Roger Pondel - IR Zee Hakimoglu - President and CEO Narsi Narayanan - SVP, Finance.

Kara Anderson - B. Riley & Company Dennis Van Zelfden - Brazos Research Lisa Springer - Singular Research Alan Mitrani - Sylvan Lake Asset Management George Melas - MKH Management.

Good morning, everyone, and welcome to the ClearOne's Second Quarter 2015 Earnings Results Conference Call. This call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Mr. Roger Pondel. Mr. Pondel, please go ahead..

Thanks so much, operator, and good morning, everyone. Welcome and thank you for joining us to discuss ClearOne's 2015 second quarter financial results. On the call today are Zee Hakimoglu, President and CEO, and Narsi Narayanan, Senior Vice President of Finance. First, some housekeeping before we begin.

Please be advised that this call is being broadcast live on the Internet at www.clearone.com. Playback of the call will be available for at least three months and may be accessed on the internet at ClearOne's website.

I would like to make a cautionary statement and remind everyone that all of the information discussed on the call today is covered under the Safe Harbor provisions of the Litigation Reform Act.

The company's discussion today will include forward-looking information reflecting management's current forecast of certain aspects of the company's future, and results could differ materially from those stated or implied today. With that, let me turn the call over to Zee.

Zee?.

Thank you, Roger. And good morning, everyone and thanks for joining us today to discuss our second quarter 2015 results. We reported strong Q2 earnings with a record Q2 gross profit and record operating income. Our Q2 reported revenue of $14 million was essentially a flat quarter.

Despite this, we recorded yet another quarter of impressive earnings growth. Our non-GAAP operating income increased by 79%, gross margin increased from 57% to 64%, and our non-GAAP EPS increased 43% from $0.14 to $0.20.

Our substantial gross profit margin increase to 64% in the second quarter of 2015 from 57% last year was due to product mix and an increasing share of software in our revenue. We expect gross margin level to be around 62% to 63% in the near future. Non-GAAP operating expenses for the second quarter was $6.1 million, down from $6.5 million last year.

Operating expenses declined as a result of tight execution of our operating plans. In terms of revenue, Q2 was essentially flat due to a couple of factors. One, we had a temporary delay beyond our control in shipping a major overseas project.

Had we shipped before the end of the second quarter, revenue in the most recent quarter would have been well above revenue in Q2 last year. The good news is the project has shipped, and that we will recognize that revenue in Q3. Two, we experienced an unseasonal low in the U.S. market during the month of May.

We heard from partners this was the case across many of their product lines. Sales momentum picked up again in June and continues on track so far this quarter. Like many companies with sales outside the U.S., the strong dollar had and is likely to have a modest dampening effect on our future financial performance.

This is not because of currency translation since ClearOne transacts mostly in U.S. dollars, but rather because international customers lose purchasing power for U.S. products due to a strong U.S. dollar. Weakness in EMEA and Australia markets and lowered spending by the China government will also continue to have a small impact on sales.

We are confident in our ability to generate positive revenue growth in the second half of the current year and beyond. We believe we continue to offer the right products, which are ideally positioned in the market. Our microphones continue to contribute to our professional audio revenue growth.

Video products that include our COLLABORATE low cost media collaboration appliance and Spontania cloud-based media collaboration service continue to show healthy growth. In addition, we had a number of important sales wins in Q2 that bode well for us in the future.

These wins include initial orders from large, new marquee customers both domestic and international. These large customers with numerous office locations around the globe will provide excellent opportunities for future additional business and growth.

Another important sales win was partnering with American Doctors Online and PhoneDOCTORx through a partnership with the Massachusetts Department of Public Health to provide secure cloud-based communications through our HIPAA-compliant Spontania services.

Spontania provides video connectivity between the National TeleNursing Center and telemedicine carts used by clinicians in remote locations throughout the USA.

Our Spontania Cloud-based services empower professionals in medicine and many other industries to engage in wide area, high quality video, voice, and data collaboration without the burden of expensive hardware or infrastructure.

It also allows service providers and technical partners to expand their own offering by deploying Spontania within their own network building on other ClearOne solution to enhance and advance their conferencing and collaboration experience.

