Exhibit 99.1
REALNETWORKS ANNOUNCES THIRD QUARTER 2013 RESULTS
SEATTLE - October 30, 2013 - RealNetworks, Inc. (Nasdaq: RNWK) today announced results for the third quarter ended September 30, 2013.
Financial Summary
| |
| • | Revenue of $49.0 million |
| |
| • | Net loss of $(31.4) million or $(0.88) per share |
| |
| • | Adjusted EBITDA loss of $(8.4) million |
| |
| • | Cash and short-term investments of $218.4 million as of September 30, 2013 |
Recent Highlights
| |
| • | On September 24, launched RealPlayer Cloud, the first integrated video player and cloud service |
| |
| • | Acquired Muzicall Limited, a leading service provider for mobile carriers and media companies in Europe, for $6.7 million |
| |
| • | Settled our two most significant outstanding litigation matters for an aggregate of $11.5 million |
"We are pleased with our continued progress towards revitalizing RealNetworks," said Rob Glaser, Chairman and interim CEO of RealNetworks. "Last month we launched RealPlayer Cloud, our breakthrough product that makes it easy to move, watch, save and share video across every popular digital device. The initial market response to RealPlayer Cloud has been excellent and we think lays the foundation for a great future."
Third Quarter Results
For the third quarter of 2013, revenue was $49.0 million, a sequential decrease of (2)% from the second quarter of 2013, and a decrease of (17)% compared with the third quarter of 2012. Revenue trends in each of RealNetworks' businesses in the third quarter of 2013 compared with the year-earlier quarter were: a (18)% decrease in RealPlayer Group revenue to $17.6 million, a (13)% decrease in Mobile Entertainment revenue to $19.9 million and a (24)% decrease in Games revenue to $11.4 million.
Net loss for the third quarter of 2013 was $(31.4) million, or $(0.88) per share, compared with net loss of $(22.2) million, or $(0.63) per share, in the third quarter of 2012.
Adjusted EBITDA loss for the third quarter of 2013 was $(8.4) million, compared with an adjusted EBITDA loss of $(6.0) million for the third quarter of 2012. A reconciliation of GAAP operating income (loss) to adjusted EBITDA is provided in the financial tables that accompany this release.
As of September 30, 2013, RealNetworks had $218.4 million in unrestricted cash, cash equivalents and short-term investments compared with $271.4 million as of December 31, 2012, of which approximately $37.5 million was held in foreign jurisdictions. In addition, RealNetworks had $39.5 million in restricted cash and available-for-sale securities as of September 30, 2013, compared with $44.3 million as of December 31, 2012.
Segment Operating Results
|
| | | | | | | | | | | | | |
| | | | 2013 | | 2013 | | 2012 |
| | | | Q3 | | Q2 | | Q3 |
| | | | (in thousands) |
| Revenue | | | | | |
| | RealPlayer Group | $ | 17,641 |
| | $ | 18,383 |
| | $ | 21,392 |
|
| | Mobile Entertainment | 19,948 |
| | 18,592 |
| | 22,820 |
|
| | Games | 11,369 |
| | 12,875 |
| | 14,876 |
|
| | Corporate | — |
| | — |
| | — |
|
| | | Total | $ | 48,958 |
| | $ | 49,850 |
| | $ | 59,088 |
|
| | | | | | | | |
| Operating Income (loss) | | | | | |
| | RealPlayer Group | $ | (72 | ) | | $ | (27 | ) | | $ | 1,575 |
|
| | Mobile Entertainment | (1,477 | ) | | (990 | ) | | (1,856 | ) |
| | Games | (3,360 | ) | | (2,261 | ) | | (2,136 | ) |
| | Corporate | (23,528 | ) | | (13,226 | ) | | (20,758 | ) |
| | | Total | $ | (28,437 | ) | | $ | (16,504 | ) | | $ | (23,175 | ) |
| | | | | | | | |
| Adjusted EBITDA | | | | | |
| | RealPlayer Group | $ | 624 |
| | $ | 470 |
| | $ | 2,275 |
|
| | Mobile Entertainment | 503 |
| | 694 |
| | 341 |
|
| | Games | (2,704 | ) | | (1,315 | ) | | (1,321 | ) |
| | Corporate | (6,792 | ) | | (5,602 | ) | | (7,337 | ) |
| | | Total | $ | (8,369 | ) | | $ | (5,753 | ) | | $ | (6,042 | ) |
Business Outlook
For the fourth quarter of 2013, RealNetworks expects total revenue of $47.0 million to $50.0 million, with all segments declining year over year, Mobile Entertainment increasing, Games flat and RealPlayer Group declining sequentially. We expect adjusted EBITDA for the quarter to be a loss of $(8.0) million to $(11.0) million.
