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Audible Announces Third Quarter 2007 Financial Results

Revenue up 38% Year over Year

NEWARK, N.J.--(BUSINESS WIRE)--Nov. 1, 2007--Audible, Inc. (NASDAQ: ADBL; www.audible.com), the leader in spoken audio entertainment, information, and educational programming on the Internet, today announced unaudited financial results for the third quarter ended September 30, 2007.

Audible reported consolidated third quarter net revenue of $27.6 million, up 38% over the $20.0 million reported in the third quarter of 2006. Revenue for the nine-month period ended September 30, 2007, was $78.8 million, up 34% from the $58.9 million earned during the same period in 2006. Adjusted EBITDA was $1.8 million, an increase of $2.0 million from an EBITDA loss in the third quarter of 2006, but a decrease of $0.3 million from $2.1 million in the second quarter of 2007. Adjusted EBITDA in the third quarter included a $1.0 million non-recurring incentive compensation accrual due to the stronger-than-anticipated performance of the Company in the third quarter. Net loss for the third quarter of 2007 was $(0.2 million), or $(0.01) per share, an improvement from the net loss of $(2.5 million), or $(0.10) per share, reported in the third quarter of 2006.

During the quarter 63,000 new AudibleListener(R) members were acquired, a decrease from the 71,000 AudibleListener members reported in the third quarter of 2006, but an increase from the 55,000 members reported in the second quarter of 2007. Ninety-Eight percent of new AudibleListener members acquired in Q3 2007 were Gold or Platinum recurring revenue customers versus 51% of new AudibleListeners acquired in the third quarter of 2006 signing up for Gold or Platinum service.

There were 455,000 total AudibleListener members at the end of the third quarter of 2007, an increase compared to the 345,000 total members reported in the third quarter of 2006.

"Audible's third quarter financial performance was marked by strong revenue growth, accelerating quarter-over-quarter new and net membership growth, lower churn, and solid ARPU. We continue to enhance our brand presence and the quality of our audio service, and this has clearly elevated our ability to acquire and retain loyal customers," observed Donald Katz, Chairman and Chief Executive Officer.

"On the bottom line, our consistent delivery of multi-million dollar year-over-year improvements in adjusted EBITDA in 2007 has significantly exceeded our internal goals," Mr. Katz continued. "This has triggered a non-recurring employee profit-sharing-based incentive plan expense in the third quarter that resulted in lower quarter-over-quarter profitability. We expect our profitable growth model to be very much back on track in Q4."

The Company has decided to provide limited financial performance guidance. "We have decided to offer 2007 guidance to help investors understand two dynamics in our performance," commented William H. Mitchell, Chief Financial Officer. "Since we decided to focus on growing monthly members beginning December 2006, which contributed to that quarter's unusually strong sequential performance, our year over year growth will not be as strong in the fourth quarter as it has been the past two. On the bottom line, we are seeking to underscore the magnitude of the non-recurring nature of our compensation adjustment in third quarter by stipulating the range to which our adjusted EBITDA metric will grow in the fourth quarter."

Third Quarter 2007 Key Financial and Operating Metrics and Business Outlook

Consolidated Net Revenue: Consolidated third quarter net revenue of $27.6 million, up 38% over the $20.0 million in consolidated net revenue reported in the third quarter of 2006 and a 7% increase over $25.9 million in the second quarter of 2007.

Adjusted EBITDA: EBITDA was $1.8 million, up from $(0.2) million in the third quarter of 2006 and down from $2.1 million in the second quarter of 2007.

Deferred revenue: Deferred revenue was $17.1 million at September 30, 2007, an increase of $2.7 million since December 31, 2006.

Total New AudibleListener Members: 63,000 new AudibleListener members were acquired during the third quarter of 2007, a decrease from the 71,000 AudibleListener members reported in the third quarter of 2006 but an increase from the 55,000 members reported in the second quarter of 2007.

Business Outlook

The Company has decided to offer 2007 full-year guidance that includes consolidated net revenue of $106-$108 million, which represents 28-30% year-over-year revenue growth.

