Audible Announced Fourth Quarter 2007 Financial Results
NEWARK, N.J.–(BUSINESS WIRE)–Feb. 29, 2008–Audible, Inc. (NASDAQ: ADBL; http://www.audible.com), the leader in spoken audio entertainment, information, and educational programming on the Internet, today announced unaudited financial results for the fourth quarter and year ended December 31, 2007.Audible reported consolidated fourth quarter net revenue of $31.1 million, up 35% over the $23.2 million reported in the fourth quarter of 2006 and 13% over the $27.6 million reported in the third quarter of 2007. Revenue for the year ended December 31, 2007, was $110.0 million, up 34% from the $82.0 million in revenue for 2006.
Adjusted EBITDA for the fourth quarter of 2007 was $3.2 million, an increase of $2.6 million from adjusted EBITDA in the fourth quarter of 2006, and an increase of $1.3 million from $1.9 million in the third quarter of 2007. The company finished 2007 with $8.0 million of adjusted EBITDA, compared to a loss of $(1.0 million) in 2006.
Net income for the fourth quarter of 2007 was $4.0 million, or $0.16 per share, an improvement from the net loss of $(0.9 million), or $(0.04) per share, reported in the fourth quarter of 2006. Net income included a non-operating benefit of $3.1 million from the sale of net operating loss tax credits in the state of New Jersey. The company finished 2007 with net income of $2.4 million or $0.10 per share compared to a net loss of $(8.7 million) or $(0.36) per share in 2006.
During the quarter, 71,000 new AudibleListener(R) members were acquired, an increase from the 70,000 new AudibleListener members reported in the fourth quarter of 2006, and a 13% increase quarter over quarter, from the 63,000 new members reported in the third quarter of 2007.
There were 457,000 total AudibleListener members at the end of 2007, compared to 381,000 total members reported at the end of 2006. This included 324,000 Gold/Platinum members which represented a gain of 85,000 members in one of the minimum monthly delivery subscription plans since last year.
Amazon Acquisition
On January 31, 2008, Audible and Amazon.com, Inc. (NASDAQ:AMZN) announced that they had reached an agreement for Amazon to acquire Audible. Amazon commenced a tender offer on February 11, 2008, to purchase for cash all of the outstanding shares of Audible for $11.50 per share. The transaction is subject to certain regulatory reviews and other conditions and is expected to close by the second quarter of 2008.
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 180,000 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 its 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 Year ended
----------------------------------- -----------------------
December September December December December
31, 30, 31, 31, 31,
2007 2007 2006 2007 2006
----------- ----------- ----------- ----------- -----------
Revenue,
net:
Content
and
services:
Consumer
content $ 30,479 $ 26,973 $ 22,536 $ 108,158 $ 80,217
Point of
sale
rebates (4) (4) (25) (37) (318)
Services 19 28 26 109 111
----------- ----------- ----------- ----------- -----------
Total
content and
services 30,494 26,997 22,537 108,230 80,010
Hardware 118 28 148 310 431
Related
party
revenue 106 431 395 648 1,247
Other 421 162 70 780 344
----------- ----------- ----------- ----------- -----------
Total
revenue,
net 31,139 27,618 23,150 109,968 82,032
Operating
expenses:
Cost of
content
and
services
revenue:
Royalties
and other
content
charges 13,492 11,989 9,734 47,947 33,677
Discount
certificate
rebates 181 74 418 588 1,328
----------- ----------- ----------- ----------- -----------
Total cost
of content
and
services
revenue 13,673 12,063 10,152 48,535 35,005
Cost of
hardware
revenue 221 95 246 616 1,953
Cost of
related
party
revenue 106 133 139 476 637
Operations 3,894 3,761 3,225 14,887 12,168
Technology
and
development 4,504 4,680 4,303 18,324 16,984
Marketing 4,692 4,300 4,108 16,945 15,322
General
and
adminis-
trative 3,831 3,609 3,402 13,903 12,009
----------- ----------- ----------- ----------- -----------
Total
operating
expenses 30,921 28,641 25,575 113,686 94,078
----------- ----------- ----------- ----------- -----------
Income
(loss) from
operations 218 (1,023) (2,425) (3,718) (12,046)
Loss on
equity
investment (303) (17) (94) (380) (364)
Other
income
(expense):
Interest
income 930 904 822 3,536 2,975
Other
expense 12 (4) - (1) -
