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 first quarter ended March 31, 2007. Audible reported consolidated first quarter net revenues of $25.3 million, up 28% over the first quarter of 2006 and up 9% over the fourth quarter of 2006. Adjusted EBITDA of $0.9 million, increased by $2.4 million over the negative EBITDA reported in the first quarter of 2006. Net loss for the first quarter of 2007 was $1.2 million, or ($0.05) per share, a decrease from the net loss of $3.0 million, or ($0.12) per share, reported in the first quarter of 2006. During the quarter, 72,000 AudibleListener� members were acquired. �The first quarter saw continued improvement on the bottom line, as well as a striking change in the mix of our new member additions,� noted Donald Katz, CEO and Chairman, Audible, Inc. �The mix of new members in the first quarter included an increased percentage of higher-revenue monthly AudibleListeners who responded to our introductory membership offer. This, plus strong, programmatic execution by our merchants � particularly with our email campaigns � led to a promising start to the year.� First Quarter 2007 Key Financial and Operating Metrics Consolidated Net Revenue: Consolidated net revenue totaled $25.3 million in first quarter of 2007, a 28% increase over the $19.7 million reported in the first quarter of 2006 and a sequential increase of 9% over $23.2 million in the fourth quarter of 2006. Adjusted EBITDA: Adjusted EBITDA was $0.9 million. This is based upon a net loss of $1.2 million, which excludes stock-based compensation of $1.6 million, depreciation and amortization of $1.3 million, and interest income (net) of $0.8 million. Adjusted EBITDA increased by $2.4 million from ($1.5) million reported in the first quarter of 2006 and increased $0.4 million from $0.5 million in the fourth quarter of 2006, in each case excluding the same additional expenses from such amounts as listed above. Deferred revenue: Deferred revenue was $15.8 million at March 31, 2007, a $1.4 million or 10% increase over the $14.4 million balance at December 31, 2006. Total New AudibleListener Members: 71,874 new AudibleListener members were acquired during the first quarter of 2007, a 2% increase from the 70,400 reported in the previous quarter and down from 79,000 new AudibleListener members in first quarter of 2006. Conference Call Senior management will host an investor teleconference at 5:00 p.m. EDT today to discuss first 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)-904-6908 or +1-(416)-915-8329. Passcode 3009412. 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, impairment 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 130,000 hours of audio programs from more than 420 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 March 31, December 31, March 31, � 2007� � 2006� � 2006� � Revenue, net: Content and services: Consumer content $ 24,979� $ 22,536� $ 19,281� Point of sale rebates (19) (25) (167) Services � 24� � 26� � 33� Total content and services 24,984� 22,537� 19,147� Hardware 77� 148� 125� Related party revenue 91� 395� 373� Other � 112� � 70� � 70� Total revenue, net 25,264� 23,150� 19,715� � Operating expenses: Cost of content and services revenue: Royalties and other content charges 11,256� 9,734� 7,983� Discount certificate rebates � 260� � 418� � 298� Total cost of content and services revenue 11,516� 10,152� 8,281� Cost of hardware revenue 179� 246� 675� Cost of related party revenue 129� 139� 158� Operations 3,826� 3,225� 3,102� Technology and development 4,571� 4,303� 3,694� Marketing 3,904� 4,108� 4,301� General and administrative � 3,104� � 3,402� � 3,201� Total operating expenses � 27,229� � 25,575� � 23,412� � Loss from operations (1,965) (2,425) (3,697) � Loss on equity investment (60) (94) -� � Other income (expense): Interest income 845� 822� 660� Other expense � (6) � -� � -� Other income, net 839� 822� 660� � � � Loss before income taxes (1,186) (1,697) (3,037) � Income tax expense (24) (5) (3) State income tax benefit -� 769� -� � � � Net loss $ (1,210) $ (933) $ (3,040) � � Basic and diluted net loss per common share $ (0.05) $ (0.04) $ (0.12) � Basic and diluted weighted average common shares outstanding 24,205,043� 24,158,857� 24,481,751� AUDIBLE INC. AND SUBSIDIARY NON-GAAP INFORMATION (Unaudited) (in thousands, except share and per share amounts) � Three months ended March 31, December 31, March 31, � 2007� � 2006� � 2006� � Stock-based compensation included in expense line items: Operations $ 347� $ 344� $ 143� Technology and development 293� 294� 131� Marketing 300� 327� 204� General and administrative � 636� � 787� � 616� $ 1,576� $ 1,752� $ 1,094� � � Depreciation and amortization included in expense line items: Operations $ 