Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Jul. 31, 2015 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | RNWK | |
Entity Registrant Name | REALNETWORKS INC | |
Entity Central Index Key | 1,046,327 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 36,176,118 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 92,663 | $ 103,253 |
Short-term investments | 18,337 | 58,453 |
Trade accounts receivable, net of allowances | 21,922 | 15,257 |
Deferred costs, current portion | 305 | 702 |
Deferred tax assets, net, current portion | 645 | 652 |
Prepaid expenses and other current assets | 9,108 | 8,980 |
Total current assets | 142,980 | 187,297 |
Equipment, software, and leasehold improvements, at cost: | ||
Equipment and software | 71,552 | 74,100 |
Leasehold improvements | 3,737 | 3,590 |
Total equipment, software, and leasehold improvements, at cost | 75,289 | 77,690 |
Less accumulated depreciation and amortization | 61,886 | 61,442 |
Net equipment, software, and leasehold improvements | 13,403 | 16,248 |
Restricted cash equivalents and investments | 3,000 | 3,000 |
Investment in and advances to Rhapsody | 5,121 | 10,000 |
Available for sale securities | 2,394 | 2,676 |
Other assets | 3,187 | 2,299 |
Deferred costs, non-current portion | 204 | 316 |
Deferred tax assets, net, non-current portion | 916 | 999 |
Other intangible assets, net | 9,181 | 10,109 |
Goodwill | 17,001 | 17,355 |
Total assets | 197,387 | 250,299 |
Current liabilities: | ||
Accounts payable | 18,241 | 18,653 |
Accrued and other current liabilities | 22,803 | 25,286 |
Deferred tax liabilities, net, current portion | 1,580 | 1,628 |
Deferred revenue, current portion | 3,637 | 5,301 |
Total current liabilities | 46,261 | 50,868 |
Deferred revenue, non-current portion | 124 | 235 |
Deferred rent | 1,240 | 1,215 |
Deferred tax liabilities, net, non-current portion | 693 | 702 |
Other long-term liabilities | 458 | 81 |
Total liabilities | $ 48,776 | $ 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 36,165 shares in 2015 and 36,099 shares in 2014 | $ 36 | $ 36 |
Additional paid-in capital | 623,701 | 617,756 |
Accumulated other comprehensive loss | (57,534) | (55,252) |
Retained deficit | (417,592) | (365,342) |
Total shareholders’ equity | 148,611 | 197,198 |
Total liabilities and shareholders’ equity | 197,387 | 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 BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Preferred stock, par value (USD per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (USD per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 250,000 | 250,000 |
Common stock, issued | 36,165 | 36,099 |
Common stock, outstanding | 36,165 | 36,099 |
Preferred stock, Series A | ||
Preferred stock, authorized | 200 | 200 |
Preferred stock, Undesignated series | ||
Preferred stock, authorized | 59,800 | 59,800 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |||
Income Statement [Abstract] | ||||||
Net revenue (A) | $ 33,954 | $ 40,825 | [1] | $ 64,551 | $ 86,549 | |
Cost of revenue (B) | 19,832 | [2] | 20,786 | [2] | 36,379 | 39,572 |
Extinguishment of liability | 0 | 0 | 0 | (10,580) | ||
Gross profit | 14,122 | 20,039 | 28,172 | 57,557 | ||
Operating expenses: | ||||||
Research and development | 11,801 | 13,267 | 24,180 | 27,326 | ||
Sales and marketing | 14,047 | 16,016 | 26,884 | 37,739 | ||
General and administrative | 7,008 | 8,577 | 14,291 | 17,894 | ||
Restructuring and other charges | 1,964 | 541 | 2,449 | 1,757 | ||
Lease exit and related charges | 9 | 470 | 87 | 549 | ||
Total operating expenses | 34,829 | 38,871 | 67,891 | 85,265 | ||
Operating income (loss) | (20,707) | (18,832) | (39,719) | (27,708) | ||
Other income (expenses): | ||||||
Interest income, net | 250 | 180 | 450 | 316 | ||
Gain (loss) on sale of available for sale securities, net | 94 | 0 | 393 | 2,371 | ||
Equity in net loss of Rhapsody | (6,916) | (1,802) | (13,096) | (2,640) | ||
Other income (expense), net | (112) | (95) | 331 | (172) | ||
Total other income (expenses), net | (6,684) | (1,717) | (11,922) | (125) | ||
Income (loss) before income taxes | (27,391) | (20,549) | (51,641) | (27,833) | ||
Income tax expense (benefit) | 390 | 480 | 609 | 966 | ||
Net income (loss) | $ (27,781) | $ (21,029) | $ (52,250) | $ (28,799) | ||
Basic net income (loss) per share (USD per share) | $ (0.77) | $ (0.59) | $ (1.45) | $ (0.80) | ||
Diluted net income (loss) per share (USD per share) | $ (0.77) | $ (0.59) | $ (1.45) | $ (0.80) | ||
Shares used to compute basic net income (loss) per share (shares) | 36,106 | 35,890 | 36,105 | 35,865 | ||
Shares used to compute diluted net income (loss) per share (shares) | 36,106 | 35,890 | 36,105 | 35,865 | ||
Comprehensive income (loss): | ||||||
Unrealized investment holding gains (losses), net of reclassification adjustments | $ (191) | $ (38) | $ (285) | $ (3,613) | ||
Foreign currency translation adjustments, net of reclassification adjustments | 588 | 216 | (1,997) | 191 | ||
Total other comprehensive income (loss) | 397 | 178 | (2,282) | (3,422) | ||
Net income (loss) | (27,781) | (21,029) | (52,250) | (28,799) | ||
Comprehensive income (loss) | $ (27,384) | $ (20,851) | $ (54,532) | $ (32,221) | ||
[1] | Quarters ended June 30, 2015 quarter ended June 30, 2015Components of Revenue License Fees6,921 6,664Service Revenue27,033 34,161Net Revenue33,954 40,825 6 months ended June 30, 2015 June 30, 2014Components of Revenue License Fees$14,210 $15,243Service Revenue50,341 71,306Net Revenue$64,551 $86,549 | |||||
[2] | Components of Cost of RevenueJune 30, 2015 June 30, 2014 License Fees1,428 2,170 Service Revenue18,404 18,616 Net Revenue Costs19,832 20,786 6 months ended June 30, 2015 June 30, 2014Components of Cost of Revenue License Fees$3,171 $4,382Service Revenue33,208 35,190Net Revenue Costs$36,379 $39,572 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |||
