Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | Apr. 30, 2015 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | RNWK | |
Entity Registrant Name | REALNETWORKS INC | |
Entity Central Index Key | 1046327 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 36,106,018 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $102,994 | $103,253 |
Short-term investments | 31,394 | 58,453 |
Trade accounts receivable, net of allowances | 15,510 | 15,257 |
Deferred costs, current portion | 314 | 702 |
Deferred tax assets, net, current portion | 651 | 652 |
Prepaid expenses and other current assets | 8,278 | 8,980 |
Total current assets | 159,141 | 187,297 |
Equipment, software, and leasehold improvements, at cost: | ||
Equipment and software | 71,840 | 74,100 |
Leasehold improvements | 3,395 | 3,590 |
Total equipment, software, and leasehold improvements, at cost | 75,235 | 77,690 |
Less accumulated depreciation and amortization | 60,610 | 61,442 |
Net equipment, software, and leasehold improvements | 14,625 | 16,248 |
Restricted cash equivalents and investments | 3,000 | 3,000 |
Investment in and advances to Rhapsody | 10,743 | 10,000 |
Available for sale securities | 2,648 | 2,676 |
Other assets | 3,761 | 2,299 |
Deferred costs, non-current portion | 263 | 316 |
Deferred tax assets, net, non-current portion | 899 | 999 |
Other intangible assets, net | 9,700 | 10,109 |
Goodwill | 16,839 | 17,355 |
Total assets | 221,619 | 250,299 |
Current liabilities: | ||
Accounts payable | 18,315 | 18,653 |
Accrued and other current liabilities | 22,052 | 25,286 |
Deferred tax liabilities, net, current portion | 1,576 | 1,628 |
Deferred revenue, current portion | 3,857 | 5,301 |
Total current liabilities | 45,800 | 50,868 |
Deferred revenue, non-current portion | 173 | 235 |
Deferred rent | 1,207 | 1,215 |
Deferred tax liabilities, net, non-current portion | 690 | 702 |
Other long-term liabilities | 448 | 81 |
Total liabilities | 48,318 | 53,101 |
Commitments and contingencies | ||
Preferred stock, $0.001 par value, no shares issued and outstanding: | ||
Common stock, $0.001 par value authorized 250,000 shares; issued and outstanding 36,106 shares in 2015 and 36,099 shares in 2014 | 36 | 36 |
Additional paid-in capital | 621,007 | 617,756 |
Accumulated other comprehensive loss | -57,931 | -55,252 |
Retained deficit | -389,811 | -365,342 |
Total shareholders’ equity | 173,301 | 197,198 |
Total liabilities and shareholders’ equity | 221,619 | 250,299 |
Preferred stock, Series A | ||
Preferred stock, $0.001 par value, no shares issued and outstanding: | ||
Preferred stock | 0 | 0 |
Preferred stock, Undesignated series | ||
Preferred stock, $0.001 par value, no shares issued and outstanding: | ||
Preferred stock | $0 | $0 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, except Per Share data, unless otherwise specified | ||
Preferred stock, par value (USD per share) | $0.00 | $0.00 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (USD per share) | $0.00 | $0.00 |
Common stock, authorized | 250,000 | 250,000 |
Common stock, issued | 36,106 | 36,099 |
Common stock, outstanding | 36,106 | 36,099 |
Preferred stock, Series A | ||
Preferred stock, authorized | 200 | 200 |
Preferred stock, Undesignated series | ||
Preferred stock, authorized | 59,800 | 59,800 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (USD $) | 3 Months Ended | |||
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Income Statement [Abstract] | ||||
Net revenue (A) | $30,597 | $45,724 | [1] | |
Cost of revenue (B) | 16,547 | [2] | 18,786 | [2] |
Extinguishment of liability | 0 | -10,580 | ||
Gross profit | 14,050 | 37,518 | ||
Operating expenses: | ||||
Research and development | 12,379 | 14,059 | ||
Sales and marketing | 12,837 | 21,723 | ||
General and administrative | 7,283 | 9,317 | ||
Restructuring and other charges | 485 | 1,216 | ||
Lease exit and related charges | 78 | 79 | ||
Total operating expenses | 33,062 | 46,394 | ||
Operating income (loss) | -19,012 | -8,876 | ||
Other income (expenses): | ||||
Interest income, net | 200 | 136 | ||
Gain (loss) on sale of available for sale securities, net | 299 | 2,371 | ||
Equity in net loss of Rhapsody | -6,180 | -838 | ||
Other income (expense), net | 443 | -77 | ||
Total other income (expenses), net | -5,238 | 1,592 | ||
Income (loss) before income taxes | -24,250 | -7,284 | ||
Income tax expense (benefit) | 219 | 486 | ||
Net income (loss) | -24,469 | -7,770 | ||
Basic net income (loss) per share (USD per share) | ($0.68) | ($0.22) | ||
Diluted net income (loss) per share (USD per share) | ($0.68) | ($0.22) | ||
Shares used to compute basic net income (loss) per share (shares) | 36,104 | 35,840 | ||
Shares used to compute diluted net income (loss) per share (shares) | 36,104 | 35,840 | ||
Comprehensive income (loss): | ||||
Unrealized investment holding gains (losses), net of reclassification adjustments | -94 | -3,575 | ||
Foreign currency translation adjustments, net of reclassification adjustments | -2,585 | -25 | ||
Total other comprehensive income (loss) | -2,679 | -3,600 | ||
Net income (loss) | -24,469 | -7,770 | ||
Comprehensive income (loss) | ($27,148) | ($11,370) | ||
[1] | Quarters ended March 31, 2015 quarter ended March 31, 2015Components of Revenue License Fees7,289 8,579Service Revenue23,308 37,145Net Revenue30,597 45,724 9 months ended 9 months ended September 30, 2014 September 30, 2013Components of Revenue License Fees$21,168 $33,494Service Revenue99,538 122,107Net Revenue$120,706 $155,601 | |||
[2] | Components of Cost of RevenueMarch 31, 2015 March 31, 2014 License Fees1,743 2,212 Service Revenue14,804 16,574 Net Revenue Costs16,547 18,786 9 months ended 6 months ended September 30, 2014 September 30, 2013Components of Cost of Revenue License Fees$6,426 $6,377Service Revenue52,074 52,638Net Revenue Costs$58,500 $59,015 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Parenthetical) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Components of net revenue: | ||||
License fees | $7,289 | $8,579 | ||
Service revenue | 23,308 | 37,145 | ||
Net revenue | 30,597 | 45,724 | [1] | |
Components of cost of revenue: | ||||
License fees | 1,743 | 2,212 | ||
Service revenue | 14,804 | 16,574 | ||
Cost of revenue | $16,547 | [2] | $18,786 | [2] |
[1] | Quarters ended March 31, 2015 quarter ended March 31, 2015Components of Revenue License Fees7,289 8,579Service Revenue23,308 37,145Net Revenue30,597 45,724 9 months ended 9 months ended September 30, 2014 September 30, 2013Components of Revenue License Fees$21,168 $33,494Service Revenue99,538 122,107Net Revenue$120,706 $155,601 | |||
[2] | Components of Cost of RevenueMarch 31, 2015 March 31, 2014 License Fees1,743 2,212 Service Revenue14,804 16,574 Net Revenue Costs16,547 18,786 9 months ended 6 months ended September 30, 2014 September 30, 2013Components of Cost of Revenue License Fees$6,426 $6,377Service Revenue52,074 52,638Net Revenue Costs$58,500 $59,015 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Cash flows from operating activities: | ||
Net income (loss) | ($24,469) | ($7,770) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 2,503 | 2,983 |
Stock-based compensation | 1,329 | 1,337 |
Equity in net loss of Rhapsody | 6,180 | 838 |
Deferred income taxes, net | -77 | 10 |
Gain on sale of available for sale securities | -299 | -2,371 |
Realized translation gain | 0 | -48 |
Extinguishment of liability | 0 | -10,580 |
Fair value of warrants received | -1,155 | 0 |
Net change in certain operating assets and liabilities: | ||
Trade accounts receivable | -654 | -818 |
Prepaid expenses and other assets | 621 | -1,426 |
Accounts payable | -62 | 1,435 |
Accrued and other liabilities | -4,011 | -2,100 |
Net cash provided by (used in) operating activities | -20,094 | -18,510 |
Cash flows from investing activities: | ||
Purchases of equipment, software, and leasehold improvements | -306 | -998 |
Proceeds from sale of available for sale securities | 352 | 2,754 |
Purchases of short-term investments | -6,018 | -29,030 |
Proceeds from sales and maturities of short-term investments | 33,077 | 25,589 |
Advance to Rhapsody | 5,000 | 0 |
Net cash provided by (used in) investing activities | 22,105 | -1,685 |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock (stock options and stock purchase plan) | 6 | 210 |
Tax payments from shares withheld upon vesting of restricted stock | -7 | -60 |
Net cash provided by (used in) financing activities | -1 | 150 |
Effect of exchange rate changes on cash and cash equivalents | -2,269 | 86 |
Net increase (decrease) in cash and cash equivalents | -259 | -19,959 |
Cash and cash equivalents, beginning of period | 103,253 | 151,235 |
Cash and cash equivalents, end of period | 102,994 | 131,276 |
Supplemental disclosure of cash flow information: | ||
Cash received from income tax refunds | 229 | 86 |
Cash paid for income taxes | 229 | 621 |
Non-cash investing activities: | ||
Increase (decrease) in accrued purchases of equipment, software, and leasehold improvements | 49 | 3 |
Acquisition of intangible assets | $473 | $0 |
Description_of_Business_and_Su
Description of Business and Summary of Significant Accounting Policies | 3 Months Ended | |
Mar. 31, 2015 | ||
Accounting Policies [Abstract] | ||
Description of Business and Summary of Significant Accounting Policies | ||
Note 1 | Description of Business and Summary of Significant Accounting Policies | |
Description of Business. RealNetworks, Inc. and subsidiaries is a leading global provider of network-delivered digital media applications and services that make it easy to manage, play and share digital media. The Company also develops and markets software products and services that enable the creation, distribution and consumption of digital media, including audio and video. | ||
