Audible Announces First Quarter 2006 Financial Results; Company Reports Record Net Revenue of $19.7 Million; Reports GAAP Diluted EPS of ($0.12) and Non-GAAP Diluted EPS of ($0.08)

Audible reported record consolidated net revenue for the firstquarter 2006 of $19.7 million, up 53% year over year; GAAP loss fromoperations of $3.7 million and non-GAAP loss from operations of $2.6million, versus a non-GAAP loss from operations of $3.3 million inQ4-05.

GAAP net loss in Q1-06 was $3.0 million, or $0.12 net loss perdiluted share. Non-GAAP net loss was $1.9 million, or $0.08 non-GAAPnet loss per diluted share.

The total number of customers acquired during the quarter was98,700, representing growth of 38% year over year. TotalAudibleListener(R) members acquired during the quarter was 78,500,representing growth of 46% year over year. At the end of Q1-06, thetotal number of AudibeListener members was 278,800, representinggrowth of 50% year over year.

"The first quarter was marked by strong revenue and new membershipgrowth, and lower customer acquisition costs and churn rates," notedDonald Katz, Chairman and CEO, Audible, Inc. "We are extremelyencouraged by the early customer response to our new membership plansin terms of consumption levels, customer retention rates, and muchhigher levels of customer satisfaction. We continue to feel confidantabout a business plan that shows continued growth and improvingprofitability for the rest of the year."

Key Financial and Operating Metrics:

Consolidated Net Revenue: Consolidated net revenue totaled $19.7million in Q1-06, a 53% increase over the $12.9 million reported inQ1-05.

Total Deferred Revenue: Deferred revenue was $8.6 million at theend of Q1-06, a 31% increase over the $6.6 million reported at the endof Q4-05 and a 236% increase over the $2.6 million reported at the endof Q1-05.

Total New Customers: Total new customers, which includes newAudibleListener(R) members and other new customers, totaled 98,700 inQ1-06, a 38% increase over 71,500 in Q1-05.

New AudibleListener(R) Members:* New AudibleListener(R) memberstotaled 78,500 in Q1-06, a 46% increase over 53,900 in Q1-05.

This is the first quarter that Audible's financial results includestock-based compensation expenses from the adoption of the newaccounting standard, FAS 123(R), which Audible adopted on January 1,2006. In addition, Audible has begun to disclose non-GAAP financialmeasures that, in each case, exclude the stock-based compensationexpense and any related income tax expenses or benefits.

GAAP Loss from Operations: GAAP loss from operations totaled $3.7million in Q1-06, as compared to GAAP loss from operations of $3.7million in Q4-05 and GAAP income from operations of $0.6 million inQ1-05.

Non-GAAP Loss from Operations: Non-GAAP loss from operationstotaled $2.6 million in Q1-06, as compared to Non-GAAP loss fromoperations of $3.3 million in Q4-05 and Non-GAAP income fromoperations of $0.6 million in Q1-05.

GAAP Net Loss: GAAP net loss totaled $3.0 million, or $0.12 netloss per diluted share in Q1-06.

Non-GAAP Net Loss: Non-GAAP net loss totaled $1.9 million, or$0.08 net loss per diluted share in Q1-06.

Cash, Cash Equivalents and Short-Term Investments: Audible's cash,cash equivalents and short-term investments totaled $60.4 million atthe end of Q1-06.

* See last table for detailed disclosure of historicalAudibleListener membership metrics

Conference Call

Senior management will host an investor teleconference at 5:00p.m. EDT today, to discuss first quarter results as well as relatedfinancial and operational developments. A live webcast of theconference call is available at www.audible.com/ir for audio streamingaccess to the call. To participate in the call, the dial-in number is(800) 946-0706 or +1(719) 457-2638.

To sign up for the podcast of the earnings call through AudibleWordcast, please go to the Webcast & Presentation section of Audible'sInvestor Relations Web site (www.audible.com/ir).

