Audible Announces Third Quarter 2005 Financial Results; Company Reports Record Q3-05 Revenue of $16.8 Million; Reports Q3-05 Diluted EPS of ($0.01); Reaffirms 2005 Guidance.WAYNE Wayne, city (1990 pop. 19,899), Wayne co., SE Mich., a suburb of Detroit, on the Lower Rouge River; inc. as a village 1869, and with surrounding areas as a city 1960. It has automobile and aircraft industries and other varied manufactures. , N.J. -- Audible A protected MP3 file format from the Audible.com audio download service. See Audible.com. , Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : ADBL ADBL Agricultural Development Bank Limited (Nepal) ; www.audible.com A Web site that offers a library of audio material for downloading and listening on a computer or an Audible-enabled digital music player. Either Audible's own software or iTunes is required to manage the files. ), the Internet's leading provider of digital spoken audio information and entertainment, today announced financial results for the third quarter ended September September: see month. 30, 2005. Audible reported record consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: net revenue for the third quarter 2005 of $16.8 million, up 81% year over year; an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $793,000; and a net loss after taxes of $189,000, or a $0.01 loss per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. Total customers acquired during the quarter were 79,800, representing growth of 75% year over year. AudibleListener(R) members acquired during the quarter were 61,900, representing growth of 102% year over year. "The third quarter saw continued momentum in our acquisition of new AudibleListener members," stated Donald Donald (Domnall, Domhnall, Dumhnuil, Dónall) is an anglicized version of a Scottish or Irish Gaelic personal name, containing the elements dumno "world" and val "rule", viz. "ruler of the world". Compare Dumnorix. Katz Katz , Bernard 1911-2003. German-born British physiologist. He shared a 1970 Nobel Prize for the study of nerve impulse transmission. , chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Audible. "But perhaps more importantly, execution on our AudibleAir The transmission of audio books to wireless-equipped PDAs from Audible.com. It enables users to update their PDAs with audio programs from the Audible Web site. See Audible.com. , Audible UK, education, and podcasting Recording a non-music audio broadcast (news, sports, discussion, etc.) in the MP3 format for playback in a digital music player. See podcast. initiatives has allowed us to plant flags in new markets that will become increasingly important contributors to our growth and profitability in 2006 and beyond." Key Financial and Operating Metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. : Consolidated Net Revenue: consolidated net revenue totaled $16.8 million in Q3-05, an 81% increase over the $9.3 million reported in Q3-04. Total New Customers: total new customers, a combination of new AudibleListener(R) members and new a la carte customers, totaled 79,800 in Q3-05, a 75% increase over 45,500 in Q3-04. New AudibleListener(R) Members: new AudibleListener(R) members totaled 61,900, representing 102% year-over-year growth. Loss from Operations: loss from operations totaled $793,000 in Q3-05, as compared to income from operations of $528,000 in Q3-04. Loss before Income Taxes: loss before income taxes totaled $239,000 in Q3-05, as compared to income before income taxes of $542,000 in Q3-04. Net Loss: net loss totaled $189,000, or $0.01 loss per diluted share. Cash, Cash Equivalents and Short-Term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. Investments: Audible's cash, cash equivalents and short-term investments totaled $69.7 million at the end of Q3-05. Business Outlook: The company today reaffirmed 2005 full-year guidance for consolidated net revenue of $62 million to $65 million, which represents 80% to 89% year-over-year revenue growth. The company also reaffirmed 2005 full-year guidance for income before income taxes and before charges related to stock-based compensation of $1.6 million to $2.0 million. Key Third Quarter Announcements: --September 27, 2005 - Audible announces the launch of AudibleAir(TM), an innovative new service that allows the automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. wireless download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. of secure digital audio files to smartphones. --September 8, 2005 - Audible and Bookspan announce online commerce partnership aimed at providing Audible's audiobook download service to the millions of members of Bookspan's book clubs, including Book-Of-The-Month Club, Doubleday Dou·ble·day , Abner 1819-1893. American army officer traditionally considered the inventor of baseball, although a game similar to baseball predates him. Book Club, Literary Guild guild Association of craftsmen or merchants formed for mutual aid and for the advancement of their professional interests. Guilds