SOURCE: Audience

Audience

October 31, 2013 16:05 ET

Audience Announces Third Quarter 2013 Financial Results

MOUNTAIN VIEW, CA--(Marketwired - Oct 31, 2013) - Audience, Inc. (NASDAQ: ADNC), the leader in advanced voice and audio processing for mobile devices, today announced its third quarter 2013 financial results.

Revenue for the third quarter of 2013 was $34.5 million, compared with $40.8 million for the same period in 2012. As reported under U.S. generally accepted accounting principles (GAAP), third quarter 2013 net loss was $2.3 million, or ($0.11) per diluted share based on weighted average shares outstanding of 21.6 million. This compares with GAAP net income of $3.7 million, or $0.16 per diluted share based on weighted average shares outstanding of 23.2 million, for the same period in 2012. Gross margin on a GAAP basis for the third quarter of 2013 was 55.9% of revenue, compared to 55.0% of revenue for the same period in 2012.

Non-GAAP net loss as defined below, for the third quarter of 2013 was $0.3 million, or ($0.01) per diluted share based on weighted average shares outstanding of 21.6 million. This compares with non-GAAP net income of $4.9 million, or $0.21 per diluted share based on weighted average shares outstanding of 23.2 million, for the same period in 2012. Gross margin on a non-GAAP basis for the third quarter of 2013 was 56.2% of revenue, compared to 55.1% of revenue for the same period in 2012.

"Strong demand for Audience® earSmart™ solutions contributed to a solid third quarter as we continued to penetrate the mobile device market worldwide," said Peter Santos, president and chief executive officer. "We were pleased to announce in the third quarter that one of China's leaders in mobility, ZTE, has chosen the eS305 for their new ZTE Geek mobile handset. We also announced the release of our eS320, the world's first Advanced Voice processor created specifically for tablets, ultrabooks and hybrid all-in-one PCs, and we see these platforms becoming increasingly important as users look for an improved and consistent user experience on every device they use."

"We reported a good quarter as we continued to focus on operational excellence and the diversification of our solutions across additional platforms, building upon our strong relationships with Samsung and leading Chinese OEMs," said Kevin Palatnik, chief financial officer. "We expect to close the year with continued penetration into the Chinese handset marketplace and look forward to reporting on wins in adjacent markets."

Business Outlook

For the fourth quarter of 2013, Audience expects total revenue to be in the range of $31 to $34 million. Fourth quarter GAAP gross margin is expected to be in the range of 52% to 55%. Fourth quarter GAAP net loss, which includes $1.7 million of expected stock-based compensation expense, is expected to be in the range of $4.4 to $5.3 million, or ($0.20) to ($0.24) per diluted share on approximately 22.1 million diluted weighted average shares outstanding.

Fourth quarter non-GAAP gross margin is expected to be in the range of 52% to 55%. Fourth quarter non-GAAP net loss is expected to be in the range of $2.7 to $3.6 million, or ($0.12) to ($0.16) per share on a diluted basis.

A schedule showing a reconciliation of the business outlook from GAAP diluted net income per share to non-GAAP diluted net income per share is included with this release.

The above information concerning guidance represents Audience's outlook only as of the date hereof and is subject to change as a result of amendments to material contracts and other changes in business conditions. Audience undertakes no obligation to update or revise any financial forecast or other forward looking statements, as a result of new developments or otherwise.

Quarterly Conference Call Today
Peter Santos, president and chief executive officer, and Kevin Palatnik, chief financial officer, will host a third quarter 2013 financial results conference call today at 1:30 pm (Pacific) / 4:30 pm (Eastern). Attendees are asked to join the conference call at least ten minutes prior to the scheduled conference call time. The call may be accessed by dialing 1-877-212-6076 (toll free) or 1-707-287-9331 (international). The passcode is 77210693. A live and archived webcast of the call will be available on Audience's website at http://investor.audience.com/ for 30 days.

Audience expects that its corporate representatives will meet privately during the quarter with investors, the media, investment analysts and others. At these meetings, Audience may reiterate the business outlook published in this press release. At the same time, Audience will keep this press release, including the business outlook, publicly available on its website.

