence costs, partially offset by a decrease in overhead costs. Sequential gross profit margin was negatively impacted by a shift in our revenue mix in addition to factors like higher tariff burden, higher freight costs and increased inventory obsolescence costs.

-- Operating expenses inQ22020were $4.5million, compared to $5.0million inQ22019and $4.6million inQ12020. Non-GAAP operating expenses inQ22020were $4.0million, compared to $4.7million inQ22019and $4.2million inQ12020. The majority of the sequential decline as well as decrease inQ22020operating expenses overQ22019is attributable to decreases in each of trade-show related expenses, employee travel related expenses, demonstration inventory expenses, and independent rep commissions partially offset by an increase in employee benefits costs.

-- GAAP net loss in Q22020 was $1.9 million, or $0.12 per share, compared to net loss of $2.1 million, or $0.13 per share, in Q22019 and net loss of $1.8 million, or $0.11 per share, in Q12020. The decrease in net loss in Q22020 compared to Q22019was primarily due to a decrease in operating costs partially offset by a reduction in gross margin. The net loss in Q2 2020 does not materially vary from the net loss in Q1 2020.

($ in000,except Three months ended June 30, Six months ended June 30, pershare) 2020 2019 Change 2020 2019 Change GAAP Revenue $ 6,357 $ 6,420 -1 % $ 12,091 $ 12,725 -5 %Gross 2,618 2,939 -11 % 5,456 5,643 -3 %profitOperating 4,457 5,043 -12 % 9,046 10,138 -11 %expensesOperating (1,839 ) (2,104 ) -13 % (3,590 ) (4,495 ) -20 %lossNet loss (1,937 ) (2,098 ) -8 % (3,784 ) (4,447 ) -15 %Dilutedloss per (0.12 ) (0.13 ) -8 % (0.23 ) (0.27 ) -15 %shareNon-GAAP Non-GAAPgross $ 2,618 $ 2,941 -11 % $ 5,458 $ 5,647 -3 %profitNon-GAAPoperating 4,034 4,654 -13 % 8,220 9,313 -12 %expensesNon-GAAPoperating (1,416 ) (1,713 ) -17 % (2,762 ) (3,666 ) -25 %lossNon-GAAP (1,514 ) (1,707 ) -11 % (2,956 ) (3,618 ) -18 %net lossNon-GAAPAdjusted (1,296 ) (1,536 ) -16 % (2,503 ) (3,315 ) -24 %EBITDANon-GAAPloss per (0.09 ) (0.10 ) -10 % (0.18 ) (0.22 ) -18 %share(diluted)

Balance Sheet Highlights

At June 30, 2020, cash, cash equivalents and investments were $6.1million, as compared with $8.6million at December 31, 2019. The Company carries a debt of $3.8 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, INC.CONSOLIDATED BALANCE SHEETS(Dollars in thousands, except par value)

June December 30, 2020 31, 2019ASSETS Current assets: Cash and cash equivalents $ 2,106 $ 4,064 Marketable securities 2,841 3,026 Receivables, net of allowance for doubtful 5,792 5,468 accounts of $455 and$424, respectivelyInventories, net 8,224 11,441 Prepaid expenses and other assets 957 1,184 Total current assets 19,920 25,183 Long-term marketable securities 1,130 1,517 Long-term inventories, net 6,510 6,284 Property and equipment, net 1,050 1,044 Operating lease - right of use assets, net 2,227 2,459 Intangibles, net 17,141 14,009 Other assets 4,593 4,614 Total assets $ 52,571 $ 55,110 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 3,172 $ 2,871 Accrued liabilities 2,782 3,205 Deferred product revenue 201 173 Total current liabilities 6,155 6,249 Senior convertible notes 3,819 2,222 Operating lease liability, net of current 1,767 2,021 Other long-term liabilities 111 140 Total liabilities 11,852 10,632 Shareholders' equity: Common stock, par value $0.001, 50,000,000shares authorized, 16,655,207 and 16,650,725 17 17 shares issued and outstandingAdditional paid-in capital 58,580 58,520 Accumulated other comprehensive loss (211 ) (176 )Accumulated deficit (17,667 ) (13,883 )Total shareholders' equity 40,719 44,478 Total liabilities and shareholders' equity $ 52,571 $ 55,110