In June, ClearOne also introduced CONNECT Bluetooth, a compact and portable USB adapter that brings Bluetooth connectivity to its full line of personal, premium, and professional audio products including CHAT speakerphones, INTERACT mixers, and CONVERGE Pro audio product.

Our CONNECT Bluetooth solutions simply and conveniently enables mobile devices to connect directly to ClearOne audio products to make mobile calls and also provide audio bridging capability that connect PC-based voice or video call and mobile calls into a unified group experience.

At InfoComm 2015 in June, we released two new models of our CONVERGE Matrix Line of Dante-based network audio distribution solutions to complement our larger scale mixers and routers. These new, smaller scale 64- and 128-channel models work equally well with Dante digital network audio technology and interoperate with all third-party Dante devices.

They enhance the suite to now accommodate a full spectrum of applications. Also at InfoComm 2015, we launched a new series of integrated packages in our COLLABORATE line of video collaboration solution, the world's first technology that combines low cost video appliances with powerful, scalable, cloud collaboration capability.

The COLLABORATE media appliance provides standard-based video conferencing with a wide assortment of collaboration tool, including wireless presentation and whiteboarding, streaming, recording and multi-party conferencing, and adds more functionality, flexibility and participant value to elevate ClearOne's leadership in the enterprise conferencing marketplace.

Finally, during the quarter, we announced a groundbreaking software strategy for adding new and richer capability to our view network video streaming system without requiring any changes or any additions to system hardware.

The powerful functionality can be added by easy software license purchases to ensure that one time hardware investments are future proof. Customers can continuously upgrade their view system only if needed and when desired.

With this wrap-up of our recent highlights, I'd like to turn the call over to Narsi for a detailed discussion of our second quarter 2015 financial performance. Following Narsi's discussion, we will take questions for the remainder of the available time.

Narsi?.

Thank you, Zee, and good morning, everyone. Before I begin, I would like to point out two things. First, I will be discussing certain non-GAAP financial measures. The reconciliation of these non-GAAP measures to reported GAAP measures is included in the earnings release that went out this morning.

Now, turning to our financial results for the second quarter of 2015. Please note the following comparisons refer to second quarter of 2015 versus the same quarter of 2014. Net revenue, at $14.1 million, was a tad below our 2014 second quarter revenue of $14 million, recording a 1% decrease.

Gross profit was $9 million, or 64% of revenue, compared with $8.1 million, or 57% of revenue. Gross profit increased by 11%. This is our highest ever Q2 gross profit. As Zee already remarked, gross profit margin increased due to better product mix and increasing contribution of software sales to our revenue.

Turning to operating expenses, sales and marketing expense decreased by 7% to $2.8 million from $3 million. The decrease was mainly due to decreased commissions to sales persons [ph] and reduced spending [indiscernible]. R&D expense decreased by 12% to $2.1 million from $2.3 million primarily due to reduction in project related expenses.

Non-GAAP G&A expense increased by 17% from $1.2 million to $1.4 million primarily due to increased legal expenses and travel related expenses. Total non-GAAP operating expenses decreased by 5% from $6.5 million in 2014 to $6.1 million in 2015. Non-GAAP operating income increased to $2.9 million from $1.6 million, an impressive increase of 79%.

This is our highest ever recorded Q2 operating income. Non-GAAP net income increased by 39% to $1.9 million, or $0.20 per diluted share from $1.4 million or $0.14 per diluted share for the prior year period. Non-GAAP adjusted EBITDA increased by 70% from $1.9 million to $3.2 million.

Let's turn our attention to financial results for the six months ended June 30, 2015. Please note the following comparisons refer to first half of 2015 versus the first half of 2014. Net revenue increased to $27.6 million from $26.8 million, an increase of 3%.

Gross profit was $17.5 million, or 63% of revenue, compared to $15.8 million or 59% of revenue. Turning to operating expenses, Sales and marketing expense decreased by 6% to $5.4 million from $5.7 million. Research and product development expense reduced by about 13% to $4 million from $4.6 million.

Non-GAAP G&A expense increased by 11% from $2.6 million to $2.8 million. Total non-GAAP operating expenses declined by 6% from $12.8 million in the first half of 2014 to $12 million in 2015 first half. Non-GAAP operating income increased to $5.4 million from $3 million, an increase of 81%.