11� $ 15� $ 14� Technology and development 1,131� 1,148� 994� Marketing -� -� -� General and administrative � 168� � 145� � 114� $ 1,310� $ 1,308� $ 1,122� � � Reconciliation to Non-GAAP Financial Measures (unaudited) Net loss $ (1,210) $ (933) $ (3,040) Add back: Stock-based compensation 1,576� 1,752� 1,094� Depreciation and amortization 1,310� 1,308� 1,122� Income tax expense 24� 5� 3� Less: Interest income, net (839) (822) (660) State income tax benefit -� (769) -� � � � Non-GAAP adjusted EBITDA $ 861� $ 541� $ (1,481) � � Reconciliation to Non-GAAP Financial Measures (unaudited) Total revenue, net $ 25,264� $ 23,150� $ 19,715� Add: Change in deferred revenue � 1,432� � 2,258� � 2,076� Non-GAAP total cash sales $ 26,696� $ 25,408� $ 21,791� AUDIBLE INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands) � March 31, December 31, Assets � 2007� � 2006� (unaudited) � Current Assets: Cash and cash equivalents $ 19,086� $ 14,925� Short-term investments 46,415� 51,295� Interest receivable on short-term investments 379� 626� Accounts receivable, net of allowance 3,589� 4,181� Accounts receivable, related parties 169� 100� Royalty advances 637� 710� Prepaid expenses and other current assets 1,452� 1,797� Inventory � 125� � 212� Total current assets 71,852� 73,846� � Property and equipment, net 10,989� 8,149� Other assets 950� 781� � � Total Assets $ 83,791� $ 82,776� � Liabilities and Stockholders' Equity � Current Liabilities: Accounts payable $ 2,860� $ 3,121� Accrued expenses 5,180� 4,678� Accrued royalties 7,323� 9,028� Accrued compensation 844� 778� Deferred revenue, current � 15,180� � 13,840� Total current liabilities 31,387� 31,445� � Deferred revenue, non current 603� 513� Other liabilities, non current 525� 262� Royalty obligations, non current 75� 90� � Commitments and contingencies � Stockholders' Equity: Common stock 242� 241� Additional paid-in capital 192,745� 190,799� Accumulated other comprehensive (loss) income (38) (36) Accumulated deficit � (141,748) � (140,538) Total Stockholders' Equity 51,201� 50,466� � � Total Liabilities and Stockholders' Equity $ 83,791� $ 82,776� AUDIBLE INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (unaudited) � Three months ended March 31, � 2007� � 2006� � Cash flows from operating activities: Net loss $ (1,210) $ (3,040) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 1,310� 1,122� Non-cash stock-based compensation charge 1,576� 1,094� Accretion of discounts on short-term investments (259) (230) Changes in assets and liabilities: Interest receivable on short-term investments 247� 35� Accounts receivable, net 591� (582) Accounts receivable, related parties (68) (3) Royalty advances 73� 11� Prepaid expenses and other current assets 346� (1,083) Inventory 86� 223� Other assets (169) (774) Accounts payable (261) (2,413) Accrued expenses (227) (482) Other liabilities, non current 263� -� Accrued royalties (1,707) 7� Accrued compensation 29� 393� Deferred revenue � 1,430� � 2,076� Net cash provided by (used in) operating activities � 2,050� � (3,646) � Cash flows from investing activities: Purchases of property and equipment (3,284) (3,716) Capitalized software development costs (115) (198) Purchases of short-term investments (21,736) (14,964) Proceeds from maturity of short-term investments � 26,875� � 24,500� Net cash provided by investing activities � 1,740� � 5,622� � Cash flows from financing activities: Proceeds from exercise of common stock options 371� 151� Proceeds from exercise of common stock warrants -� 750� Repurchase of treasury stock at cost � -� � (360) Net cash provided by financing activities � 371� � 541� � Effect of exchange rate changes on cash and cash equivalents � -� � (5) � Increase in cash and cash equivalents 4,161� 2,512� � Cash and cash equivalents at beginning of period � 14,925� � 11,549� Cash and cash equivalents at end of period $ 19,086� $ 14,061� � � Supplemental Cash Flow information Accrued purchases of property and equipment $ 750� $ -� AUDIBLE INC. AND SUBSIDIARY UNAUDITED SUPPLEMENTAL OPERATING DATA (Numbers in thousands) � � New AudibleListener Membership Reporting: Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Total AudibleListener� Members1 186� 205� 224� 245� 279� 309� 345� 383� 415� Year-over-year 77% 77% 70% 56% 50% 51% 54% 56% 49% � Quarter-over-quarter 18% 10% 9% 10% 14% 11% 12% 11% 8% New AudibleListener� Members2 54� 52� 60� 62� 79� 65� 71� 70� 72� Year-over-year 143% 141% 104% 58% 46% 25% 18% 13% -9% � Quarter-over-quarter 37% -3% 15% 4% 26% -17% 9% -1% 3% Average Monthly Churn in AudibleListener� Members3 4.00% 4.70% 5.10% 4.80% 4.60% 3.40% 3.10% 2.50% 3.00% Cost per New AL $52� $57� $57� $94� $51� $44� $45� $49� $41� (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.