Beginning December 13, 2013, Audience will observe a Quiet Period during which Audience's representatives will not comment on Audience's business outlook, financial results or expectations. The Quiet Period will extend until the day when Audience's Fourth Quarter 2013 Earnings Release is published, which is currently scheduled to be February 6, 2014.

Use of Non-GAAP Financial Measures
Audience prepares its financial statements in accordance with generally accepted accounting principles for the United States (GAAP). The non-GAAP financial measures, such as gross margin, net income and earnings per share information for the three months and quarter ended September 30, 2013 and similar periods from the prior year included in this press release are different from those otherwise presented under GAAP. The following are explanations of each type of adjustment that we incorporate into non-GAAP financial measures:

Stock-based compensation expense relates to equity incentive awards granted to our employees, directors, and consultants under GAAP. Stock-based compensation expense has been and will continue to be a significant recurring expense for Audience. While we include the dilutive impact of such equity awards in weighted average shares outstanding, the expense associated with stock-based awards reflects a non-cash charge that we exclude from non-GAAP net income.

Stock warrant revaluation expense reflected in the nine months ended September 30, 2012 is related to preferred stock warrants outstanding that had to be revalued each quarter prior to our initial public offering. We believe the comparisons of ongoing operations should exclude effects of such revaluations as preferred stock warrant revaluation represented a non-cash expense that did not occur after our initial public offering.

On June 5, 2012, Audience entered into a lease agreement for its future corporate headquarters facility in Mountain View, California. Pursuant to the lease agreement, the lease falls under "build-to-suit" accounting treatment and therefore, in accordance with accounting for the effect of lessee involvement in asset construction, the company is considered to be the owner of the real estate project during the construction period. As such, Audience recorded an asset for construction in progress for incurred construction costs, and a liability for those costs that are not funded by the company. Additionally, the rent costs associated with the ground lease during construction was recorded to the income statement. This rent cost is a non-cash charge that the company excluded from its non-GAAP net income. The construction was completed and the lease commenced October 1, 2013.

Non-GAAP financial information is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenues and expenses and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.

The shares used to compute non-GAAP basic and diluted net income per share include the assumed conversion of all outstanding shares of convertible preferred stock and certain preferred stock warrants into shares of common stock using the as-if converted method as of the beginning of each period presented or the date of issuance, if later. In May 2012, in conjunction with the closing of our initial public offering, all of our outstanding preferred stock was converted into shares of our common stock.

Audience has provided these measures in addition to GAAP financial results because management believes these non-GAAP measures help provide a consistent basis for comparison between quarters and annual growth rates that are not influenced by certain non-cash charges and therefore are helpful in understanding Audience's underlying operating results. These non-GAAP measures are some of the primary measures Audience's management uses for planning and forecasting. These measures are not in accordance with, or an alternative to, GAAP and these non-GAAP measures may not be comparable to information provided by other companies. Reconciliations of the GAAP to non-GAAP results are presented at the end of this press release.