----------- ----------- ----------- ----------- -----------
Other
income,
net 942 900 822 3,535 2,975
----------- ----------- ----------- ----------- -----------
Income
(loss)
before
income
taxes 857 (140) (1,697) (563) (9,435)
Income
tax
expense (53) (52) (5) (160) (14)
State
income
tax
benefit 3,148 - 769 3,148 769
----------- ----------- ----------- ----------- -----------
Net income
(loss) $ 3,952 $ (192) $ (933) $ 2,425 $ (8,680)
=========== =========== =========== =========== ===========
Basic net
income
(loss)
per
common
share $ 0.16 $ (0.01) $ (0.04) $ 0.10 $ (0.36)
Diluted net
income
(loss)
per
common
share $ 0.16 $ (0.01) $ (0.04) $ 0.10 $ (0.36)
Basic
weighted
average
common
shares
outstanding 24,406,910 24,349,644 24,158,857 24,311,667 24,371,844
Diluted
weighted
average
common
shares
outstanding 25,171,943 24,349,644 24,158,857 24,958,120 24,371,844
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,
2007 2007 2006 2007 2006
-------- --------- -------- --------- --------
Stock-based
compensation included
in expense line items:
Operations $ 286 $ 243 $ 344 $ 1,095 $ 1,111
Technology and
development 295 240 294 1,098 993
Marketing 326 292 327 1,224 1,123
General and
administrative 710 694 787 2,777 2,687
-------- --------- -------- --------- --------
$ 1,617 $ 1,469 $ 1,752 $ 6,194 $ 5,914
======== ========= ======== ========= ========
Depreciation and
amortization included
in expense line items:
Operations $ 13 $ 13 $ 14 $ 45 $ 57
Technology and
development 1,122 1,117 1,148 4,482 4,377
Marketing - - - - -
General and
administrative 219 204 145 791 583
-------- --------- -------- --------- --------
$ 1,354 $ 1,334 $ 1,307 $ 5,318 $ 5,017
======== ========= ======== ========= ========
Asset impairment
included in expense
line items:
Technology and
development - 160 - 160 144
-------- --------- -------- --------- --------
$ - $ 160 $ - $ 160 $ 144
======== ========= ======== ========= ========
Reconciliation to Non-
GAAP Financial
Measures (unaudited)
Net income (loss) $ 3,952 $ (192) $ (933) $ 2,425 $(8,680)
Add back:
Stock-based
compensation 1,617 1,469 1,752 6,194 5,914
Depreciation and
amortization 1,354 1,334 1,307 5,318 5,017
Loss on equity
investment 303 17 94 380 364
Asset impairment - 160 - 160 144
Income tax expense 53 52 5 160 14
Less:
Interest income, net (942) (900) (822) (3,535) (2,975)
State income tax
benefit (3,148) - (769) (3,148) (769)
-------- --------- -------- --------- --------
Non-GAAP adjusted
EBITDA $ 3,189 $ 1,940 $ 634 $ 7,954 $ (971)
======== ========= ======== ========= ========
Reconciliation to Non-
GAAP Financial
Measures (unaudited)
Total revenue, net $31,139 $ 27,618 $23,150 $109,968 $82,032
Add:
Change in deferred
revenue 2,080 785 2,253 4,843 7,125
-------- --------- -------- --------- --------
Non-GAAP total cash
sales $33,219 $ 28,403 $25,403 $114,811 $89,157
======== ========= ======== ========= ========
AUDIBLE INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, December 31,
Assets 2007 2006
------------ ------------
(unaudited)
Current Assets:
Cash and cash equivalents $ 72,384 $ 14,925
Short-term investments 8,453 51,295
Interest receivable on short-term
investments 332 626
Accounts receivable, net of allowance 5,007 4,181
Accounts receivable, related parties 443 100
Royalty advances 310 710
Prepaid expenses and other current assets 740 1,797
Inventory 69 212
------------ ------------
Total current assets 87,738 73,846
Property and equipment, net 9,910 8,149
Investment in related party, net at equity 657 -
Other assets 1,695 781
------------ ------------
Total Assets $ 100,000 $ 82,776
============ ============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 1,796 $ 3,121
Accrued expenses 3,804 4,678
Accrued royalties 9,532 9,028
Accrued compensation 6,241 778
Deferred revenue, current 18,651 13,840
------------ ------------
Total current liabilities 40,024 31,445
Deferred revenue, non current 546 513
Royalty obligations, non current - 90
Other liabilities, non current 1,734 262
Commitments and contingencies
Stockholders' Equity:
Common stock 243 241
Additional paid-in capital 195,617 190,799
Accumulated other comprehensive (loss)
income (51) (36)
Accumulated deficit (138,113) (140,538)
------------ ------------
Total Stockholders' Equity 57,696 50,466
------------ ------------
Total Liabilities and Stockholders' Equity $ 100,000 $ 82,776
============ ============
