A sales deal between a hearing aid company and a manufacturer of noisy percussion instruments might seem incongruous, but for ASX-listed Audeara (ASX:AUA), the deal sends all the right notes, loud and clear.
Audeara is best known for its headphones that adjust volume and other levels to the individual user profile, its patented algorithm-based technology.
The A-O1 and A-O2 headphones are sold through hearing clinics, in addition to the global giant Amplifon, which has more than three hundred clinics here.
The products will be available in 10 countries, in addition to the U. S. We are partnering in the U. S. and France through partnerships with hearing corporations Demant, WS Audiology, and Specsavers (which are making a breakthrough in the hearing industry). Audeara’s CEO and co-founder, Dr. James Fielding, states that the general precept is “better, not stronger. “
Compare the experience to a driver listening to the radio with the window open and then closing.
“You haven’t replaced the volume of your radio one iota, but your experience has been reshaped because you’ve replaced other factors. “After slowly but slowly gaining traction with its $399 headphones (and a $599 TV listening package), Audeara is pursuing a strategy to expand and license its underlying generation of sound enhancement to other parties.
Last month, Audeara’s AUA generation division won its first acquisition order for mass production for tool giant Avedis Zildjian, which makes cymbals, drumsticks, gongs and percussion accessories.
Zildjian products are sold internationally under the brands Zildjian, Balter and Vic Firth (headphones) and are used by everyone from beginners to top rock stars, jazz artists and concert percussionists.
The initial order is valued at $2. 1 million, and “the timing and duration of the long-term orders were decided through the product’s advertising good fortune. “
“We’re passionate about the best audio solutions,” says Alex Afflick, co-founder of Audeara.
“Audeara sees this partnership as just the beginning of long-term product licensing and sales agreements to expand the success of our generation in collaboration with established industry leaders. “
The deal is likely to “have a very positive effect on the company’s cash flow and progress toward break-even and profitability. “
Otherwise, Audeara’s compliance disclosure is silent on the details, out of respect for Avedis Zildjian, a 401-year-old man.
Founded in Constantinople (now Istanbul) by Armenian Avedis Zildjian, the company is one of the oldest operating companies in the world.
(Surname conferred through Sultan Mustafa I, Zildjian, literally “cymbal maker” in Turkish. )
Avedis Zildjian now operates out of Norwell, Massachusetts, and remains controlled through the Zildjian family.
Today, all Zildjian tools are made in the USA. He has worked in the U. S. , at the company’s cymbal factory in Norwell, and at the drumstick and mallet factory in Newport, Maine.
Fielding, a Brisbane-based medical graduate with a reputation for being an avid drummer, co-founded Audeara after becoming frustrated by his training’s tedious audition testing process.
Audeara is listed on the ASX in May 2021, after raising $6 million at 20 cents each.
Actually, the pieces of hardware (the headsets) are generic items.
Audeara’s “secret sauce” lies in the test function built into the bulky audiometers that cost thousands of dollars.
During the testing process, the user puts on the earbuds, and with a beep, the volume is reduced to the hearing threshold (note that those settings vary not only from user to user, but also from one left ear to the other).
In fact, the devices don’t update hearing aids, but they do update the ability of other people with hearing loss to enjoy music, TV, or Zoom calls, etc.
Since headsets are classified as medical devices, Audeara must be compliant and certified on an ongoing basis. On the other hand, since they are “serious” hearing aids, they are refundable.
Currently, Audeara accounts for a portion of all non-hearing hearing aids sold under the federal government’s hearing program and one-fifth of those provided under the Department of Veterans Affairs banner.
Last month, Audeara reported a half-year profit of $786,000, down $42 due to abnormal orders.
“We didn’t expect the Australian market to turn out the lights, but the March quarter is good,” Fielding said.
The company’s loss of just over $1 million exceeded the previous deficit of $1. 87 million.
At the end of December, the monetary balance stood at $1. 6 million, with an R&D tax incentive of $673,000 raised this week.
Fielding says the company is at the “tipping point” where a few more buy orders will take the bottom line from red to black. At the same time, currency prices declined by 42 percent to $858,000.
“I feel like I’ve been battened on my toes and I’m sailing rough seas,” he says. “Today’s investors don’t like expansion at all costs, but expansion at an appropriate cost.
“We have absorbed a lot of operating expenses and if we can maintain earnings growth, we will be able to beat the times. “
Fielding says one of the main benefits of promotion through audiologists is that clinics pay upfront, while a store like JB Hi-Fi and Harvey Norman will buy on consignment (cash is only known when a unit is purchased, and if it is purchased).
“Plus, our product is the only one on the shelves. “Iain Wilkie, an analyst at brokerage Morgans, says Avedis Zildjian’s win is the kind of deal Audeara has been signaling for some time now and “provides significant validation of product quality in the market. “”
He says that although the generation division’s gross margins are lower than those of Audeara-branded headphones, the company incurs no sales, marketing or distribution expenses.
Investors are listening, and Audeara’s stock doubled following Avedis Zildjian’s announcement on Feb. 27.
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