Components of net revenue: | ||||||
License fees | $ 6,921 | $ 6,664 | $ 14,210 | $ 15,243 | ||
Service revenue | 27,033 | 34,161 | 50,341 | 71,306 | ||
Net revenue | 33,954 | 40,825 | [1] | 64,551 | 86,549 | |
Components of cost of revenue: | ||||||
License fees | 1,428 | 2,170 | 3,171 | 4,382 | ||
Service revenue | 18,404 | 18,616 | 33,208 | 35,190 | ||
Cost of revenue | 19,832 | [2] | 20,786 | [2] | 36,379 | 39,572 |
Extinguishment of liability | $ 0 | $ 0 | $ 0 | $ (10,580) | ||
[1] | Quarters ended June 30, 2015 quarter ended June 30, 2015Components of Revenue License Fees6,921 6,664Service Revenue27,033 34,161Net Revenue33,954 40,825 6 months ended June 30, 2015 June 30, 2014Components of Revenue License Fees$14,210 $15,243Service Revenue50,341 71,306Net Revenue$64,551 $86,549 | |||||
[2] | Components of Cost of RevenueJune 30, 2015 June 30, 2014 License Fees1,428 2,170 Service Revenue18,404 18,616 Net Revenue Costs19,832 20,786 6 months ended June 30, 2015 June 30, 2014Components of Cost of Revenue License Fees$3,171 $4,382Service Revenue33,208 35,190Net Revenue Costs$36,379 $39,572 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (52,250) | $ (28,799) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 4,894 | 6,145 |
Stock-based compensation | 2,583 | 3,010 |
Equity in net loss of Rhapsody | 13,096 | 2,640 |
Deferred income taxes, net | (23) | 10 |
Gain on sale of available for sale securities | (393) | (2,371) |
Realized translation gain | 0 | (48) |
Extinguishment of liability | 0 | (10,580) |
Fair value of warrants, net of mark to market adjustments | (1,128) | 0 |
Interest receivable on advance to Rhapsody | (121) | 0 |
Net change in certain operating assets and liabilities: | ||
Trade accounts receivable | (7,091) | 3,346 |
Prepaid expenses and other assets | 429 | 94 |
Accounts payable | (26) | (114) |
Accrued and other liabilities | (3,542) | (4,111) |
Net cash provided by (used in) operating activities | (43,572) | (30,778) |
Cash flows from investing activities: | ||
Purchases of equipment, software, and leasehold improvements | (859) | (1,689) |
Proceeds from sale of available for sale securities | 459 | 2,754 |
Purchases of short-term investments | (8,514) | (48,326) |
Proceeds from sales and maturities of short-term investments | 48,630 | 52,663 |
Acquisitions, net of cash acquired | 161 | 733 |
Advance to Rhapsody | 5,000 | 0 |
Other | 0 | (467) |
Net cash provided by (used in) investing activities | 34,555 | 4,202 |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock (stock options and stock purchase plan) | 276 | 580 |
Tax payments from shares withheld upon vesting of restricted stock | (10) | (307) |
Payment of contingent consideration | 0 | 696 |
Net cash provided by (used in) financing activities | 266 | (423) |
Effect of exchange rate changes on cash and cash equivalents | (1,839) | 214 |
Net increase (decrease) in cash and cash equivalents | (10,590) | (26,785) |
Cash and cash equivalents, beginning of period | 103,253 | 151,235 |
Cash and cash equivalents, end of period | 92,663 | 124,450 |
Supplemental disclosure of cash flow information: | ||
Cash received from income tax refunds | 965 | 97 |
Cash paid for income taxes | 872 | 1,074 |
Non-cash investing activities: | ||
Increase (decrease) in accrued purchases of equipment, software, and leasehold improvements | (39) | (321) |
Acquisition of intangible assets | $ 312 | $ 0 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 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 and six months ended June 30, 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 Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 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, 2018; with early adoption permitted beginning January 1, 2017. 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. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 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 Six Months Ended 2015 2014 2015 2014 Total stock-based compensation expense $ 1,254 $ 1,673 $ 2,583 $ 3,010 The fair value of options granted determined using the Black-Scholes model used the following weighted-average assumptions: Quarters Ended Six Months Ended 2015 2014 2015 2014 Expected dividend yield 0 % 0 % 0 % 0 % Risk-free interest rate 1.70 % 1.20 % 1.26 % 1.19 % Expected life (years) 5.5 3.8 4.4 3.8 Volatility 42 % 40 % 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 June 30, 2015 , $12.8 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 2 years. |
Rhapsody Joint Venture
Rhapsody Joint Venture | 6 Months Ended |
Jun. 30, 2015 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Rhapsody Joint Venture | Note 4 Rhapsody Joint Venture As of June 30, 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 $6.9 million and $13.1 million for the quarters and six months ended June 30, 2015 , and $1.8 million and $2.6 million for the quarters and six months ended June 30, 2014 . Because of the $10.0 million liquidation preference on the preferred stock we hold in Rhapsody, under the equity method of accounting we did 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 , until Rhapsody's book value was reduced below $10.0 million which occurred in the first quarter of 2015. As of June 30, 2015, the carrying value of our Rhapsody equity investment is zero, as we do not record any share of Rhapsody losses that would reduce our carrying value of Rhapsody below zero unless we commit to provide financial support for Rhapsody. In March 2015, RealNetworks extended a $5.0 million loan to Rhapsody, as did the other 43% owner of Rhapsody. The loans have original maturity dates of June 2018 or earlier if Rhapsody's certain loan to an external strategic partner is repaid in full. During June 2015, Rhapsody's external strategic partner repaid half of its loan to Rhapsody and the maturity date of the second half was extended to August 2015. The loans to Rhapsody bear interest at the greater of prime plus 5.25% or 9% per annum, and interest accrues and is due upon final maturity. As of June 30, 2015, RealNetworks accrued $0.1 million of interest income on the loan which is included in Interest income, net on the unaudited condensed consolidated statements of operations and comprehensive income (loss). The interest receivable is included in Investment in and advances to Rhapsody on the unaudited condensed consolidated balance sheet. 