Inherent in our business are various risks and uncertainties, including a limited history of certain of our product and service offerings. RealNetworks' success will depend on the acceptance of our technology, products and services and the ability to generate related revenue. | ||
In this Quarterly Report on Form 10-Q (10-Q or Report), RealNetworks, Inc. and Subsidiaries is referred to as “RealNetworks”, the “Company”, “we”, “us”, or “our”. "RealPlayer," and other trademarks of ours appearing in this report are our property. | ||
Basis of Presentation. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. | ||
The unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal, recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations for the periods presented. Operating results for the quarter ended March 31, 2015 are not necessarily indicative of the results that may be expected for any subsequent period or for the year ending December 31, 2015. Certain information and disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). | ||
These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2014 (the 10-K). | ||
Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Recent_Accounting_Pronouncemen
Recent Accounting Pronouncements | 3 Months Ended | |
Mar. 31, 2015 | ||
Accounting Changes and Error Corrections [Abstract] | ||
Recent Accounting Pronouncements | ||
Note 2 | Recent Accounting Pronouncements | |
In August 2014, the Financial Accounting Standards Board (FASB) issued a new standard, "Disclosure of Uncertainties About an Entity's Ability to Continue as a Going Concern". This standard provides guidance around management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. The new guidance is effective for all annual and interim periods ending after December 15, 2016. We are currently evaluating the impact, if any, the adoption of this standard will have on our consolidated financial statements. | ||
In May 2014, the FASB issued new revenue recognition guidance. The guidance will require an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The new guidance will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new guidance is effective for us on January 1, 2017; however, the FASB is in the process of reconsidering and potentially deferring the effective date by one year. The guidance permits the use of either the retrospective or cumulative effect transition method. We are evaluating the effect that the guidance will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method nor determined the effect of the standard on our ongoing financial reporting. | ||
There have been no other recent accounting pronouncements or changes in accounting pronouncements to be implemented that are of significance or potential significance to RealNetworks. |
StockBased_Compensation
Stock-Based Compensation | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||
Stock-Based Compensation | ||||||||
Note 3 | Stock-Based Compensation | |||||||
Total stock-based compensation expense recognized in our unaudited condensed consolidated statements of operations and comprehensive income (loss) includes amounts related to stock options, restricted stock units, and employee stock purchase plans and was as follows (in thousands): | ||||||||
Quarters Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Total stock-based compensation expense | $ | 1,329 | $ | 1,337 | ||||
The fair value of options granted determined using the Black-Scholes model used the following weighted-average assumptions: | ||||||||
Quarters Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Expected dividend yield | 0 | % | 0 | % | ||||
Risk-free interest rate | 1.2 | % | 1.1 | % | ||||
Expected life (years) | 4.2 | 3.8 | ||||||
Volatility | 37 | % | 40 | % | ||||
The total stock-based compensation amounts for 2015 and 2014 disclosed above are recorded in their respective line items within operating expenses in the unaudited condensed consolidated statements of operations and comprehensive income (loss). As of March 31, 2015, $13.5 million of total unrecognized compensation cost, net of estimated forfeitures, related to stock awards. The unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 3 years. |
Rhapsody_Joint_Venture
Rhapsody Joint Venture | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Equity Method Investments and Joint Ventures [Abstract] | ||||||||
Rhapsody Joint Venture | ||||||||
Note 4 | Rhapsody Joint Venture | |||||||
As of March 31, 2015 we owned approximately 43% of the issued and outstanding stock of Rhapsody and account for our investment using the equity method of accounting. | ||||||||
Rhapsody was initially formed in 2007 as a joint venture between RealNetworks and MTV Networks, a division of Viacom International Inc. (MTVN), to own and operate a business-to-consumer digital audio music service known as Rhapsody. | ||||||||
Following certain restructuring transactions effective March 31, 2010, we began accounting for our investment in Rhapsody using the equity method of accounting. As part of the 2010 restructuring transactions, RealNetworks contributed $18.0 million in cash, the Rhapsody brand and certain other assets, including content licenses, in exchange for shares of convertible preferred stock of Rhapsody, carrying a $10.0 million preference upon certain liquidation events. | ||||||||
We recorded our share of losses of Rhapsody of $6.2 million and $0.8 million for the quarters ended March 31, 2015 and 2014, respectively. Because of the $10.0 million liquidation preference on the preferred stock we hold in Rhapsody, under the equity method of accounting we do not record any share of Rhapsody losses that would reduce our carrying value of Rhapsody, which is impacted by Rhapsody equity transactions, below $10.0 million, unless Rhapsody's book value is reduced below $10.0 million. Because Rhapsody's book value declined below $10.0 million in the first quarter of 2015, we reduced our investment in Rhapsody below the $10.0 million liquidation preference and recorded $6.2 million of our share of losses of Rhapsody. On the unaudited condensed consolidated balance sheet, Investment in and advances to Rhapsody of $10.7 million includes the $5.7 million carrying value of our Rhapsody equity investment. | ||||||||
In March 2015, RealNetworks extended a $5.0 million loan to Rhapsody, as did the other 43% owner of Rhapsody. The loans have maturity dates of June 2018 or earlier if Rhapsody's certain loan to an external strategic partner is repaid on its due date of June 2015. The loans bear interest at the greater of prime plus 5.25% or 9% per annum, and interest accrues and is paid upon final maturity. In April 2015 RealNetworks and the other 43% owner of Rhapsody each provided a $5.0 million guaranty to Rhapsody's senior secured lender, related to the senior lender's loans to Rhapsody, which mature in April 2018. The guaranties will be released by the senior secured lender upon the June 2015 maturity of Rhapsody's loan to the external strategic partner, or no later than April 2018 if Rhapsody's loan to the external strategic partner is not repaid upon its due date. Summarized financial information for Rhapsody, which represents 100% of their financial information, is as follows (in thousands): | ||||||||
Quarters Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Net revenue | $ | 46,324 | $ | 42,003 | ||||
Gross profit | 8,090 | 9,121 | ||||||
Net loss | (8,924 | ) | (1,630 | ) |
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||
Fair Value Measurements | ||||||||||||||||||||
Note 5 | Fair Value Measurements | |||||||||||||||||||
Items Measured at Fair Value on a Recurring Basis | ||||||||||||||||||||
The following table presents information about our financial assets that have been measured at fair value on a recurring basis as of March 31, 2015 and December 31, 2014, and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands). | ||||||||||||||||||||
Fair Value Measurements as of | Amortized Cost as of | |||||||||||||||||||
March 31, 2015 | 31-Mar-15 | |||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||||||
Cash | $ | 26,642 | $ | — | $ | — | $ | 26,642 | $ | 26,642 | ||||||||||
Money market funds | 9,370 | — | — | 9,370 | 9,370 | |||||||||||||||
Corporate notes and bonds | — | 66,982 | — | 66,982 | 66,982 | |||||||||||||||
Total cash and cash equivalents | 36,012 | 66,982 | — | 102,994 | 102,994 | |||||||||||||||
Short-term investments: | ||||||||||||||||||||
Corporate notes and bonds | — | 24,394 | — | 24,394 | 24,383 | |||||||||||||||
U.S. government agency securities | 7,000 | — | — | 7,000 | 7,000 | |||||||||||||||
Total short-term investments | 7,000 | 24,394 | — | 31,394 | 31,383 | |||||||||||||||
Restricted cash equivalents and investments | — | 3,000 | — | 3,000 | 3,000 | |||||||||||||||
Equity investment in publicly traded securities | 2,648 | — | — | 2,648 | 376 | |||||||||||||||
Warrant issued by Rhapsody (included in Other assets) | — | — | 1,155 | 1,155 | — | |||||||||||||||
Total | $ | 45,660 | $ | 94,376 | $ | 1,155 | $ | 141,191 | $ | 137,753 | ||||||||||
Fair Value Measurements as of | Amortized Cost as of | |||||||||||||||||||
December 31, 2014 | 31-Dec-14 | |||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||||||
Cash | $ | 30,105 | $ | — | $ | — | $ | 30,105 | $ | 30,105 | ||||||||||
Money market funds | 11,629 | — | — | 11,629 | 11,630 | |||||||||||||||
Corporate notes and bonds | — | 61,519 | — | 61,519 | 61,520 | |||||||||||||||
Total cash and cash equivalents | 41,734 | 61,519 | — | 103,253 | 103,255 | |||||||||||||||
Short-term investments: | ||||||||||||||||||||
Corporate notes and bonds | — | 51,453 | — | 51,453 | 51,438 | |||||||||||||||
U.S. government agency securities | 7,000 | — | — | 7,000 | 7,000 | |||||||||||||||