The Company also expects to report 2007 full-year adjusted EBITDA of $6.8-$7.5 million, compared to a $1.0 million adjusted EBITDA loss in 2006.

Conference Call

Senior management will host an investor teleconference at 5:00 p.m. EDT today to discuss third quarter results as well as related financial and operational developments. A live webcast of the conference call will be available at www.audible.com/ir for audio streaming access to the call. To participate in the call, the dial-in number is (866) 550-6338 or +1(347) 284-6930. Passcode 6184725.

Use of Non-GAAP Measures

In addition to the results presented in accordance with generally accepted accounting principles, or GAAP, Audible presents financial measures that are non-GAAP measures, specifically adjusted EBITDA. Adjusted EBITDA is net (loss) income excluding interest, taxes, depreciation, amortization, asset impairment, loss on equity investment, and stock based compensation. Audible believes that this non-GAAP measure, viewed in addition to and not in lieu of Audible's reported GAAP results, provides useful information to investors regarding its performance and overall results of operations. These metrics are an integral part of Audible's internal reporting to measure the performance of the Company and the overall effectiveness of senior management. Reconciliations to comparable GAAP measures are available in the accompanying schedules to this press release and on Audible's Web site. The GAAP financial measures presented are consistent with Audible's historical financial reporting practices. The non-GAAP measures presented herein may not be comparable to similarly titled measures presented by other companies, and are not identical to corresponding measures used in our various agreements or other public filings. Management also presents total cash sales. The measurement of total cash sales is defined as the change in deferred revenue plus consolidated net sales. Management believes that total cash sales is a useful measurement when understanding the increase in deferred revenue.

About Audible, Inc.:

Audible (www.audible.com) is the leader in spoken audio information and entertainment on the Internet. Content from Audible is downloaded and played back on personal computers, CDs, or AudibleReady computer-based and wireless mobile devices. Audible has 140,000 hours of audio programs from more than 470 content partners that include leading audiobook publishers, broadcasters, entertainers, magazine and newspaper publishers, and business information providers. Audible is the preeminent provider of spoken-word audio products for Apple's iTunes Store. Among Audible's key business relationships are Apple, Inc., Amazon.com, Palm, Inc., Creative Labs Inc., SanDisk Corporation, and XM Satellite Radio, Inc. Audible has approximately 170 employees with headquarters in Newark, NJ, and an office in London, England. Audible, audible.com, AudibleListener, and AudibleReady are registered trademarks of Audible, Inc. and all are part of the family of Audible, Inc. trademarks. Other product or service names mentioned herein are the trademarks of their respective owners.

Forward-Looking Statements

The statements in this press release which are not historical facts may be deemed to contain forward-looking statements about Audible. Actual results may differ materially from those anticipated in any forward-looking statements as a result of certain risks and uncertainties, including, without limitation, Audible's limited operating history, history of losses, uncertain market for its services, and its inability to license or produce compelling audio content and other risks and uncertainties detailed in Audible's Securities and Exchange Commission filings. No forward-looking statement can be guaranteed. Forward-looking statements speak only as of the date on which they are made and Audible, Inc. undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

                     AUDIBLE INC. AND SUBSIDIARY
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
           (in thousands, except share and per share data)
                             (Unaudited)

                       Three months ended          Nine months ended
                -------------------------------- ---------------------
                September             September  September  September
                    30,     June 30,      30,        30,        30,
                   2007       2007       2006       2007       2006
                ---------- ---------- ---------- ---------- ----------

Revenue, net:
 Content and
  services:
   Consumer
    content        $26,973    $25,727    $19,565    $77,679    $57,681
   Point of sale
    rebates            (4)       (10)          -       (33)      (293)
   Services             28         38         26         90         85
                ---------- ---------- ---------- ---------- ----------
Total content
 and services       26,997     25,755     19,591     77,736     57,473
   Hardware             28         87         73        192        283
   Related party
    revenue            431         20        222        542        852
   Other               162         85        140        359        274
                ---------- ---------- ---------- ---------- ----------
 Total revenue,
  net               27,618     25,947     20,026     78,829     58,882