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 were released in June 2015 upon the partial repayment of Rhapsody's loan by the external strategic partner. Summarized financial information for Rhapsody, which represents 100% of their financial information, is as follows (in thousands): Quarters Ended Six Months Ended 2015 2014 2015 2014 Net revenue $ 50,063 $ 42,427 $ 96,387 $ 84,430 Gross profit 7,753 7,870 15,843 16,991 Net loss (12,061 ) (4,717 ) (20,985 ) (6,347 ) |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 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 June 30, 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 June 30, 2015 June 30, 2015 Level 1 Level 2 Level 3 Total Cash and cash equivalents: Cash $ 21,147 $ — $ — $ 21,147 $ 21,147 Money market funds 11,856 — — 11,856 11,856 Corporate notes and bonds — 59,660 — 59,660 59,660 Total cash and cash equivalents 33,003 59,660 — 92,663 92,663 Short-term investments: Corporate notes and bonds — 18,337 — 18,337 18,332 U.S. government agency securities — — — — — Total short-term investments — 18,337 — 18,337 18,332 Restricted cash equivalents and investments — 3,000 — 3,000 3,000 Equity investment in publicly traded securities 2,394 — — 2,394 362 Warrant issued by Rhapsody (included in Other assets) — — 1,128 1,128 — Total $ 35,397 $ 80,997 $ 1,128 $ 117,522 $ 114,357 Fair Value Measurements as of Amortized Cost as of December 31, 2014 December 31, 2014 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 June 30, 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 and six months ended June 30, 2015 and 2014 were not significant. Gross unrealized gains and gross unrealized losses on short-term investment securities as of June 30, 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 June 30, 2015 (in thousands): Estimated Fair Value Within one year $ 16,915 Between one year and five years 1,422 Total short-term investments $ 18,337 Our equity investment in a publicly traded company as of June 30, 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. During the quarter and six months ended June 30, 2015 , we sold a portion of J-Stream shares we held, resulting in cash proceeds of $0.1 million and $0.5 million , respectively and pre-tax gains of $0.1 million and $0.4 million , respectively. In March 2014, we sold a portion of the J-Stream shares we held, resulting in cash proceeds of $2.8 million and a pre-tax gain of $2.4 million . The gains on the sale of these securities are 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% . On the date of issuance, 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). The warrants are free-standing derivatives and as such their fair value is determined each quarter using updated inputs in the Black-Scholes option-pricing model. During the quarter ended June 30, 2015 , the change in the fair value of the warrants from that originally recorded was insignificant. 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 six months ended June 30, 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 Accounts
Allowance for Doubtful Accounts Receivable and Sales Returns | 6 Months Ended |
Jun. 30, 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 Accounts Receivable Sales Returns Balances, December 31, 2014 $ 1,288 $ 354 Addition (reduction) to allowance 139 (194 ) Amounts written off (98 ) (6 ) Foreign currency translation (68 ) — Balances, June 30, 2015 $ 1,261 $ 154 One customer accounted for 47% and one customer accounted for 10% of trade accounts receivable as of June 30, 2015 . At December 31, 2014 , one customer accounted for 21% and one other customer accounted for 15% of trade accounts receivable. One customer accounted for 30% of consolidated revenue, or $10.2 million , and one customer accounted for 11% or $3.8 million of consolidated revenue during the quarter ended June 30, 2015 ; both are reflected in our Mobile Entertainment segment. One customer accounted for 24% of consolidated revenue, or $15.5 million , during the six months ended June 30, 2015 , also reflected in our Mobile Entertainment segment. One customer accounted for 21% of consolidated revenue, or $8.6 million , during the quarter ended June 30, 2014 and 19% , or $16.4 million , during the six months ended June 30, 2014 and is reflected in our Mobile Entertainment segment. One additional customer accounted for 12% of consolidated revenue, or $10.5 million , during the six months ended June 30, 2014 and is reflected in our RealPlayer segment. |
Other Intangible Assets
Other Intangible Assets | 6 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other Intangible Assets | Note 7 Other Intangible Assets Other intangible assets (in thousands): June 30, 2015 December 31, 2014 Gross Amount Accumulated Amortization Net Gross Amount Accumulated Amortization Net Amortizing intangible assets: Customer relationships $ 33,090 $ 31,405 $ 1,685 $ 33,853 $ 31,643 $ 2,210 Developed technology 27,809 25,799 2,010 28,261 25,699 2,562 Patents, trademarks and tradenames 4,191 3,512 679 3,817 3,528 289 Service contracts 6,190 5,883 307 6,312 5,764 548 71,280 66,599 4,681 72,243 66,634 5,609 Non-amortizing intangible assets: Trademarks and tradenames 4,500 — 4,500 4,500 — 4,500 Total $ 75,780 $ 66,599 $ 9,181 $ 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 six months ended June 30, 2015 or 2014 . |