flourished in Europe between the 11th and 16th century and were of two types: merchant guilds, including all the merchants of a particular town , QPB QPB Quad Pumped Bus QPB Quality Paperback Book Club , and others. --August 16, 2005 - XM Satellite Radio and Audible announce the launch of the XM Audible Store (http://www.audible.com/xmradio), featuring exclusive XM programming available for individual purchase or download subscription, including "The Bob Edwards For the article on Canadian newspaperman Bob Edwards, see Robert Chambers Edwards. Robert Alan Edwards (born May 16, 1947 in Louisville, Kentucky) is an award-winning American public radio broadcaster. Show" and "Opie O´pie n. 1. Opium. and Anthony." Conference Call Senior management will host an investor teleconference at 5:00 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT today, to discuss third 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 See streaming audio. access to the call. To participate in the call, the dial-in number is (877) 236-1078 or +1(213) 408-0663. * Use of Non-GAAP Measures Management believes that free cash flow is a useful measure of liquidity because it includes cash provided by operating activities as well as the impact of cash used for investment in property and equipment. However, this non-GAAP measure should be considered in addition to, not as a substitute for, or superior to, net cash provided by operating activities, or other financial measures prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with U.S. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . A reconciliation to the U.S. GAAP equivalents of this non-GAAP measure is contained in tabular form Same as table view with respect to printed output. on the attached unaudited condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge . About Audible Inc.: Audible (www.audible.com) is the leader in spoken audio information and entertainment on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the . Content from Audible is downloaded and played back on personal computers, CDs, or AudibleReady(R) computer-based mobile devices. Audible has 80,000 hours of audio programs from 270 content partners that include leading audiobook publishers, broadcasters, entertainers, magazine and newspaper publishers, and business information providers. Audible.com is the Apple iTunes Digital jukebox software for the Mac and Windows from Apple. Designed to transfer music to the iPod and iPhone and administer the copy protection on purchased music titles, iTunes is extremely popular because of its ease of use. Music Store's preeminent pre·em·i·nent or pre-em·i·nent adj. Superior to or notable above all others; outstanding. See Synonyms at dominant, noted. [Middle English, from Latin prae provider of spoken-word spo·ken-word adj. 1. Spoken aloud, especially in performance: spoken-word poetry. 2. Performing or involving a performance of the spoken word: products for downloading downloading - download or streaming via the Web. Additionally, the Company is strategically aligned with Random House, Inc. in the first-ever imprint im·print tr.v. im·print·ed, im·print·ing, im·prints 1. To produce (a mark or pattern) on a surface by pressure. 2. To produce a mark on (a surface) by pressure. 3. to produce spoken-word content specifically suited for digital distribution, Random House Audible. Among the Company's key business relationships are Amazon.com (Amazon.com, Seattle, WA, www.amazon.com) The largest online shopping site and one of the most widely known e-commerce sites on the Web. Founded by Jeff Bezos in 1995, it had 11 employees by year's end. Within four years, it had more than 1,600 employees and four million customers. , Apple Corp., Hewlett-Packard See HP. Hewlett-Packard - (HP) Hewlett-Packard designs, manufactures and services electronic products and systems for measurement, computation and communications. The company's products and services are used in industry, business, engineering, science, medicine and Company, Microsoft Corporation (company) Microsoft Corporation - The biggest supplier of operating systems and other software for IBM PC compatibles. Software products include MS-DOS, Microsoft Windows, Windows NT, Microsoft Access, LAN Manager, MS Client, SQL Server, Open Data Base Connectivity (ODBC), MS Mail, , palmOne, Inc., XM Satellite Radio, PhatNoise Inc., Rio See RapidIO and MP3. Audio, Creative Labs, Texas Instruments See TI. (company) Texas Instruments - (TI) A US electronics company. A TI engineer, Jack Kilby invented the integrated circuit in 1958. Three TI employees left the company in 1982 to start Compaq. Inc., and VoiceAge Corporation. 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. This press release contains information about Audible, Inc. that is not historical fact and may be deemed to contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. about the company. 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 the company's Securities and Exchange Commission filings.