Total short-term investments | 7,000 | 51,453 | — | 58,453 | 58,438 | |||||||||||||||
Restricted cash equivalents and investments | — | 3,000 | — | 3,000 | 3,000 | |||||||||||||||
Equity investment in publicly traded securities | 2,676 | — | — | 2,676 | 428 | |||||||||||||||
Total | $ | 51,410 | $ | 115,972 | $ | — | $ | 167,382 | $ | 165,121 | ||||||||||
Restricted cash equivalents and investments amounts as of March 31, 2015, and December 31, 2014 relate to cash pledged as collateral against a letter of credit in connection with a lease agreement. | ||||||||||||||||||||
Realized gains or losses on sales of short-term investment securities for the quarters ended March 31, 2015 and 2014 were not significant. Gross unrealized gains and gross unrealized losses on short-term investment securities as of March 31, 2015 and December 31, 2014 were also not significant. | ||||||||||||||||||||
Investments with remaining contractual maturities of five years or less are classified as short-term because the investments are marketable and highly liquid, and we have the ability to utilize them for current operations. Contractual maturities of short-term investments as of March 31, 2015 (in thousands): | ||||||||||||||||||||
Estimated | ||||||||||||||||||||
Fair Value | ||||||||||||||||||||
Within one year | $ | 27,809 | ||||||||||||||||||
Between one year and five years | 3,585 | |||||||||||||||||||
Total short-term investments | $ | 31,394 | ||||||||||||||||||
Our equity investment in a publicly traded company as of March 31, 2015 and December 31, 2014 consisted of J-Stream Inc., a Japanese media services company. This equity investment is accounted for as available for sale. In March 2015 and 2014 we sold a portion of the J-Stream shares we held, resulting in cash proceeds of $0.4 million and $2.8 million, respectively, and a pre-tax gain of $0.3 million and $2.4 million respectively, reported in Other income (expense), net, in the unaudited condensed consolidated statements of operations and comprehensive income (loss). | ||||||||||||||||||||
In February 2015, Rhapsody issued warrants to purchase Rhapsody common shares to each of RealNetworks and Rhapsody's one other 43% stockholder. The warrants were issued as compensation for past services provided by RealNetworks and the other 43% stockholder, and both warrants covered the same number of underlying shares. The exercise price of the warrants was equal to the fair value of the underlying shares on the issuance date, and we used the Black-Scholes option-pricing model to calculate the fair value of the warrant, using an expected term of 5 years and expected volatility of 55%. We recognized and recorded the $1.2 million fair value of the warrant issued to RealNetworks within Other assets in the unaudited condensed consolidated balance sheets, and as an expense reduction within General and administrative expense in the unaudited condensed consolidated statements of operations and comprehensive income (loss). | ||||||||||||||||||||
Items Measured at Fair Value on a Non-recurring Basis | ||||||||||||||||||||
Certain of our assets and liabilities are measured at estimated fair value on a non-recurring basis, using Level 3 inputs. These instruments are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). During the three months ended March 31, 2015 and 2014, we did not record any impairments on those assets required to be measured at fair value on a non-recurring basis. |
Allowance_for_Doubtful_Account
Allowance for Doubtful Accounts Receivable and Sales Returns | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Receivables [Abstract] | ||||||||
Allowance for Doubtful Accounts Receivable and Sales Returns | ||||||||
Note 6 | Allowance for Doubtful Accounts Receivable and Sales Returns | |||||||
Activity in the allowance for doubtful accounts receivable and sales returns (in thousands): | ||||||||
Allowance For | ||||||||
Doubtful | Sales | |||||||
Accounts | Returns | |||||||
Receivable | ||||||||
Balances, December 31, 2014 | $ | 1,288 | $ | 354 | ||||
Addition (reduction) to allowance | 65 | 15 | ||||||
Amounts written off | (34 | ) | — | |||||
Foreign currency translation | (98 | ) | (1 | ) | ||||
Balances, March 31, 2015 | $ | 1,221 | $ | 368 | ||||
One customer accounted for 35% of trade accounts receivable as of March 31, 2015. One customer accounted for 21% and one other customer accounted for 15% of trade accounts receivable as of December 31, 2014. | ||||||||
One customer accounted for 17% of consolidated revenue, or $5.3 million during the quarter ended March 31, 2015, and is reflected in our Mobile Entertainment segment. | ||||||||
Two customers each accounted for 17% of consolidated revenue during the quarter ended March 31, 2014. The revenue from one of these customers, which totaled $7.6 million, is reflected in our RealPlayer Group and Games segments. The other customer, which accounted for $7.8 million of consolidated revenue during the quarter ended March 31, 2014, is reflected in our Mobile Entertainment segment. |
Other_Intangible_Assets
Other Intangible Assets | 3 Months Ended | |||||||||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||
Other Intangible Assets | ||||||||||||||||||||||||||
Note 7 | Other Intangible Assets | |||||||||||||||||||||||||
Other intangible assets (in thousands): | ||||||||||||||||||||||||||
31-Mar-15 | 31-Dec-14 | |||||||||||||||||||||||||
Gross | Accumulated | Net | Gross | Accumulated | Net | |||||||||||||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||||||||||||||
Amortizing intangible assets: | ||||||||||||||||||||||||||
Customer relationships | $ | 33,047 | $ | 31,174 | $ | 1,873 | $ | 33,853 | $ | 31,643 | $ | 2,210 | ||||||||||||||
Developed technology | 27,719 | 25,519 | 2,200 | 28,261 | 25,699 | 2,562 | ||||||||||||||||||||
Patents, trademarks and tradenames | 4,148 | 3,419 | 729 | 3,817 | 3,528 | 289 | ||||||||||||||||||||
Service contracts | 6,171 | 5,773 | 398 | 6,312 | 5,764 | 548 | ||||||||||||||||||||
71,085 | 65,885 | 5,200 | 72,243 | 66,634 | 5,609 | |||||||||||||||||||||
Non-amortizing intangible assets: | ||||||||||||||||||||||||||
Trademarks and tradenames | 4,500 | — | 4,500 | 4,500 | — | 4,500 | ||||||||||||||||||||
Total | $ | 75,585 | $ | 65,885 | $ | 9,700 | $ | 76,743 | $ | 66,634 | $ | 10,109 | ||||||||||||||
An asset purchase relating to our Games business was completed in the first quarter of 2015 and resulted in an intangible asset of $0.5 million being recorded in the first quarter, the date the transaction closed. Cash for the transaction was subsequently paid in April 2015. | ||||||||||||||||||||||||||
No impairments of other intangible assets were recognized in either of the three months ended March 31, 2015 or 2014. |
Goodwill
Goodwill | 3 Months Ended | |||
Mar. 31, 2015 | ||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Goodwill | ||||
Note 8 | Goodwill | |||
Changes in goodwill (in thousands): | ||||
Balance, December 31, 2014 | $ | 17,355 | ||
Effects of foreign currency translation | (516 | ) | ||
Balance, March 31, 2015 | $ | 16,839 | ||
Goodwill by segment (in thousands): | ||||
March 31, | ||||
2015 | ||||
RealPlayer Group | $ | 940 | ||
Mobile Entertainment | 1,870 | |||
Games | 14,029 | |||
Total goodwill | $ | 16,839 | ||
No impairment of goodwill was recognized in either of the three months ended March 31, 2015 or 2014. |
Accrued_and_Other_Liabilities
Accrued and Other Liabilities | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Payables and Accruals [Abstract] | ||||||||
Accrued and Other Liabilities | ||||||||
Note 9 | Accrued and Other Current Liabilities | |||||||
Accrued and other current liabilities (in thousands): | ||||||||
31-Mar-15 | 31-Dec-14 | |||||||
Royalties and other fulfillment costs | $ | 4,341 | $ | 4,868 | ||||
Employee compensation, commissions and benefits | 5,696 | 7,711 | ||||||
Sales, VAT and other taxes payable | 5,508 | 5,896 | ||||||
Other | 6,507 | 6,811 | ||||||
Total accrued and other current liabilities | $ | 22,052 | $ | 25,286 | ||||
During the quarter ended March 31, 2014, certain accrued royalty liabilities of $10.6 million associated with our historical music business, which had originally been recorded based on statutory rates, were extinguished. |
Restructuring_Charges
Restructuring Charges | 3 Months Ended | |||
Mar. 31, 2015 | ||||
Restructuring and Related Activities [Abstract] | ||||
Restructuring Charges | ||||
Note 10 | Restructuring Charges | |||
Restructuring and other charges in 2015 and 2014 consist of costs associated with the ongoing reorganization of our business operations and our ongoing expense re-alignment efforts. The expense amounts in both years relate primarily to severance costs due to workforce reductions and are classified as Employee Separation Costs in the table below. | ||||
Restructuring charges by type of cost, excluding non-cash charges (in thousands): | ||||
Employee Separation Costs | ||||
Costs incurred and charged to expense for the three months ended March 31, 2015 | $ | 485 | ||
Costs incurred and charged to expense for the three months ended March 31, 2014 | $ | 1,216 | ||
Changes to the accrued restructuring liability (which is included in Accrued and other current liabilities) for 2015 (in thousands) are as follows: | ||||
Employee Separation Costs | ||||
Accrued liability at December 31, 2014 | $ | 449 | ||
Costs incurred and charged to expense for the three months ended March 31, 2015 | 485 | |||
Cash payments | (791 | ) | ||
Accrued liability at March 31, 2015 | $ | 143 | ||
Lease_Exit_and_Related_Charges
Lease Exit and Related Charges | 3 Months Ended | |||
Mar. 31, 2015 | ||||
Disclosure Changes To Accrued Loss On Excess Office Facilities [Abstract] | ||||
Lease Exit and Related Charges | ||||
Note 11 | Lease Exit and Related Charges | |||