Non-GAAP Measures

To supplement the company's consolidated financial statementspresented in accordance with GAAP, Audible uses non-GAAP measures ofcertain components of financial performance. These non-GAAP measuresinclude non-GAAP income (loss) from operations, non-GAAP net (loss)income, and non-GAAP earnings (net loss) per diluted share. Non-GAAPfigures exclude the impact of stock-based compensation expenses.Audible's reference to these measures should be considered in additionto results that are prepared under U.S. GAAP but should not beconsidered a substitute for results that are presented in accordancewith GAAP.

These non-GAAP measures are provided to enhance investors' overallunderstanding of the company's current financial performance and thecompany's prospects for the future and provide further information forcomparative information due to the adoption of the new accountingstandard FAS 123(R). The company believes the non-GAAP measuresprovide useful information to both management and investors byexcluding the non-cash impact of stock-based compensation expenses,which may not be indicative of the company's core operating resultsand business outlook.

Reconciliation to the nearest GAAP measure of all non-GAAPmeasures included in this press release can be found in the financialtable included on page 6.

About Audible, Inc.

Audible (www.audible.com) is the leading provider of spokenentertainment and information on the Internet. Content from Audible isdownloaded and played back on personal computers, CDs, orAudibleReady(R) computer-based mobile devices. Audible has 100,000hours of audio programming from 318 content partners, includingleading audiobook publishers, broadcasters, entertainers, magazine andnewspaper publishers, and business information providers. Audible.comis the Apple iTunes Music Store's preeminent provider of spokenproducts for downloading or streaming via the Web. Among Audible'sother key business relationships are Bookspan, Creative Labs, Dell,iriver, Microsoft, Palm, SanDisk, Texas Instruments, and XM SatelliteRadio.

Audible, www.audible.com, www.audible.co.uk, AudibleListener, andAudibleReady are registered trademarks of Audible, Inc. and all arepart of the family of Audible, Inc. trademarks. Other product orservice names mentioned herein are the trademarks of their respectiveowners.

This press release contains information about Audible, Inc. thatis not historical fact and may be deemed to contain forward-lookingstatements about the company. Actual results may differ materiallyfrom those anticipated in any forward-looking statements as a resultof certain risks and uncertainties, including, without limitation,Audible's limited operating history, history of losses, uncertainmarket for its services, and its inability to license or producecompelling audio content and other risks and uncertainties detailed inthe company's Securities and Exchange Commission filings.

AUDIBLE INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)


Three month period ending
----------------------------------------
March 31, December 31, March 31,
2006 2005 2005
------------ ------------ ------------
Revenue, net:
Content and services
revenue:
Consumer content $ 19,281 $ 17,717 $ 12,838
Point of sale rebates (167) (211) (356)
Services 33 49 19
------------ ------------ ------------
Total content and services
revenue 19,147 17,555 12,501
Hardware revenue 125 280 104
Related party revenue 373 349 275
Other revenue 69 80 25
------------ ------------ ------------
Total revenue, net 19,714 18,264 12,905

Operating expenses:
Cost of content and
services revenue:
Royalties and other
content charges 7,983 7,028 4,153
Discount certificate
rebates 298 295 601
------------ ------------ ------------
Total cost of content and
services revenue 8,281 7,323 4,754
Cost of hardware revenue 675 1,493 294
Cost of related party
revenue 158 135 30
Operations 3,102 2,771 1,847
Technology and development 3,694 2,428 1,625
Marketing 4,301 5,019 2,260
General and administrative 3,201 2,765 1,536
------------ ------------ ------------
Total operating expenses 23,412 21,934 12,346
------------ ------------ ------------

(Loss) income from
operations (3,698) (3,670) 559

Other income (expense):
Interest income 660 654 414
Interest expense -- -- (1)
------------ ------------ ------------
Other income, net 660 654 413
------------ ------------ ------------

(Loss) income before income
taxes (3,038) (3,016) 971

Income tax expense (3) 96 (81)
State income tax benefit -- 740 --
------------ ------------ ------------

