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Audible Announces 4th Quarter 2006 & Full Year Financial Results

Company Reports 2006 Revenue of $82.2 Million, up 30% Year over Year

Results Include Positive Adjusted EBITDA for 4th Quarter 2006

NEWARK, N.J.--(BUSINESS WIRE)--Feb. 27, 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 4th quarter and full year ended December 31, 2006.

Audible reported consolidated 4th quarter net revenues of $23.3 million, up 27.6% over the prior year period and 16.3% over the prior quarter. Adjusted EBITDA (as defined below) of $0.8 million improved by $3.6 million over the 4th quarter of 2005 and $1.1 million over the prior quarter. Net loss for the 4th quarter 2006 was $0.7 million, or ($0.03) per share, which compares to a net loss of $2.2 million, or ($0.09) per share, in the 4th quarter of 2005 and a net loss of $2.5 million, or ($0.10) per share, in the 3rd quarter of 2006.

For the full year 2006, Audible reported net revenue of $82.2 million, up 30% year over year. Net loss for 2006 was $8.4 million or ($0.35) per share. This compares to a net loss of $0.6 million or ($0.03) per share, in 2005. The net loss in 2006 includes $5.9 million of stock-based compensation expense, an increase of $5.0 million compared to similar charges in 2005.

"The 4th quarter of 2006 delivered across-the-board improved financial results for Audible," stated Donald Katz, CEO and Chairman, Audible, Inc. "We saw a strong seasonal sales lift during the quarter, as well as positive results from focused promotional merchandising efforts."

"As we move with confidence into 2007," Mr. Katz continued, "we are committed to continuously improving our audio service as we also increase consumer awareness of our powerful listening products. We expect the results of our efforts will be stronger profitability in 2007 and beyond."

4th Quarter 2006 Key Financial and Operating Metrics

Consolidated Net Revenue: Consolidated net revenue totaled $23.3 million in 4th quarter 2006, a 27.6% increase over the $18.3 million reported in the 4th quarter 2005.

Adjusted EBITDA: Adjusted EBITDA was $0.8 million based upon a net loss of $0.7 million excluding stock-based compensation of $1.8 million, depreciation and amortization of $1.3 million, income tax benefit (net) of $0.8 million and interest income (net) of $0.8 million. Adjusted EBITDA improved by $3.6 million over the 4th quarter 2005, and $1.1 million over the 3rd quarter of 2006.

Deferred revenue: Deferred revenue was $14.4 million at December 31, 2006, a $2.3 million or 19.2% increase over an adjusted $12.0 million at September 30, 2006 and a $7.2 million or 109% increase over the $6.6 million balance at December 31, 2005. (The changes in deferred revenue exclude a $0.7 million prior period adjustment made as of January 1, 2006 in accordance with SAB 108.)

Total New AudibleListener Members: 70,400 new AudibleListener members were acquired during the 4th quarter 2006, a 13.3% increase year over year.

Full Year Key Financial and Operating Metrics

Consolidated Net Revenue: Consolidated net revenue was $82.2 million, up 30% year over year from the $63.2 million reported in 2005.

Adjusted EBITDA: Adjusted EBITDA was negative $1.1 million based upon a net loss of $8.4 million, excluding stock-based compensation of $5.9 million, depreciation and amortization of $5.0 million, asset impairment of $0.1 million, income tax benefit (net) of $0.8 million and interest income (net) of $3.0 million.

Cash, Cash Equivalents, and Short-Term Investments: Audible's cash, cash equivalents and short term investments totaled $66.2 million at the end of December 31, 2006 versus $67.2 million at December 31, 2005.

Total New AudibleListener Members: AudibleListener members acquired in 2006 were 285,300, up 25% versus the prior year. There were approximately 383,000 AudibleListener members on December 31, 2006, including approximately 142,000 basic AudibleListener members.

Ongoing Audit of Financial Results and Internal Controls

The company is undergoing an audit of its financial results for the year 2006, and an audit of its internal controls over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002. These audit procedures are not yet complete as of the date of this press release. There can be no assurance that our financial results as disclosed in this press release will not change following the completion of the audits or that our internal controls will be found to be effective.

Conference Call

Senior management will host an investor teleconference at 5:00 p.m. EDT today, to discuss 4th quarter results as well as related financial and operational developments. A live webcast of the conference call is available at www.audible.com/ir for audio streaming access to the call. To participate in the call, the dial-in number is 800-238-9007 or +1-719-457-2622. Passcode 5495299.