The foregoing forward-looking statements reflect RealNetworks' expectations as of October 30, 2013. It is not RealNetworks' general practice to update these forward-looking statements until its next quarterly results announcement.
Webcast and Conference Call Information
The company will host an audio Webcast conference call to review results and discuss the company's operations for the third quarter at 5:00 p.m. ET on October 30. The Webcast will be available at: http://investor.realnetworks.com
The on-demand Webcast will be available beginning approximately two hours following the conclusion of the live Webcast.
Conference Call Details
5 p.m. ET / 2 p.m. PT
Dial in:
888-790-3162 Domestic
415-228-4854 International
Passcode: Third Quarter Earnings
Leader: Rob Glaser
Telephonic replay will be available until 8 p.m. ET, November 20, 2013.
Replay dial in:
800-568-9796 Domestic
203-369-3292 International
Passcode: 103013
RNWK-F
For More Information
Investor Relations: ir@realnetworks.com
About RealNetworks
RealNetworks creates innovative applications and services that make it easy to connect with and enjoy digital media. RealNetworks invented the streaming media category in 1995 and continues to connect consumers with their digital media both directly and through partners, aiming to support every network, device, media type and social network. RealNetworks' corporate information is located at http://www.realnetworks.com/about-us.
RealNetworks, RealPlayer and GameHouse are trademarks or registered trademarks of RealNetworks, Inc. or its subsidiaries. All other companies or products listed herein are trademarks or registered trademarks of their respective owners.
About Non-GAAP Financial Measures
To supplement RealNetworks' consolidated financial information presented in accordance with GAAP in this press release, the company also discloses certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA by reportable segment, which management believes provide investors with useful information.
In the financial tables of our earnings press release, RealNetworks has included reconciliations of GAAP operating income (loss) to adjusted EBITDA and to adjusted EBITDA by reportable segment.
The rationale for management's use of non-GAAP measures is included in the supplementary materials presented with the third quarter earnings materials. Please refer to Exhibit 99.2 (“Information Regarding Non-GAAP Financial Measures”) to the company's report on Form 8-K, which is being submitted today to the SEC.
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties, including statements relating to RealNetworks' current expectations regarding future revenue and adjusted EBITDA, future market performance, and its plans to attain growth and profitability and undertake certain strategic initiatives. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements. Actual results may differ materially from the results predicted. Factors that could cause actual results to differ from the results predicted include: RealNetworks' ability to realize operating efficiencies, growth and other benefits from the implementation of its growth plan, strategic initiatives, and restructuring efforts; the emergence of new entrants and competition in the market for digital media products and services; other competitive risks, including the growth of competing technologies, products and services;
the potential outcomes and effects of claims and legal proceedings on RealNetworks' business, prospects, financial condition or results of operations; risks associated with key customer or strategic relationships, business acquisitions and the introduction of new products and services; changes in consumer and advertising spending in response to disruptions in the global financial markets; fluctuations in foreign currencies; and changes in RealNetworks' effective tax rate. More information about potential risk factors that could affect RealNetworks' business and financial results is included in RealNetworks' annual report on Form 10-K for the most recent year ended December 31, its quarterly reports on Form 10-Q and in other reports and documents filed by RealNetworks from time to time with the Securities and Exchange Commission. The preparation of RealNetworks' financial statements and forward-looking financial guidance requires the company to make estimates and assumptions that affect the reported amount of assets and liabilities, and revenues and expenses during the reported period. Actual results may differ materially from these estimates under different assumptions or conditions. The company assumes no obligation to update any forward-looking statements or information, which are in effect as of their respective dates.