Cautionary Note Concerning Forward-Looking Statements

Statements in the press release and certain matters to be discussed on the third quarter conference call regarding Audience, Inc., which are not historical facts, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by terms such as believe, expect, may, will, provide, could and should and the negative of these terms or other similar expressions. These statements, including statements relating to expectations of future revenue, net income and operating margin performance, future success for various products and our leadership position in the market, reporting on wins in the market, the demand for our solutions including continued demand by customers upon whom we are substantially dependent and diversification of our customer base are based on current expectations and assumptions that are subject to risks and uncertainties. Our actual results could differ materially from those we anticipate as a result of various factors, including: our dependence on a single OEM, Samsung Electronics Co. Ltd., for a substantial portion of our revenue; weak demand for high end smart phones and the impact on our business; our need to maintain and expand our existing relationships with our OEMs, including Samsung and leading Chinese OEMs and to establish relationships with new OEMs in order to maintain and increase our revenue; our ability to sustain profitable operations due to our history of losses and accumulated deficit; quarterly fluctuations in our results due to factors such as the timing of OEM product launches, customer purchasing behavior in light of anticipated mobile phone launches and our assessments of whether we have excess or obsolete inventory, among other factors; increasing competition and new entrants in the market for our products; our need to develop products for the lower end of the smartphone market; our need to diversify our sources of revenue; our ability to enter new end user product markets, such as notebooks and smart TVs, as well as new geographic markets; pressure on the average selling prices for our products; our lengthy sales cycle and the lack of certainty as to whether any given OEM's products will achieve market acceptance; our OEMs' lengthy and expensive process to qualify our products; our ability to develop new or enhanced products in a timely manner that achieve market acceptance; our reliance on third parties to manufacture, assemble and test our products; defects that may be present in our products; the impact of future intellectual property litigation and claims for indemnification; changes in tax laws or our ability to utilize our tax structure and net operating losses and other risks inherent in fabless semiconductor businesses. For a discussion of these and other related risks, please refer to "Risk Factors" in our most recent Form 10-Q for the three months ended June 30, 2013, which is available on the SEC's website at www.sec.gov. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management's beliefs and assumptions only as of the date made. You should review our SEC filings carefully and with the understanding that our actual future results may be materially different from what we expect.

Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

About Audience
Audience is the leader in advanced voice and audio processing for mobile devices. Its family of earSmart™ intelligent voice processors is based on the processes of human hearing, to suppress background noise and enhance mobile voice quality. Audience's technology substantially improves the mobile voice experience, while also improving the performance of speech-based services, and enhancing audio quality for multimedia. Audience earSmart™ processors are featured in mobile devices from leading providers in Asia-Pacific, Europe and the U.S. The company is based in Mountain View, California. For more information, see www.audience.com.

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Audience, Inc.  
Condensed consolidated balance sheets  
(in thousands)  
(unaudited)  
             
             
    September 30,     December 31,  
    2013     2012  
Assets                
Current assets:                
  Cash and cash equivalents   $ 110,180     $ 109,606  
  Restricted cash     170       -  
  Marketable securities     21,869       18,032  
  Accounts receivable, net     9,102       12,926  
  Inventories     17,536       13,266  
  Other current assets     6,425       3,669  
    Total current assets     165,282       157,499  
                 
Property and equipment, net     27,073       11,801  
Other noncurrent assets     1,110       1,389  
Restricted cash - noncurrent portion     -       170  
    Total assets   $ 193,465     $ 170,859  
                 
Liabilities and stockholders' equity                
Current liabilities:                
  Accounts payable   $ 2,703     $ 9,745  
  Accrued and other current liabilities     12,525       9,228  
  Deferred credits and income     342       285  
  Financing obligation for construction in progress     17,229       5,290  
    Total current liabilities     32,799       24,548  
                 
Taxes payable - noncurrent     1,170       376  
Other liabilities - noncurrent     19       -  
    Total liabilities     33,988       24,924  
                 
Stockholders' equity:                
Preferred stock     -       -  
Common stock     22       21  
Additional paid-in capital     181,011       172,461  
Accumulated other comprehensive income     3       3  
Accumulated deficit     (21,559 )     (26,550 )
    Total shareholders' equity     159,477       145,935  
Total liabilities and stockholders' equity   $ 193,465     $ 170,859  
                 
                 
   
   
Audience, Inc.  
Condensed consolidated statements of comprehensive income (loss)  
(in thousands, except per share data)  
(unaudited)  
                         
                         
    Three months ended
September 30,
    Nine months ended
September 30,
 
    2013     2012     2013     2012  
                                 
Revenue:                                
  Hardware   $ 32,445     $ 32,252     $ 118,901     $ 72,805  
  Licensing     2,007       8,499       8,089       32,411  
                                 
    Total revenue     34,452       40,751       126,990       105,216  
                                 
Cost of revenue     15,179       18,355       55,461       44,392  
                                 
  Gross profit     19,273       22,396       71,529       60,824  
                                 
Operating expenses:                                
  Research and development     11,499       9,501       31,298       23,047  
  Selling, general and administrative     9,929       9,102       31,067       24,773  
Total operating expenses     21,428       18,603       62,365       47,820  
                                 
