Realnetworks (RNWK) 8-K Other Events

Exhibit 99.1

RealNetworks, Inc. and Subsidiaries

Segment Results of Operations

(Unaudited)

	2011															2012
	Q1			Q2			Q3			Q4			YTD			Q1			Q2			Q3			Q4			YTD
	(in thousands)															(in thousands)
RealPlayer Group
Net revenue	$	24,333		$	25,598		$	24,987		$	27,460		$	102,378		$	22,081		$	22,158		$	21,392		$	25,838		$	91,469
Cost of revenue	3,098			5,101			6,726			6,609			21,534			4,564			4,727			6,735			5,518			21,544
Impairment of deferred costs	—			—			—			633			633			—			—			—			—			—
Gross profit	21,235			20,497			18,261			20,218			80,211			17,517			17,431			14,657			20,320			69,925
Gross margin	87		%	80		%	73		%	74		%	78		%	79		%	79		%	69		%	79		%	76		%
Operating expenses	15,446			15,543			15,537			13,303			59,829			15,975			12,792			13,082			13,374			55,223
Operating income (loss)	$	5,789		$	4,954		$	2,724		$	6,915		$	20,382		$	1,542		$	4,639		$	1,575		$	6,946		$	14,702
Adjusted EBITDA	$	5,949		$	5,444		$	3,204		$	8,035		$	22,632		$	1,985		$	5,087		$	2,275		$	7,620		$	16,967
Mobile Entertainment
Net revenue	$	34,909		$	32,854		$	36,482		$	31,207		$	135,452		$	25,775		$	26,005		$	22,820		$	25,718		$	100,318
Cost of revenue	19,539			17,354			19,805			17,826			74,524			15,478			14,875			12,740			14,577			57,670
Impairment of deferred costs	—			—			—			19,329			19,329			—			—			—			—			—
Gross profit	15,370			15,500			16,677			(5,948		)	41,599			10,297			11,130			10,080			11,141			42,648
Gross margin	44		%	47		%	46		%	(19		)%	31		%	40		%	43		%	44		%	43		%	43		%
Operating expenses	16,748			15,769			15,341			14,063			61,921			14,804			13,851			11,936			12,023			52,614
Operating income (loss)	$	(1,378	)	$	(269	)	$	1,336		$	(20,011	)	$	(20,322	)	$	(4,507	)	$	(2,721	)	$	(1,856	)	$	(882	)	$	(9,966	)
Adjusted EBITDA	$	1,120		$	2,301		$	4,008		$	1,974		$	9,403		$	(2,077	)	$	(409	)	$	341		$	1,687		$	(458	)
Games
Net revenue	$	28,059		$	25,300		$	22,945		$	21,552		$	97,856		$	19,108		$	17,363		$	14,876		$	15,708		$	67,055
Cost of revenue	8,578			8,088			7,247			6,922			30,835			6,713			5,630			4,989			4,496			21,828
Gross profit	19,481			17,212			15,698			14,630			67,021			12,395			11,733			9,887			11,212			45,227
