ADBL Audible (MM)

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 second quarter ended June 30, 2007. Audible reported consolidated second quarter net revenues of $25.9 million, up 36% over the $19.1 million reported in the second quarter of 2006 and 3% over $25.3 million in the first quarter of 2007. Adjusted EBITDA (�EBITDA�) increased to $2.1 million, up from $113,000 EBITDA reported in the second quarter of 2006 and $1.0 million in the first quarter of 2007. Net loss for the second quarter of 2007 was ($125,000), or $(0.01) per share, a decrease from the net loss of ($2.2) million, or $(0.09) per share reported in the second quarter of 2006, and ($1.2) million or $(0.05) per share in the first quarter of 2007. During the quarter, approximately 56,000 new AudibleListener� members were acquired. There were nearly 431,000 AudibleListener members at the end of the quarter, an increase compared to 309,000 at the end of second quarter of 2006 and 415,000 at the end of first quarter of 2007. �During the second quarter of 2007 our continued focus on acquiring higher value AudibleListener members produced stellar results. We served them with superior listening, while offering targeted customer communications and consistent customer support,� noted Donald Katz, CEO and Chairman, Audible, Inc. �We are pleased to have achieved a quarter that demonstrates our commitment to profitable growth.� Second Quarter 2007 Key Financial and Operating Metrics Consolidated Net Revenue: Consolidated net revenue totaled $25.9 million in the second quarter of 2007, a 36% increase over the $19.1 million in consolidated net revenue in the second quarter of 2006 and a 3% increase over $25.3 million in the first quarter 2007. Adjusted EBITDA: EBITDA increased to $2.1 million, up from $113,000 EBITDA reported in the second quarter of 2006. EBITDA for the second quarter of 2007 is based upon a net loss of ($125,000) which then excludes stock-based compensation of $1.5 million, depreciation and amortization of $1.3 million, interest income (net) of $854,000, and asset impairment of $160,000. Deferred revenue: Deferred revenue was $16.3 million at June 30, 2007, a $1.9 million or 14% increase over the $14.4 million balance reported at December 31, 2006. Total New Audible Listener Members: Nearly 56,000 new AudibleListener members were acquired during the second quarter of 2007, a decrease from the 65,000 Audible Listener members reported in second quarter of 2006. However, 96% percent of new members acquired in Q2 2007 were higher revenue AudibleListener Gold and Platinum members, versus 47% of new members acquired in the second quarter of 2006. Conference Call Senior management will host an investor teleconference at 5:00 p.m. EDT today to discuss second 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 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, 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 analyzing period results. 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, and XM Satellite Radio. 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 Six months ended June 30, March 31, June 30, June 30, June 30, 2007 2007 2006 2007 2006 � Revenue, net: Content and services: Consumer content $ 25,727 $ 24,979 $ 18,835 $ 50,706 $ 38,116 Point of sale rebates (10) (19) (126) (29) (293) Services � 38 � 24 � 26 � 62 � 59 Total content and services 25,755 24,984 18,735 50,739 37,882 Hardware 87 77 85 164 210 Related party revenue 20 91 257 111 630 Other � 85 � 112 � 64 � 197 � 134 Total revenue, net 25,947 25,264 19,141 51,211 38,856 � Operating expenses: Cost of content and services revenue: Royalties and other content charges 11,210 11,256 7,720 22,466 15,703 Discount certificate