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

Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Revenue $ 6,357 $ 6,420 $ 12,091 $ 12,725 Cost of goods sold 3,739 3,481 6,635 7,082 Gross profit 2,618 2,939 5,456 5,643 Operating expenses:Sales and 1,457 2,261 3,196 4,214 marketingResearch andproduct 1,474 1,307 2,818 2,894 developmentGeneral and 1,526 1,475 3,032 3,030 administrativeTotal operating 4,457 5,043 9,046 10,138 expenses Operating loss (1,839 ) (2,104 ) (3,590 ) (4,495 ) Interest expense (109 ) ? (217 ) ? Other income, net 16 51 51 93 Loss before income (1,932 ) (2,053 ) (3,756 ) (4,402 )taxes Provision for 5 45 28 45 income taxes Net loss $ (1,937 ) $ (2,098 ) $ (3,784 ) $ (4,447 ) Basic weightedaverage shares 16,650,774 16,630,770 16,650,750 16,630,684 outstandingDiluted weightedaverage shares 16,650,774 16,630,770 16,650,750 16,630,684 outstanding Basic loss per $ (0.12 ) $ (0.13 ) $ (0.23 ) $ (0.27 )shareDiluted loss per $ (0.12 ) $ (0.13 ) $ (0.23 ) $ (0.27 )share Comprehensive loss:Net loss (1,937 ) (2,098 ) (3,784 ) (4,447 )Unrealized gain onavailable-for-sale 30 84 7 154 securities, net oftaxChange in foreigncurrency (8 ) 9 (42 ) (17 )translationadjustmentComprehensive loss (1,915 ) (2,005 ) (3,819 ) (4,310 )

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, 2020 2019 2020 2019 GAAP gross $ 2,618 $ 2,939 $ 5,456 $ 5,643 profitStock-based ? 2 2 4 compensationNon-GAAP $ 2,618 $ 2,941 $ 5,458 $ 5,647 gross profit GAAPoperating $ (1,839 ) $ (2,104 ) $ (3,590 ) $ (4,495 )lossStock-based 17 55 54 129 compensationAmortizationof 406 336 774 700 intangiblesNon-GAAPoperating $ (1,416 ) $ (1,713 ) $ (2,762 ) $ (3,666 )loss GAAP net $ (1,937 ) $ (2,098 ) $ (3,784 ) $ (4,447 )lossStock-based 17 55 54 129 compensationAmortizationof 406 336 774 700 intangiblesNon-GAAP net $ (1,514 ) $ (1,707 ) $ (2,956 ) $ (3,618 )loss GAAP net $ (1,937 ) $ (2,098 ) $ (3,784 ) $ (4,447 )lossNumber ofshares usedin computing 16,650,774 16,630,770 16,650,750 16,630,684 GAAP lossper share(diluted)GAAP lossper share $ (0.12 ) $ (0.13 ) $ (0.23 ) $ (0.27 )(diluted)Non-GAAP net $ (1,514 ) $ (1,707 ) $ (2,956 ) $ (3,618 )lossNumber ofshares usedin computingNon-GAAP 16,650,774 16,630,770 16,650,750 16,630,684 loss pershare(diluted)Non-GAAPloss per $ (0.09 ) $ (0.10 ) $ (0.18 ) $ (0.22 )share(diluted) GAAP net $ (1,937 ) $ (2,098 ) $ (3,784 ) $ (4,447 )lossStock-based 17 55 54 129 compensationDepreciation 104 126 208 258 Amortizationof 406 336 774 700 intangiblesInterest 109 ? 217 ? expenseProvisionfor (benefit 5 45 28 45 from) incometaxesNon-GAAPAdjusted $ (1,296 ) $ (1,536 ) $ (2,503 ) $ (3,315 )EBITDA