Goodwill
Goodwill | 6 Months Ended |
Jun. 30, 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 (354 ) Balance, June 30, 2015 $ 17,001 Goodwill by segment (in thousands): June 30, RealPlayer Group $ 957 Mobile Entertainment 1,952 Games 14,092 Total goodwill $ 17,001 No impairment of goodwill was recognized in either of the six months ended June 30, 2015 or 2014 . |
Accrued and Other Liabilities
Accrued and Other Liabilities | 6 Months Ended |
Jun. 30, 2015 | |
Payables and Accruals [Abstract] | |
Accrued and Other Liabilities | Note 9 Accrued and Other Current Liabilities Accrued and other current liabilities (in thousands): June 30, 2015 December 31, 2014 Royalties and other fulfillment costs $ 4,038 $ 4,868 Employee compensation, commissions and benefits 6,603 7,711 Sales, VAT and other taxes payable 6,007 5,896 Other 6,155 6,811 Total accrued and other current liabilities $ 22,803 $ 25,286 |
Restructuring Charges
Restructuring Charges | 6 Months Ended |
Jun. 30, 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. Restructuring charges are as follows (in thousands): Employee Separation Costs Costs incurred and charged to expense for the six months ended June 30, 2015 $ 2,449 Costs incurred and charged to expense for the six months ended June 30, 2014 $ 1,757 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 six months ended June 30, 2015 2,449 Cash payments (1,201 ) Accrued liability at June 30, 2015 $ 1,697 |
Lease Exit and Related Charges
Lease Exit and Related Charges | 6 Months Ended |
Jun. 30, 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. We may incur similar charges in the future. 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 83 Less amounts paid, net of sublease amounts (102 ) Accrued loss at June 30, 2015 $ 215 |
Shareholders_ Equity
Shareholders’ Equity | 6 Months Ended |
Jun. 30, 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 Six Months Ended 2015 2014 2015 2014 Investments Accumulated other comprehensive income (loss), beginning of period $ 2,158 $ 2,822 $ 2,252 $ 6,397 Unrealized gains (losses), net of tax effects of $(60), $0, $56 and $0 (97 ) (38 ) 108 (1,242 ) Reclassification adjustments for losses (gains) included in other income (expense), net of tax effects of $0, $0, $(1) and $(4) (94 ) — (393 ) (2,371 ) Net current period other comprehensive income (191 ) (38 ) (285 ) (3,613 ) Accumulated other comprehensive income (loss) balance, end of period $ 1,967 $ 2,784 $ 1,967 $ 2,784 Foreign currency translation Accumulated other comprehensive income (loss), beginning of period $ (60,089 ) $ (54,117 ) $ (57,504 ) $ (54,092 ) Translation adjustments 588 216 (1,997 ) 239 Reclassification adjustments for losses (gains) included in other income (expense) — — — (48 ) Net current period other comprehensive income 588 216 (1,997 ) 191 Accumulated other comprehensive income (loss) balance, end of period $ (59,501 ) $ (53,901 ) $ (59,501 ) $ (53,901 ) Total accumulated other comprehensive income (loss), end of period $ (57,534 ) $ (51,117 ) $ (57,534 ) $ (51,117 ) |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 13 Income Taxes As of June 30, 2015 , there have been no material changes to RealNetworks’ uncertain tax positions disclosures as provided in Note 14 of the 2014 10-K. However, as a result of the closure of our United States federal audit for the year ended December 31, 2012, we anticipate a decrease in the Company’s total unrecognized tax benefit by an amount up to $3.3 million within the next 12 months, which will have no impact on the financial statements since the Company maintains a valuation allowance on its deferred tax assets. 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 2013 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. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 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 Six Months Ended 2015 2014 2015 2014 Net income (loss) $ (27,781 ) $ (21,029 ) $ (52,250 ) $ (28,799 ) Weighted average common shares outstanding used to compute basic EPS 36,106 35,890 36,105 35,865 Dilutive effect of stock based awards — — — — Weighted average common shares outstanding used to compute diluted EPS 36,106 35,890 36,105 35,865 Basic EPS $ (0.77 ) $ (0.59 ) $ (1.45 ) $ (0.80 ) Diluted EPS $ (0.77 ) $ (0.59 ) $ (1.45 ) $ (0.80 ) During the quarter and six months ended June 30, 2015 , 6.0 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. During the quarter and six months ended June 30, 2014 , 6.3 million and 6.2 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 | 6 Months Ended |
Jun. 30, 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 | 6 Months Ended |
Jun. 30, 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 in April 2015 related to a loan Rhapsody made to an external strategic partner, which was released in June 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 | 6 Months Ended |
Jun. 30, 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 and six months ended June 30, 2015 and 2014 (in thousands): RealPlayer Group Quarters Ended Six Months Ended 2015 2014 2015 2014 Revenue $ 7,344 $ 8,556 $ 15,357 $ 23,771 Cost of revenue 4,317 3,620 8,429 7,138 Gross profit 3,027 4,936 6,928 16,633 Operating expenses 13,001 12,489 25,376 30,276 Operating income (loss) $ (9,974 ) $ (7,553 ) $ (18,448 ) $ (13,643 ) Mobile Entertainment Quarters Ended Six Months Ended 2015 2014 2015 2014 Revenue $ 18,515 $ 23,182 $ 32,995 $ 43,095 Cost of revenue 13,079 14,298 22,585 26,248 Gross profit 5,436 8,884 10,410 16,847 Operating expenses 5,301 9,424 10,934 19,040 Operating income (loss) $ 135 $ (540 ) $ (524 ) $ (2,193 ) Games Quarters Ended Six Months Ended 2015 2014 2015 2014 Revenue $ 8,095 $ 9,087 $ 16,199 $ 19,683 Cost of revenue 2,286 2,717 5,080 5,846 Gross profit 5,809 6,370 11,119 