RealNetworks, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
|
| | | | | | | | | | | | | | | | | |
| | | | Quarters Ended September 30, | | Nine Months Ended September 30, |
| | | | |
| | | | 2013 | | 2012 | | 2013 | | 2012 |
| | | | (in thousands, except per share data) |
| | | | | | | | | | |
| Net revenue | | | $ | 48,958 |
| | $ | 59,088 |
| | $ | 155,601 |
| | $ | 191,578 |
|
| | | | | | | | | | |
| Cost of revenue | | | 18,990 |
| | 25,244 |
| | 59,015 |
| | 78,633 |
|
| | | | | | | | | | |
| Gross profit | | | 29,968 |
| | 33,844 |
| | 96,586 |
| | 112,945 |
|
| | | | | | | | | | |
| Sale of patents and other technology assets, net of costs (A) | | | — |
| | — |
| | — |
| | 116,353 |
|
| | | | | | | | | | |
| Operating expenses: | | | | | | | | | |
| Research and development | | | 15,707 |
| | 15,321 |
| | 45,951 |
| | 49,167 |
|
| Sales and marketing | | | 19,427 |
| | 21,972 |
| | 59,830 |
| | 68,462 |
|
| General and administrative | | | 9,869 |
| | 8,759 |
| | 28,506 |
| | 35,103 |
|
| Restructuring and other charges | | | 1,877 |
| | 10,724 |
| | 4,075 |
| | 13,872 |
|
| Lease exit and related charges | | | — |
| | 243 |
| | 3,066 |
| | 243 |
|
| Loss on litigation settlements | | | 11,525 |
| | — |
| | 11,525 |
| | — |
|
| | | | | | | | | | |
| Total operating expenses | | | 58,405 |
| | 57,019 |
| | 152,953 |
| | 166,847 |
|
| | | | | | | | | | |
| Operating income (loss) | | | (28,437 | ) | | (23,175 | ) | | (56,367 | ) | | 62,451 |
|
| | | | | | | | | | |
| Other income (expenses): | | | | | | | | | |
| Interest income, net | | | 166 |
| | 164 |
| | 992 |
| | 1,033 |
|
| Gain (loss) on sale of equity and other investments, net | | | — |
| | 2,210 |
| | — |
| | 5,288 |
|
| Equity in net loss of Rhapsody investment | | | (2,629 | ) | | (1,613 | ) | | (6,209 | ) | | (4,095 | ) |
| Other income (expense), net | | | (118 | ) | | 248 |
| | (146 | ) | | 1,674 |
|
| | | | | | | | | | |
| Total other income (expense), net | | | (2,581 | ) | | 1,009 |
| | (5,363 | ) | | 3,900 |
|
| | | | | | | | | | |
| Income (loss) before income taxes | | | (31,018 | ) | | (22,166 | ) | | (61,730 | ) | | 66,351 |
|
| Income tax expense (benefit) | | | 357 |
| | 48 |
| | (210 | ) | | 24,583 |
|
| | | | | | | | | | |
| Net income (loss) | | | $ | (31,375 | ) | | $ | (22,214 | ) | | $ | (61,520 | ) | | $ | 41,768 |
|
| | | | | | | | | | |
| Basic net income (loss) per share | | | $ | (0.88 | ) | | $ | (0.63 | ) | | $ | (1.73 | ) | | $ | 1.20 |
|
| Diluted net income (loss) per share | | | $ | (0.88 | ) | | $ | (0.63 | ) | | $ | (1.73 | ) | | $ | 1.19 |
|
| | | | | | | | | | |
| Shares used to compute basic net income (loss) per share | | | 35,670 |
| | 34,998 |
| | 35,490 |
| | 34,747 |
|
| Shares used to compute diluted net income (loss) per share | | | 35,670 |
| | 34,998 |
| | 35,490 |
| | 35,000 |
|
| | | | | | | | | | |
| | | | | | | | | | |
| (A) On April 5, 2012, RealNetworks completed the sale of certain patents and other technology assets to Intel for a cash purchase of $120.0 million. |
RealNetworks, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
|
| | | | | | | |
| | September 30,
2013 | | December 31,
2012 |
| | (in thousands) |
| ASSETS |
| Current assets: | | | |