Income (loss) from operations     (2,155 )     3,793       9,164       13,004  
                                 
Interest income, net     37       77       128       90  
Other expense, net     (50 )     (39 )     (209 )     (504 )
                                 
Income (loss) before income taxes     (2,168 )     3,831       9,083       12,590  
Income tax expense     153       167       4,092       432  
                                 
Net income (loss)   $ (2,321 )   $ 3,664     $ 4,991     $ 12,158  
                                 
Net income (loss) per share:                                
  Basic   $ (0.11 )   $ 0.18     $ 0.23     $ 0.57  
  Diluted   $ (0.11 )   $ 0.16     $ 0.22     $ 0.49  
                                 
Weighted average shares used in computing netincome (loss) per share:                                
  Basic     21,636       20,342       21,281       10,956  
  Diluted     21,636       23,159       23,121       13,816  
                                 
Other comprehensive income (loss):                                
  Foreign currency translation adjustments, net of tax   $ -     $ -     $ -     $ 31  
  Unrealized gain (loss) on marketable securities, net of tax     4       -       -       -  
Net comprehensive income (loss)   $ (2,317 )   $ 3,664     $ 4,991     $ 12,189  
                                 
                                 
 
 
Audience, Inc.
Consolidated statements of operations
GAAP to Non-GAAP net income (loss) reconciliation
(in thousands)
                 
  Three months ended
September 30,
  Nine months ended
September 30,
  2013     2012   2013   2012
                         
GAAP net income (loss) $ (2,321 )   $ 3,664   $ 4,991   $ 12,158
  Stock-based compensation   1,552       1,062     4,195     2,190
  Non-cash rent expense   231       148     663     148
  Revaluation of warrant liability   -       -     -     290
  Tax adjustments   230       -     1,708     -
Non-GAAP net income (loss) $ (308 )   $ 4,874   $ 11,557   $ 14,786
                         
                         
                         
   
   
Audience, Inc.  
Unaudited computation of GAAP earnings (loss) per share  
(in thousands, except for per share amounts)  
                     
    Three months ended
September 30,
  Nine months ended
September 30,
 
    2013     2012   2013   2012  
                             
Computation of GAAP net income (loss) per share:                            
                             
GAAP net income (loss)   $ (2,321 )   $ 3,664   $ 4,991   $ 12,158  
Non-cumulative dividends to preferred stockholders     -       -     -     (2,248 )
Undistributed earnings allocated to preferred stockholders     -       -     -     (3,709 )
Net income (loss) - basic     (2,321 )     3,664     4,991     6,201  
Adjustment for undistributed earnings reallocated to the holders of common stock    
-
     
-
   
-
   
521
 
Net income (loss) - diluted   $ (2,321 )   $ 3,664   $ 4,991   $ 6,722  
                             
Weighted average shares used in computing net income (loss) per share:                            
  Basic     21,636       20,342     21,281     10,956  
  Diluted     21,636       23,159     23,121     13,816  
                             
Net income (loss) per share:                            
  Basic   $ (0.11 )   $ 0.18   $ 0.23   $ 0.57  
  Diluted   $ (0.11 )   $ 0.16   $ 0.22   $ 0.49  
                             
                             
       
Audience, Inc.      
Unaudited reconciliation of GAAP to non-GAAP diluted earnings (loss) per share      
(in thousands, except per share data)      
                         
    Three months ended
September 30,
  Nine months ended
September 30,
     
    2013     2012   2013   2012      
                                 
GAAP net income (loss)   $ (2,321 )   $ 3,664   $ 4,991   $ 12,158      
Non-cumulative dividends to preferred stockholders     -       -     -     (2,248 )   (B)
Undistributed earnings allocated to preferred stockholders     -       -     -     (3,709 )    
GAAP net income (loss) - basic     (2,321 )     3,664     4,991     6,201      
Adjustment for undistributed earnings reallocated to theholders of common stock    
-
     