AUDIBLE INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Nine Months ended
September 30, September 30,
------------------------ -------------------------
2005 2004 2005 2004
------------ ----------- ------------ ------------
(unaudited) (unaudited) (unaudited) (unaudited)
Revenue, net:
Content and
services:
Consumer
content $16,471,719 $9,110,575 $44,468,360 $23,724,075
Point of sale
rebates (208,320) (101,640) (795,130) (285,645)
Services 41,472 17,791 81,806 47,794
------------ ----------- ------------ ------------
Total content
and services 16,304,871 9,026,726 43,755,036 23,486,224
Hardware 141,790 186,408 331,686 530,874
Related party
revenue 263,358 65,762 796,889 65,762
Other 60,275 - 89,009 32,257
------------ ----------- ------------ ------------
Total revenue,
net $16,770,294 $9,278,896 $44,972,620 $24,115,117
------------ ----------- ------------ ------------
Operating expenses:
Cost of content
and services
revenue:
Royalties and
other content
charges 5,919,011 2,838,098 15,553,805 7,492,866
Discount
certificate
rebates 297,860 434,170 1,261,591 778,505
------------ ----------- ------------ ------------
Total cost of
content and
services
revenue $6,216,871 $3,272,268 $16,815,396 $8,271,371
Cost of hardware
revenue 840,463 747,734 1,460,169 1,879,337
Operations 2,461,166 1,318,442 6,587,547 3,658,374
Technology and
development 2,324,678 1,271,737 5,771,436 3,807,839
Marketing 3,344,560 1,180,929 8,539,016 3,332,926
General and
administrative 2,375,895 959,518 5,600,114 2,367,233
------------ ----------- ------------ ------------
Total
operating
expenses $17,563,633 $8,750,628 $44,773,678 $23,317,080
------------ ----------- ------------ ------------
(Loss) income from
operations $(793,339) $528,268 $198,942 $798,037
Other income
(expense):
Interest income $553,994 $23,467 $1,424,318 $83,122
Interest expense - (10,069) (1,495) (26,347)
------------ ----------- ------------ ------------
Other income,
net $553,994 $13,398 $1,422,823 $56,775
------------ ----------- ------------ ------------
(Loss) income before
income taxes $(239,345) $541,666 $1,621,765 $854,812
Income tax
benefit
(expense) 50,315 (57,782) (97,535) (76,571)
------------ ----------- ------------ ------------
Net (loss) income $(189,030) $483,884 $1,524,230 $778,241
Dividends on
preferred stock - - - (614,116)
Charges related to
conversion of
convertible
preferred stock - - - (9,873,394)
------------ ----------- ------------ ------------
Total
preferred
stock expense - - - (10,487,510)
------------ ----------- ------------ ------------
Net (loss) income
applicable to
common shareholders $(189,030) $483,884 $1,524,230 $(9,709,269)
============ =========== ============ ============
Basic net (loss)
income applicable
to common
shareholders per
common share $(0.01) $0.02 $0.06 $(0.48)
------------ ----------- ------------ ------------
Basic weighted
average common
shares outstanding 24,291,008 21,270,416 24,157,233 20,394,380
------------ ----------- ------------ ------------
Diluted net (loss)
income applicable
to common
shareholders per
common share $(0.01) $0.02 $0.06 $(0.48)
------------ ----------- ------------ ------------
Diluted weighted
average common
shares outstanding 24,291,008 23,678,669 25,458,621 20,394,380
------------ ----------- ------------ ------------
AUDIBLE INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
Assets 2005 2004
------------- -------------
(unaudited)
Current Assets:
Cash and cash equivalents $13,570,880 $13,296,006
Short-term investments 56,136,629 48,386,399
Interest receivable on short-term
investments 242,335 76,151
Accounts receivable, net of allowance 1,424,408 786,987
Accounts receivable, related party 176,334 87,625
Royalty advances 541,421 140,634
Prepaid expenses and other current assets 733,507 665,984
Inventory 98,705 394,109
------------- -------------
Total current assets 72,924,219 63,833,895
Property and equipment, net 3,116,455 919,090
Other assets 131,803 20,805
------------- -------------
Total Assets $76,172,477 $64,773,790
============= =============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $1,734,116 $850,906
Accrued expenses 9,470,509 3,628,556
Royalty obligations, current 331,652 150,800
Accrued compensation 958,977 448,156
Capital lease obligations - 120,795
Deferred revenue, current 3,218,599 2,445,868
------------- -------------
