EFTA01177093.pdf

JAWBONE PRODUCTS & SERVICES FOR I HE MOBILE LirES I YLL EFTA01177093 Opening Comments EFTA01177094 state of the union. . . • Making significant progress on organizational development and culture shift...stil l work to be done but we are seeing returns • BIG JAMBOX is the first example of a product tested within the new system — we found things that we resolved and believe that ultimately we will be much better off • A successful BIG JAMBOX launch is as important for us internally as it for the outside world • Markets continue to be excited about our products — we just need to get them out • We need to continue our "molting" process and see the transition through all the way to the next level EFTA01177095 Q1'12 financials EFTA01177096 Q1 financial highlights - solid performance against the Plan • Demand for all products continues strong, with customer orders totaling $42M for the quarter, versus a revenue Plan of $32.6M • Even without BIG JAMBOX, Q1 net revenue was a solid $28.6M - Big orders were $9M by the end of Q1 and continue to grow • Q1 gross margin of 21.7%, compared with Plan of 18.5% • Operating expense was 3% lower than Plan • Because of the strong gross margin and lower OpEx than Plan, operating loss was 5% lower than Plan • Cash burn was $2.3M less than Plan EFTA01177097 Q1'12 income statement — GAAP Actual Forecasted Pos (Neg) Qtr Ended Qtr Ended Percent Amounts in 000's $ 3/31/2012 3/31/2012 Variance Variance Net revenue $ 28,625 $ 32,566 $ (3,941) -12% Total cost of goods sold 22,400 26,527 (4,127) 16% Gross profit 6,225 6,039 186 3% Gross margin (%) 21.7% 18.5% 3.2% Selling and marketing 6,184 8,932 (2,748) -31% General and administrative 4,855 4,554 301 7% Research and devebpment 10,548 9,532 1,016 11% Depreciation and amortization 773 773 Total operating expenses 22,360 23,018 (658) 3% Operating income (loss) (16,135) (16,979) 844 5% Operating margin (%) -56.4% -52.1% -4.2% NOTES: Preliminary and unaudited financials. The financials include GAAP treatment for items such as Revenue Recognition under SOP 97-2 and EITF 08-1, Capitalization of overhead and freight into inventory, and FS123R stock based compensation (in the COGS) 6 EFTA01177098 balance sheet - GAAP ($s in 000s) Preliminary and Unaudited 3/31/2012 12/31/2011 ASSETS Current assets: Cash & Equivalents $ 52,899 $ 77,066 Accounts receivable and other receivables, net 3,623 18,692 Inventory, net ofreserves 17,387 14,177 Prepaids and other current assets 4,351 2,341 Total current assets 78,260 112,276 Property and equipment, net 5,977 5,538 Other assets 4,514 7,399 TOTAL ASSETS $ 88,751 $ 125,213 LIABILITIES AND STOCKIIOLDERS' EQUITY Current liabilities: Accounts payable 17,444 29,865 Accrued expenses 19,721 25,330 Deferred revenue 3,060 3,109 Other current liabilities 12,910 15,127 Total current liabilities 53,135 73,431 TOTAL LIABILITIES 53,135 73,431 Stockholders' equity: Common stock, preferred stock, & add'I paid in cap 165,715 165,321 Accumulated deficit (130,105) (113,548) Accumulated other comprehensive income (loss) 6 9 TOTAL EQUITY 35,616 51,782 TOTAL LIABILITIES AND EQUITY $ 88,751 $ 125,213 7 EFTA01177099 statement of cash flow ($s in 000s) Qtr Ended Preliminary and Unaudited 3/31/2012 Cash flow from operating actisi ties Net loss $ (16,557) Depreciation & amortization 1,053 Stock-based convensation expense 323 Effects ofexchange rate changes on monetary assets and liabilitic (3) Changes in operating assets and liabilities: Accounts receivable 15,069 Inventory (3,210) Other current assets and non-current assets 477 Accounts payable (12,421) Deferred revenue (49) Other current and non-current liabilities (8,250) Net cash used in operating activities (23,568) Cash flow from investing activities Recovery oftenant improvements allowance 400 Capital expenditures (1,070) Net cash used in investing activities (670) Cash flow from financing activities Proceeds from option and warrant exercises 71 Net cash provided by financing activities 71 Net decrease in cash and cash equivalents (24,167) Cash and cash equivalents at beginning of period 77,066 Cash and cash equivalents at end of period 52,899 8 EFTA01177100 speaker driving revenue mix (and this is BEFORE BIG) 01 2011 Sales By Product 01 2012 Sales By Product Othe Headset 4% Other Other Other 0% H eadset 1% -\\ 0% ERA Jambox ERA 26% 40% -ERA • ERA Icon • Icon la mbox — lambox Jambox a Other 0the r 72% — Other Headset a Other Headset 9 EFTA01177101 new products & categories foster international growth Q1 2011 Sales By Region Q1 2012 Sales By Region AsiaPac 8% EMEA 15% LATAM 0% North America • AsiaPac 89% As.aPac • EMEA EMEA North America 77% LATAM North Arr • North America 10 EFTA01177102 Go-to-Market Update EFTA01177103 notes from the battlefield ■ Built back a critical amount of customer confidence throughout the quarter ■ BIG excitement in the channel as we get closer to launch - Our partners are ready to get started, and are excited for Father's Day - The Jambox family is positioned to dominate • Competition is heating up and they are spending millions ■ Customers are eagerly awaiting the UP re-launch • Jambox continues to gain momentum worldwide having our best sell through quarter outside of Q4, and continues to be the best selling speaker in North America • Global business continues to scale, and is on pace to be one-third of overall business by Q4 EFTA01177104 ql - solid results, although it was setup to be a big one • Exceeded our plan on all core Total Units products 500 - Mono at 114% of plan 400 62 4'. 300 53 - Jambox at 125% of Plan 200 "A 197 183 - Jambox 51% higher than any 100 previous non-holiday quarter 148 Plan What Could Have Been Actual Bluetooth d lambox -- BIG • BIG Impact $11M orders for 62K revenue units - Sales not lost, but shifted into Q2 - Another 20K Apple units - All units could have shipped in the quarter EFTA01177105 global sell through •••Jambox Launch —•> Icon VZW Launch Icon BF Prime Launch • Sell through flat from last non-holiday quarter • EMEA / APAC increased 31% compared to previous non-holiday quarter and 86% year over year • B2B channel starting to develop selling through 9K units in Q1 • Average of 30K units / week EFTA01177106 strong global Jambox sales • Q1 Sell through up 5X compared to previous year's quarter • Non-holiday sell in increased by 51% • EMEA / APAC contributed 25% of sell through EFTA01177107 customer mix diversifies globally in q1 2012 Americas • AT&T & Amazon contribution up 2X year over year • AT&T continues to dominates the carrier segment Global • EMEA / APAC grows to 22% of global sales and doubled year over year (vs. 01 11) • APAC is 36% of international sales and growth • Currently expanding into key markets with a focus on customers who can scale EFTA01177108 key areas of focus for q2 ■ Flawless execution of BIG - Get it right with our launch partners with focus on inventory, training, in-store displays and marketing - Building demand and buzz with consumers ■ Own music - Leverage our Jambox family to blank our competition, and send the market a message - Aggressively attack shelf space, and start locking holiday promotions ■ Get our customers involved and start building the momentum for the re-launch of UP ■ Intense focus on our global business with key hiring and expansion (GM Asia, VP Sales Europe, Sales Director for LatAm) EFTA01177109