For the first quarter of 2013, the company expects total revenue to be in the range of $43 to $46 million. First quarter GAAP gross margin is expected to be in the range of 53% to 56%. First quarter GAAP net income, which includes $1.1 million of expected stock based compensation expense and $0.7 million of non-cash rent expense, is expected to be in the range of $1.9 to $2.9 million, or $0.08 to $0.12 per diluted share on approximately 23.2 million diluted weighted average shares outstanding.
First quarter non-GAAP gross margin is expected to be in the range of 53% to 56%. First quarter non-GAAP net income is expected to be in the range of $3.7 to $4.7 million, or $0.15 to $0.19 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.
Quarterly Conference Call Today
Peter Santos, president and chief executive officer, and Kevin Palatnik, chief financial officer, will host a fourth quarter 2012 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 1-877-303-3199 (toll free) or 1-253-237-1247 (international). The passcode is 87087101. 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 March 15, 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 First Quarter 2013 Earnings Release is published, which is currently scheduled for May 2, 2013.
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 year ended December 31, 2012 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 accounted for 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 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 represents a non-cash expense.
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