-
   
-
   
521
     
GAAP net income (loss) - diluted     (2,321 )     3,664   $ 4,991   $ 6,722      
Non-GAAP adjustments:                                
  Stock-based compensation     1,552       1,062     4,195     2,190      
  Non-cash rent expense     231       148     663     148      
  Revaluation of warrant liability     -       -     -     290      
  Non-GAAP as if converted method     -       -     -     5,436     (A)
  Tax adjustments     230       -     1,708     -      
Non-GAAP net income (loss) - diluted   $ (308 )   $ 4,874   $ 11,557   $ 14,786      
                                 
GAAP - diluted weighted average shares     21,636       23,159     23,121     13,816      
Non-GAAP - diluted weighted average shares     21,636       23,159     23,121     20,322      
                                 
                                 
GAAP - diluted net income (loss) per share   $ (0.11 )   $ 0.16   $ 0.22   $ 0.49      
Non-GAAP adjustments:                                
  Stock-based compensation     0.08       0.04     0.18     0.11      
  Non-cash rent expense     0.01       0.01     0.03     0.01      
  Revaluation of warrant liability     -       -     -     0.01      
  Non-GAAP as if converted method     -       -     -     0.11     (B)
  Tax adjustments     0.01       -     0.07     -      
Non-GAAP - diluted net income (loss) per share   $ (0.01 )   $ 0.21   $ 0.50   $ 0.73      
(A) Non-GAAP net income was adjusted by $5,436 for the nine months ended September 30, 2012 to give effect to the conversion of our convertible preferred stock and certain preferred stock warrants using the as-if converted method into common shares as if the conversion had occurred as of the beginning of the period presented 
 
(B) Non-GAAP diluted EPS for the nine months ended September 30, 2012 was computed to give effect to the conversion of our convertible preferred stocks and certain preferred stock warrants using the as-if converted method into common shares as if the conversion had occurred as of the beginning of the period. Therefore to bridge the GAAP to non-GAAP EPS the non-cumulative dividends to preferred stockholders should not be allocated to stockholders for the nine months ended September 30, 2012 of $2,248 
 
 
 
Audience, Inc. 
Non-GAAP condensed consolidated statements of operations 
Impact of Non-GAAP adjustments on reported GAAP net income (loss) 
(in thousands, except per share data) 
(unaudited) 
                                                 
    Three months ended September 30, 2013     Three months ended September 30, 2012  
    Reported GAAP     Adjustments           Non-GAAP     Reported GAAP     Adjustments           Non-GAAP  
                                                             
Revenue:                                                            
  Hardware   $ 32,445     $ -           $ 32,445     $ 32,252     $ -           $ 32,252  
  Licensing     2,007       -             2,007       8,499       -             8,499  
                                                             
    Total revenue     34,452       -             34,452       40,751       -             40,751  
                                                             
Cost of revenue     15,179       (82 )   (A )     15,097       18,355       (50 )   (B )     18,305  
                                                             
  Gross profit     19,273       82             19,355       22,396       50             22,446  
                                                             
Operating expenses:                                                            
  Research and development     11,499       (727 )   (A )     10,772       9,501       (424 )   (B )     9,077  
  Selling, general and administrative     9,929       (974 )   (A )     8,955       9,102       (736 )   (B )     8,366  
                                                             
Total operating expenses     21,428       (1,701 )           19,727       18,603       (1,160 )           17,443  
                                                             
Income (loss) from operations     (2,155 )     1,783             (372 )     3,793       1,210             5,003  
                                                             
Interest income, net     37       -             37       77       -             77  
Other expense, net     (50 )     -             (50 )     (39 )     -             (39 )
                                                             
Income (loss) before income taxes     (2,168 )     1,783             (385 )     3,831       1,210             5,041  
Income tax expense (benefit)     153       (230 )   (C )     (77 )     167       -             167  
                                                             
Net income (loss)   $ (2,321 )   $ 2,013           $ (308 )   $ 3,664     $ 1,210           $ 4,874  
                                                             
Net income (loss) per share:                                                            
  Basic   $ (0.11 )                 $ (0.01 )   $ 0.18                   $ 0.24  
  Diluted   $ (0.11 )                 $ (0.01 )   $ 0.16                   $ 0.21  
                                                             