As a result of the reduction in use of RealNetworks' office space losses have been recognized representing rent and contractual operating expenses over the remaining life of the leases, and related write-downs of leasehold improvements to their estimated fair value. | ||||
Changes to accrued lease exit and related charges (which is included in Accrued and other current liabilities) for 2015 (in thousands) are as follows: | ||||
Accrued loss at December 31, 2014 | $ | 234 | ||
Additions and adjustments to the lease loss accrual, including sublease income estimate revision | 83 | |||
Less amounts paid, net of sublease amounts | (57 | ) | ||
Accrued loss at March 31, 2015 | $ | 260 | ||
Shareholders_Equity
Shareholders’ Equity | 3 Months Ended | |||||||||
Mar. 31, 2015 | ||||||||||
Equity [Abstract] | ||||||||||
Shareholders’ Equity | ||||||||||
Note 12 | Shareholders’ Equity | |||||||||
Accumulated Other Comprehensive Income (Loss) | ||||||||||
Changes in components of accumulated other comprehensive income (in thousands): | ||||||||||
Quarters Ended | ||||||||||
March 31, | ||||||||||
2015 | 2014 | |||||||||
Investments | ||||||||||
Accumulated other comprehensive income (loss), beginning of period | $ | 2,252 | $ | 6,397 | ||||||
Unrealized gains (losses), net of tax effects of $116 and $0 in 2015 and 2014 | 205 | (1,204 | ) | |||||||
Reclassification adjustments for losses (gains) included in other income (expense), net of tax effects of $(1) and $(4) in 2015 and 2014 | (299 | ) | (2,371 | ) | ||||||
Net current period other comprehensive income | (94 | ) | (3,575 | ) | ||||||
Accumulated other comprehensive income (loss) balance, end of period | $ | 2,158 | $ | 2,822 | ||||||
Foreign currency translation | ||||||||||
Accumulated other comprehensive income (loss), beginning of period | $ | (57,504 | ) | $ | (54,092 | ) | ||||
Translation adjustments | (2,585 | ) | 23 | |||||||
Reclassification adjustments for losses (gains) included in other income (expense) | — | (48 | ) | |||||||
Net current period other comprehensive income | (2,585 | ) | (25 | ) | ||||||
Accumulated other comprehensive income (loss) balance, end of period | $ | (60,089 | ) | $ | (54,117 | ) | ||||
Total accumulated other comprehensive income (loss), end of period | $ | (57,931 | ) | $ | (51,295 | ) | ||||
Income_Taxes
Income Taxes | 3 Months Ended | |
Mar. 31, 2015 | ||
Income Tax Disclosure [Abstract] | ||
Income Taxes | ||
Note 13 | Income Taxes | |
As of March 31, 2015, there have been no material changes to RealNetworks’ uncertain tax positions disclosures as provided in Note 14 of the 2014 10-K. | ||
We file numerous consolidated and separate income tax returns in the U.S including federal, state and local, as well as foreign jurisdictions. With few exceptions, we are no longer subject to U.S federal income tax examinations for tax years before 2008 or state, local, or foreign income tax examinations for years before 1993. We are currently under audit by various states and foreign jurisdictions for certain tax years subsequent to 1993. We are currently under United States federal audit for the consolidated group (RealNetworks, Inc. and Subsidiaries) for the year ended December 31, 2012. |
Earnings_Per_Share
Earnings Per Share | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Earnings Per Share [Abstract] | ||||||||
Earnings Per Share | ||||||||
Note 14 | Earnings (Loss) Per Share | |||||||
Basic net income (loss) per share (EPS) is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income (loss) by the weighted average number of common and dilutive potential common shares outstanding during the period. Basic and diluted EPS (in thousands, except per share amounts): | ||||||||
Quarters Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Net income (loss) | $ | (24,469 | ) | $ | (7,770 | ) | ||
Weighted average common shares outstanding used to compute basic EPS | 36,104 | 35,840 | ||||||
Dilutive effect of stock based awards | — | — | ||||||
Weighted average common shares outstanding used to compute diluted EPS | 36,104 | 35,840 | ||||||
Basic EPS | $ | (0.68 | ) | $ | (0.22 | ) | ||
Diluted EPS | $ | (0.68 | ) | $ | (0.22 | ) | ||
During the quarter ended March 31, 2015 and March 31, 2014, 6.3 million and 6.1 million shares of common stock, respectively, of potentially issuable shares from stock awards were excluded from the calculation of diluted EPS because of their antidilutive effect. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended | |
Mar. 31, 2015 | ||
Commitments and Contingencies Disclosure [Abstract] | ||
Commitments and Contingencies | ||
Note 15 | Commitments and Contingencies | |
We may become subject to legal proceedings, governmental investigations and claims in the ordinary course of business, including employment claims, contract-related claims, and claims of alleged infringement of third-party patents, trademarks and other intellectual property rights. Such claims, even if not meritorious, could force us to expend significant financial and managerial resources. In addition, given the broad distribution of some of our consumer products, any individual claim related to those products could give rise to liabilities that may be material to us. In the event of a determination adverse to us, we may incur substantial monetary liability, and/or be required to change our business practices. Either of these could have a material adverse effect on our consolidated financial statements. |
Guarantees
Guarantees | 3 Months Ended | |
Mar. 31, 2015 | ||
Guarantees [Abstract] | ||
Guarantees | ||
Note 16 | Guarantees | |
In the ordinary course of business, RealNetworks is subject to potential obligations for standard warranty and indemnification provisions that are contained within many of our customer license and service agreements. Our warranty provisions are consistent with those prevalent in our industry, and we do not have a history of incurring losses on warranties; therefore, we do not maintain accruals for warranty-related obligations. With regard to indemnification provisions, nearly all of our carrier contracts obligate us to indemnify our carrier customers for certain liabilities that may be incurred by them. We have received in the past, and may receive in the future, claims for indemnification from carrier customers. | ||
See Note 4, Rhapsody Joint Venture, for a discussion of the $5.0 million guaranty provided by RealNetworks related to a loan Rhapsody made to an external strategic partner in April 2015. | ||
In relation to the patents and other technology assets we sold to Intel in the second quarter of 2012, we have specific obligations to indemnify Intel for breaches of the representations and warranties that we made and covenants that we agreed to in the asset purchase agreement for certain potential future intellectual property infringement claims brought by third parties against Intel. The amount of any potential liabilities related to our indemnification obligations to Intel will not be determined until a claim has been made, but we are obligated to indemnify Intel up to the amount of the gross purchase price that we received in the sale. |
Segment_Information
Segment Information | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Segment Reporting [Abstract] | ||||||||
Segment Information | ||||||||
Note 17 | Segment Information | |||||||
We have three reportable segments: (1) RealPlayer Group, which includes our new RealPlayer Cloud product, our RealPlayer media player software and related products and our SuperPass service; (2) Mobile Entertainment, which includes our SaaS services, our LISTEN product, and the residual components of our Helix business; and (3) Games, which includes all our games-related businesses, including licenses, online games subscription services, advertising on games sites and social network sites, microtransactions from online and social games, and mobile games. | ||||||||
We allocate certain corporate expenses which are directly attributable to supporting the business to our reportable segments. These corporate expenses include but are not limited to a portion of finance, legal, human resources and headquarters facilities. Remaining expenses, which are not directly attributable to supporting the business, are reported as corporate items. Also reported in our corporate segment were restructuring charges as well as lease exit and related charges, and in 2014 the extinguishment of the liability associated with our historical music business. | ||||||||
RealNetworks reports three reportable segments based on factors such as how we manage our operations and how our Chief Operating Decision Maker reviews results. Our Chief Operating Decision Maker is considered to be the CEO Staff (CEOS), which includes the Chief Executive Officer, Chief Financial Officer, our Presidents and General Counsel. The CEOS reviews financial information presented on both a consolidated basis and on a business segment basis. The accounting policies used to derive segment results are the same as those described in Note 1, Description of Business and Summary of Significant Accounting Policies, in the 10-K. | ||||||||
Segment results for the quarters ended March 31, 2015 and 2014 (in thousands): | ||||||||
RealPlayer Group | ||||||||
Quarters Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Revenue | $ | 8,013 | $ | 15,215 | ||||
Cost of revenue | 4,112 | 3,518 | ||||||
Gross profit | 3,901 | 11,697 | ||||||
Operating expenses | 12,375 | 17,787 | ||||||
Operating income (loss) | $ | (8,474 | ) | $ | (6,090 | ) | ||
Mobile Entertainment | ||||||||
Quarters Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Revenue | $ | 14,480 | $ | 19,913 | ||||
Cost of revenue | 9,506 | 11,950 | ||||||
Gross profit | 4,974 | 7,963 | ||||||