| Cash and cash equivalents | $ | 134,879 |
| | $ | 163,198 |
|
| Short-term investments | 83,527 |
| | 108,216 |
|
| Trade accounts receivable, net | 26,494 |
| | 30,754 |
|
| Deferred costs, current portion | 1,622 |
| | 825 |
|
| Deferred tax assets - current | 3,942 |
| | 2,869 |
|
| Prepaid expenses and other current assets | 12,152 |
| | 17,002 |
|
| Total current assets | 262,616 |
| | 322,864 |
|
| | | | |
| Equipment, software, and leasehold improvements, at cost: | | | |
| Equipment and software | 94,054 |
| | 98,041 |
|
| Leasehold improvements | 3,516 |
| | 22,767 |
|
| Total equipment, software, and leasehold improvements | 97,570 |
| | 120,808 |
|
| Less accumulated depreciation and amortization | 73,105 |
| | 91,492 |
|
| Net equipment, software, and leasehold improvements | 24,465 |
| | 29,316 |
|
| | | | |
| Restricted cash equivalents and investments | 5,000 |
| | 10,000 |
|
| Equity method investment | 12,656 |
| | 19,204 |
|
| Available for sale securities | 34,485 |
| | 34,334 |
|
| Other assets | 2,844 |
| | 3,153 |
|
| Deferred costs, non-current portion | 1,032 |
| | 531 |
|
| Deferred tax assets, net, non-current portion | 1,576 |
| | 4,911 |
|
| Other intangible assets, net | 14,051 |
| | 3,275 |
|
| Goodwill | 17,518 |
| | 6,309 |
|
| | | | |
| Total assets | $ | 376,243 |
| | $ | 433,897 |
|
| | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY |
| | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 20,562 |
| | $ | 19,013 |
|
| Accrued and other current liabilities | 58,024 |
| | 57,530 |
|
| Deferred revenue, current portion | 7,604 |
| | 8,675 |
|
| Total current liabilities | 86,190 |
| | 85,218 |
|
| | | | |
| Deferred revenue, non-current portion | 167 |
| | 169 |
|
| Deferred rent | 613 |
| | 2,250 |
|
| Deferred tax liabilities, net, non-current portion | 3,166 |
| | 432 |
|
| Other long-term liabilities | 492 |
| | 3,100 |
|
| | | | |
| Total liabilities | 90,628 |
| | 91,169 |
|
| | | | |
| | | | |
| Shareholders' equity | 285,615 |
| | 342,728 |
|
| | | | |
| Total liabilities and shareholders' equity | $ | 376,243 |
| | $ | 433,897 |
|
RealNetworks, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
| | | | | | | |
| | Nine Months Ended
September 30, |
| | 2013 | | 2012 |
| | (in thousands) |
| |
| Cash flows from operating activities: | | | |
| Net income (loss) | $ | (61,520 | ) | | $ | 41,768 |
|
| Adjustments to reconcile net income (loss) to net cash used in operating activities: |
| Depreciation and amortization | 15,045 |
| | 12,478 |
|
| Stock-based compensation | 5,671 |
| | 6,419 |
|
| Loss on asset disposal | — |
| | 1,965 |
|
| Equity in net loss of Rhapsody | 6,209 |
| | 4,095 |
|
| Deferred income taxes, net | (1,238 | ) | | 22,399 |
|
| Gain on sale of patent and other technology assets, net of costs | — |
| | (116,353 | ) |
| Gain on sale of equity and other investments, net | — |
| | (5,288 | ) |
| Realized translation gain | (35 | ) | | (1,968 | ) |
| Other | 51 |
| | — |
|
| Net change in certain operating assets and liabilities | 7,514 |
| | 3,735 |
|
| Net cash provided by (used in) operating activities | (28,303 | ) | | (30,750 | ) |
| | | | |
| Cash flows from investing activities: | | | |
