Executive Summary

Q1 2025 results deteriorated on liquidity-driven supply chain pauses: revenue fell 36% YoY to $2.313M and 21.8% QoQ; GAAP gross margin compressed to 5% (vs 32% YoY and 30% QoQ), and GAAP net loss widened to $(2.834)M or $(0.11) per share .
Management cited cash constraints that interrupted inventory flow from contract manufacturers; unabsorbed overhead flowed through COGS, materially depressing gross margin .
Operating discipline persisted: GAAP OpEx declined to $3.0M; non-GAAP OpEx to $2.9M (both down YoY), reflecting continued cost optimization .
Strategic updates: $1M investment in February enabled partial restart of inventory purchases; company engaged RBW Capital Partners and Dawson James to pursue capital raise and strategic alternatives (including sale/merger) on March 27, 2025 .
Consensus context: S&P Global EPS and revenue consensus for Q1 2025 were unavailable; no beat/miss determination can be made. Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well
- Cost control remained intact: sales and R&D expenses decreased 15% and 23% YoY, with non-GAAP OpEx down YoY and sequentially, reflecting continued benefits from cost-cutting initiatives .
- Product cadence and recognition: five new products launched in Q1 (incl. BMA 360DX), which won “Best of Show” at ISE 2025; the CEO emphasized ongoing innovation to meet customer needs .
- Partial liquidity relief: $1M investment in February 2025 enabled resumption of some inventory purchases, positioning for improved availability when constraints ease .
What Went Wrong
- Revenue pressure and mix: total revenue down 36% YoY, driven by significant declines in audio conferencing/DSP; sequential revenue also fell 21.8% .
- Margin compression: GAAP gross margin dropped to 5% due to insufficient new inventory to absorb overhead (unabsorbed overhead expensed to COGS), alongside supply chain pauses from cash constraints .
- Liquidity/inventory dynamics: inventory balances fell by ~$1.4M vs 12/31/24; cash, cash equivalents and investments ended Q1 at $1.0M, constraining manufacturing continuity .

Financial Results

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($M)	$2.504	$2.956	$2.313
Gross Profit ($M)	$0.612	$0.886	$0.121
Gross Margin (%)	24%	30%	5%
Operating Expenses ($M)	$2.800	$2.907	$2.967
Operating Income (Loss) ($M)	$(2.188)	$(2.021)	$(2.846)
Net Income (Loss) ($M)	$(2.062)	$(2.203)	$(2.834)
Diluted EPS ($)	$(0.09)	$(0.09)	$(0.11)

Non-GAAP Metrics	Q3 2024	Q4 2024	Q1 2025
Non-GAAP Operating Expenses ($M)	$2.738	$2.831	$2.893
Non-GAAP Operating Loss ($M)	$(2.118)	$(1.943)	$(2.772)
Non-GAAP Net Loss ($M)	$(1.992)	$(2.125)	$(2.760)
Adjusted EBITDA ($M)	$(1.982)	$(1.940)	$(2.686)
Non-GAAP Diluted EPS ($)	$(0.08)	$(0.09)	$(0.11)

Balance Sheet & KPIs	Q4 2024	Q1 2025
Cash, Cash Equivalents & Investments ($M)	$1.4	$1.0
Inventory ($M)	$11.224	$9.866
Change in Inventory vs prior period ($M)	—	$(1.4)

Notes:

Management attributes the gross margin decline to unabsorbed overhead expensed amid low production caused by cash constraints and paused supply chain activity .
Revenue pressure was concentrated in audio conferencing/DSP .

Segment breakdown: No formal segment reporting disclosed; management cited audio conferencing category (incl. DSP) as the principal area of revenue decline .

Guidance Changes

No quantitative guidance was provided for revenue, margins, OpEx, OI&E, or tax. The company disclosed engagement with RBW Capital Partners and Dawson James to pursue capital raise and strategic alternatives as of March 27, 2025 .