Non-GAAP net income increased by 62% to $3.6 million or $0.37 per diluted share from $2.2 million or $0.23 per diluted share for the prior year period. Non-GAAP adjusted EBITDA increased by 72% from $3.5 million to $6 million. Turning briefly to the balance sheet, our balance sheet remains strong.

At June 30, our cash and investment balance was $36 million, up from $33.6 million at the end of the year. We continued distributing quarterly dividends. We have quarterly dividend declare for Q2 of $0.035 cents a share. I would now like to turn the call back to Zee..

Thank you, Narsi. We will now take questions.

Operator?.

[Operator Instructions] And our first question comes from the line of Kara Anderson from B. Riley & Company. Your line is open. .

Hi, thanks for taking my question.

Just a little housekeeping, can you provide a breakout of revenue performance by Pro, Video, and UC?.

Okay. Pro for Q2 grew by 2.1%, our video grew by 19%, and UC was down by 19%..

Sorry, did you say 90% or 19%?.

Nineteen..

Nineteen.

And then in which product area did the delayed project that didn't ship until this quarter fall?.

That was mostly Professional actually..

Great. Thank you..

Thank you..

Our next question comes from Dennis Van Zelfden from Brazos Research. Your line is open..

Good morning, Zee and Narsi..

Good morning..

Regarding the product of shipping delay, can you tell us the amount of that or range?.

No, we would not want to disclose that, but it was a significant project I would say, larger than our average project; significantly larger..

Okay. And I know that you mentioned, it would ship in the third quarter.

Has it actually shipped yet?.

Yes, it has shipped. They were -- quite frankly, because it was an international shipment, there were administrative snafus, I would say, that delayed our shipment. And as you may know, ClearOne takes an extremely conservative approach to revenue recognition.

And we felt that with the paperwork not exactly perfect, we didn't want to take the risk, given that it was an international shipment. So it has shipped, it shipped, I would say probably the first week of Q3..

Okay.

And then you made a comment in the press release and I think probably in your verbal comments about how you expect the return to revenue growth in the second half, what gives you the confidence in that growth given that some of the factors that you mentioned that hurt you this quarter are going to still be there?.

Well, that's a good question. We see good momentum this quarter. We're tracking our performance at least pretty close to our expectation. We have some of the new products. We have a very, very good interest in many of the new collaborate suite that we introduced. We see good momentum on the video products.

And we are introducing -- just looking at the pipeline, we believe that we will have continued growth. It was an unfortunate disappointment to not see the growth this quarter. But quite frankly, we've absorbed the macroscopic headwinds that we've described.

But I think there is enough on our plate and our pipeline and our projects that we're pretty confident. And unless there is sudden change of headwinds, that we should have profitability and growth for the remainder of the year..

Let me add to what Zee was mentioning. EMEA declined by 17% this quarter. Last quarter, EMEA grew by 9%, actually. That's a significant change actually. We also noted that Australia was down in Q2 actually.

And despite these decline, we would still be on the growth trajectory if we have shipment delay that we talked about in the press release, and also there was the unseasonal slowness in Maine in the U.S. With these two factors removed, we believe we can be on the same growth path that we have been there for the last three years, actually.

So, June was a great month, we had a great momentum, and that continues in July. So we think that will be on the growth track, actually..

Okay.

And, Zee, I guess you would still cling to your projection of growth in the second half and in the third quarter even excluding this one shipment that was delayed, correct? Or is the shipment that was delayed giving you the confidence that there's going to be growth?.

Even excluding that shipment, we see growth..

Okay, perfect, perfect. Okay, one question on your cash, it's quite high and growing, which is always good, and you've always made the comments that rather than buying companies, you tend to buy technology.

So I'm wondering what holes in your technology do you need to fill? What else is there to buy? What kinds of technology, I guess, is what I'm saying?.

Well, fortunately, or unfortunately, technology never seizes to evolve. And usually, what we're buying is more complex than just the technology tool, we're buying technology systems that literally tens of millions of dollars have been poured in to develop the system of this technology.

And there is quite a bit -- there's always something and we certainly have a technology roadmap that we're addressing.