rebates � 73 � 260 � 305 � 333 � 603 Total cost of content and services revenue 11,283 11,516 8,025 22,799 16,306 Cost of hardware revenue 121 179 206 300 881 Cost of related party revenue 108 129 171 237 329 Operations 3,406 3,826 2,854 7,232 5,956 Technology and development 4,569 4,571 4,362 9,140 8,056 Marketing 4,049 3,904 3,573 7,953 7,874 General and administrative � 3,359 � 3,104 � 2,663 � 6,463 � 5,864 Total operating expenses � 26,895 � 27,229 � 21,854 � 54,124 � 45,266 � Loss from operations (948) (1,965) (2,713) (2,913) (6,410) � Loss on equity investment - (60) (180) (60) (180) � Other income (expense): Interest income 857 845 714 1,702 1,374 Other expense � (3) � (6) � - � (9) � - Other income, net 854 839 714 1,693 1,374 � � � � � Loss before income taxes (94) (1,186) (2,179) (1,280) (5,216) � Income tax expense (31) (24) (3) (55) (6) � � � � � Net loss $ (125) $ (1,210) $ (2,182) $ (1,335) $ (5,222) � � Basic and diluted net loss per common share $ (0.01) $ (0.05) $ (0.09) $ (0.06) $ (0.21) � Basic and diluted weighted average common shares outstanding 24,279,102 24,205,043 24,501,629 24,242,777 24,491,745 AUDIBLE INC. AND SUBSIDIARY NON-GAAP INFORMATION (Unaudited) (in thousands) � Three months ended Six months ended June 30, March 31, June 30, June 30, June 30, 2007 2007 2006 2007 2006 � Stock-based compensation included in expense line items: Operations $ 218 $ 347 $ 300 $ 565 $ 443 Technology and development 271 293 287 564 417 Marketing 306 300 321 606 525 General and administrative � 737 � 636 � 655 � 1,373 � 1,271 $ 1,532 $ 1,576 $ 1,563 $ 3,108 $ 2,656 � � Depreciation and amortization included in expense line items: Operations $ 7 $ 11 $ 14 $ 18 $ 28 Technology and development 1,112 1,131 1,112 2,243 2,106 Marketing - - - - - General and administrative � 201 � 168 � 137 � 369 � 252 $ 1,320 $ 1,310 $ 1,263 $ 2,630 $ 2,386 � � Asset impairment included in expense line items: Technology and development � 160 � - � - � 160 � - $ 160 $ - $ - $ 160 $ - � � Reconciliation to Non-GAAP Financial Measures (unaudited) Net loss $ (125) $ (1,210) $ (2,182) $ (1,335) $ (5,222) Add back: Stock-based compensation 1,532 1,576 1,563 3,108 2,656 Depreciation and amortization 1,320 1,310 1,263 2,630 2,386 Asset impairment 160 - - 160 - Loss on equity investment - 60 180 60 180 Income tax expense 31 24 3 55 6 Less: Interest income, net (854) (839) (714) (1,693) (1,374) � � � � � Non-GAAP adjusted EBITDA $ 2,064 $ 921 $ 113 $ 2,985 $ (1,368) � � Reconciliation to Non-GAAP Financial Measures (unaudited) Total revenue, net $ 25,947 $ 25,264 $ 19,141 $ 51,211 $ 38,856 Add: Change in deferred revenue � 548 � 1,430 � 1,273 � 1,978 � 3,353 Non-GAAP total cash sales $ 26,495 $ 26,694 $ 20,414 $ 53,189 $ 42,209 AUDIBLE INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands) � June 30, December 31, Assets 2007 2006 (unaudited) � Current Assets: Cash and cash equivalents $ 18,597 $ 14,925 Short-term investments 48,720 51,295 Interest receivable on short-term investments 536 626 Accounts receivable, net of allowance 3,122 4,181 Accounts receivable, related parties 232 100 Royalty advances 504 710 Prepaid expenses and other current assets 3,106 1,797 Inventory � 103 � 212 Total current assets 74,920 73,846 � Property and equipment, net 10,537 8,149 Other assets 1,416 781 � � Total Assets $ 86,873 $ 82,776 � Liabilities and Stockholders' Equity � Current Liabilities: Accounts payable $ 2,385 $ 3,121 Accrued expenses and other current liabilities 5,391 4,678 Accrued royalties 6,543 9,028 Accrued compensation 2,049 778 Deferred revenue, current � 15,691 � 13,840 Total current liabilities 32,059 31,445 � Deferred revenue, non current 644 513 Other liabilities, non current 1,703 