Weighted average shares used in                                                            
computing net income (loss) per share:                                                            
  Basic     21,636                     21,636       20,342                     20,342  
  Diluted     21,636                     21,636       23,159                     23,159  
 
(A) Stock-based compensation expense total - $1,552 and Non-cash rent expense total $231
(B) Stock-based compensation expense total - $1,062 and Non-cash rent expense total $148
(C) Non-GAAP financial information for the three months ended September 30, 2013 is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenues and expenses and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities
 
 
Audience, Inc.    
Non-GAAP condensed consolidated statements of operations    
Impact of Non-GAAP adjustments on reported GAAP net income    
(in thousands, except per share data)    
(unaudited)    
                                                           
    Nine months ended September 30, 2013     Nine months ended September 30, 2012        
    Reported GAAP     Adjustments           Non-GAAP     Reported GAAP           Adjustments         Non-GAAP        
                                                                       
Revenue:                                                                      
  Hardware   $ 118,901     $ -           $ 118,901     $ 72,805           $ -         $ 72,805        
  Licensing     8,089       -             8,089       32,411             -           32,411        
                                                                       
    Total revenue     126,990       -             126,990       105,216             -           105,216        
                                                                       
Cost of revenue     55,461       (226 )   (A )     55,235       44,392             (104 )   (B )   44,288        
                                                                       
  Gross profit     71,529       226             71,755       60,824             104           60,928        
                                                                       
Operating expenses:                                                                      
  Research and development     31,298       (1,940 )   (A )     29,358       23,047             (773 )   (B )   22,274        
  Selling, general and administrative     31,067       (2,692 )   (A )     28,375       24,773             (1,461 )   (B )   23,312        
                                                                       
Total operating expenses     62,365       (4,632 )           57,733       47,820             (2,234 )         45,586        
                                                                       
Income from operations     9,164       4,858             14,022       13,004             2,338           15,342        
                                                                       
Interest income, net     128       -             128       90             -           90        
Other expense, net     (209 )     -             (209 )     (504 )           290     (C )   (214 )      
                                                                       
Income before income taxes     9,083       4,858             13,941       12,590             2,628           15,218        
Income tax expense (benefit)     4,092       (1,708 )   (D )     2,384       432             -           432        
                                                                       
Net income   $ 4,991     $ 6,566           $ 11,557     $ 12,158           $ 2,628         $ 14,786        
                                                                       
Net income per share:                                                                      
  Basic   $ 0.23                   $ 0.54     $ 0.57     (E )               $ 0.85        
  Diluted   $ 0.22                   $ 0.50     $ 0.49     (E )               $ 0.73        
                                                                       
Weighted average shares used in                                                                      
computing net income per share:                                                                      
  Basic     21,281                     21,281       10,956                         17,462     (F )
  Diluted     23,121                     23,121       13,816                         20,322     (F )
                                                                       
 
(A) Stock-based compensation expense total - $4,195 and Non-cash rent expense total - $663
(B) Stock-based compensation expense total - $2,190 and Non-cash rent expense total - $148
(C) Nine months ended September 30, 2012 warrant revaluation - $290
(D) Non-GAAP financial information for the nine months ended September 30, 2013 is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenues and expenses and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities
(E) GAAP basic and diluted EPS was calculated using the two-class method until our convertible preferred stock converted to common stock upon the closure of our initial public offering. Therefore, our GAAP net income was adjusted by a decrease of $5,957 and $5,436 in arriving to "net income" for the calculation of basic and diluted GAAP EPS, respectively
(F) Non-GAAP basic and diluted EPS was computed to give effect to the conversion of our convertible preferred stock and certain preferred stock warrants using the as-if converted method into common shares as if the conversion had occurred as of the beginning of each period presented
 
 
Audience, Inc.
Estimated computation of GAAP to non-GAAP diluted net loss per share
   
  Three months
  ending
  December 31, 2013
   
Estimated GAAP diluted net loss per share ($0.20) - ($0.24)
Estimated stock-based compensation expense per share $0.08
Non-GAAP - diluted net loss per share ($0.12) - ($0.16)

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    Diane Vanasse
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