| Purchases of equipment, software, and leasehold improvements | (5,798 | ) | | (6,478 | ) |
| Proceeds from sale of patents and other technology assets, net of costs | — |
| | 116,353 |
|
| Proceeds from sale of equity and other investments | — |
| | 7,244 |
|
| Purchases of short-term investments | (85,670 | ) | | (76,191 | ) |
| Proceeds from sales and maturities of short-term investments | 110,359 |
| | 51,885 |
|
| Decrease (increase) in restricted cash equivalents and investments, net | 5,000 |
| | 103 |
|
| Acquisitions of businesses, net of cash acquired | (22,480 | ) | | — |
|
| Net cash provided by (used in) investing activities | 1,411 |
| | 92,916 |
|
| Cash flows from financing activities: | | | |
| Proceeds from issuance of common stock (stock options and stock purchase plan) | 408 |
| | 3,240 |
|
| Tax payments from shares withheld upon vesting of restricted stock | (911 | ) | | (964 | ) |
| Payment of contingent consideration | (828 | ) | | — |
|
| Net cash provided by (used in) financing activities | (1,331 | ) | | 2,276 |
|
| Effect of exchange rate changes on cash and cash equivalents | (96 | ) | | (73 | ) |
| Net increase (decrease) in cash and cash equivalents | (28,319 | ) | | 64,369 |
|
| Cash and cash equivalents, beginning of period | 163,198 |
| | 106,333 |
|
| Cash and cash equivalents, end of period | $ | 134,879 |
| | $ | 170,702 |
|
RealNetworks, Inc. and Subsidiaries
Supplemental Financial Information
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2013 | | 2012 |
| | | Q3 | | Q2 | | Q1 | | Q4 | | Q3 | | Q2 | | Q1 |
| | | (in thousands) |
| Net Revenue by Line of Business | | | | | | | | | | | | | | |
| RealPlayer Group (A) | | $ | 17,641 |
| | $ | 18,383 |
| | $ | 22,383 |
| | $ | 25,838 |
| | $ | 21,392 |
| | $ | 22,158 |
| | $ | 22,081 |
|
| Mobile Entertainment (B) | | 19,948 |
| | 18,592 |
| | 20,495 |
| | 25,718 |
| | 22,820 |
| | 26,005 |
| | 25,775 |
|
| Games (C) | | 11,369 |
| | 12,875 |
| | 13,915 |
| | 15,708 |
| | 14,876 |
| | 17,363 |
| | 19,108 |
|
| Total net revenue | | $ | 48,958 |
| | $ | 49,850 |
| | $ | 56,793 |
| | $ | 67,264 |
| | $ | 59,088 |
| | $ | 65,526 |
| | $ | 66,964 |
|
| | | | | | | | | | | | | | | |
| Net Revenue by Product | | | | | | | | | | | | | | |
| RealPlayer Group | | | | | | | | | | | | | | |
| - License (D) | | $ | 7,281 |
| | $ | 6,766 |
| | $ | 8,332 |
| | $ | 10,956 |
| | $ | 6,757 |
| | $ | 8,334 |
| | $ | 7,733 |
|
| - Subscriptions (E) | | 3,616 |
| | 4,193 |
| | 4,924 |
| | 6,192 |
| | 7,056 |
| | 6,810 |
| | 7,601 |
|
| - Media Properties (F) | | 6,745 |
| | 7,424 |
| | 9,127 |
| | 8,690 |
| | 7,579 |
| | 7,014 |
| | 6,747 |
|
| | | | | | | | | | | | | | | |
| Mobile Entertainment | | | | | | | | | | | | | | |
| - SaaS (G) | | 18,155 |
| | 17,002 |
| | 18,674 |
| | 22,793 |
| | 20,696 |
| | 23,286 |
| | 23,464 |
|
| - Systems Integration / Professional Services (H) | | 322 |
| | 300 |
| | 291 |
| | 1,295 |
| | 247 |
| | 965 |
| | 426 |
|
| - Technology License & Other (I) | | 1,470 |
| | 1,290 |
| | 1,530 |
| | 1,630 |
| | 1,877 |
| | 1,754 |
| | 1,885 |
|
| | | | | | | | | | | | | | | |
| Games | | | | | | | | | | | | | | |
| - License (J) | | 3,421 |
| | 4,089 |
| | 5,249 |
| | 5,222 |