Use of Non-GAAP Measures

In addition to the results presented in accordance with generally accepted accounting principles, or GAAP, the company presents financial measures that are non-GAAP measures, specifically adjusted EBITDA. Adjusted EBITDA is net (loss) income excluding interest, taxes, depreciation, amortization, impairment and stock based compensation. The company believes that this non-GAAP measure, viewed in addition to and not in lieu of the company's reported GAAP results, provides useful information to investors regarding its performance and overall results of operations. These metrics are an integral part of the company'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 and on the company's Web site with this press release. The GAAP financial measures presented are consistent with the company'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 public filings. Management also presents total cash sales. The measure total cash sales is defined as change in deferred revenue plus consolidated net sales. Management believes that total cash sales is a useful measure 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(R) computer-based and wireless mobile devices. Audible has 127,000 hours of audio programs from more than 390 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, and XM Satellite Radio.

Audible, www.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
                               ---------------------------------------
                               December 31, September 30, December 31,
                                  2006          2006         2005
                               ------------ ------------- ------------

Revenue, net:
  Content and services:
   Consumer content                $22,682       $19,565      $17,716
   Point of sale rebates               (25)            -         (211)
   Services                             26            26           49
                               ------------ ------------- ------------
  Total content and services        22,683        19,591       17,554
   Hardware                            148            73          280
   Related party revenue               395           222          349
   Other                                70           140           80
                               ------------ ------------- ------------
  Total revenue, net                23,296        20,026       18,263

Operating expenses:
  Cost of content and services
   revenue:
   Royalties and other content
    charges                          9,734         8,240        7,028
   Discount certificate
    rebates                            453           307          294
                               ------------ ------------- ------------
  Total cost of content and
   services revenue                 10,187         8,547        7,322
   Cost of hardware revenue            246           826        1,493
   Cost of related party
    revenue                            139           169          134
   Operations                        3,225         2,988        2,772
   Technology and development        4,303         4,624        2,428
   Marketing                         4,001         3,340        5,019
   General and administrative        3,387         2,743        2,765
                               ------------ ------------- ------------
Total operating expenses            25,488        23,237       21,933
                               ------------ ------------- ------------

Loss from operations                (2,192)       (3,211)      (3,670)

Loss on equity investment              (94)          (90)           -

                               ------------ ------------- ------------
  Net Interest income                  822           779          654

                               ------------ ------------- ------------
Loss before income taxes            (1,464)       (2,522)      (3,016)

  Income tax (expense) benefit          (5)           (3)          96
  State income tax benefit             769             -          740

                               ------------ ------------- ------------
Net loss                             $(700)      $(2,525)     $(2,180)
                               ============ ============= ============

Basic and diluted net loss per
 common share                       $(0.03)       $(0.10)      $(0.09)

Basic and diluted weighted
 average common shares
 outstanding                    24,158,857    24,348,938   24,310,129


                                       Year ended
                               --------------------------
                               December 31, December 31,
                                  2006          2005
                               ------------ -------------

Revenue, net:
  Content and services:
   Consumer content                $80,363       $62,185
   Point of sale rebates              (318)       (1,006)
   Services                            111           131
                               ------------ -------------
  Total content and services        80,156        61,310
   Hardware                            431           612
   Related party revenue             1,247         1,146
   Other                               344           169
                               ------------ -------------
  Total revenue, net                82,178        63,237

Operating expenses:
  Cost of content and services
   revenue:
   Royalties and other content
    charges                         33,677        22,613
   Discount certificate
    rebates                          1,363         1,556
                               ------------ -------------
  Total cost of content and
   services revenue                 35,040        24,169
   Cost of hardware revenue          1,953         2,934
   Cost of related party
    revenue                            637           256
   Operations                       12,168         9,355
   Technology and development       16,984         8,239
   Marketing                        15,215        13,387
   General and administrative       11,994         8,366
                               ------------ -------------
Total operating expenses            93,991        66,706
                               ------------ -------------

Loss from operations               (11,813)       (3,469)

Loss on equity investment             (364)            -

                               ------------ -------------
  Net Interest income                2,975         2,077

                               ------------ -------------
Loss before income taxes            (9,202)       (1,392)

  Income tax (expense) benefit         (14)           (1)
  State income tax benefit             769           740

                               ------------ -------------
Net loss                           $(8,447)        $(653)
                               ============ =============

Basic and diluted net loss per
 common share                       $(0.35)       $(0.03)

Basic and diluted weighted
 average common shares
 outstanding                    24,371,844    24,195,771
                     AUDIBLE INC. AND SUBSIDIARY
                         NON-GAAP INFORMATION
                             (Unaudited)
                            (in thousands)

                             Three months ended         Year ended
                         --------------------------- -----------------
                         December September December December December
                            31,      30,       31,      31,      31,
                           2006     2006      2005     2006     2005
                         -------- --------- -------- -------- --------