I would rather not get into the specifics but I could certainly say that networking technology is core to that, and software and networking technology is where the market is going, and we're focused on that and there is more technology to be have on that.

But as you all know, we won't overpay for acquisitions which are more than just technology companies. I would say they're technology, but they have some core base value in their market that they've developed. But I would say those two areas are big areas.

And we, also I should add, made the decision to initiate dividend payments and based on our board's decision, and going future, as we increase profitability, we will continue to look at our dividends for the use of that..

Okay, thank you. Good luck..

Thank you, Dennis..

Our next question is from Lisa Springer from Singular Research. Your line is open..

Thank you. Good morning and thank you for taking my question. My question concerns the agreement you signed with a large IT distributor in China.

Has that agreement started to generate revenues for you? And how is that tracking versus your expectations for it?.

Yes. Yes, they've already generated good revenue for us. They focus both the government projects as well as commercial projects. We noted in our call and press release that government projects have been somewhat or somewhat declined in China because of their anticorruption initiative.

The commercial projects are still hot and heavy, and we're very pleased with their performance so far. And they're bringing in our whole product suite to many, many large and interesting projects for us.

Of course because of the size of the projects, these are quotes and tenders that from the time that you quote, to the time that you win, takes a little bit longer. The larger the project, the more that is the case, but we're satisfied with the performance of this group.

In fact, I will add last quarter, our team went to China and they held a very impressive partner conference where they invited about 150 of their partnered integrators and dealers and consultant just for the specific purpose of introducing ClearOne products. It was a big expense on their part.

And fortunately, we didn't have to pay for it outside of our travel. And it was a very good showing and there was great enthusiasm for our solutions in the China market..

Okay, thank you..

Thank you, Lisa..

Thank you. Our next question comes from Alan Mitrani from Sylvan Lake Asset Management. Your line is open..

Hi, thanks. Just a follow-up since Lisa asked that question, I may as well ask. In looking at your historical sales in the U.S. and outside of the U.S., I see that all countries outside of the U.S. in 2014 represented about 31.6% of your sales. That's actually gone down. The sales have grown each year. But as a percent of your sales because the U.S.

is growing faster, it's actually declined from the high 30s back maybe five years ago.

So can you maybe just give us some context into how big China is for you maybe last year and where you think that could be in the next couple of years given your products have not really been sold there as broadly as they have in the past, as broadly as they could be? Excuse me..

Okay, actually, if you look at the mix, there have been changes, but it has not changed significantly since, I can give you 2013, 2014, and so far in 2015. 2013, the impact was about 18% actually..

I'm sorry.

Do you mind giving it in millions so I know out of the -- let's say, out of the $18.3 million you did last year in all other countries, roughly how much is that in Asia or China?.

The impact was about $10 million plus actually in 2014..

Ten million dollars.

And is that -- what was that in 2013?.

Yes. It's actually -- it was kind of flat actually. It was about -- I'm looking at the percentage of sales actually because we have been growing revenue -- it grew actually. From the impact in 2013, it was about $9 million and it grew to about $10.2 million in 2014. And in 2015 so far, they're already $5.2 million.

Their percentage of our revenue has grown to now 19% actually..

Okay.

So the ability of this -- so the China -- how big, what I'm really trying to get because I think it's an opportunity is, how big do you think that could be if your products weren't that widely distributed before and China is a very large market, albeit a slowing market from where they had been, nevertheless, how big can that be for you? Can this be $20 million, $30 million of sales in a few years now that you have better distribution points? Can you talk about that broadly?.

We have our ambitious goals to our Asia-Pac, especially in two regions, one is China and other one is Middle East. We think that those two areas are the growth areas for us. In China, we even have goals to double the revenue within a couple years actually.

The new IT distributor that we have would be a large lever in bringing out this big growth actually..

Okay. Good, that's helpful, I appreciate that. On the issue of your sales -- so I guess I wasn't aware that most of your sales are done in U.S. dollars. Is that like 90% plus are done in U.S.

dollars?.

Yes, more than 90% actually..

So, technically, currency does impact you, it just doesn't impact you the way other companies might report it from a currency adjusted basis versus not. It just gets factored into lower sales given that your product becomes more expensive as the dollar --.