| | 5,136 |
| | 6,053 |
| | 7,587 |
|
| - Subscriptions (K) | | 5,733 |
| | 5,980 |
| | 6,312 |
| | 6,876 |
| | 6,952 |
| | 7,536 |
| | 8,170 |
|
| - Media Properties (L) | | 2,215 |
| | 2,806 |
| | 2,354 |
| | 3,610 |
| | 2,788 |
| | 3,774 |
| | 3,351 |
|
| | | | | | | | | | | | | | | |
| Total net revenue | | $ | 48,958 |
| | $ | 49,850 |
| | $ | 56,793 |
| | $ | 67,264 |
| | $ | 59,088 |
| | $ | 65,526 |
| | $ | 66,964 |
|
| | | | | | | | | | | | | | | |
| Net Revenue by Geography | | | | | | | | | | | | | | |
| United States | | $ | 21,039 |
| | $ | 21,463 |
| | $ | 28,024 |
| | $ | 28,315 |
| | $ | 29,101 |
| | $ | 28,614 |
| | $ | 31,814 |
|
| Rest of world | | 27,919 |
| | 28,387 |
| | 28,769 |
| | 38,949 |
| | 29,987 |
| | 36,912 |
| | 35,150 |
|
| Total net revenue | | $ | 48,958 |
| | $ | 49,850 |
| | $ | 56,793 |
| | $ | 67,264 |
| | $ | 59,088 |
| | $ | 65,526 |
| | $ | 66,964 |
|
| | | | | | | | | | | | | | | |
| 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. |
RealNetworks, Inc. and Subsidiaries
Segment Results of Operations
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | |
| | | 2013 | | 2012 | | 2013 | | 2012 |
| | | Q3 | | Q2 | | Q3 | | YTD | | YTD |
| | | (in thousands) |
| RealPlayer Group | | | | | | | | | | |
| | | | | | | | | | | |
| Net revenue | | $ | 17,641 |
| | $ | 18,383 |
| | $ | 21,392 |
| | $ | 58,407 |
| | $ | 65,631 |
|
| Cost of revenue | | 3,264 |
| | 4,409 |
| | 6,735 |
| | 12,984 |
| | 16,026 |
|
| Gross profit | | 14,377 |
| | 13,974 |
| | 14,657 |
| | 45,423 |
| | 49,605 |
|
| | | | | | | | | | | |
| Gross margin | | 81 | % | | 76 | % | | 69 | % | | 78 | % | | 76 | % |
| | | | | | | | | | | |
| Operating expenses | | 14,449 |
| | 14,001 |
| | 13,082 |
| | 44,656 |
| | 41,849 |
|
| Operating income (loss) | | $ | (72 | ) | | $ | (27 | ) | | $ | 1,575 |
| | $ | 767 |
| | $ | 7,756 |
|
| | | | | | | | | | | |
| Adjusted EBITDA | | $ | 624 |
| | $ | 470 |
| | $ | 2,275 |
| | $ | 2,425 |
| | $ | 9,347 |
|
| | | | | | | | | | | |
| Mobile Entertainment | | | | | | | | | | |
| | | | | | | | | | | |
| Net revenue | | $ | 19,948 |
| | $ | 18,592 |
| | $ | 22,820 |
| | $ | 59,035 |
| | $ | 74,600 |
|
| Cost of revenue | | 11,972 |
| | 11,170 |
| | 12,740 |
| | 33,974 |
| | 43,093 |
|
| Gross profit | | 7,976 |
| | 7,422 |
| | 10,080 |
| | 25,061 |
| | 31,507 |
|
| | | | | | | | | | | |
| Gross margin | | 40 | % | | 40 | % | | 44 | % | | 42 | % | | 42 | % |
| | | | | | | | | | | |
| Operating expenses | | 9,453 |
| | 8,412 |
| | 11,936 |
| | 26,976 |
| | 40,591 |
|
| Operating income (loss) | | $ | (1,477 | ) | | $ | (990 | ) | | $ | (1,856 | ) | | $ | (1,915 | ) | | $ | (9,084 | ) |
| | | | | | | | | | | |
| Adjusted EBITDA | | $ | 503 |
| | $ | 694 |
| | $ | 341 |
| | $ | 4,579 |
| | $ | (2,145 | ) |
| | | | | | | | | | | |
| Games | | | | | | | | | | |
| | | | | | | | | | | |
| Net revenue | | $ | 11,369 |
| | $ | 12,875 |
| | $ | 14,876 |
| | $ | 38,159 |
| | $ | 51,347 |
|
| Cost of revenue | | 3,216 |
| | 3,381 |
| | 4,989 |
| | 10,397 |
| | 17,332 |
|
| Gross profit | | 8,153 |
| | 9,494 |
| | 9,887 |
| | 27,762 |
| | 34,015 |
|
| | | | | | | | | | | |
| Gross margin | | 72 | % | | 74 | % | | 66 | % | | 73 | % | | 66 | % |