AUDIBLE INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three months ended Year ended
December 31, December 31,
------------------ -------------------
2007 2006 2007 2006
-------- --------- --------- ---------
Cash flows from operating
activities:
Net income (loss) $ 3,952 $ (933) $ 2,425 $ (8,680)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Loss on equity investment in
related party 303 - 320 -
Depreciation and amortization 1,354 1,308 5,318 5,018
Amortization of audio
production costs 186 69 553 148
Impairment loss on purchased
software - - 160 144
Non-cash stock-based
compensation charge 1,617 1,752 6,194 5,914
Income tax benefit from
exercise of stock options 20 - 20 -
Amortization of discounts on
short-term investments (114) (280) (881) (1,004)
Changes in assets and
liabilities:
Interest receivable on short-
term investments 90 (121) 294 (198)
Accounts receivable, net (1,383) (1,337) (823) (1,833)
Accounts receivable, related
parties (180) 427 (343) 494
Royalty advances 114 (191) 400 (239)
Prepaid expenses and other
current assets 758 202 1,059 (896)
Inventory 10 (52) 144 293
Other assets (254) (45) (1,467) (812)
Accounts payable (257) 762 (1,326) (1,640)
Accrued expenses 176 (129) (967) (724)
Accrued royalties 1,935 3,129 499 3,902
Accrued compensation 2,249 (295) 5,460 (101)
Deferred revenue 2,080 2,253 4,843 7,125
Other liabilites, non-current (109) 262 1,471 262
-------- --------- --------- ---------
Net cash provided by operating
activities 12,547 6,781 23,353 7,173
-------- --------- --------- ---------
Cash flows from investing
activities:
Purchases of property and
equipment (657) (231) (6,051) (4,280)
Capitalized software
development costs (535) (427) (1,188) (872)
Investment in related party - - (978) -
Purchases of short-term
investments - (25,367) (44,313) (85,465)
Proceeds from maturity of
short-term investments 19,615 21,725 88,036 90,790
-------- --------- --------- ---------
Net cash provided by investing
activities 18,423 (4,300) 35,506 173
-------- --------- --------- ---------
Cash flows from financing
activities:
Proceeds from exercise of
common stock options 47 248 516 633
Proceeds from exercise of
common stock warrants 76 - 76 750
Payment of taxes due on
vested restricted stock (124) - (572) -
Repurchase of treasury stock
at cost (1,414) (1,363) (1,414) (5,351)
-------- --------- --------- ---------
Net cash (used in) provided by
financing activities (1,415) (1,115) (1,394) (3,968)
-------- --------- --------- ---------
Effect of exchange rate changes
on cash and cash equivalents (17) 3 (6) (2)
-------- --------- --------- ---------
Increase in cash and cash
equivalents 29,538 1,369 57,459 3,376
Cash and cash equivalents at
beginning of period 42,846 13,556 14,925 11,549
-------- --------- --------- ---------
Cash and cash equivalents at
end of period $72,384 $ 14,925 $ 72,384 $ 14,925
======== ========= ========= =========
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) 186 204 223 245 277 306 343 381
Year-over-year 77% 78% 70% 56% 49% 50% 54% 56%
Quarter-over-
quarter 18% 10% 9% 10% 13% 10% 12% 11%
Basic/Value
AudibleListener(R)
Members (2) 0 0 0 9 47 80 113 142
All Other
(Gold/Platinmu)
AudibleListener(R)
Members (2) 186 204 223 236 230 226 230 239
Year-over-year 77% 78% 70% 56% 24% 11% 3% 1%
Quarter-over-
quarter 18% 10% 9% 6% -3% -2% 2% 4%
New AudibleListener(R)
Members(3) 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(4) 4.78% 4.70% 5.20% 4.80% 4.80% 3.50% 3.00% 2.60%
Cost per New AL $52 $57 $57 $94 $51 $44 $45 $49
New AudibleListener Membership Q1 2007 Q2 2007 Q3 2007 Q4 2007
Reporting:
Total AudibleListener(R) Members(1) 412 425 441 457
Year-over-year 49% 39% 29% 20%
Quarter-over-quarter 8% 3% 4% 4%
Basic/Value AudibleListener(R) Members
(2) 150 147 143 133
All Other (Gold/Platinmu)
AudibleListener(R) Members (2) 262 278 298 324
Year-over-year 14% 23% 30% 36%
Quarter-over-quarter 10% 6% 7% 9%
New AudibleListener(R) Members(3) 72 55 63 71
Year-over-year -9% -15% -11% 1%
Quarter-over-quarter 3% -24% 15% 13%
Average Monthly Churn in
AudibleListener(R) Members(4) 3.00% 3.00% 3.30% 3.50%
Cost per New AL $41 $48 $45 $46
(1) Total number of AudibleListener(R) members at the end of the
period.
(2) Number of Basic/Value AudibleListener(R)members at the end of the
period.
(3) 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.
(4) 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.
