Audible Inc. expects revenues in its content and services group to be between $11.5 million and $12 million in 2001, chief financial officer Andy Kaplan told analysts on a conference call discussing the Internet audio service provider's 2000 results. Content and services generated revenues of $2.5 million last year, 55% of the company's total revenues of $4.5 million. Hardware sales and other revenue accounted for the remainder of Audible's sales. Net loss in 2000 was $32.3 million compared to $13.5 million in 1999. Kaplan estimated that Audible will lose between $31 million and $32 million in 2001, although he said that the company should break even by the second half of 2002.
Despite the red ink, Kaplan, president Tom Baxter and chairman Dan Katz said they were pleased with the company's performance in 2000. The number of Audible customers increased 283% in the year to finish 2000 at 51,000, and more than 10,000 customers are now part of the AudibleListener subscription program. As more customers join Audible's subscription programs, "our revenues will become more predictable," Baxter said. Another positive sign was the increase in the number of devices that can download audio, although Baxter acknowledged that the company was disappointed that several players, including the eBookman, failed to ship before last Christmas. Katz noted that Random House Audible, Audible's joint venture with Random House, had a very strong start, and he expects that more than 100 titles will be available under the program this year.
Two events that occurred after the close of business in 2000 bolstered the executives' optimism about Audible's future. Last month, the company announced that it had restructured its strategic and marketing alliance with Amazon.com. Audible serves as Amazon's exclusive provider of digital spoken-word products available for download. Under the original agreement, Audible was scheduled to pay $10 million to Amazon in 2002; the new deal calls for Audible to pay a minimum of $2.5 million through 2002. Baxter said the new terms reflect Audible's enhanced relationship with Amazon and noted that Audible gets about one-third of its new customers through promotions with the e-retailer.
Also last month, Audible received a $10-million investment from Microsoft. The infusion of capital should provide Audible with enough funds to let it approach break-even by next year. Kaplan said Audible had $16.2 million in cash at the end of 2000, which was sufficient to carry the company "well into the second half of 2001."