| | | | | | | | | | | |
| Operating expenses | | 11,513 |
| | 11,755 |
| | 12,023 |
| | 35,120 |
| | 39,962 |
|
| Operating income (loss) | | $ | (3,360 | ) | | $ | (2,261 | ) | | $ | (2,136 | ) | | $ | (7,358 | ) | | $ | (5,947 | ) |
| | | | | | | | | | | |
| Adjusted EBITDA | | $ | (2,704 | ) | | $ | (1,315 | ) | | $ | (1,321 | ) | | $ | (5,173 | ) | | $ | (3,790 | ) |
| | | | | | | | | | | |
| Corporate | | | | | | | | | | |
| | | | | | | | | | | |
| Net revenue | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| Cost of revenue | | 538 |
| | 559 |
| | 780 |
| | 1,660 |
| | 2,182 |
|
| Gross profit | | (538 | ) | | (559 | ) | | (780 | ) | | (1,660 | ) | | (2,182 | ) |
| | | | | | | | | | | |
| Gross margin | | N/A |
| | N/A |
| | N/A |
| | N/A |
| | N/A |
|
| | | | | | | | | | | |
| Gain on sale of patents and other technology assets, net of costs | | — |
| | — |
| | — |
| | — |
| | 116,353 |
|
| Operating expenses | | 22,990 |
| | 12,667 |
| | 19,978 |
| | 46,201 |
| | 44,445 |
|
| Operating income (loss) | | $ | (23,528 | ) | | $ | (13,226 | ) | | $ | (20,758 | ) | | $ | (47,861 | ) | | $ | 69,726 |
|
| | | | | | | | | | | |
| Adjusted EBITDA | | $ | (6,792 | ) | | $ | (5,602 | ) | | $ | (7,337 | ) | | $ | (18,962 | ) | | $ | (23,380 | ) |
| | | | | | | | | | | |
| Total | | | | | | | | | | |
| | | | | | | | | | | |
| Net revenue | | $ | 48,958 |
| | $ | 49,850 |
| | $ | 59,088 |
| | $ | 155,601 |
| | $ | 191,578 |
|
| Cost of revenue | | 18,990 |
| | 19,519 |
| | 25,244 |
| | 59,015 |
| | 78,633 |
|
| Gross profit | | 29,968 |
| | 30,331 |
| | 33,844 |
| | 96,586 |
| | 112,945 |
|
| | | | | | | | | | | |
| Gross margin | | 61 | % | | 61 | % | | 57 | % | | 62 | % | | 59 | % |
| | | | | | | | | | | |
| Gain on sale of patents and other technology assets, net of costs | | — |
| | — |
| | — |
| | — |
| | 116,353 |
|
| Operating expenses | | 58,405 |
| | 46,835 |
| | 57,019 |
| | 152,953 |
| | 166,847 |
|
| Operating income (loss) | | $ | (28,437 | ) | | $ | (16,504 | ) | | $ | (23,175 | ) | | $ | (56,367 | ) | | $ | 62,451 |
|
| | | | | | | | | | | |
| Adjusted EBITDA | | $ | (8,369 | ) | | $ | (5,753 | ) | | $ | (6,042 | ) | | $ | (17,131 | ) | | $ | (19,968 | ) |
RealNetworks, Inc. and Subsidiaries
Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | |
| | | 2013 | | 2012 | | 2013 | | 2012 |
| | | Q3 | | Q2 | | Q3 | | YTD | | YTD |
| | | (in thousands) |
| RealPlayer Group | | | | | | | | | | |
| | | | | | | | | | | |
| Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment: | | | | | | |
| | | | | | | | | | | |
| Operating income (loss) | | $ | (72 | ) | | $ | (27 | ) | | $ | 1,575 |
| | $ | 767 |
| | $ | 7,756 |
|
| Acquisitions related intangible asset amortization | | 60 |
| | 62 |
| | 62 |
| | 189 |
| | 220 |
|
| Depreciation and amortization | | 636 |
| | 435 |
| | 638 |
| | 1,469 |
| | 1,371 |
|
| Adjusted EBITDA | | $ | 624 |
| | $ | 470 |
| | $ | 2,275 |
| | $ | 2,425 |
| | $ | 9,347 |
|
| | | | | | | | | | | |
| Mobile Entertainment | | | | | | | | | | |
| | | | | | | | | | | |
| Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment: | | | | | | |
| | | | | | | | | | | |
| Operating income (loss) | | $ | (1,477 | ) | | $ | (990 | ) | | $ | (1,856 | ) | | $ | (1,915 | ) | | $ | (9,084 | ) |