Stock-based compensation
 included in expense
 line items:
  Operations                $344      $324      $73   $1,111     $171
  Technology and
   development               294       281       71      993      133
  Marketing                  327       271       52    1,123      101
  General and
   administrative            787       629      226    2,687      552
                         -------- --------- -------- -------- --------
                          $1,752    $1,505     $422   $5,914     $957
                         -------- --------- -------- -------- --------

Depreciation and
 amortization included
 in expense line items:
  Operations                 $15       $15      $13      $57      $44
  Technology and
   development             1,148     1,268      303    4,378      772
  Marketing                   --        --       --       --       --
  General and
   administrative            145       186      112      583      290
                         -------- --------- -------- -------- --------
                          $1,308    $1,469     $428   $5,018   $1,106
                         -------- --------- -------- -------- --------

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

Reconciliation to Non-
 GAAP Financial Measures
Net loss                   $(700)  $(2,525) $(2,180) $(8,447)   $(653)
Add back:
  Stock-based
   compensation            1,752     1,505      422    5,914      957
  Depreciation and
   amortization            1,308     1,469      428    5,018    1,106
  Asset impairment             -         -        -      144        -
  Income tax expense
   (benefit)                   5         3      (96)      14        1
Less:
  Interest income, net      (822)     (779)    (654)  (2,975)  (2,077)
  State income tax
   benefit                  (769)        -     (740)    (769)    (740)

                         -------- --------- -------- -------- --------
Non-GAAP adjusted EBITDA    $774     $(327) $(2,820) $(1,101) $(1,406)
                         ======== ========= ======== ======== ========

Reconciliation to Non-
 GAAP Financial Measures
Total revenue, net       $23,296   $20,026  $18,263  $82,178  $63,237
Add:
  Change in deferred
   revenue              *  2,313     1,526    3,314 *  7,192    4,112
                         -------- --------- -------- -------- --------
Non-GAAP total cash
 sales                   $25,609   $21,552  $21,577  $89,370  $67,349
                         ======== ========= ======== ======== ========

*Excludes $658 SAB 108 adjustment
                     AUDIBLE INC. AND SUBSIDIARY
                CONDENSED CONSOLIDATED BALANCE SHEETS
                        (dollars in thousands)

                                             December 31, December 31,
                   Assets                        2006         2005
                                             ------------ ------------
                                             (unaudited)

Current Assets:
  Cash and cash equivalents                  $    14,925  $    11,549
  Short-term investments                          51,295       55,616
  Interest receivable on short-term
   investments                                       626          428
  Accounts receivable, net of allowance            4,104        2,337
  Accounts receivable, related parties               101          594
  Royalty advances                                   710          471
  Prepaid expenses and other current assets        1,777          899
  Inventory                                          212          498
                                             ------------ ------------
Total current assets                              73,750       72,392

  Property and equipment, net                      8,149        8,159
  Other assets                                       781          114

                                             ------------ ------------
Total Assets                                 $    82,680  $    80,665
                                             ============ ============

    Liabilities and Stockholders' Equity

Current Liabilities:
  Accounts payable                           $     3,120  $     4,750
  Accrued expenses                                 3,809        4,802
  Accrued royalties                                9,028        5,104
  Accrued compensation                               778          868
  Deferred revenue, current                       13,895        6,459
                                             ------------ ------------
Total current liabilities                         30,630       21,983

  Deferred revenue, non current                      513           99
  Other liabilities, non current                     262           --
  Royalty obligations, non current                    90          188

  Commitments and contingencies

Stockholders' Equity:
  Common stock                                       241          243
  Additional paid-in capital                     190,799      192,547
  Deferred compensation                                -       (3,696)
 Accumulated other comprehensive (loss)
  income                                             (36)          15
  Accumulated deficit                           (139,819)    (130,714)
                                             ------------ ------------
Total Stockholders' Equity                        51,185       58,395

                                             ------------ ------------
Total Liabilities and Stockholders' Equity   $    82,680  $    80,665
                                             ============ ============
                     AUDIBLE INC. AND SUBSIDIARY
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                        (dollars in thousands)
                             (unaudited)

                               Three months ended      Year ended
                                  December 31,        December 31,
                               ------------------- -------------------
                                 2006      2005      2006      2005
                               --------- --------- --------- ---------