Gross margin	69		%	68		%	68		%	68		%	68		%	65		%	68		%	66		%	71		%	67		%
Operating expenses	17,410			15,854			14,622			14,709			62,595			14,138			13,801			12,023			11,928			51,890
Operating income (loss)	$	2,071		$	1,358		$	1,076		$	(79	)	$	4,426		$	(1,743	)	$	(2,068	)	$	(2,136	)	$	(716	)	$	(6,663	)
Adjusted EBITDA	$	2,700		$	2,058		$	1,762		$	576		$	7,096		$	(1,084	)	$	(1,385	)	$	(1,321	)	$	(71	)	$	(3,861	)
Corporate
Net revenue	—			—			—			—			—			—			—			—			—			—
Cost of revenue	851			123			(1,962		)	732			(256		)	672			730			780			507			2,689
Gross profit	(851		)	(123		)	1,962			(732		)	256			(672		)	(730		)	(780		)	(507		)	(2,689		)
Gross margin	N/A			N/A			N/A			N/A			N/A			N/A			N/A			N/A			N/A			N/A
(Loss) Gain on sale of patents and other technology assets, net of costs	—			—			—			—			—			(1,580		)	117,933			—			—			116,353
Operating expenses	11,297			10,704			10,581			9,770			42,352			11,582			12,885			19,978			11,729			56,174
Operating income (loss)	$	(12,148	)	$	(10,827	)	$	(8,619	)	$	(10,502	)	$	(42,096	)	$	(13,834	)	$	104,318		$	(20,758	)	$	(12,236	)	$	57,490
Adjusted EBITDA	$	(2,227	)	$	(7,581	)	$	(4,887	)	$	(6,745	)	$	(21,440	)	$	(6,241	)	$	(9,802	)	$	(7,337	)	$	(5,972	)	$	(29,352	)
Total
Net revenue	$	87,301		$	83,752		$	84,414		$	80,219		$	335,686		$	66,964		$	65,526		$	59,088		$	67,264		$	258,842
Cost of revenue	32,066			30,666			31,816			32,089			126,637			27,427			25,962			25,244			25,098			103,731
Impairment of deferred costs	—			—			—			19,962			19,962			—			—			—			—			—
Gross profit	55,235			53,086			52,598			28,168			189,087			39,537			39,564			33,844			42,166			155,111
Gross margin	63		%	63		%	62		%	35		%	56		%	59		%	60		%	57		%	63		%	60		%
(Loss) Gain on sale of patents and other technology assets, net of costs	—			—			—			—			—			(1,580		)	117,933			—			—			116,353
Operating expenses	60,901			57,870			56,081			51,845			226,697			56,499			53,329			57,019			49,054			215,901
Operating income (loss)	$	(5,666	)	$	(4,784	)	$	(3,483	)	$	(23,677	)	$	(37,610	)	$	(18,542	)	$	104,168		$	(23,175	)	$	(6,888	)	$	55,563
Adjusted EBITDA	$	7,542		$	2,222		$	4,087		$	3,840		$	17,691		$	(7,417	)	$	(6,509	)	$	(6,042	)	$	3,264		$	(16,704	)