Net (loss) income $ (3,041) (2,180) $ 891
============ ============ ============

Basic net (loss) income per
common share $ (0.12) (0.09) $ 0.04

Basic weighted average
common shares outstanding 24,482 24,310 24,008

Diluted net (loss) income
per common share $ (0.12) (0.09) $ 0.03

Diluted weighted average
common shares outstanding 24,482 24,310 26,118


AUDIBLE INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share and per share data)
(unaudited)

Three month period
--------------------------------------
March 31, December 31, March 31,
2006 2005 2005
----------- ----------- -----------

Amortization of stock-based
compensation included in
expense line items:
Operations $ 143 $ 72 $ 18
Technology and development 131 71 2
Marketing 204 51 3
General and administrative 616 226 14
----------- ----------- -----------
$ 1,094 $ 420 $ 37
=========== =========== ===========

=========== =========== ===========
Reconciliation to non-GAAP
financial measures (unaudited)
Net (loss) income from
operations $ (3,698) $ (3,670) $ 559
Add back:
Stock-based compensation 1,094 420 37

------------ ------------ -----------
Non-GAAP (loss) income from
operations $ (2,604) $ (3,250) $ 596
=========== =========== ===========


Reconciliation to non-GAAP
financial measures (unaudited)
Net (loss) income $ (3,041) $ (2,180) $ 891
Add back:
Stock-based compensation 1,094 420 37

------------ ------------ -----------
Non-GAAP net (loss) income $ (1,947) $ (1,760) $ 928
=========== =========== ===========

Non-GAAP net (loss) income per
common share:
Basic $ (0.08) $ (0.07) $ 0.04
Diluted $ (0.08) $ (0.07) $ 0.04

Weighted average common shares
outstanding
Basic 24,482 24,310 24,008
Diluted 24,482 24,310 26,118




AUDIBLE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)


March 31, December 31,
2006 2005
------------ ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 14,061 $ 11,549
Short-term investments 46,310 55,616
Interest receivable on short-term
investments 393 428
Accounts receivable, net of allowance 2,920 2,337
Accounts receivable, related parties 597 594
Royalty advances 460 471
Prepaid expenses and other current assets 1,982 899
Inventory 275 498
----------- -----------

Total current assets 66,998 72,392

Property and equipment, net 10,952 8,159
Other assets 888 114
----------- -----------

Total assets $ 78,838 $ 80,665
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable $ 2,337 $ 4,750
Accrued expenses 4,344 4,802
Accrued royalties 5,111 5,104
Accrued compensation 1,238 868
Deferred revenue 8,413 6,459
----------- -----------

Total current liabilities 21,443 21,983

Deferred revenue, noncurrent 221 99
Royalty obligations, noncurrent 190 188

Commitments and contingencies

Stockholders' equity:
Common stock 245 243
Additional paid-in capital 190,484 192,547
Deferred compensation -- (3,696)
Accumulated other comprehensive income 10 15
Accumulated deficit (133,755) (130,714)
----------- -----------

Total stockholders' equity 56,984 58,395
----------- -----------

Total liabilities and stockholders' equity $ 78,838 $ 80,665
=========== ===========



AUDIBLE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(unaudited)

Three month period
ended
March 31,
-------------------
2006 2005
--------- ---------
Cash flows from operating activities:
Net (loss) income $ (3,041) $ 891
Adjustments to reconcile net (loss) income to net
cash (used in) provided by operating activities:
Depreciation and amortization 1,122 140
Share-based compensation expense 1,094 37
Accretion of discounts on short-term investments (230) (301)
Income tax benefit from exercise of stock
options -- 22
Changes in assets and liabilities:
Interest receivable on short-term investments 35 49
Accounts receivable, net (583) (141)
Accounts receivable, related parties (3) (62)
Royalty advances 11 (64)
Prepaid expenses and other current assets (1,083) 241
Inventory 223 20
Other assets (774) (11)
Accounts payable (2,412) 1,107
Accrued expenses (482) 198
Accrued royalties 7 1,182
Accrued compensation 393 74
Deferred revenue 2,076 123
-------- --------
Net cash (used in) provided by operating
activities (3,647) 3,505
Cash flows from investing activities:
Purchases of property and equipment (3,716) (463)
Capitalized internally developed software costs (198) --
Purchases of short-term investments (14,964) (11,716)
Proceeds from maturity of short-term investments 24,500 5,000
-------- --------
Net cash provided by (used in) investing
activities 5,622 (7,179)