Operating
 expenses:
 Cost of content
  and services
  revenue:
   Royalties and
    other
    content
    charges         11,989     11,210      8,240     34,455     23,943
   Discount
    certificate
    rebates             74         73        307        407        910
                ---------- ---------- ---------- ---------- ----------
 Total cost of
  content and
  services
  revenue           12,063     11,283      8,547     34,862     24,853
  Cost of
   hardware
   revenue              95        121        826        395      1,707
  Cost of
   related party
   revenue             133        108        169        370        498
  Operations         3,761      3,406      2,987     10,993      8,943
  Technology and
   development       4,680      4,569      4,625     13,820     12,681
  Marketing          4,300      4,049      3,340     12,253     11,214
  General and
  administrative     3,609      3,359      2,743     10,072      8,607
                ---------- ---------- ---------- ---------- ----------
Total operating
 expenses           28,641     26,895     23,237     82,765     68,503
                ---------- ---------- ---------- ---------- ----------

Loss from
 operations        (1,023)      (948)    (3,211)    (3,936)    (9,621)

Loss on equity
 investment           (17)          -       (90)       (77)      (270)

Other income
 (expense):
  Interest
   income              904        857        779      2,606      2,153
  Other expense        (4)        (3)          -       (13)          -
                ---------- ---------- ---------- ---------- ----------
 Other income,
  net                  900        854        779      2,593      2,153

                ---------- ---------- ---------- ---------- ----------
Loss before
 income taxes        (140)       (94)    (2,522)    (1,420)    (7,738)

 Income tax
  expense             (52)       (31)        (3)      (107)        (9)

                ---------- ---------- ---------- ---------- ----------
Net loss            $(192)     $(125)   $(2,525)   $(1,527)   $(7,747)
                ========== ========== ========== ========== ==========


Basic and
 diluted net
 loss per common
 share             $(0.01)    $(0.01)    $(0.10)    $(0.06)    $(0.32)

Basic and
 diluted
 weighted
 average common
 shares
 outstanding    24,349,644 24,279,102 24,348,938 24,278,459 24,443,620
                     AUDIBLE INC. AND SUBSIDIARY
                         NON-GAAP INFORMATION
                             (Unaudited)
                            (in thousands)


                           Three months ended       Nine months ended
                       --------------------------- -------------------
                       September  June   September September September
                          30,      30,      30,       30,       30,
                         2007     2007     2006      2007      2006
                       --------- ------- --------- --------- ---------

Stock-based
 compensation included
 in expense line
 items:
  Operations                $243    $218      $324      $808      $767
  Technology and
   development               240     271       281       804       699
  Marketing                  292     306       271       898       796
  General and
   administrative            694     737       629     2,067     1,900
                       --------- ------- --------- --------- ---------
                          $1,469  $1,532    $1,505    $4,577    $4,162
                       --------- ------- --------- --------- ---------


Depreciation and
 amortization included
 in expense line
 items:
  Operations                 $13      $7       $15       $31       $43
  Technology and
   development             1,117   1,112     1,124     3,360     3,230
  Marketing                    -       -         -         -         -
  General and
   administrative            204     201       186       573       437
                       --------- ------- --------- --------- ---------
                          $1,334  $1,320    $1,325    $3,964    $3,710
                       --------- ------- --------- --------- ---------


Asset impairment
 included in expense
 line items:
  Technology and
   development                 -     160       144       160       144
                       --------- ------- --------- --------- ---------
                              $-    $160      $144      $160      $144
                       --------- ------- --------- --------- ---------


Reconciliation to Non-
 GAAP Financial
 Measures (unaudited)
Net loss                  $(192)  $(125)  $(2,525)  $(1,527)  $(7,747)
Add back:
  Stock-based
   compensation            1,469   1,532     1,505     4,577     4,162
  Depreciation and
   amortization            1,334   1,320     1,325     3,964     3,710
  Loss on equity
   investment                 17       -        90        77       270
  Asset impairment             -     160       144       160       144
  Income tax expense          52      31         3       107         9
Less:
  Interest income, net     (900)   (854)     (779)   (2,593)   (2,153)