Operating expenses | 5,633 | 9,616 | ||||||
Operating income (loss) | $ | (659 | ) | $ | (1,653 | ) | ||
Games | ||||||||
Quarters Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Revenue | $ | 8,104 | $ | 10,596 | ||||
Cost of revenue | 2,794 | 3,129 | ||||||
Gross profit | 5,310 | 7,467 | ||||||
Operating expenses | 8,683 | 9,766 | ||||||
Operating income (loss) | $ | (3,373 | ) | $ | (2,299 | ) | ||
Corporate | ||||||||
Quarters Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Cost of revenue | $ | 135 | $ | 189 | ||||
Extinguishment of liability | — | (10,580 | ) | |||||
Operating expenses | 6,371 | 9,225 | ||||||
Operating income (loss) | $ | (6,506 | ) | $ | 1,166 | |||
Our customers consist primarily of consumers and corporations located in the U.S., Europe, Republic of Korea and various foreign countries (Rest of the World). Revenue by geographic region (in thousands): | ||||||||
Quarters Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
United States | $ | 12,349 | $ | 20,428 | ||||
Europe | 4,163 | 8,412 | ||||||
Republic of Korea | 6,324 | 10,294 | ||||||
Rest of the World | 7,761 | 6,590 | ||||||
Total net revenue | $ | 30,597 | $ | 45,724 | ||||
Long-lived assets (which consist of equipment, software, leasehold improvements, other intangible assets, and goodwill) by geographic region (in thousands) are as follows: | ||||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
United States | $ | 31,542 | $ | 33,421 | ||||
Europe | 6,300 | 6,696 | ||||||
Republic of Korea | 497 | 547 | ||||||
Rest of the World | 2,825 | 3,048 | ||||||
Total long-lived assets | $ | 41,164 | $ | 43,712 | ||||
Related_Party_Transactions
Related Party Transactions | 3 Months Ended | |
Mar. 31, 2015 | ||
Related Party Transactions [Abstract] | ||
Related Party Transactions | ||
Note 18 | Related Party Transactions | |
See Note 4, Rhapsody Joint Venture, and Note 5, Fair Value Measurements, for details on transactions involving Rhapsody. |
Description_of_Business_and_Su1
Description of Business and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business. RealNetworks, Inc. and subsidiaries is a leading global provider of network-delivered digital media applications and services that make it easy to manage, play and share digital media. The Company also develops and markets software products and services that enable the creation, distribution and consumption of digital media, including audio and video. |
Inherent in our business are various risks and uncertainties, including a limited history of certain of our product and service offerings. RealNetworks' success will depend on the acceptance of our technology, products and services and the ability to generate related revenue. | |
In this Quarterly Report on Form 10-Q (10-Q or Report), RealNetworks, Inc. and Subsidiaries is referred to as “RealNetworks”, the “Company”, “we”, “us”, or “our”. | |
Basis of Presentation | Basis of Presentation. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. |
The unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal, recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations for the periods presented. Operating results for the quarter ended March 31, 2015 are not necessarily indicative of the results that may be expected for any subsequent period or for the year ending December 31, 2015. Certain information and disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). | |
These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2014 (the 10-K). | |
Use of Estimates | Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||
Stock-Based Compensation Expense | Total stock-based compensation expense recognized in our unaudited condensed consolidated statements of operations and comprehensive income (loss) includes amounts related to stock options, restricted stock units, and employee stock purchase plans and was as follows (in thousands): | |||||||
Quarters Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Total stock-based compensation expense | $ | 1,329 | $ | 1,337 | ||||
Weighted-Average Assumptions Used to Determine Fair Value of Options Granted | The fair value of options granted determined using the Black-Scholes model used the following weighted-average assumptions: | |||||||
Quarters Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Expected dividend yield | 0 | % | 0 | % | ||||
Risk-free interest rate | 1.2 | % | 1.1 | % | ||||
Expected life (years) | 4.2 | 3.8 | ||||||
Volatility | 37 | % | 40 | % |
Rhapsody_Joint_Venture_Tables
Rhapsody Joint Venture (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Equity Method Investments and Joint Ventures [Abstract] | ||||||||
Summarized Financial Operating Information for Rhapsody | Summarized financial information for Rhapsody, which represents 100% of their financial information, is as follows (in thousands): | |||||||
Quarters Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Net revenue | $ | 46,324 | $ | 42,003 | ||||
Gross profit | 8,090 | 9,121 | ||||||
Net loss | (8,924 | ) | (1,630 | ) |
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||
Financial Assets Measured at Fair Value on a Recurring Basis | The following table presents information about our financial assets that have been measured at fair value on a recurring basis as of March 31, 2015 and December 31, 2014, and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands). | |||||||||||||||||||
Fair Value Measurements as of | Amortized Cost as of | |||||||||||||||||||
March 31, 2015 | 31-Mar-15 | |||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||||||
Cash | $ | 26,642 | $ | — | $ | — | $ | 26,642 | $ | 26,642 | ||||||||||
Money market funds | 9,370 | — | — | 9,370 | 9,370 | |||||||||||||||
Corporate notes and bonds | — | 66,982 | — | 66,982 | 66,982 | |||||||||||||||
Total cash and cash equivalents | 36,012 | 66,982 | — | 102,994 | 102,994 | |||||||||||||||
Short-term investments: | ||||||||||||||||||||
Corporate notes and bonds | — | 24,394 | — | 24,394 | 24,383 | |||||||||||||||
U.S. government agency securities | 7,000 | — | — | 7,000 | 7,000 | |||||||||||||||
Total short-term investments | 7,000 | 24,394 | — | 31,394 | 31,383 | |||||||||||||||
Restricted cash equivalents and investments | — | 3,000 | — | 3,000 | 3,000 | |||||||||||||||
Equity investment in publicly traded securities | 2,648 | — | — | 2,648 | 376 | |||||||||||||||
Warrant issued by Rhapsody (included in Other assets) | — | — | 1,155 | 1,155 | — | |||||||||||||||
Total | $ | 45,660 | $ | 94,376 | $ | 1,155 | $ | 141,191 | $ | 137,753 | ||||||||||
Fair Value Measurements as of | Amortized Cost as of | |||||||||||||||||||
December 31, 2014 | 31-Dec-14 | |||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||||||
Cash | $ | 30,105 | $ | — | $ | — | $ | 30,105 | $ | 30,105 | ||||||||||
Money market funds | 11,629 | — | — | 11,629 | 11,630 | |||||||||||||||
Corporate notes and bonds | — | 61,519 | — | 61,519 | 61,520 | |||||||||||||||
Total cash and cash equivalents | 41,734 | 61,519 | — | 103,253 | 103,255 | |||||||||||||||
Short-term investments: | ||||||||||||||||||||
Corporate notes and bonds | — | 51,453 | — | 51,453 | 51,438 | |||||||||||||||
U.S. government agency securities | 7,000 | — | — | 7,000 | 7,000 | |||||||||||||||
Total short-term investments | 7,000 | 51,453 | — | 58,453 | 58,438 | |||||||||||||||
Restricted cash equivalents and investments | — | 3,000 | — | 3,000 | 3,000 | |||||||||||||||
Equity investment in publicly traded securities | 2,676 | — | — | 2,676 | 428 | |||||||||||||||
Total | $ | 51,410 | $ | 115,972 | $ | — | $ | 167,382 | $ | 165,121 | ||||||||||
Schedule of Contractual Maturity Date | Contractual maturities of short-term investments as of March 31, 2015 (in thousands): | |||||||||||||||||||
Estimated | ||||||||||||||||||||
Fair Value | ||||||||||||||||||||
Within one year | $ | 27,809 | ||||||||||||||||||
Between one year and five years | 3,585 | |||||||||||||||||||
Total short-term investments | $ | 31,394 | ||||||||||||||||||
Allowance_for_Doubtful_Account1
Allowance for Doubtful Accounts Receivable and Sales Returns (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Receivables [Abstract] | ||||||||
Activity in Allowance for Doubtful Accounts Receivable and Sales Returns | Activity in the allowance for doubtful accounts receivable and sales returns (in thousands): | |||||||
Allowance For | ||||||||
Doubtful | Sales | |||||||
Accounts | Returns | |||||||
Receivable | ||||||||
Balances, December 31, 2014 | $ | 1,288 | $ | 354 | ||||
Addition (reduction) to allowance | 65 | 15 | ||||||
Amounts written off | (34 | ) | — | |||||
Foreign currency translation | (98 | ) | (1 | ) | ||||
Balances, March 31, 2015 | $ | 1,221 | $ | 368 | ||||
Other_Intangible_Assets_Tables
Other Intangible Assets (Tables) | 3 Months Ended | |||||||||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||
Other Intangible Assets | Other intangible assets (in thousands): | |||||||||||||||||||||||||
31-Mar-15 | 31-Dec-14 | |||||||||||||||||||||||||
Gross | Accumulated | Net | Gross | Accumulated | Net | |||||||||||||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||||||||||||||
Amortizing intangible assets: | ||||||||||||||||||||||||||
Customer relationships | $ | 33,047 | $ | 31,174 | $ | 1,873 | $ | 33,853 | $ | 31,643 | $ | 2,210 | ||||||||||||||
Developed technology | 27,719 | 25,519 | 2,200 | 28,261 | 25,699 | 2,562 | ||||||||||||||||||||
Patents, trademarks and tradenames | 4,148 | 3,419 | 729 | 3,817 | 3,528 | 289 | ||||||||||||||||||||
Service contracts | 6,171 | 5,773 | 398 | 6,312 | 5,764 | 548 | ||||||||||||||||||||
71,085 | 65,885 | 5,200 | 72,243 | 66,634 | 5,609 | |||||||||||||||||||||
Non-amortizing intangible assets: | ||||||||||||||||||||||||||
Trademarks and tradenames | 4,500 | — | 4,500 | 4,500 | — | 4,500 | ||||||||||||||||||||