13,837 Operating expenses 8,719 8,769 17,402 18,535 Operating income (loss) $ (2,910 ) $ (2,399 ) $ (6,283 ) $ (4,698 ) Corporate Quarters Ended Six Months Ended 2015 2014 2015 2014 Cost of revenue $ 150 $ 151 $ 285 $ 340 Extinguishment of liability — — — (10,580 ) Operating expenses 7,808 8,189 14,179 17,414 Operating income (loss) $ (7,958 ) $ (8,340 ) $ (14,464 ) $ (7,174 ) 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 Six Months Ended 2015 2014 2015 2014 United States $ 12,303 $ 15,092 $ 24,652 $ 35,520 Europe 3,728 6,968 7,891 15,380 Republic of Korea 12,375 11,092 18,699 21,386 Rest of the World 5,548 7,673 13,309 14,263 Total net revenue $ 33,954 $ 40,825 $ 64,551 $ 86,549 Long-lived assets (which consist of equipment, software, leasehold improvements, other intangible assets, and goodwill) by geographic region (in thousands) are as follows: June 30, December 31, United States $ 30,198 $ 33,421 Europe 6,172 6,696 Republic of Korea 438 547 Rest of the World 2,777 3,048 Total long-lived assets $ 39,585 $ 43,712 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 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. |
Subsequent Event (Notes)
Subsequent Event (Notes) | 6 Months Ended |
Jun. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Event | Note 19 Subsequent Event As described in detail in the Current Report on Form 8-K dated July 24, 2015, we announced an agreement to sell the Slingo and Social Casino portion of our games business to Gaming Realms plc, a publicly-traded, London-based online gaming company, for $18.0 million . The consideration for the sale is comprised of $10.0 million of cash which will be paid at closing, with the remainder payable either all in cash or a mix of cash and Gaming Realms stock, at RealNetworks' election, on the first and second anniversaries of the closing. The transaction is expected to close in the third quarter of 2015 and is subject to a financing contingency, as well as other customary closing conditions. |
Description of Business and S26
Description of Business and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 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 and six months ended June 30, 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. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 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 Six Months Ended 2015 2014 2015 2014 Total stock-based compensation expense $ 1,254 $ 1,673 $ 2,583 $ 3,010 |
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 Six Months Ended 2015 2014 2015 2014 Expected dividend yield 0 % 0 % 0 % 0 % Risk-free interest rate 1.70 % 1.20 % 1.26 % 1.19 % Expected life (years) 5.5 3.8 4.4 3.8 Volatility 42 % 40 % 37 % 40 % |
Rhapsody Joint Venture (Tables)
Rhapsody Joint Venture (Tables) | 6 Months Ended |
Jun. 30, 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 Six Months Ended 2015 2014 2015 2014 Net revenue $ 50,063 $ 42,427 $ 96,387 $ 84,430 Gross profit 7,753 7,870 15,843 16,991 Net loss (12,061 ) (4,717 ) (20,985 ) (6,347 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 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 June 30, 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 June 30, 2015 June 30, 2015 Level 1 Level 2 Level 3 Total Cash and cash equivalents: Cash $ 21,147 $ — $ — $ 21,147 $ 21,147 Money market funds 11,856 — — 11,856 11,856 Corporate notes and bonds — 59,660 — 59,660 59,660 Total cash and cash equivalents 33,003 59,660 — 92,663 92,663 Short-term investments: Corporate notes and bonds — 18,337 — 18,337 18,332 U.S. government agency securities — — — — — Total short-term investments — 18,337 — 18,337 18,332 Restricted cash equivalents and investments — 3,000 — 3,000 3,000 Equity investment in publicly traded securities 2,394 — — 2,394 362 Warrant issued by Rhapsody (included in Other assets) — — 1,128 1,128 — Total $ 35,397 $ 80,997 $ 1,128 $ 117,522 $ 114,357 Fair Value Measurements as of Amortized Cost as of December 31, 2014 December 31, 2014 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 June 30, 2015 (in thousands): Estimated Fair Value Within one year $ 16,915 Between one year and five years 1,422 Total short-term investments $ 18,337 |
Allowance for Doubtful Accoun30
Allowance for Doubtful Accounts Receivable and Sales Returns (Tables) | 6 Months Ended |
Jun. 30, 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 Accounts Receivable Sales Returns Balances, December 31, 2014 $ 1,288 $ 354 Addition (reduction) to allowance 139 (194 ) Amounts written off (98 ) (6 ) Foreign currency translation (68 ) — Balances, June 30, 2015 $ 1,261 $ 154 |
Other Intangible Assets (Tables
Other Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other Intangible Assets | Other intangible assets (in thousands): June 30, 2015 December 31, 2014 Gross Amount Accumulated Amortization Net Gross Amount Accumulated Amortization Net Amortizing intangible assets: Customer relationships $ 33,090 $ 31,405 $ 1,685 $ 33,853 $ 31,643 $ 2,210 Developed technology 27,809 25,799 2,010 28,261 25,699 2,562 Patents, trademarks and tradenames 4,191 3,512 679 3,817 3,528 289 Service contracts 6,190 5,883 307 6,312 5,764 548 71,280 66,599 4,681 72,243 66,634 5,609 Non-amortizing intangible assets: Trademarks and tradenames 4,500 — 4,500 4,500 — 4,500 Total $ 75,780 $ 66,599 $ 9,181 $ 76,743 $ 66,634 $ 10,109 |
Goodwill (Tables)
Goodwill (Tables) | 6 Months Ended |
Jun. 30, 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 (354 ) Balance, June 30, 2015 $ 17,001 |
Goodwill Assigned by Segments | Goodwill by segment (in thousands): June 30, RealPlayer Group $ 957 Mobile Entertainment 1,952 Games 14,092 Total goodwill $ 17,001 |
Accrued and Other Liabilities (
Accrued and Other Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Payables and Accruals [Abstract] | |