                       --------- ------- --------- --------- ---------
Non-GAAP adjusted
 EBITDA                   $1,780  $2,064    $(237)    $4,765  $(1,605)
                       ========= ======= ========= ========= =========


Reconciliation to Non-
 GAAP Financial
 Measures (unaudited)
Total revenue, net       $27,618 $25,947   $20,026   $78,829   $58,882
Add:
  Change in deferred
   revenue                   785     548     1,523     2,763     4,872
                       --------- ------- --------- --------- ---------
Non-GAAP total cash
 sales                   $28,403 $26,495   $21,549   $81,592   $63,754
                       ========= ======= ========= ========= =========
                     AUDIBLE INC. AND SUBSIDIARY
                CONDENSED CONSOLIDATED BALANCE SHEETS
                            (in thousands)

                                            September 30, December 31,
                  Assets                        2007          2006
                                            ------------- ------------
                                             (unaudited)

Current Assets:
  Cash and cash equivalents                      $42,846      $14,925
  Short-term investments                          27,954       51,295
  Interest receivable on short-term
   investments                                       422          626
  Accounts receivable, net of allowance            3,626        4,181
  Accounts receivable, related parties               263          100
  Royalty advances                                   426          710
  Prepaid expenses and other current assets        1,497        1,797
  Inventory                                           79          212
                                            ------------- ------------
Total current assets                              77,113       73,846

  Property and equipment, net                     10,755        8,149
  Investment in related party, net at
   equity                                            961            -
  Other assets                                     1,629          781

                                            ------------- ------------
Total Assets                                     $90,458      $82,776
                                            ============= ============

   Liabilities and Stockholders' Equity

Current Liabilities:
  Accounts payable                                $2,057       $3,121
  Accrued expenses                                 4,243        4,678
  Accrued royalties                                7,606        9,028
  Accrued compensation                             3,995          778
  Deferred revenue, current                       16,508       13,840
                                            ------------- ------------
Total current liabilities                         34,409       31,445

  Deferred revenue, non current                      616          513
  Royalty obligations, non current                    75           90
  Other liabilities, non current                   1,842          262

  Commitments and contingencies

Stockholders' Equity:
  Common stock                                       244          241
  Additional paid-in capital                     195,394      190,799
  Accumulated other comprehensive (loss)
   income                                            (57)         (36)
  Accumulated deficit                           (142,065)    (140,538)
                                            ------------- ------------
Total Stockholders' Equity                        53,516       50,466

                                            ------------- ------------
Total Liabilities and Stockholders' Equity       $90,458      $82,776
                                            ============= ============
                     AUDIBLE INC. AND SUBSIDIARY
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (in thousands)
                             (unaudited)
                                  Three months ended Nine months ended
                                    September 30,      September 30,
                                  ------------------ -----------------
                                    2007      2006     2007     2006
                                  --------- -------- -------- --------

Cash flows from operating
 activities:
  Net loss                           $(192) $(2,525) $(1,527) $(7,747)
Adjustments to reconcile net loss
 to net cash provided by
 operating activities:
  Loss on equity investment in
   related party                         17       90       77      270
  Depreciation and amortization       1,334    1,325    3,964    3,710
  Amortization of audio
   production costs                     161       57      367       79
  Impairment loss on purchased
   software                               -      144      160      144
  Non-cash stock-based
   compensation charge                1,469    1,505    4,577    4,162
  Accretion of discounts on
   short-term investments             (226)    (275)    (718)    (724)
Changes in assets and
 liabilities:
  Interest receivable on short-
   term investments                     114     (10)      204     (77)
  Accounts receivable, net            (501)    (905)      560    (496)
  Accounts receivable, related
   parties                             (31)     (10)    (223)    (203)
  Royalty advances                       78     (88)      286     (48)
  Prepaid expenses and other
   current assets                       359    (301)      301  (1,098)
  Inventory                              25      646      134      345
  Other assets                        (373)       76  (1,213)    (767)
  Accounts payable                    (332)    (345)  (1,069)  (2,402)
  Accrued expenses                    (948)      594  (1,143)    (595)
  Accrued royalties                   1,056      773  (1,436)      773
  Accrued compensation                1,942    (231)    3,211      194
  Deferred revenue                      785    1,523    2,763    4,872
  Other liabilities, non-current      1,211        -    1,580        -
                                  --------- -------- -------- --------
Net cash provided by operating
 activities                           5,948    2,043   10,855      392
                                  --------- -------- -------- --------