Cash flows from financing activities:
Proceeds from exercise of common stock options 151 66
Proceeds from exercise of common stock warrants 750 273
Purchase of treasury stock at cost (360) --
Principal payments made on obligations under
capital leases -- (121)
-------- --------
Net cash provided by financing activities 541 218

Effect of exchange rate changes on cash and cash
equivalents (4) 1
-------- --------

Increase (decrease) in cash and cash equivalents 2,512 (3,455)
Cash and cash equivalents at beginning of period 11,549 13,296
-------- --------
Cash and cash equivalents at end of period $ 14,061 $ 9,841
======== ========

AUDIBLE INC. AND SUBSIDIARY
UNAUDITED SUPPLEMENTAL OPERATING DATA
(Numbers in thousands)

Please Note: As part of Audible's ongoing efforts to improve the
company's internal and external reporting, Audible has refined its
disclosure policies and more clearly defined certain operating metrics
relating to its AudibleListener membership program. Audible's ongoing
goal is to achieve excellence in reporting and to ensure that the
internal metrics management relies on as a gauge of the company's
operational performance are the same as those disclosed to the public.
As a result, the company has included the below information aimed at
clearly outlining and defining Audible's revised policies and how they
are reflected in the metrics publicly disclosed today and
historically.


New
AudibleListener
Membership Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Reporting: 2004 2004 2004 2004 2005 2005 2005 2005 2006
----------------
Total
AudibleListener(R)
Members(1) 105 115 132 157 186 205 224 245 279
Year-over-year -- -- -- -- 77% 77% 70% 56% 50%
Quarter-over-
quarter 13% 10% 14% 20% 18% 10% 9% 10% 14%
New
AudibleListener(R)
Members(2) 22 22 29 39 54 52 60 62 79
Year-over-year -- -- -- -- 143% 141% 104% 58% 46%
Quarter-over-
quarter -- -2% 35% 34% 37% -3% 15% 4% 26%
Average Monthly
Churn in
AudibleListener(R)
Members(3) 3.1% 3.0% 3.0% 2.6% 4.0% 4.7% 5.1% 4.8% 4.6%
Cost per New AL $43 $64 $62 $64 $52 $58 $58 $95 $52


(1) Total number of AudibleListener(R) members at the end of the
period.
(2) Total number of new AudibleListener(R) members added during
the period. Members canceling and rejoining a membership within the
same day are counted as one membership.
(3) Churn is defined as member cancellations in the period divided
by the sum of members at the beginning of the period plus gross member
adds, divided by three months.



Prior AudibleListener Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Membership Reporting: 2004 2004 2004 2004 2005 2005 2005 2005
----------------------
Total
AudibleListener(R)
Members(1) 109 118 134 159 189 206 223 248
Year-over-year -- -- -- -- 74% 74% 66% 56%
Quarter-over-quarter 13% 9% 14% 19% 18% 9% 8% 11%
New AudibleListener(R)
Members(2) 23 22 31 41 55 55 62 65
Year-over-year -- -- -- -- 146% 143% 102% 60%
Quarter-over-quarter -- 0% 36% 33% 36% -1% 13% 5%
Average Monthly Churn
in AudibleListener(R)
Members(3) 2.8% 3.3% 3.2% 3.0% 4.0% 5.1% 5.6% 4.6%
Cost per New AL $43 $62 $59 $62 $51 $53 $53 $87


(1) Total number of AudibleListener(R) members at the end of the
period.
(2) Total number of new AudibleListener(R) members added during
the period. Members canceling and rejoining a membership within the
same day are counted as two distinct memberships.
(3) Churn is defined as member cancellations in the period divided
by the sum of members at the beginning of the period plus gross member
adds, divided by three months.