Accrued and Other Liabilities | Accrued and other current liabilities (in thousands): June 30, 2015 December 31, 2014 Royalties and other fulfillment costs $ 4,038 $ 4,868 Employee compensation, commissions and benefits 6,603 7,711 Sales, VAT and other taxes payable 6,007 5,896 Other 6,155 6,811 Total accrued and other current liabilities $ 22,803 $ 25,286 |
Restructuring Charges (Tables)
Restructuring Charges (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring Charges by Type of Cost | Restructuring charges are as follows (in thousands): Employee Separation Costs Costs incurred and charged to expense for the six months ended June 30, 2015 $ 2,449 Costs incurred and charged to expense for the six months ended June 30, 2014 $ 1,757 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 six months ended June 30, 2015 2,449 Cash payments (1,201 ) Accrued liability at June 30, 2015 $ 1,697 |
Lease Exit and Related Charges
Lease Exit and Related Charges (Tables) | 6 Months Ended |
Jun. 30, 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 83 Less amounts paid, net of sublease amounts (102 ) Accrued loss at June 30, 2015 $ 215 |
Shareholders_ Equity (Tables)
Shareholders’ Equity (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | Changes in components of accumulated other comprehensive income (in thousands): Quarters Ended Six Months Ended 2015 2014 2015 2014 Investments Accumulated other comprehensive income (loss), beginning of period $ 2,158 $ 2,822 $ 2,252 $ 6,397 Unrealized gains (losses), net of tax effects of $(60), $0, $56 and $0 (97 ) (38 ) 108 (1,242 ) Reclassification adjustments for losses (gains) included in other income (expense), net of tax effects of $0, $0, $(1) and $(4) (94 ) — (393 ) (2,371 ) Net current period other comprehensive income (191 ) (38 ) (285 ) (3,613 ) Accumulated other comprehensive income (loss) balance, end of period $ 1,967 $ 2,784 $ 1,967 $ 2,784 Foreign currency translation Accumulated other comprehensive income (loss), beginning of period $ (60,089 ) $ (54,117 ) $ (57,504 ) $ (54,092 ) Translation adjustments 588 216 (1,997 ) 239 Reclassification adjustments for losses (gains) included in other income (expense) — — — (48 ) Net current period other comprehensive income 588 216 (1,997 ) 191 Accumulated other comprehensive income (loss) balance, end of period $ (59,501 ) $ (53,901 ) $ (59,501 ) $ (53,901 ) Total accumulated other comprehensive income (loss), end of period $ (57,534 ) $ (51,117 ) $ (57,534 ) $ (51,117 ) |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 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 Six Months Ended 2015 2014 2015 2014 Net income (loss) $ (27,781 ) $ (21,029 ) $ (52,250 ) $ (28,799 ) Weighted average common shares outstanding used to compute basic EPS 36,106 35,890 36,105 35,865 Dilutive effect of stock based awards — — — — Weighted average common shares outstanding used to compute diluted EPS 36,106 35,890 36,105 35,865 Basic EPS $ (0.77 ) $ (0.59 ) $ (1.45 ) $ (0.80 ) Diluted EPS $ (0.77 ) $ (0.59 ) $ (1.45 ) $ (0.80 ) |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Segment Reporting Information [Line Items] | |
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 Six Months Ended 2015 2014 2015 2014 United States $ 12,303 $ 15,092 $ 24,652 $ 35,520 Europe 3,728 6,968 7,891 15,380 Republic of Korea 12,375 11,092 18,699 21,386 Rest of the World 5,548 7,673 13,309 14,263 Total net revenue $ 33,954 $ 40,825 $ 64,551 $ 86,549 |
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: June 30, December 31, United States $ 30,198 $ 33,421 Europe 6,172 6,696 Republic of Korea 438 547 Rest of the World 2,777 3,048 Total long-lived assets $ 39,585 $ 43,712 |
RealPlayer Group | |
Segment Reporting Information [Line Items] | |
Segment Results | RealPlayer Group Quarters Ended Six Months Ended 2015 2014 2015 2014 Revenue $ 7,344 $ 8,556 $ 15,357 $ 23,771 Cost of revenue 4,317 3,620 8,429 7,138 Gross profit 3,027 4,936 6,928 16,633 Operating expenses 13,001 12,489 25,376 30,276 Operating income (loss) $ (9,974 ) $ (7,553 ) $ (18,448 ) $ (13,643 ) |
Mobile Entertainment | |
Segment Reporting Information [Line Items] | |
Segment Results | Mobile Entertainment Quarters Ended Six Months Ended 2015 2014 2015 2014 Revenue $ 18,515 $ 23,182 $ 32,995 $ 43,095 Cost of revenue 13,079 14,298 22,585 26,248 Gross profit 5,436 8,884 10,410 16,847 Operating expenses 5,301 9,424 10,934 19,040 Operating income (loss) $ 135 $ (540 ) $ (524 ) $ (2,193 ) |
Games | |
Segment Reporting Information [Line Items] | |
Segment Results | Games Quarters Ended Six Months Ended 2015 2014 2015 2014 Revenue $ 8,095 $ 9,087 $ 16,199 $ 19,683 Cost of revenue 2,286 2,717 5,080 5,846 Gross profit 5,809 6,370 11,119 13,837 Operating expenses 8,719 8,769 17,402 18,535 Operating income (loss) $ (2,910 ) $ (2,399 ) $ (6,283 ) $ (4,698 ) |
Corporate | |
Segment Reporting Information [Line Items] | |
Segment Results | Corporate Quarters Ended Six Months Ended 2015 2014 2015 2014 Cost of revenue $ 150 $ 151 $ 285 $ 340 Extinguishment of liability — — — (10,580 ) Operating expenses 7,808 8,189 14,179 17,414 Operating income (loss) $ (7,958 ) $ (8,340 ) $ (14,464 ) $ (7,174 ) |
Stock-Based Compensation (Recog
Stock-Based Compensation (Recognized Stock-Based Compensation Expense) (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Total stock-based compensation expense | $ 1,254 | $ 1,673 | $ 2,583 | $ 3,010 |
Stock-Based Compensation (Weigh
Stock-Based Compensation (Weighted-Average Assumptions Used to Determine Fair Value of Options Granted) (Detail) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Expected dividend yield (percent) | 0.00% | 0.00% | 0.00% | 0.00% |
Risk-free interest rate (percent) | 1.70% | 1.20% | 1.26% | 1.19% |
Expected life (years) | 5 years 6 months | 3 years 9 months | 4 years 5 months | 3 years 9 months |
Volatility (percent) | 42.00% | 40.00% | 37.00% | 40.00% |