Cash flows from operating
 activities:
  Net loss                        $(700)  $(2,180)  $(8,447)    $(653)
Adjustments to reconcile net
 (loss) income to net cash
 provided by operating
 activities:
  Depreciation and
   amortization                   1,308       428     5,018     1,106
  Impairment loss on
   internally developed
   software                           -         -       144         -
  Non-cash stock-based
   compensation charge            1,752       422     5,914       957
  Accretion of discounts on
   short-term investments          (280)     (252)   (1,004)   (1,184)
  Income tax benefit from
   exercise of stock options          -       (97)
Changes in assets and
 liabilities:
  Interest receivable on
   short-term investments          (121)     (186)     (198)     (352)
  Accounts receivable, net       (1,260)     (913)   (1,756)   (1,550)
  Accounts receivable, related
   parties                          427      (417)      494      (506)
  Royalty advances                 (191)       71      (239)     (330)
  Prepaid expenses and other
   current assets                   222      (165)     (876)     (233)
  Inventory                         (52)     (399)      293      (104)
  Other assets                       24        21      (664)      (93)
  Accounts payable                  762     3,017    (1,640)    3,903
  Accrued expenses                 (512)      251    (1,107)    3,062
  Other liabilities, non-
   current                          263        --       263        --
  Accrued royalties               3,129      (202)    3,902     3,222
  Accrued compensation             (295)      (93)     (101)      420
  Deferred revenue                2,306     3,316     7,178     4,114
                               --------- --------- --------- ---------
Net cash provided by operating
 activities                       6,782     2,622     7,174    11,779
                               --------- --------- --------- ---------

Cash flows from investing
 activities:
  Purchases of property and
   equipment                       (231)   (1,599)   (4,280)   (3,706)
  Capitalized software
   development costs               (427)   (3,872)     (872)   (4,640)
  Purchases of short-term
   investments                  (25,367)  (17,828)  (85,465)  (79,546)
  Proceeds from maturity of
   short-term investments        21,725    18,600    90,790    73,500
                               --------- --------- --------- ---------
Net cash (used in) provided by
 investing activities            (4,300)   (4,699)      173   (14,392)
                               --------- --------- --------- ---------

Cash flows from financing
 activities:
  Proceeds from exercise of
   common stock options             248        67       633       690
  Proceeds from exercise of
   common stock warrants              -         -       750       295
  Principal payments made on
   capital lease obligations          -         -         -      (121)
  Repurchase of treasury stock
   at cost                       (1,363)        -    (5,351)        -
                               --------- --------- --------- ---------
Net cash (used in) provided by
 financing activities            (1,115)       67    (3,968)      864
                               --------- --------- --------- ---------

Effect of exchange rate
 changes on cash and cash
 equivalents                          2       (12)       (3)        2
                               --------- --------- --------- ---------

   Increase in cash and cash
    equivalents                   1,369    (2,022)    3,376    (1,747)

Cash and cash equivalents at
 beginning of period             13,556    13,571    11,549    13,296
                               --------- --------- --------- ---------
Cash and cash equivalents at
 end of period                  $14,925   $11,549   $14,925   $11,549
                               ========= ========= ========= =========
                     AUDIBLE INC. AND SUBSIDIARY
                UNAUDITED SUPPLEMENTAL OPERATING DATA
                        (Numbers in thousands)

New AudibleListener           Q2    Q3    Q4    Q1    Q2    Q3    Q4
 Membership Reporting:        2004  2004  2004  2005  2005  2005  2005
----------------------------
Total AudibleListener(R)
 Members(1)                   115   132   157   186   205   224   245
  Year-over-year               --    --    --    77%   78%   70%   56%
  Quarter-over-quarter         10%   15%   19%   18%   10%    9%    9%

New AudibleListener(R)
 Members(2)                    22    29    39    54    52    60    62
  Year-over-year               --    --    --   143%  136%  107%   59%
  Quarter-over-quarter         -2%   32%   34%   38%   -4%   15%    3%

Average Monthly Churn in
 AudibleListener(R)
 Members(3)                  3.00% 3.00% 2.60% 4.00% 4.70% 5.10% 4.80%
Cost per New AL               $64   $62   $64   $52   $58   $58   $95

                                                Q1    Q2    Q3    Q4
New AudibleListener Membership Reporting:       2006  2006  2006  2006
----------------------------------------------
Total AudibleListener(R) Members(1)             279   309   345   383
  Year-over-year                                 50%   51%   54%   57%
  Quarter-over-quarter                           14%   11%   12%   11%

New AudibleListener(R) Members(2)                79    65    71    70
  Year-over-year                                 46%   25%   18%   13%
  Quarter-over-quarter                           27%  -18%    9%   -1%

Average Monthly Churn in AudibleListener(R)
 Members(3)                                    4.60% 3.40% 3.10% 2.50%
Cost per New AL                                 $52   $45   $47   $49

(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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