Total | $ | 75,585 | $ | 65,885 | $ | 9,700 | $ | 76,743 | $ | 66,634 | $ | 10,109 | ||||||||||||||
Goodwill_Tables
Goodwill (Tables) | 3 Months Ended | |||
Mar. 31, 2015 | ||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Changes in Goodwill | Changes in goodwill (in thousands): | |||
Balance, December 31, 2014 | $ | 17,355 | ||
Effects of foreign currency translation | (516 | ) | ||
Balance, March 31, 2015 | $ | 16,839 | ||
Goodwill Assigned by Segments | Goodwill by segment (in thousands): | |||
March 31, | ||||
2015 | ||||
RealPlayer Group | $ | 940 | ||
Mobile Entertainment | 1,870 | |||
Games | 14,029 | |||
Total goodwill | $ | 16,839 | ||
Accrued_and_Other_Liabilities_
Accrued and Other Liabilities (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Payables and Accruals [Abstract] | ||||||||
Accrued and Other Liabilities | Accrued and other current liabilities (in thousands): | |||||||
31-Mar-15 | 31-Dec-14 | |||||||
Royalties and other fulfillment costs | $ | 4,341 | $ | 4,868 | ||||
Employee compensation, commissions and benefits | 5,696 | 7,711 | ||||||
Sales, VAT and other taxes payable | 5,508 | 5,896 | ||||||
Other | 6,507 | 6,811 | ||||||
Total accrued and other current liabilities | $ | 22,052 | $ | 25,286 | ||||
Restructuring_Charges_Tables
Restructuring Charges (Tables) | 3 Months Ended | |||
Mar. 31, 2015 | ||||
Restructuring and Related Activities [Abstract] | ||||
Schedule of Restructuring Charges by Type of Cost | Restructuring charges by type of cost, excluding non-cash charges (in thousands): | |||
Employee Separation Costs | ||||
Costs incurred and charged to expense for the three months ended March 31, 2015 | $ | 485 | ||
Costs incurred and charged to expense for the three months ended March 31, 2014 | $ | 1,216 | ||
Changes to the accrued restructuring liability (which is included in Accrued and other current liabilities) for 2015 (in thousands) are as follows: | ||||
Employee Separation Costs | ||||
Accrued liability at December 31, 2014 | $ | 449 | ||
Costs incurred and charged to expense for the three months ended March 31, 2015 | 485 | |||
Cash payments | (791 | ) | ||
Accrued liability at March 31, 2015 | $ | 143 | ||
Lease_Exit_and_Related_Charges1
Lease Exit and Related Charges (Tables) | 3 Months Ended | |||
Mar. 31, 2015 | ||||
Disclosure Changes To Accrued Loss On Excess Office Facilities [Abstract] | ||||
Changes to Accrued Loss on Excess Office Facilities | Changes to accrued lease exit and related charges (which is included in Accrued and other current liabilities) for 2015 (in thousands) are as follows: | |||
Accrued loss at December 31, 2014 | $ | 234 | ||
Additions and adjustments to the lease loss accrual, including sublease income estimate revision | 83 | |||
Less amounts paid, net of sublease amounts | (57 | ) | ||
Accrued loss at March 31, 2015 | $ | 260 | ||
Shareholders_Equity_Tables
Shareholders’ Equity (Tables) | 3 Months Ended | |||||||||
Mar. 31, 2015 | ||||||||||
Equity [Abstract] | ||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | Changes in components of accumulated other comprehensive income (in thousands): | |||||||||
Quarters Ended | ||||||||||
March 31, | ||||||||||
2015 | 2014 | |||||||||
Investments | ||||||||||
Accumulated other comprehensive income (loss), beginning of period | $ | 2,252 | $ | 6,397 | ||||||
Unrealized gains (losses), net of tax effects of $116 and $0 in 2015 and 2014 | 205 | (1,204 | ) | |||||||
Reclassification adjustments for losses (gains) included in other income (expense), net of tax effects of $(1) and $(4) in 2015 and 2014 | (299 | ) | (2,371 | ) | ||||||
Net current period other comprehensive income | (94 | ) | (3,575 | ) | ||||||
Accumulated other comprehensive income (loss) balance, end of period | $ | 2,158 | $ | 2,822 | ||||||
Foreign currency translation | ||||||||||
Accumulated other comprehensive income (loss), beginning of period | $ | (57,504 | ) | $ | (54,092 | ) | ||||
Translation adjustments | (2,585 | ) | 23 | |||||||
Reclassification adjustments for losses (gains) included in other income (expense) | — | (48 | ) | |||||||
Net current period other comprehensive income | (2,585 | ) | (25 | ) | ||||||
Accumulated other comprehensive income (loss) balance, end of period | $ | (60,089 | ) | $ | (54,117 | ) | ||||
Total accumulated other comprehensive income (loss), end of period | $ | (57,931 | ) | $ | (51,295 | ) | ||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Earnings Per Share [Abstract] | ||||||||
Calculation of Basic and Diluted Earnings Per Share | Basic and diluted EPS (in thousands, except per share amounts): | |||||||
Quarters Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Net income (loss) | $ | (24,469 | ) | $ | (7,770 | ) | ||
Weighted average common shares outstanding used to compute basic EPS | 36,104 | 35,840 | ||||||
Dilutive effect of stock based awards | — | — | ||||||
Weighted average common shares outstanding used to compute diluted EPS | 36,104 | 35,840 | ||||||
Basic EPS | $ | (0.68 | ) | $ | (0.22 | ) | ||
Diluted EPS | $ | (0.68 | ) | $ | (0.22 | ) |
Segment_Information_Tables
Segment Information (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Segment Reporting [Abstract] | ||||||||
Segment Results | Segment results for the quarters ended March 31, 2015 and 2014 (in thousands): | |||||||
RealPlayer Group | ||||||||
Quarters Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Revenue | $ | 8,013 | $ | 15,215 | ||||
Cost of revenue | 4,112 | 3,518 | ||||||
Gross profit | 3,901 | 11,697 | ||||||
Operating expenses | 12,375 | 17,787 | ||||||
Operating income (loss) | $ | (8,474 | ) | $ | (6,090 | ) | ||
Mobile Entertainment | ||||||||
Quarters Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Revenue | $ | 14,480 | $ | 19,913 | ||||
Cost of revenue | 9,506 | 11,950 | ||||||
Gross profit | 4,974 | 7,963 | ||||||
Operating expenses | 5,633 | 9,616 | ||||||
Operating income (loss) | $ | (659 | ) | $ | (1,653 | ) | ||
Games | ||||||||
Quarters Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Revenue | $ | 8,104 | $ | 10,596 | ||||
Cost of revenue | 2,794 | 3,129 | ||||||
Gross profit | 5,310 | 7,467 | ||||||
Operating expenses | 8,683 | 9,766 | ||||||
Operating income (loss) | $ | (3,373 | ) | $ | (2,299 | ) | ||
Corporate | ||||||||
Quarters Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Cost of revenue | $ | 135 | $ | 189 | ||||
Extinguishment of liability | — | (10,580 | ) | |||||
Operating expenses | 6,371 | 9,225 | ||||||
Operating income (loss) | $ | (6,506 | ) | $ | 1,166 | |||
Revenue by Geographic Region | Our customers consist primarily of consumers and corporations located in the U.S., Europe, Republic of Korea and various foreign countries (Rest of the World). Revenue by geographic region (in thousands): | |||||||
Quarters Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
United States | $ | 12,349 | $ | 20,428 | ||||
Europe | 4,163 | 8,412 | ||||||
Republic of Korea | 6,324 | 10,294 | ||||||
Rest of the World | 7,761 | 6,590 | ||||||
Total net revenue | $ | 30,597 | $ | 45,724 | ||||
Long-Lived Assets by Geographic Region | Long-lived assets (which consist of equipment, software, leasehold improvements, other intangible assets, and goodwill) by geographic region (in thousands) are as follows: | |||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
United States | $ | 31,542 | $ | 33,421 | ||||
Europe | 6,300 | 6,696 | ||||||
Republic of Korea | 497 | 547 | ||||||
Rest of the World | 2,825 | 3,048 | ||||||
Total long-lived assets | $ | 41,164 | $ | 43,712 | ||||
StockBased_Compensation_Recogn
Stock-Based Compensation (Recognized Stock-Based Compensation Expense) (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Total stock-based compensation expense | $1,329 | $1,337 |
StockBased_Compensation_Weight
Stock-Based Compensation (Weighted-Average Assumptions Used to Determine Fair Value of Options Granted) (Detail) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Expected dividend yield | 0.00% | 0.00% |
Risk-free interest rate | 1.20% | 1.10% |
Expected life (years) | 4 years 2 months | 3 years 9 months |
Volatility | 37.00% | 40.00% |
StockBased_Compensation_Additi
Stock-Based Compensation (Additional Information) (Detail) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2015 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Total unrecognized compensation cost | $13.50 |
Total unrecognized compensation cost, expected recognition period (in years) | 3 years |
Rhapsody_Joint_Venture_Additio
Rhapsody Joint Venture (Additional Information) (Detail) (USD $) | 3 Months Ended | 1 Months Ended | 3 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2010 | Dec. 31, 2014 | Apr. 30, 2015 | |
Schedule of Equity Method Investments [Line Items] | ||||||
Losses recorded in the operations of Rhapsody | $6,180,000 | $838,000 | ||||
Investment in and advances to Rhapsody | 10,743,000 | 10,743,000 | 10,000,000 | |||
Equity carrying value of investment | 5,700,000 | 5,700,000 | ||||
Loan to investee | 5,000,000 | 0 | ||||
Rhapsody America LLC | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Percentage of ownership interest in Rhapsody | 43.00% | 43.00% | ||||
Payments for restructuring | 18,000,000 | |||||
Liquidation preference amount | 10,000,000 | 10,000,000 | ||||
Losses recorded in the operations of Rhapsody | 6,200,000 | 800,000 | ||||
Annual interest rate (percent) | 9.00% | 9.00% | ||||
Loan to investee | 5,000,000 | |||||
Rhapsody America LLC | Prime Rate | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Variable rate (percent) | 5.25% | |||||
Rhapsody America LLC | Other Owner | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Percentage of ownership interest in Rhapsody held by third party | 43.00% | |||||