Stock-Based Compensation (Addit
Stock-Based Compensation (Additional Information) (Detail) - Jun. 30, 2015 - USD ($) $ in Millions | Total |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Total unrecognized compensation cost | $ 12.8 |
Total unrecognized compensation cost, expected recognition period (in years) | 2 years |
Rhapsody Joint Venture (Additio
Rhapsody Joint Venture (Additional Information) (Detail) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||
Mar. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Mar. 31, 2010 | Jun. 30, 2015 | Jun. 30, 2014 | Apr. 30, 2015 | Dec. 31, 2014 | |
Schedule of Equity Method Investments [Line Items] | ||||||||
Losses recorded in the operations of Rhapsody | $ 6,916 | $ 1,802 | $ 13,096 | $ 2,640 | ||||
Investment in and advances to Rhapsody | $ 5,121 | 5,121 | $ 10,000 | |||||
Loan to investee | $ 5,000 | 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 | |||||||
Liquidation preference amount | $ 10,000 | $ 10,000 | ||||||
Losses recorded in the operations of Rhapsody | $ 6,900 | $ 1,800 | $ 13,100 | $ 2,600 | ||||
Annual interest rate (percent) | 9.00% | 9.00% | ||||||
Accrued interest income | $ 100 | $ 100 | ||||||
Loan to investee | $ 5,000 | |||||||
Rhapsody America LLC | Senior Notes | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Guarantee of related party debt | $ 5,000 | |||||||
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% | 43.00% | 43.00% |
Rhapsody Joint Venture (Summari
Rhapsody Joint Venture (Summarized Financial Operating Information for Rhapsody) (Detail) - Rhapsody America LLC - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Schedule of Equity Method Investments [Line Items] | ||||
Net revenue | $ 50,063 | $ 42,427 | $ 96,387 | $ 84,430 |
Gross profit | 7,753 | 7,870 | 15,843 | 16,991 |
Net loss | $ (12,061) | $ (4,717) | $ (20,985) | $ (6,347) |
Fair Value Measurements (Financ
Fair Value Measurements (Financial Assets Measured at Fair Value on a Recurring Basis) (Detail) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | $ 117,522 | $ 167,382 |
Amortized Cost | 114,357 | 165,121 |
Cash and Cash Equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 92,663 | 103,253 |
Amortized Cost | 92,663 | 103,255 |
Cash and Cash Equivalents | Cash | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 21,147 | 30,105 |
Amortized Cost | 21,147 | 30,105 |
Cash and Cash Equivalents | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 11,856 | 11,629 |
Amortized Cost | 11,856 | 11,630 |
Cash and Cash Equivalents | Corporate notes and bonds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 59,660 | 61,519 |
Amortized Cost | 59,660 | 61,520 |
Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 18,337 | 58,453 |
Amortized Cost | 18,332 | 58,438 |
Short-term Investments | Corporate notes and bonds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 18,337 | 51,453 |
Amortized Cost | 18,332 | 51,438 |
Short-term Investments | U.S. government agency securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 7,000 |
Amortized Cost | 0 | 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 | 2,394 | 2,676 |
Amortized Cost | 362 | 428 |
Related Party Transaction [Domain] | Warrants issued by Rhapsody | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 1,128 | |
Amortized Cost | 0 | |
Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 35,397 | 51,410 |
Level 1 | Cash and Cash Equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 33,003 | 41,734 |
Level 1 | Cash and Cash Equivalents | Cash | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 21,147 | 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 | 11,856 | 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 | 0 | 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 | 0 | 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 | 2,394 | 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 | 80,997 | 115,972 |
Level 2 | Cash and Cash Equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 59,660 | 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 | 59,660 | 61,519 |
Level 2 | Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 18,337 | 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 | 18,337 | 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 | 1,128 | 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 | $ 1,128 |
Fair Value Measurements (Short-
Fair Value Measurements (Short-term Investments) (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | $ 117,522 | $ 167,382 |
Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 18,337 | $ 58,453 |
Estimate of Fair Value Measurement | Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 18,337 | |
Estimate of Fair Value Measurement | Short-term Investments | Within one year | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 16,915 | |
Estimate of Fair Value Measurement | Short-term Investments | Between one year and five years | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | $ 1,422 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||
Feb. 28, 2015 | Mar. 31, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Mar. 31, 2015 | Dec. 31, 2014 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||
Proceeds from sale of investment | $ (459) | $ (2,754) | ||||||
Gain (loss) on sale of investment | $ 94 | $ 0 | 393 | 2,371 | ||||
Financial assets fair value | 117,522 | 117,522 | $ 167,382 | |||||
J-Stream | ||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||
Proceeds from sale of investment | $ (2,800) | (100) | (500) | |||||
Gain (loss) on sale of investment | $ 100 | $ 400 | ||||||
Lo En Entertainment Inc | ||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||
Gain (loss) on sale of investment | $ 2,400 | |||||||
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% | 43.00% | 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 Accoun47