Right. Exactly right..

So could you -- I mean I know it's hard then to do, but can you sort of quantify it or do you have a sense as to how much sales you lost because the dollar is stronger year-over-year?.

No, it's difficult to say, but you could see that the impact on EMEA, that is one of the factors in EMEA and, of course, Russia is impacted, et cetera. And, yes, it's just that we couldn't measure it but --.

Usually, currency problems go hand-in-hand with the local economy problems. So it's hard to parse out the impact of one versus the other actually..

Okay. And then on the -- you said on the product that shipped, your overall inventory jumped sequentially, it was up to 3% sequentially, 19% year-over-year, I think the total inventory, the short term and the long term.

Is that mostly due to the fact that you have that product already in terms of finished goods sitting on your books, the June book to sale because it came in the beginning of the third quarter?.

Yes, that's one factor. Second factor is our anticipated growth was higher, so we had -- we were not expecting this kind of slowdown in EMEA and things like that. So we knew stocking of our Q2. And Q3 is going to be a big quarter, so we can just order right the day before so we are preparing ourselves two big quarters actually..

Okay. And then since the growth isn't what you thought, I know it's just one quarter growth, and maybe the year might not turn out as strong as you thought at least going in giving the dollar strength and some of the weakness you're seeing in other markets even though it will still be a good year.

My question to you is, are you changing anything? Are you slowing down any spend? Are you not adding as much? Have you done -- I mean you guys keep a pretty tight ship on things anyway in terms of your cost, but are you doing anything because maybe the slowdown is not just a one quarter slowdown in terms of the rate of slow down? I understand it's growth free for you, but you thought it would be much more growth as did we.

So I'm thinking about how tight a rein you're keeping on cost looking out, in case the slow down comes in a little faster than you think it might going out the next six to nine months?.

I think we pretty well established that we keep a very tight control of our cost sometimes to the chagrin of our employees on our cost. We pay attention as far out to the horizon as we can and without disrupting possibility of shipments, of course, we don't want to do double damage.

We would rather have the damage fall on the inventory side than not having product to ship. But we respond, we respond both internally, we work with our partners to make sure everybody is getting the best value for their money, and we have great insights and great ability to manage.

But of course, there's always a little time delay, the so called hysteresis between responding. But again, the good news with our products is that they stay fresh in the inventory, they don't go obsolete.

Like I say, we have products that I joined 11 years ago, we could sell today, the original APN Zap [ph] that even have a market should we have inventory; in fact we did sell out of those. So it's a balance, and we're committed, again, to manage our bottom-line if you could see we did in this quarter..

Okay, good. I appreciate that. If I can ask another question, if it's okay. Can you explain -- I saw the recent vote that you had in terms like the results from the proxy, and I thought it was interesting is the vote on the compensation, 3 million shares for -- but then the Bagley [ph] votes, which I guess are still excluded based on a deal.

Is that deal still excluded from two years ago? Was that an item? I was under the impression that those votes -- that taking away his votes for certain, under Utah law, had to be done each year to shareholders to put to because it seems like the broker no votes were more than the broker for, for the compensation passing..

Actually, let me clarify that. It was not a deal. It's owned by investors, like you or shareholders, to exclude certain portion of Bagley shares.

And those shares according to our shareholders resolution and according to Utah statute that operates on the control shares, these have been excluded on all matters that Bagley shares have been ordered actually..

Right, I'm sorry, Narsi. Yes, under the Utah Control Shares Acquisition Act, I realized, as ClearOne shareholders approved back almost two years ago now, in December of 2013, they were excluded.

My question is are they excluded forever as long as he's a shareholder? As a shareholder, I was under the impression that they were only going to be excluded for the year that that vote was happening and that each year, we would need to go --.

No, no. It's -- until there is another vote, there are facts underlying voting change, this will continue actually. That resolution, shareholder resolution is not meant for just one year..

Not meant for -- okay. Thank you. That was my mistake. And then lastly, you guys are still sitting on $3.75 a share in cash. The buyback is done, the dividends, I appreciate but don't really need, they're fairly small, you guys can pay out a lot more, you're basically just paying out less than free cash flow.