Total current liabilities 15,713,853 7,645,081
Royalty obligations, non current 250,578 38,000
Deferred revenue, non current 24,995 -
Commitments and contingencies
Stockholders' Equity:
Common stock 243,023 241,697
Additional paid-in capital 192,317,575 187,248,675
Deferred compensation (3,858,676) (154,173)
Accumulated other comprehensive income 17,649 -
Treasury stock at cost - (184,740)
Accumulated deficit (128,536,520) (130,060,750)
------------- -------------
Total Stockholders' Equity 60,183,051 57,090,709
------------- -------------
Total Liabilities and Stockholders' Equity $76,172,477 $64,773,790
------------- -------------
AUDIBLE INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended Nine months ended
September 30, September 30,
------------------------- --------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
(unaudited) (unaudited) (unaudited) (unaudited)
Cash flows from
operating
activities:
Net (loss)
income $(189,030) $483,884 $1,524,230 $778,241
Adjustments to
reconcile net
(loss) income to
net cash provided
by operating
activities:
Depreciation and
amortization 299,564 121,857 676,755 377,284
Services
rendered for
common stock
and warrants - - - 432,327
Non-cash
compensation
charge 363,027 14,913 535,460 70,339
Deferred cash
compensation - - - (58,750)
Accretion of
discounts on
short-term
investments (305,634) - (932,053) -
Income tax
effect from
exercise of
stock options (50,316) - 96,985 -
Changes in
assets and
liabilities:
Interest
receivable on
short-term
investments (89,949) - (166,184) -
Accounts
receivable,
net 52,365 (87,246) (637,690) (284,589)
Accounts
receivable,
from related
parties (130,405) (65,762) (88,709) (65,762)
Royalty
advances (145,137) (14,700) (400,787) 43,838
Prepaid
expenses and
other current
assets 196,483 295,916 (67,739) (41,704)
Inventory 50,918 52,094 294,303 (50,902)
Other assets (103,243) - (113,846) 397,719
Accounts
payable 258,994 224,055 885,706 187,630
Accrued
expenses 3,083,133 88,894 5,845,733 704,429
Royalty
obligations 163,600 (19,000) 393,430 (146,500)
Accrued
compensation 238,233 28,714 513,334 60,674
Deferred
revenue 285,528 114,411 798,351 312,729
------------ ------------ ------------ ------------
Net cash
provided by
operating
activities 3,978,131 1,238,030 9,157,279 2,717,003
------------ ------------ ------------ ------------
Cash flows from
investing
activities:
Purchases of
property and
equipment (389,485) (87,269) (2,106,440) (325,080)
Capitalized
software
development
costs (768,352) - (768,352) -
Purchases of
short-term
investments (29,069,562) - (61,718,177) -
Proceeds from
maturity of
short-term
investments 28,900,000 - 54,900,000 -
------------ ------------ ------------ ------------
Net cash used
in investing
activities (1,327,399) (87,269) (9,692,969) (325,080)
------------ ------------ ------------ ------------
Cash flows from
financing
activities:
Proceeds from
exercise of
common stock
options 33,451 34,529 623,518 362,962
Proceeds from
exercise of
common stock
warrants - - 294,500 27,500
Principal
payments made
on capital
lease
obligations - (149,874) (120,795) (468,439)
Payments
received on
notes due from
stockholders
for common
stock - - - 58,750
------------ ------------ ------------ ------------
Net cash
provided by
(used in)
financing
activities 33,451 (115,345) 797,223 (19,227)
------------ ------------ ------------ ------------
Effect of exchange
rate changes on
cash and cash
equivalents (773) - 13,341 -
------------ ------------ ------------ ------------
Increase in
cash and cash
equivalents 2,683,410 1,035,416 274,874 2,372,696
Cash and cash
equivalents at
beginning of
period 10,887,470 10,412,267 13,296,006 9,074,987
------------ ------------ ------------ ------------
Cash and cash
equivalents at
end of period $13,570,880 $11,447,683 $13,570,880 $11,447,683
============ ============ ============ ============
Non-GAAP Free Cash
Flow
reconciliation:
Net cash
provided by
operating
activities $3,978,131 $1,238,030 $9,157,279 $2,717,003
Purchases of
property and
equipment and
capital lease
payments (389,485) (237,143) (2,227,235) (556,376)
Capitalized
software
development
costs (768,352) - (768,352) -
------------ ------------ ------------ ------------
Non-GAAP Free Cash
Flow $2,820,294 $1,000,887 $6,161,692 $2,160,627
------------ ------------ ------------ ------------
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