Helped by the growing popularity of Apple's iPod, revenue at Audible jumped 87%, to $9.3 million, for the third quarter ended September 30, and the company had net income of $483,884, compared to a net loss of $872,404 in the third quarter of 2003. In addition to higher sales of Audible digital audio content through Apple's iTunes Music Store, sales benefited from the addition of 40,566 new members to Audible's AudibleListener service.
Company chairman Don Katz told analysts in a conference call that these are "heartening times" for Audible, noting that despite limited awareness of Audible's services, sales continue to grow rapidly as the company signs new partnering agreements and adds new sales channels. Katz said the company is seeing more sales of nonbook content as customers look for specific bits of information, although he added that audiobooks continue to be a "tremendous [sales] driver."
Based on the strong results in the quarter, Audible raised its sales forecast for 2004 to $33 million—$34 million, up from an earlier prediction of $29.5 million—$31.5 million. Sales in 2003 were $19.3 million. The company said it also expects earnings to be in the "higher end" of the $1 million—$1.4 million forecast given earlier this year.
The improvement in its results has prompted Audible to move forward with a new stock offering that will include the sale of 1.5 million shares from the company plus 3.3 million shares from existing shareholders. Among the shareholders planning to sell shares are Katz and CFO Andrew Kaplan, as well as Random House Inc. and Random House Ventures. RH Inc. plans to sell 115,000 shares, leaving it with 301,667 shares, 1.4% of Audible's outstanding shares. RH Ventures will sell 275,000 shares and will retain 706,366 shares, a 3.3% stake. Based on a share price of $22 (the figure used in the prospectus; Audible's shares were selling at $23.76 on November 11), RH Inc. will earn $2.5 million from the sale, while RH Ventures will earn about $6 million. Katz will receive approximately $3.3 million from the stock sale, while Kaplan will receive $2.7 million.
The company expects to generate net proceeds for itself of about $31.4 million from the sale of corporate shares, which it will use for general corporate purposes and potential acquisitions.