ClearOne reported a 58% sequentially, and 39% year-over-year, decline in revenue citing a “significant decrease in revenues from the audio conferencing category, which includes our DSP mixer products.” But, it was made clear, in the announcement last week, that the company sees the decline from production problems, not a shift in the market or a problem with its product offering.

In fact, the announcement of the decline in sales included the following quote: “We believe this revenue decline was primarily due to the cumulative impact of past production shortages,” said Derek Graham, CEO of ClearOne. “Historically, we have seen a lag of several months between the time that our professional conferencing products are specified for a project and the date when those products are purchased for installation. Since our product availability was constrained through a significant part of Q4 2023 as a result of delays in the transition of outsourced manufacturing from China to Singapore throughout 2023, we believe our revenue was impacted negatively by these market dynamics through much of Q2 2024. We have also faced sales headwinds from our products’ lack of Microsoft Teams certification, despite their longtime functional compatibility with this platform.

Our work through early 2024 has focused on mitigating these impacts through maintaining consistent dialogues, product demonstrations, and feedback cycles with end users and channel partners, along with improving our visibility at key industry events. Our sales in Q2 2024 were also impacted by our transition to a new distributor in the Middle East. We anticipate, although there can be no assurance, that our new Middle East distributor will continue our previous history of sales growth in the region, but there was an impact to our sales in that region due to the transition.”

For some product context, here’s a video from InfoComm 2024 that ClearOne shot about the now Dante-enabled BMA 360D Ceiling Array Mic:

Also, at InfoComm, ClearOne said it captured 60% more sales leads at the 2024 show over the 2023 show.

ClearOne also introduced the Versa Lite BMA 360D in Q2 2024; it’s a bundle that combines ClearOne’s BMA 360D Dante-enabled microphone array ceiling tile (the one mentioned above in the video) with the Versa USB22D Dante adapter.

The earnings announcement also mentioned it reduced operating expenses by 10.1% sequentially and 9.33% year-over-year.

Graham continued, “During the first half of 2024, our team has been diligently working to win back customers who have defected to competing brands. We believe, although there can be no assurance, those efforts will bear fruit soon. We continue to see strong interest in our innovative products as demonstrated by the 60% increase in visitors at our Infocomm USA booth even though overall Infocomm USA attendance was only up 3% this year.”

A complete financial summary:

• Q2 2024 revenue was $2.3 million, compared to $5.5 million in Q2 2023 and $3.6 million in Q1 2024. The 36.1% sequential decrease was driven by reduced demand across all product categories. We believe the flow of sales orders during Q2 2024 was reduced due to the cumulative impact of past product shortages. We believe the revenue decrease was mainly due to sustained inventory sourcing and order fulfillment challenges for the Company’s core audio conferencing and beam forming microphone arrays as a result of delays in the transition of outsourced manufacturing from China to Singapore throughout 2023.
• GAAP gross profit/(loss) in Q2 2024 was $(0.02) million, compared to $1.8 million in Q2 2023 and $1.2 million in Q1 2024. GAAP gross profit margin was- 1% in Q2 2024, compared to 32% in Q1 2024 and 34% in Q2 2023. The large decrease in gross profit margin occurred due to increased inventory scrap costs, increasing the inventory reserve to write down the value for certain items, and an increase in purchase price variance from increasing vendor costs.
• Operating expenses in Q2 2024 improved to $2.9 million, compared to $3.2 million in Q2 2023 and $3.2 million in Q1 2024. Non-GAAP operating expenses in Q2 2024 improved to $2.8 million compared to $3.1 million in Q1 2024 and $3.1 million in Q2 2023. The sequential and year-over-year decrease in non-GAAP operating expenses was mainly due to the continued benefits of the cost-cutting measures initiated in 2022.
• GAAP net loss in Q2 2024 was $(2.8) million, or $(0.12) per share, compared to a net loss of $(1.0) million, or $(0.04) per share, in Q2 2023 and a net loss of $(1.9) million, or $(0.08) per share, in Q1 2024. The year-over-year increase in net loss was primarily due to the aforementioned decrease in revenue and gross profit, partially offset by a decrease in operating expenses.
• Non-GAAP net loss in Q2 2024 was $(2.7) million, or $(0.11) per share, compared to a Non-GAAP net loss of $(0.9) million, or $(0.04) per share, in Q2 2023 and a Non-GAAP net loss of $(1.8) million, or $(0.07) per share, in Q1 2024. The year-over-year increase in Non-GAAP net loss was driven by the aforementioned decrease in revenue and gross profit partially offset by a decrease in operating expenses.

The full report is here.