Subsequent Event | Rhapsody America LLC | Senior Notes | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Guarantee of related party debt | $5,000,000 |
Rhapsody_Joint_Venture_Summari
Rhapsody Joint Venture (Summarized Financial Operating Information for Rhapsody) (Detail) (Rhapsody America LLC, USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Rhapsody America LLC | ||
Schedule of Equity Method Investments [Line Items] | ||
Net revenue | $46,324 | $42,003 |
Gross profit | 8,090 | 9,121 |
Net loss | ($8,924) | ($1,630) |
Fair_Value_Measurements_Financ
Fair Value Measurements (Financial Assets Measured at Fair Value on a Recurring Basis) (Detail) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | $141,191 | $167,382 |
Amortized Cost | 137,753 | 165,121 |
Cash and Cash Equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 102,994 | 103,253 |
Amortized Cost | 102,994 | 103,255 |
Cash and Cash Equivalents | Cash | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 26,642 | 30,105 |
Amortized Cost | 26,642 | 30,105 |
Cash and Cash Equivalents | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 9,370 | 11,629 |
Amortized Cost | 9,370 | 11,630 |
Cash and Cash Equivalents | Corporate notes and bonds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 66,982 | 61,519 |
Amortized Cost | 66,982 | 61,520 |
Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 31,394 | 58,453 |
Amortized Cost | 31,383 | 58,438 |
Short-term Investments | Corporate notes and bonds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 24,394 | 51,453 |
Amortized Cost | 24,383 | 51,438 |
Short-term Investments | U.S. government agency securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 7,000 | 7,000 |
Amortized Cost | 7,000 | 7,000 |
Restricted cash equivalents and investments | Restricted cash equivalents and investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 3,000 | 3,000 |
Amortized Cost | 3,000 | 3,000 |
Equity Investment in Publicly Traded Securities | Publicly Traded Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 2,648 | 2,676 |
Amortized Cost | 376 | 428 |
Related Party Transaction [Domain] | Warrants issued by Rhapsody | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 1,155 | |
Amortized Cost | 0 | |
Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 45,660 | 51,410 |
Level 1 | Cash and Cash Equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 36,012 | 41,734 |
Level 1 | Cash and Cash Equivalents | Cash | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 26,642 | 30,105 |
Level 1 | Cash and Cash Equivalents | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 9,370 | 11,629 |
Level 1 | Cash and Cash Equivalents | Corporate notes and bonds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 1 | Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 7,000 | 7,000 |
Level 1 | Short-term Investments | Corporate notes and bonds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 1 | Short-term Investments | U.S. government agency securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 7,000 | 7,000 |
Level 1 | Restricted cash equivalents and investments | Restricted cash equivalents and investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 1 | Equity Investment in Publicly Traded Securities | Publicly Traded Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 2,648 | 2,676 |
Level 1 | Related Party Transaction [Domain] | Warrants issued by Rhapsody | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | |
Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 94,376 | 115,972 |
Level 2 | Cash and Cash Equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 66,982 | 61,519 |
Level 2 | Cash and Cash Equivalents | Cash | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 2 | Cash and Cash Equivalents | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 2 | Cash and Cash Equivalents | Corporate notes and bonds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 66,982 | 61,519 |
Level 2 | Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 24,394 | 51,453 |
Level 2 | Short-term Investments | Corporate notes and bonds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 24,394 | 51,453 |
Level 2 | Short-term Investments | U.S. government agency securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 2 | Restricted cash equivalents and investments | Restricted cash equivalents and investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 3,000 | 3,000 |
Level 2 | Equity Investment in Publicly Traded Securities | Publicly Traded Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 2 | Related Party Transaction [Domain] | Warrants issued by Rhapsody | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | |
Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 1,155 | 0 |
Level 3 | Cash and Cash Equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | Cash and Cash Equivalents | Cash | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | Cash and Cash Equivalents | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | Cash and Cash Equivalents | Corporate notes and bonds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | Short-term Investments | Corporate notes and bonds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | Short-term Investments | U.S. government agency securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | Restricted cash equivalents and investments | Restricted cash equivalents and investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | Equity Investment in Publicly Traded Securities | Publicly Traded Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | Related Party Transaction [Domain] | Warrants issued by Rhapsody | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | $1,155 |
Fair_Value_Measurements_Shortt
Fair Value Measurements (Short-term Investments) (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | $141,191 | $167,382 |
Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 31,394 | 58,453 |
Estimate of Fair Value Measurement [Member] | Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 31,394 | |
Estimate of Fair Value Measurement [Member] | Short-term Investments | Within one year | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 27,809 | |
Estimate of Fair Value Measurement [Member] | Short-term Investments | Between one year and five years | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | $3,585 |
Fair_Value_Measurements_Additi
Fair Value Measurements - Additional Information (Detail) (USD $) | 1 Months Ended | 3 Months Ended | 1 Months Ended | ||||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Feb. 28, 2015 | Dec. 31, 2014 | Mar. 31, 2010 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||||
Proceeds from sale of investment | ($352) | ($2,754) | |||||
Gain (loss) on sale of investment | 300 | 2,400 | 299 | 2,371 | |||
Financial assets fair value | 141,191 | 141,191 | 167,382 | ||||
J-Stream | |||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||||
Proceeds from sale of investment | -400 | -2,800 | |||||
Rhapsody America LLC | Other Owner | |||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||||
Percentage of ownership interest in Rhapsody held by third party | 43.00% | ||||||
Warrants issued by Rhapsody | Related Party Debt Obligation | |||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||||
Expected term | 5 years | ||||||
Expected volatility rate | 55.00% | ||||||
Financial assets fair value | $1,200 |
Allowance_for_Doubtful_Account2
Allowance for Doubtful Accounts Receivable and Sales Returns (Activity in Allowance for Doubtful Accounts Receivable and Sales Returns) (Detail) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
Allowance for Doubtful Accounts Receivable | |
Financing Receivable, Allowance for Credit Losses [Line Items] | |
Beginning Balance | $1,288 |
Addition (reduction) to allowance | 65 |
Amounts written off | -34 |
Foreign currency translation | -98 |
Ending Balance | 1,221 |
Allowance for Sales Returns | |
Financing Receivable, Allowance for Credit Losses [Line Items] | |
Beginning Balance | 354 |
Addition (reduction) to allowance | 15 |
Amounts written off | 0 |
Foreign currency translation | -1 |
Ending Balance | $368 |
Allowance_for_Doubtful_Account3
Allowance for Doubtful Accounts Receivable and Sales Returns (Additional Information) (Detail) (USD $) | 3 Months Ended | 12 Months Ended | 3 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 |
Customer | |||
Accounts Receivable | Company A | |||
Concentration Risk [Line Items] | |||
Percentage by major customer | 35.00% | 21.00% | |
Accounts Receivable | Company B | |||
Concentration Risk [Line Items] | |||
Number of customers | 1 | ||
Percentage by major customer | 15.00% | ||
Revenue by Segment | |||
Concentration Risk [Line Items] | |||
Number of customers | 1 | 2 | |
Percentage by major customer | 17.00% | ||
Revenue by Segment | Company A | |||
Concentration Risk [Line Items] | |||
Number of customers | 1 | 1 | |
Revenue by Segment | RealPlayer Group | Company A | |||
Concentration Risk [Line Items] | |||
Significant customer revenue | 7.6 | ||
Revenue by Segment | Mobile Entertainment | |||
Concentration Risk [Line Items] | |||
Percentage by major customer | 17.00% | ||
Significant customer revenue | 5.3 | ||
Revenue by Segment | Mobile Entertainment | Company B | |||
Concentration Risk [Line Items] | |||
Significant customer revenue | 7.8 |
Other_Intangible_Assets_Detail
Other Intangible Assets (Detail) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Amount | $71,085,000 | $72,243,000 |
Accumulated Amortization | 65,885,000 | 66,634,000 |
Net | 5,200,000 | 5,609,000 |
Indefinite-Lived Intangible Assets (Excluding Goodwill) [Abstract] | ||
Intangible Assets, Gross | 75,585,000 | 76,743,000 |
Intangible assets, net | 9,700,000 | 10,109,000 |
Tradenames and Trademarks | ||
Indefinite-Lived Intangible Assets (Excluding Goodwill) [Abstract] | ||