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY/Q2 2025	None	None	Maintained (no guidance)
Gross Margin	FY/Q2 2025	None	None	Maintained (no guidance)
OpEx	FY/Q2 2025	None	None	Maintained (no guidance)
OI&E	FY/Q2 2025	None	None	Maintained (no guidance)
Tax Rate	FY/Q2 2025	None	None	Maintained (no guidance)
Capital/Strategic	2025	N/A	Hired advisors to pursue capital raise/strategic alternatives	New disclosure

Earnings Call Themes & Trends

No Q1 2025 earnings call transcript was available.

Topic	Previous Mentions (Q3 2024, Q4 2024)	Current Period (Q1 2025)	Trend
Supply chain/production	Q3: recovery began after prior shortages and distributor transition; still YoY revenue pressure . Q4: sequential rev +18.1%, GM +44.8% QoQ .	Inventory flow interrupted due to cash constraints; unabsorbed overhead hit COGS; inventory down ~$1.4M .	Deteriorated sequentially
Liquidity/capital actions	Q4 ended with $1.4M cash; no secured debt .	$1M investment in Feb enabled some inventory purchases; engaged advisors to pursue capital raise/strategic alternatives .	Active financing efforts
Product innovation	Q3 showcased portfolio, awards (BMA 360, UVHF) . Q4 focus on new mics/BYOD solutions .	Five new products launched; BMA 360DX “Best of Show” ISE 2025 .	Strengthening
Regional distribution	Q3: transition to new Middle East distributor impacted sales .	Continued marketing and visibility at key events; not specific on region Q1 .	Stabilizing/monitoring
Platform certification	Q4: headwinds from lack of MS Teams certification despite compatibility .	Noted continued marketing to drive visibility; no update on certification .	Unchanged headwind
Cost optimization	Q3: OpEx down QoQ/YoY . Q4: Full-year OpEx down 9.8% YoY .	Sales and R&D down 15%/23% YoY; non-GAAP OpEx down .	Ongoing benefit

Management Commentary

“We believe this year over year revenue decline was primarily due to the cumulative impact of past production shortages.” — Derek Graham, CEO .
“In Q1 2025, we were unable to maintain an uninterrupted flow of inventory from our contract manufacturers and suppliers due to insufficient cash on hand.” .
“There was insufficient new inventory to absorb the Company’s standard overhead allocation…This led to unabsorbed overhead costs being recognized as an expense in the period, directly impacting cost of goods sold.” .
On product strategy: “The BMA 360DX shatters traditional barriers by combining advanced AV and IT technologies for unmatched performance and effortless deployment.” — Derek Graham, CEO .

Q&A Highlights

No Q1 2025 earnings call transcript was available; therefore, no Q&A themes or clarifications to report.

Estimates Context

S&P Global consensus estimates for EPS and revenue for Q1 2025 were unavailable; as a result, beat/miss analysis versus Wall Street consensus cannot be provided. Values retrieved from S&P Global.*

Where estimates may need to adjust:

Given the pronounced GM compression and liquidity-related production interruptions, near-term consensus (if published subsequently) may need to reflect lower gross margins and tighter shipment availability until financing/production normalizes .

Key Takeaways for Investors

Liquidity is the primary swing factor: cash constraints disrupted inventory flow, drove unabsorbed overhead, and compressed GM to 5%; near-term recovery hinges on securing capital and reestablishing steady production .
Despite operational headwinds, cost discipline persists; non-GAAP OpEx continues to trend down YoY, partially cushioning the P&L .
Product pipeline is a relative strength (five Q1 launches; BMA 360DX award), but commercialization depends on manufacturing continuity and working capital availability .
Strategic path optionality has increased with advisor engagement to explore capital raising and potential sale/merger; any transaction update could be a significant stock catalyst .
Revenue mix sensitivity remains: audio conferencing/DSP weakness was the core driver of decline; normalization of this category is key for topline stabilization .
Balance sheet monitoring is critical: cash of ~$1.0M at quarter-end and inventory drawdown of ~$1.4M indicate constrained capacity to meet demand without external funding .
Absent guidance and unavailable consensus, positioning should emphasize financing milestones, inventory rebuild cadence, and gross margin recapture as the triggers for narrative improvement .

Footnote: *Estimates and consensus data referenced from S&P Global; certain values or consensus metrics were unavailable at time of analysis.

CLEARONE INC (CLRO)·Q1 2025 Earnings Summary