RealNetworks, Inc. and Subsidiaries

Reconciliation of segment operating income (loss) to adjusted EBITDA by segment

(Unaudited)

	2011															2012
	Q1			Q2			Q3			Q4			YTD			Q1			Q2			Q3			Q4			YTD
	(in thousands)															(in thousands)
RealPlayer Group
Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment:
Operating income (loss)	$	5,789		$	4,954		$	2,724		$	6,915		$	20,382		$	1,542		$	4,639		$	1,575		$	6,946		$	14,702
Acquisitions related intangible asset amortization	—			53			79			79			211			79			79			62			62			282
Depreciation and amortization	160			437			401			408			1,406			364			369			638			612			1,983
Impairment of deferred costs	—			—			—			633			633			—			—			—			—			—
Adjusted EBITDA	$	5,949		$	5,444		$	3,204		$	8,035		$	22,632		$	1,985		$	5,087		$	2,275		$	7,620		$	16,967
Mobile Entertainment
Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment:
Operating income (loss)	$	(1,378	)	$	(269	)	$	1,336		$	(20,011	)	$	(20,322	)	$	(4,507	)	$	(2,721	)	$	(1,856	)	$	(882	)	$	(9,966	)
Acquisitions related intangible asset amortization	474			709			833			789			2,805			802			786			796			809			3,193
Depreciation and amortization	2,024			1,861			1,839			1,867			7,591			1,628			1,526			1,401			1,760			6,315
Impairment of deferred costs	—			—			—			19,329			19,329			—			—			—			—			—
Adjusted EBITDA	$	1,120		$	2,301		$	4,008		$	1,974		$	9,403		$	(2,077	)	$	(409	)	$	341		$	1,687		$	(458	)
Games
Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment:
Operating income (loss)	$	2,071		$	1,358		$	1,076		$	(79	)	$	4,426		$	(1,743	)	$	(2,068	)	$	(2,136	)	$	(716	)	$	(6,663	)
Acquisitions related intangible asset amortization	254			257			257			229			997			209			207			171			—			587
Depreciation and amortization	375			443			429			426			1,673			450			476			644			645			2,215
Adjusted EBITDA	$	2,700		$	2,058		$	1,762		$	576		$	7,096		$	(1,084	)	$	(1,385	)	$	(1,321	)	$	(71	)	$	(3,861	)
Corporate
Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment:
Operating income (loss)	$	(12,148	)	$	(10,827	)	$	(8,619	)	$	(10,502	)	$	(42,096	)	$	(13,834	)	$	104,318		$	(20,758	)	$	(12,236	)	$	57,490
Other income (expense), net	(123		)	(310		)	(228		)	189			(472		)	1,475			(49		)	248			(433		)	1,241
Depreciation and amortization	532			537			565			578			2,212			586			601			604			593			2,384
Restructuring and other charges	6,906			506			438			800			8,650			1,609			1,539			10,724			1,353			15,225
Stock-based compensation	2,608			2,686			2,957			2,661			10,912			2,343			1,722			1,602			1,704			7,371
Loss (Gain) on sale of patents and other technology assets, net of costs	—			—			—			—			—			1,580			(117,933		)	—			—			(116,353		)
Loss (Gain) on excess office facilities	(2		)	(173		)	—			(471		)	(646		)	—			—			243			3,047			3,290
Adjusted EBITDA	$	(2,227	)	$	(7,581	)	$	(4,887	)	$	(6,745	)	$	(21,440	)	$	(6,241	)	$	(9,802	)	$	(7,337	)	$	(5,972	)	$	(29,352	)
Total
Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment:
Operating income (loss)	$	(5,666	)	$	(4,784	)	$	(3,483	)	$	(23,677	)	$	(37,610	)	$	(18,542	)	$	104,168		$	(23,175	)	$	(6,888	)	$	55,563
Other income (expense), net	(122		)	(311		)	(228		)	188			(473		)	1,475			(49		)	248			(433		)	1,241
Acquisitions related intangible asset amortization	728			1,019			1,169			1,097			4,013			1,090			1,072			1,029			871			4,062
Depreciation and amortization	3,091			3,278			3,234			3,279			12,882			3,028			2,972			3,287			3,610			12,897
Loss (Gain) on excess office facilities	—			(174		)	—			(472		)	(646		)	—			—			243			3,047			3,290
Restructuring and other charges	6,904			508			438			800			8,650			1,609			1,539			10,724			1,353			15,225
Stock-based compensation	2,607			2,686			2,957			2,663			10,913			2,343			1,722			1,602			1,704			7,371
Impairment of deferred costs	—			—			—			19,962			19,962			—			—			—			—			—
Loss (Gain) on sale of patents and other technology assets, net of costs	—			—			—			—			—			1,580			(117,933		)	—			—			(116,353		)
Adjusted EBITDA	$	7,542		$	2,222		$	4,087		$	3,840		$	17,691		$	(7,417	)	$	(6,509	)	$	(6,042	)	$	3,264		$	(16,704	)

RealNetworks, Inc. and Subsidiaries

Supplemental Financial Information

(Unaudited)