Can you talk about what you see on the horizon the way earlier questions are asked about acquisitions or, if not acquisitions, a meaningful shareholder return whether a dividend of a dollar or more, onetime or some sort of payback? I love you guys but I don't think you need to sit on $36 million of cash forever..

As we've said before, the buyback is not -- it stopped, but it's not like it's our follower actually. Our board considers our growth, cash position, all the options available. And we will, just like we did, buyback of nearly $5 million last year and the year before. The board may consider doing things like that actually.

We are not tied to one specific option actually. Nothing is rolled out. They're attuned to the situation actually..

I understand that. But the bigger question is, in the last few years, you made acquisitions totaling, using this cash portion of maybe $17 million to $18 million, if I want to say all that.

I mean you generate cash, you're profitable, you're paying a small dividend, of course you'll buyback stock if it drops, but my question is, either do you have plans or looking to be able to put more of the money to work in a more meaningful size acquisition, if you see any out there, I wanted to hear your thoughts on that, Zee, or at some point coming back with not just -- you know what I'm saying, it's a large amount of cash for a small company..

It certainly is, and we understand your point of view. And we introduced -- Narsi will remember this -- we introduced for the first time -- yes, you're correct, it was small but significant for a small high tech company -- a dividend. And we increased it this year. It has actually been only two quarters since we announced our dividend.

And you could be sure that we are absolutely considering buybacks, tender offers, special dividends, and increases of dividend. We did it two quarters ago. It's very important.

And I could say you could rest assure that it is definitely something that we feel an obligation to continue to do as soon as we feel the time is right which is the big question. But like I say it was only two quarters ago where we introduced the dividend. As far as cushion goes, of cash, we like to keep a certain cushion.

We didn't expect the recession of 2009 and 2008, no one did, but we were in excellent position at the time. And like I say, there are many options. And I would say that the board will look at those and work on those. We talk about that quite often. It's more than talk, we acted on a small dividend, and we'll bring it up again. We will look at that..

I appreciate that.

And what about in terms of looking at acquisitions? Any on your horizon in terms of looking out 24 months, any bigger things you're looking at now that you do have a better balance sheet?.

Yes. I can't say at this time whether we do or we don't, but we're certainly not afraid of a large acquisition if it was priced right and it was digestible. And maybe a slower market will help us because there's a lot of companies that are suffering and we're pretty active on that front.

We're very good at spotting value place and we'll continue to do that..

Thank you..

Thank you..

[Operator Instructions] Our next question comes from George Melas from MKH Management. Your line is open..

Thank you. Good morning, Zee and Narsi..

Good morning, George..

Hi, George..

I have a question on revenue and sort of revenue growth. I think you said that revenue picked up nicely in June and then continued into July. And I imagined that with some contribution from the video conferencing, but probably with very little contribution from some of the other growth drivers like the VIEW streaming and the MATRIX audio distribution.

Can you talk a little bit about what you see driving the growth in the second half? And can you also maybe talk about some of these three growth drivers in terms of their readiness to market and what contribution you expect from them in '15 and '16?.

Okay. Let me talk about MATRIX. My understanding is, MATRIX, we shipped all the various models. We started with the larger models first, then we shipped the lower, what I say -- which can work in smaller installations with fewer channels, like 64 and 128.

And we are expected to release software management tool for MATRIX which will complete the full suite..

Yes, maybe I should just talk about the products. The MATRIX represents a much larger opportunity for ClearOne. But the larger the opportunity, the more time you need to quote, spec, and tender it, not to mention getting it out to the consultants and integrators so they get a chance to kick the tires. So that product is out there.

We have hired a specialist in that area for audio and video distribution. We have multiple projects especially in China where infrastructure is a big piece of the equation and look forward to contributing -- I think a good significant part of our revenue especially in 2016 when the quotes are there.

In terms of our collaboration, again, we've seen good growth. The new suite has tremendous interest from our partners. We're just sending out demo units of this unique product with cloud and traditional conferencing in low-cost appliances.

And I think that they will all continue to contribute to our growth, I can't give you a number, but they are in fact contributing and are (inaudible) to the growth that we're seeing in the video domain..

Okay.

And maybe can you talk also about the streaming systems?.

