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.