	2011										2012
	Q1		Q2		Q3		Q4		YTD		Q1		Q2		Q3		Q4		YTD
	(in thousands)										(in thousands)
Net Revenue by Line of Business
RealPlayer Group (A)	$	24,333	$	25,598	$	24,987	$	27,460	$	102,378	$	22,081	$	22,158	$	21,392	$	25,838	$	91,469
Mobile Entertainment (B)	34,909		32,854		36,482		31,207		135,452		25,775		26,005		22,820		25,718		100,318
Games (C)	28,059		25,300		22,945		21,552		97,856		19,108		17,363		14,876		15,708		67,055
Total net revenue	$	87,301	$	83,752	$	84,414	$	80,219	$	335,686	$	66,964	$	65,526	$	59,088	$	67,264	$	258,842
Net Revenue by Product
RealPlayer Group
- Licensing (D)	$	6,724	$	7,222	$	6,759	$	10,939	$	31,644	$	7,733	$	8,334	$	6,757	$	10,956	$	33,780
- Subscriptions (E)	9,316		8,623		10,230		8,421		36,590		7,601		6,810		7,056		6,192		27,659
- Media Properties (F)	8,293		9,753		7,998		8,100		34,144		6,747		7,014		7,579		8,690		30,030
Mobile Entertainment
- SaaS (G)	30,525		30,216		30,381		28,255		119,377		23,464		23,286		20,696		22,793		90,239
- Systems Integration / Professional Services (H)	1,840		388		3,844		771		6,843		426		965		247		1,295		2,933
- Licensing (I)	2,544		2,250		2,257		2,181		9,232		1,885		1,754		1,877		1,630		7,146
Games
- Licensing (J)	11,741		9,617		8,350		8,208		37,916		7,587		6,053		5,136		5,222		23,998
- Subscriptions (K)	11,257		9,936		9,883		8,698		39,774		8,170		7,536		6,952		6,876		29,534
- Media Properties (L)	5,061		5,747		4,712		4,646		20,166		3,351		3,774		2,788		3,610		13,523
Total net revenue	$	87,301	$	83,752	$	84,414	$	80,219	$	335,686	$	66,964	$	65,526	$	59,088	$	67,264	$	258,842
Net Revenue by Geography:
United States	$	44,469	$	41,984	$	38,969	$	37,298	$	162,720	$	31,814	$	28,614	$	29,101	$	28,315	$	117,844
Rest of world	42,832		41,768		45,445		42,921		172,966		35,150		36,912		29,987		38,949		140,998
Total net revenue	$	87,301	$	83,752	$	84,414	$	80,219	$	335,686	$	66,964	$	65,526	$	59,088	$	67,264	$	258,842
Net Revenue by Line of Business
(A) The RealPlayer Group primarily includes revenue from RealPlayer and related products, such as the distribution of third party software products, advertising on RealPlayer websites, and sales of RealPlayer Plus software licenses to consumers, sales of intellectual property licenses, and consumer subscriptions such as SuperPass.
(B) The Mobile Entertainment division primarily includes revenue from SaaS services, system integration, and professional services to mobile carriers, and sales of technology licenses of our software products such as Helix.
(C) The Games division primarily includes revenue from sales of games licenses, online games subscription services, advertising on games sites and social network sites, microtransactions from online and social games, and sales of mobile games.
Net Revenue by Product
(D) Licensing revenue within the RealPlayer Group includes sales of RealPlayer Plus software licenses to consumers and sales of intellectual property licenses.
(E) Subscriptions revenue within the RealPlayer Group includes revenue from subscriptions such as SuperPass.
(F) Media Properties revenue within the RealPlayer Group includes distribution of third party software products and advertising on RealPlayer websites.
(G) SaaS revenue within Mobile Entertainment includes revenue from music on demand, video on demand, ringtones, ringback tones, and intercarrier messaging services provided to network services providers who are largely mobile phone networks.
(H) Systems Integration / Professional Services revenue within Mobile Entertainment includes professional services, other than those associated with software sales, provided to mobile carriers.
(I) Licensing revenue within Mobile Entertainment includes revenue from Helix-related products.
(J) Licensing revenue within Games includes retail games-related revenue, microtransactions from online and social games and sales of mobile games.
(K) Subscriptions revenue within Games includes revenue from online games subscriptions.
(L) Media Properties revenue within Games includes distribution of third party software products and advertising on games sites and social network sites.