Yes. I mentioned the streaming system. And I mentioned the streaming system and especially for China -- we recently won a casino in Las Vegas, a small project. These projects start small. They had -- network streaming is rather new. The traditional media streaming has always been an analog enterprise based on hub-based systems.

We have a very innovative solution. We're looking forward to it. And we won, I should mention, a project in China for example, that we won't actually deploy until 2016. However, it's a subway project in China. They're often used in transportation hubs. So it's a project that we won for 2016 through our partner. I mentioned another hotel in Las Vegas.

We're making good progress with wins. But the deployment, we can't recognize the revenue because the deployment takes anywhere from six to nine months, sometimes even two years on the infrastructure systems. ClearOne is moving away from simple box sales. Of course, the Pro audio, it's neither a box sale nor a complex integration sale.

But the audio distribution and the media distribution are infrastructure sales that are large projects and continuing projects, but they do take time to get it into the market. But we're extremely optimistic that there's nothing like our systems out there today, highly competitive both functionally and price-wise..

Okay, great. That's very helpful.

And essentially, can we look at the company right now as having an audio that's relatively stable to actually maybe growing with the microphones or microphones contributing to the growth of audio, and these various growth drivers could layer growth on top of that?.

Yes. We do still a small piece, but still it is out there. It's going to be a big driver of our growth. And microphones have been contributing significantly to Pro growth to both the Beamforming side as well as the wireless microphones. They will drive the growth, continue to drive the growth in the near future.

And in the audio side, as you said, like the stable, consistent side. Video is growing and it has been consistent in growth in the last few quarters. You can see that even after our acquisition gains have -- even after comparing with acquisition, we are growing which is a good thing. It's not like you're not just adding revenue through acquisition.

So it's growing consistently especially even VIEW Pro takes up, it will be a nice top line addition to our revenue actually..

Okay, great.

But in the second half of 2015, we're going to see, you expect nice revenue growth but without much contribution from the streaming and the audio distribution systems?.

Yes. Probably, we will probably see some contributions from streaming. We anticipate the audio distribution will take a little bit longer just because that product came out much more recently..

Okay, great. And then just one final question on EMEA. I'm always sort of puzzled how EMEA is in the overall sales of the company. It seems to be maybe 12%, 13% of sales and that includes the Middle East.

Why is that market so much smaller than the U.S.? Or is it just that there are some entrenched players that have a part of that market?.

One thing I'd like to say is, we don't include Middle East as part of EMEA just for clarity, but --.

Okay..

Actually, as I mentioned to Alan, our regional mix continue to be kind of pretty stable actually. If you look at the three regions, how we report, Americas, EMEA, and APAC, 2013 Americas was about 69%, APAC was 18%, EMEA was about 13%. If you look at 2015 year-to-date now, Americas is now 69%, APAC is 19%, EMEA is about 12% actually.

So it's a slight variation here and there, but the mix continues to be the same, actually. The drivers are slightly different, but one compensates for other, and the mix doesn't seem to change much actually..

Right. But it's interesting because EMEA has been then relatively flat from a mix perspective. But could it be much bigger? Is there a good reason why one-fifth of U.S. sales --.

Well, let me say this that EMEA has been suffering a very long time, actually. It suffered since our recession. It has not really significantly improved since the 2009, 2008 time. And in that respect, that may be their norm at this point.

We don't see any great driving factors for EMEA in any meaningful way other than we will hope to retain it, grow it with the rest of our market, maybe a little bit less so. But the real driver is coming from places like China, South America, Middle East. These are the areas that have real growth potential and we're focusing on these areas..

I think I need to clarify a little bit here. EMEA is growing actually..

Yes..

EMEA is slow, but our market share is increasing, so we are posting growth..

Okay..

So we are happy that EMEA is maintaining its mix despite the problem. That's what --.

We're looking for greater growth in other areas..

Yes..

Got it. Okay. That's very helpful. Thank you very much..

Thank you, George..

Thank you, George..

Thank you. And at this time, I'd like to turn the call back over to Zee Hakimoglu for any closing remarks..

Okay, thank you. And we thank you in your interest in ClearOne. And if anyone has any further questions from our call today, please don't hesitate to call us at investor relations. Have a nice day. Thank you..

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may now disconnect. Everyone, have a great day..