| Acquisitions related intangible asset amortization | | 1,055 |
| | 638 |
| | 796 |
| | 2,506 |
| | 2,384 |
|
| Depreciation and amortization | | 925 |
| | 1,046 |
| | 1,401 |
| | 3,988 |
| | 4,555 |
|
| Adjusted EBITDA | | $ | 503 |
| | $ | 694 |
| | $ | 341 |
| | $ | 4,579 |
| | $ | (2,145 | ) |
| | | | | | | | | | | |
| Games | | | | | | | | | | |
| | | | | | | | | | | |
| Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment: | | | | | | |
| | | | | | | | | | | |
| Operating income (loss) | | $ | (3,360 | ) | | $ | (2,261 | ) | | $ | (2,136 | ) | | $ | (7,358 | ) | | $ | (5,947 | ) |
| Acquisitions related intangible asset amortization | | 314 |
| | 230 |
| | 171 |
| | 565 |
| | 587 |
|
| Depreciation and amortization | | 342 |
| | 716 |
| | 644 |
| | 1,620 |
| | 1,570 |
|
| Adjusted EBITDA | | $ | (2,704 | ) | | $ | (1,315 | ) | | $ | (1,321 | ) | | $ | (5,173 | ) | | $ | (3,790 | ) |
| | | | | | | | | | | |
| Corporate | | | | | | | | | | |
| | | | | | | | | | | |
| Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment: | | | | | | |
| | | | | | | | | | | |
| Operating income (loss) | | $ | (23,528 | ) | | $ | (13,226 | ) | | $ | (20,758 | ) | | $ | (47,861 | ) | | $ | 69,726 |
|
| Other income (expense), net | | (118 | ) | | (137 | ) | | 248 |
| | (146 | ) | | 1,674 |
|
| Depreciation and amortization | | 1,839 |
| | 1,859 |
| | 604 |
| | 4,708 |
| | 1,791 |
|
| Restructuring and other charges | | 1,877 |
| | 816 |
| | 10,724 |
| | 4,075 |
| | 13,872 |
|
| Stock-based compensation | | 1,613 |
| | 2,020 |
| | 1,602 |
| | 5,671 |
| | 5,667 |
|
| Gain on sale of patents and other technology assets, net of costs | | — |
| | — |
| | — |
| | — |
| | (116,353 | ) |
| Lease exit and related charges | | — |
| | 3,066 |
| | 243 |
| | 3,066 |
| | 243 |
|
| Loss on litigation settlements | | 11,525 |
| | — |
| | — |
| | 11,525 |
| | — |
|
| Adjusted EBITDA | | $ | (6,792 | ) | | $ | (5,602 | ) | | $ | (7,337 | ) | | $ | (18,962 | ) | | $ | (23,380 | ) |
| | | | | | | | | | | |
| Total | | | | | | | | | | |
| | | | | | | | | | | |
| Reconciliation of GAAP operating income (loss) to adjusted EBITDA: | | | | | | |
| | | | | | | | | | | |
| Operating income (loss) | | $ | (28,437 | ) | | $ | (16,504 | ) | | $ | (23,175 | ) | | $ | (56,367 | ) | | $ | 62,451 |
|
| Other income (expense), net | | (118 | ) | | (137 | ) | | 248 |
| | (146 | ) | | 1,674 |
|
| Acquisitions related intangible asset amortization | | 1,429 |
| | 930 |
| | 1,029 |
| | 3,260 |
| | 3,191 |
|
| Depreciation and amortization | | 3,742 |
| | 4,056 |
| | 3,287 |
| | 11,785 |
| | 9,287 |
|
| Lease exit and related charges | | — |
| | 3,066 |
| | 243 |
| | 3,066 |
| | 243 |
|
| Loss on litigation settlements | | 11,525 |
| | — |
| | — |
| | 11,525 |
| | — |
|
| Restructuring and other charges | | 1,877 |
| | 816 |
| | 10,724 |
| | 4,075 |
| | 13,872 |
|
| Stock-based compensation | | 1,613 |
| | 2,020 |
| | 1,602 |
| | 5,671 |
| | 5,667 |
|
| Gain on sale of patents and other technology assets, net of costs | | — |
| | — |
| | — |
| | — |
| | (116,353 | ) |
| Adjusted EBITDA | | $ | (8,369 | ) | | $ | (5,753 | ) | | $ | (6,042 | ) | | $ | (17,131 | ) | | $ | (19,968 | ) |