Cash flows from investing
 activities:
  Purchases of property and
   equipment                        (1,252)     (76)  (5,394)  (4,049)
  Capitalized software
   development costs                  (326)    (191)    (653)    (445)
  Investment in related party         (978)        -    (978)        -
  Purchases of short-term
   investments                      (4,960) (24,529) (44,316) (60,098)
  Proceeds from maturity of
   short-term investments            25,952   27,265   68,375   69,065
                                  --------- -------- -------- --------
Net cash provided by investing
 activities                          18,436    2,469   17,034    4,473
                                  --------- -------- -------- --------

Cash flows from financing
 activities:
  Proceeds from exercise of
   common stock options                  98       31      469      385
  Proceeds from exercise of
   common stock warrants                  -        -        -      750
  Payment of taxes due on vested
   restricted stock                   (242)        -    (448)        -
  Repurchase of treasury stock at
   cost                                   -  (1,701)        -  (3,988)
                                  --------- -------- -------- --------
Net cash (used in) provided by
 financing activities                 (144)  (1,670)       21  (2,853)
                                  --------- -------- -------- --------

Effect of exchange rate changes
 on cash and cash equivalents             9        7       11      (5)
                                  --------- -------- -------- --------

  Increase in cash and cash
   equivalents                       24,249    2,849   27,921    2,007

Cash and cash equivalents at
 beginning of period                 18,597   10,707   14,925   11,549
                                  --------- -------- -------- --------
Cash and cash equivalents at end
 of period                          $42,846  $13,556  $42,846  $13,556
                                  ========= ======== ======== ========
                     AUDIBLE INC. AND SUBSIDIARY
                UNAUDITED SUPPLEMENTAL OPERATING DATA
                        (Members in thousands)



New AudibleListener     Q1    Q2    Q3    Q4    Q1    Q2    Q3    Q4
 Membership Reporting:  2005  2005  2005  2005  2006  2006  2006  2006
Total
 AudibleListener(R)
 Members(1)              186   205   224   245   279   309   345   383
  Year-over-year         77%   78%   70%   56%   50%   51%   54%   56%
  Quarter-over-quarter   18%   10%    9%    9%   14%   11%   12%   11%
New AudibleListener(R)
 Members(2)               54    52    60    62    79    65    71    70
  Year-over-year        143%  136%  107%   59%   46%   25%   18%   13%
  Quarter-over-quarter   38%   -4%   15%    3%   27%  -18%    9%   -1%
Average Monthly Churn
 in AudibleListener(R)
 Members(3)            4.00% 4.70% 5.10% 4.80% 4.60% 3.40% 3.10% 2.50%
Cost per New AL          $52   $57   $57   $94   $51   $44   $45   $49



New AudibleListener Membership Reporting:            Q1    Q2    Q3
                                                     2007  2007  2007
Total AudibleListener(R) Members(1)                   415   431   455
  Year-over-year                                      49%   39%   32%
  Quarter-over-quarter                                 8%    4%    6%
New AudibleListener(R) Members(2)                      72    55    63
  Year-over-year                                      -9%  -15%  -11%
  Quarter-over-quarter                                 3%  -24%   15%
Average Monthly Churn in AudibleListener(R)
 Members(3)                                         3.00% 2.80% 2.70%
Cost per New AL                                       $41   $48   $45

(1) Total number of AudibleListener(R) members at the end of the
 period.
(2) Total number of new AudibleListener(R) members added during the
 period. Members canceling and rejoining a membership within the same
 day are counted as one membership.
(3) Churn is defined as member cancellations in the period divided by
 the sum of members at the beginning of the period plus gross member
 adds, divided by three months.

CONTACT: Audible, Inc.
James Pearson, 973-820-0474
jpearson@audible.com
SOURCE: Audible, Inc.

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