Audience, which develops audio chips for mobile devices and licenses its technology for use in the iPhone, announced terms for its IPO on Friday. The Mountain View, CA-based company plans to raise $79 million by offering 5.3 million shares (5% insider) at a price range of $14 to $16. At the midpoint of the proposed range, Audience would command a market value of $338 million.
After two years of extremely fast growth ($6 million in 2009 sales, $48 million in 2010, $98 million in 2011), revenue increased only 9% for the quarter ended 3/31/12. Processor sales declined 32% to $19 million after Apple, its largest customer, began licensing the processor IP in lieu of standalone processor purchases. Audience's chips are still built into and being sold for older models of the iPhone, but the iPhone 4S and future models are expected to only incorporate the IP. The royalty revenue is dependent on the number of phones shipped and is subject to a lifetime maximum for the latest generation IP.
Despite the higher margin royalty revenue, gross margin declined from 64% to 57%, partly because of a $1 million write down of excess and obsolete inventory. Operating income for the period was down 51% to $4 million.
Venture capital backers include New Enterprise Associates (22% post-IPO stake), Tallwood Venture Capital (24%) and Vulcan Capital Venture Capital (18%), none of which is selling.
Audience, which was founded in 2000, plans to list on the NASDAQ under the symbol ADNC. J.P. Morgan, Credit Suisse and Deutsche Bank Securities are the joint bookrunners on the deal.
With Audience, fourteen companies, representing $2.5 billion in proceeds, have set terms this week.