262 Royalty obligations, non current 75 90 � Commitments and contingencies � Stockholders' Equity: Common stock 243 241 Additional paid-in capital 194,070 190,799 Accumulated other comprehensive loss (48) (36) Accumulated deficit � (141,873) � (140,538) Total Stockholders' Equity 52,392 50,466 � � Total Liabilities and Stockholders' Equity $ 86,873 $ 82,776 AUDIBLE INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (unaudited) � Three months ended Six months ended June 30, June 30, 2007 2006 2007 2006 � Cash flows from operating activities: Net loss $ (125) $ (2,182) $ (1,335) $ (5,222) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 1,320 1,263 2,630 2,385 Impairment loss on purchased software 160 - 160 - Non-cash stock-based compensation charge 1,532 1,563 3,108 2,657 Accretion of discounts on short-term investments (233) (219) (492) (449) Changes in assets and liabilities: Interest receivable on short-term investments (157) (102) 90 (67) Accounts receivable, net 470 991 1,061 409 Accounts receivable, related parties (64) (10) (132) (13) Royalty advances 135 29 208 40 Prepaid expenses and other current assets (404) 286 (58) (797) Inventory 23 (524) 109 (301) Other assets (465) (47) (634) (821) Accounts payable (476) 356 (737) (2,057) Accrued expenses 32 (707) (195) (1,189) Other liabilities, non current 106 - 369 - Accrued royalties (785) (7) (2,492) - Accrued compensation 1,240 32 1,269 425 Deferred revenue � 548 � 1,273 � 1,978 � 3,349 Net cash provided by (used in) operating activities � 2,857 � 1,995 � 4,907 � (1,651) � Cash flows from investing activities: Purchases of property and equipment (858) (257) (4,142) (3,973) Capitalized software development costs (212) (56) (327) (254) Purchases of short-term investments (17,620) (20,605) (39,356) (35,569) Proceeds from maturity of short-term investments � 15,548 � 17,300 � 42,423 � 41,800 Net cash (used in) provided by investing activities � (3,142) � (3,618) � (1,402) � 2,004 � Cash flows from financing activities: Proceeds from exercise of common stock options - 203 371 354 Proceeds from exercise of common stock warrants - - - 750 Payment of taxes due on vested restricted stock (206) (206) Repurchase of treasury stock at cost � - � (1,927) � - � (2,287) Net cash (used in) provided by financing activities � (206) � (1,724) � 165 � (1,183) � Effect of exchange rate changes on cash and cash equivalents � 2 � (7) � 2 � (12) � (Decrease) increase in cash and cash equivalents (489) (3,354) 3,672 (842) � Cash and cash equivalents at beginning of period � 19,086 � 14,061 � 14,925 � 11,549 Cash and cash equivalents at end of period $ 18,597 $ 10,707 $ 18,597 $ 10,707 � � Supplemental Cash Flow information Accrued purchases of property and equipment $ 709 � - $ 709 � - AUDIBLE INC. AND SUBSIDIARY UNAUDITED SUPPLEMENTAL OPERATING DATA (Numbers in thousands) � � New AudibleListener Membership Reporting: Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Total AudibleListener� Members1 115 132 157 186 205 224 245 279 309 345 383 415 431 Year-over-year -- -- -- 77% 78% 70% 56% 50% 51% 54% 56% 49% 39% Quarter-over-quarter 10% 15% 19% 18% 10% 9% 9% 14% 11% 12% 11% 8% 4% New AudibleListener� Members2 22 29 39 54 52 60 62 79 65 71 70 72 56 Year-over-year -- -- -- 143% 136% 107% 59% 46% 25% 18% 13% -9% -14% Quarter-over-quarter -2% 32% 34% 38% -4% 15% 3% 27% -18% 9% -1% 3% -22% Average Monthly Churn in AudibleListener� Members3 3.0% 3.0% 2.6% 4.0% 4.7% 5.1% 4.8% 4.6% 3.4% 3.1% 2.5% 3.0% 2.8% Cost per New AL $64 $62 $64 $52 $57 $57 $94 $51 $44 $45 $49 $41 $49 � (1) Total number of AudibleListener� members at the end of the period. (2) Total number of new AudibleListener� 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.