Indefinite-Lived Intangible Assets (Excluding Goodwill) | 4,500,000 | 4,500,000 |
Customer relationships | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Amount | 33,047,000 | 33,853,000 |
Accumulated Amortization | 31,174,000 | 31,643,000 |
Net | 1,873,000 | 2,210,000 |
Developed technology | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Amount | 27,719,000 | 28,261,000 |
Accumulated Amortization | 25,519,000 | 25,699,000 |
Net | 2,200,000 | 2,562,000 |
Patents, trademarks and tradenames | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Amount | 4,148,000 | 3,817,000 |
Accumulated Amortization | 3,419,000 | 3,528,000 |
Net | 729,000 | 289,000 |
Servicing contracts and other | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Amount | 6,171,000 | 6,312,000 |
Accumulated Amortization | 5,773,000 | 5,764,000 |
Net | 398,000 | 548,000 |
RealPlayer Group | ||
Indefinite-Lived Intangible Assets (Excluding Goodwill) [Abstract] | ||
Intangible assets acquired | $500,000 |
Goodwill_Changes_in_Goodwill_D
Goodwill (Changes in Goodwill) (Detail) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Beginning Balance | $17,355 |
Effects of foreign currency translation | -516 |
Ending Balance | $16,839 |
Goodwill_Goodwill_by_Segments_
Goodwill (Goodwill by Segments) (Detail) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Goodwill [Line Items] | ||
Goodwill | $16,839 | $17,355 |
RealPlayer Group | ||
Goodwill [Line Items] | ||
Goodwill | 940 | |
Mobile Entertainment | ||
Goodwill [Line Items] | ||
Goodwill | 1,870 | |
RealPlayer Group | ||
Goodwill [Line Items] | ||
Goodwill | $14,029 |
Accrued_and_Other_Liabilities_1
Accrued and Other Liabilities (Detail) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Payables and Accruals [Abstract] | |||
Royalties and other fulfillment costs | $4,341 | $4,868 | |
Employee compensation, commissions and benefits | 5,696 | 7,711 | |
Sales, VAT and other taxes payable | 5,508 | 5,896 | |
Other | 6,507 | 6,811 | |
Total accrued and other liabilities | 22,052 | 25,286 | |
Extinguishment of liability | $0 | $10,580 |
Restructuring_Charges_Restruct
Restructuring Charges Restructuring Charges (Details) (Employee Separation Costs, USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Employee Separation Costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Costs incurred and charged to expense | $485 | $1,216 |
Restructuring Reserve [Roll Forward] | ||
Accrued liability beginning balance | 449 | |
Costs incurred and charged to expense | 485 | |
Cash payments | -791 | |
Accrued liability ending balance | $143 |
Lease_Exit_and_Related_Charges2
Lease Exit and Related Charges (Changes to Accrued Loss on Excess Office Facilities) (Detail) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
Disclosure Changes To Accrued Loss On Excess Office Facilities [Abstract] | |
Accrued loss at December 31, 2014 | $234 |
Additions and adjustments to the lease loss accrual, including sublease income estimate revision | 83 |
Less amounts paid, net of sublease amounts | -57 |
Accrued loss at March 31, 2015 | $260 |
Shareholders_Equity_Accumulate
Shareholders’ Equity (Accumulated Other Comprehensive Income (Loss)) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Accumulated other comprehensive income (loss), beginning of period | ($55,252) | |
Unrealized gains (losses), net of tax effects of $116 and $0 in 2015 and 2014 | -94 | -3,575 |
Net current period other comprehensive income | -2,679 | -3,600 |
Accumulated other comprehensive income (loss) balance, end of period | -57,931 | -51,295 |
Accumulated Other Comprehensive Income (Loss), Tax [Abstract] | ||
Unrealized gains (losses), tax effects | 116 | 0 |
Reclassification adjustments for losses (gains) included in other income (expense), tax effects | -1 | -4 |
Investments | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Accumulated other comprehensive income (loss), beginning of period | 2,252 | 6,397 |
Unrealized gains (losses), net of tax effects of $116 and $0 in 2015 and 2014 | 205 | -1,204 |
Reclassification adjustments for losses (gains) included in other income (expense) | -299 | -2,371 |
Net current period other comprehensive income | -94 | -3,575 |
Accumulated other comprehensive income (loss) balance, end of period | 2,158 | 2,822 |
Foreign currency translation | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Accumulated other comprehensive income (loss), beginning of period | -57,504 | -54,092 |
Translation adjustments | -2,585 | 23 |
Reclassification adjustments for losses (gains) included in other income (expense) | 0 | -48 |
Net current period other comprehensive income | -2,585 | -25 |
Accumulated other comprehensive income (loss) balance, end of period | ($60,089) | ($54,117) |
Earnings_Per_Share_Calculation
Earnings Per Share (Calculation of Basic and Diluted Earnings Per Share) (Detail) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Earnings Per Share [Abstract] | ||
Net income (loss) available to common shareholders | ($24,469) | ($7,770) |
Weighted average common shares outstanding used to compute basic EPS | 36,104 | 35,840 |
Dilutive effect of stock based awards | 0 | 0 |
Weighted average common shares outstanding used to compute diluted EPS | 36,104 | 35,840 |
Basic EPS (USD per share) | ($0.68) | ($0.22) |
Diluted EPS (USD per share) | ($0.68) | ($0.22) |
Earnings_Per_Share_Additional_
Earnings Per Share - Additional Information (Detail) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Earnings Per Share [Abstract] | ||
Shares of common stock excluded from the calculation of diluted net income per share because of antidilutive effect | 6.3 | 6.1 |
Guarantees_Additional_Informat
Guarantees (Additional Information) (Details) (Subsequent Event, Senior Notes, Rhapsody America LLC, USD $) | Apr. 30, 2015 |
In Millions, unless otherwise specified | |
Subsequent Event | Senior Notes | Rhapsody America LLC | |
Guarantor Obligations [Line Items] | |
Guarantee of related party debt | $5 |
Segment_Information_Additional
Segment Information (Additional Information) (Detail) | 3 Months Ended |
Mar. 31, 2015 | |
Segment | |
Segment Reporting [Abstract] | |
Number of reporting segments | 3 |
Segment_Information_Segment_Re
Segment Information (Segment Results) (Detail) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Segment Reporting Information [Line Items] | ||||
Revenue | $30,597 | $45,724 | [1] | |
Cost of revenue | 16,547 | [2] | 18,786 | [2] |
Extinguishment of liability | 0 | 10,580 | ||
Gross profit | 14,050 | 37,518 | ||
Operating expenses | 33,062 | 46,394 | ||
Operating income (loss) | -19,012 | -8,876 | ||
RealPlayer Group | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 8,013 | 15,215 | ||
Cost of revenue | 4,112 | 3,518 | ||
Gross profit | 3,901 | 11,697 | ||
Operating expenses | 12,375 | 17,787 | ||
Operating income (loss) | -8,474 | -6,090 | ||
Mobile Entertainment | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 14,480 | 19,913 | ||
Cost of revenue | 9,506 | 11,950 | ||
Gross profit | 4,974 | 7,963 | ||
Operating expenses | 5,633 | 9,616 | ||
Operating income (loss) | -659 | -1,653 | ||
RealPlayer Group | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 8,104 | 10,596 | ||
Cost of revenue | 2,794 | 3,129 | ||
Gross profit | 5,310 | 7,467 | ||
Operating expenses | 8,683 | 9,766 | ||
Operating income (loss) | -3,373 | -2,299 | ||
Corporate | ||||
Segment Reporting Information [Line Items] | ||||
Cost of revenue | 135 | 189 | ||
Extinguishment of liability | 0 | -10,580 | ||
Operating expenses | 6,371 | 9,225 | ||
Operating income (loss) | ($6,506) | $1,166 | ||
[1] | Quarters ended March 31, 2015 quarter ended March 31, 2015Components of Revenue License Fees7,289 8,579Service Revenue23,308 37,145Net Revenue30,597 45,724 9 months ended 9 months ended September 30, 2014 September 30, 2013Components of Revenue License Fees$21,168 $33,494Service Revenue99,538 122,107Net Revenue$120,706 $155,601 | |||
[2] | Components of Cost of RevenueMarch 31, 2015 March 31, 2014 License Fees1,743 2,212 Service Revenue14,804 16,574 Net Revenue Costs16,547 18,786 9 months ended 6 months ended September 30, 2014 September 30, 2013Components of Cost of Revenue License Fees$6,426 $6,377Service Revenue52,074 52,638Net Revenue Costs$58,500 $59,015 |
Segment_Information_Revenue_by
Segment Information (Revenue by Geographic Region) (Detail) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | |
Geographic Reporting Disclosure [Line Items] | |||
Revenue | $30,597 | $45,724 | [1] |
United States | |||
Geographic Reporting Disclosure [Line Items] | |||
Revenue | 12,349 | 20,428 | |
Europe | |||
Geographic Reporting Disclosure [Line Items] | |||
Revenue | 4,163 | 8,412 | |
Republic of Korea | |||
Geographic Reporting Disclosure [Line Items] | |||
Revenue | 6,324 | 10,294 | |
Rest of the World | |||
Geographic Reporting Disclosure [Line Items] | |||
Revenue | $7,761 | $6,590 | |
[1] | Quarters ended March 31, 2015 quarter ended March 31, 2015Components of Revenue License Fees7,289 8,579Service Revenue23,308 37,145Net Revenue30,597 45,724 9 months ended 9 months ended September 30, 2014 September 30, 2013Components of Revenue License Fees$21,168 $33,494Service Revenue99,538 122,107Net Revenue$120,706 $155,601 |
Segment_Information_LongLived_
Segment Information (Long-Lived Assets by Geographic Region) (Detail) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | $41,164 | $43,712 |
United States | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 31,542 | 33,421 |
Europe | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 6,300 | 6,696 |
Republic of Korea | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 497 | 547 |
Rest of the World | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | $2,825 | $3,048 |