Allowance for Doubtful Accounts Receivable and Sales Returns (Activity in Allowance for Doubtful Accounts Receivable and Sales Returns) (Detail) $ in Thousands | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Allowance for Doubtful Accounts Receivable | |
Movement in Valuation Allowances and Reserves [Roll Forward] | |
Beginning Balance | $ 1,288 |
Addition (reduction) to allowance | 139 |
Amounts written off | (98) |
Foreign currency translation | (68) |
Ending Balance | 1,261 |
Allowance for Sales Returns | |
Movement in Valuation Allowances and Reserves [Roll Forward] | |
Beginning Balance | 354 |
Addition (reduction) to allowance | (194) |
Amounts written off | (6) |
Foreign currency translation | 0 |
Ending Balance | $ 154 |
Allowance for Doubtful Accoun48
Allowance for Doubtful Accounts Receivable and Sales Returns (Additional Information) (Detail) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2015USD ($)Customer | Jun. 30, 2014USD ($)Customer | Jun. 30, 2015USD ($)Customer | Jun. 30, 2014USD ($)Customer | Dec. 31, 2014Customer | |
Accounts Receivable | Company A | |||||
Concentration Risk [Line Items] | |||||
Number of customers | 1 | 1 | |||
Percentage by major customer | 47.00% | 21.00% | |||
Accounts Receivable | Company B | |||||
Concentration Risk [Line Items] | |||||
Number of customers | 1 | 1 | |||
Percentage by major customer | 10.00% | 15.00% | |||
Revenue by Segment | Mobile Entertainment | Company A | |||||
Concentration Risk [Line Items] | |||||
Number of customers | 1 | 1 | 1 | ||
Percentage by major customer | 30.00% | 21.00% | 24.00% | 19.00% | |
Significant customer revenue | $ | $ 10.2 | $ 8.6 | $ 15.5 | $ 16.4 | |
Revenue by Segment | Mobile Entertainment | Company B | |||||
Concentration Risk [Line Items] | |||||
Number of customers | 1 | ||||
Percentage by major customer | 11.00% | ||||
Significant customer revenue | $ | $ 3.8 | ||||
Revenue by Segment | RealPlayer Group | Company B | |||||
Concentration Risk [Line Items] | |||||
Number of customers | 1 | ||||
Percentage by major customer | 12.00% | ||||
Significant customer revenue | $ | $ 10.5 |
Other Intangible Assets (Detail
Other Intangible Assets (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets, Net [Abstract] | |||
Gross Amount | $ 71,280 | $ 72,243 | |
Accumulated Amortization | 66,599 | 66,634 | |
Net | 4,681 | 5,609 | |
Indefinite-Lived Intangible Assets (Excluding Goodwill) [Abstract] | |||
Intangible Assets, Gross | 75,780 | 76,743 | |
Intangible assets, net | 9,181 | 10,109 | |
Tradenames and Trademarks | |||
Indefinite-Lived Intangible Assets (Excluding Goodwill) [Abstract] | |||
Indefinite-Lived Intangible Assets (Excluding Goodwill) | 4,500 | 4,500 | |
Customer relationships | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Gross Amount | 33,090 | 33,853 | |
Accumulated Amortization | 31,405 | 31,643 | |
Net | 1,685 | 2,210 | |
Developed technology | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Gross Amount | 27,809 | 28,261 | |
Accumulated Amortization | 25,799 | 25,699 | |
Net | 2,010 | 2,562 | |
Patents, trademarks and tradenames | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Gross Amount | 4,191 | 3,817 | |
Accumulated Amortization | 3,512 | 3,528 | |
Net | 679 | 289 | |
Servicing contracts and other | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Gross Amount | 6,190 | 6,312 | |
Accumulated Amortization | 5,883 | 5,764 | |
Net | $ 307 | $ 548 | |
Games | |||
Indefinite-Lived Intangible Assets (Excluding Goodwill) [Abstract] | |||
Intangible assets acquired | $ 500 |
Goodwill (Changes in Goodwill)
Goodwill (Changes in Goodwill) (Detail) $ in Thousands | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Goodwill [Roll Forward] | |
Beginning Balance | $ 17,355 |
Effects of foreign currency translation | (354) |
Ending Balance | $ 17,001 |
Goodwill (Goodwill by Segments)
Goodwill (Goodwill by Segments) (Detail) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Goodwill [Line Items] | ||
Goodwill | $ 17,001 | $ 17,355 |
RealPlayer Group | ||
Goodwill [Line Items] | ||
Goodwill | 957 | |
Mobile Entertainment | ||
Goodwill [Line Items] | ||
Goodwill | 1,952 | |
Games | ||
Goodwill [Line Items] | ||
Goodwill | $ 14,092 |
Accrued and Other Liabilities52
Accrued and Other Liabilities (Detail) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Payables and Accruals [Abstract] | ||
Royalties and other fulfillment costs | $ 4,038 | $ 4,868 |
Employee compensation, commissions and benefits | 6,603 | 7,711 |
Sales, VAT and other taxes payable | 6,007 | 5,896 |
Other | 6,155 | 6,811 |
Total accrued and other liabilities | $ 22,803 | $ 25,286 |
Restructuring Charges Restructu
Restructuring Charges Restructuring Charges (Details) - Employee Separation Costs - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Restructuring Cost and Reserve [Line Items] | ||
Costs incurred and charged to expense | $ 2,449 | $ 1,757 |
Restructuring Reserve [Roll Forward] | ||
Accrued liability beginning balance | 449 | |
Costs incurred and charged to expense | 2,449 | |
Cash payments | (1,201) | |
Accrued liability ending balance | $ 1,697 |
Lease Exit and Related Charge54
Lease Exit and Related Charges (Changes to Accrued Loss on Excess Office Facilities) (Detail) $ in Thousands | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Accrued Loss on Excess Office Facilities [Roll Forward] | |
Accrued loss at December 31, 2014 | $ 234 |
Additions and adjustments to the lease loss accrual, including sublease income | 83 |
Less amounts paid, net of sublease amounts | (102) |
Accrued loss at June 30, 2015 | $ 215 |
Shareholders_ Equity (Accumulat
Shareholders’ Equity (Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 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 $(60), $0, $56 and $0 | $ (191) | $ (38) | (285) | $ (3,613) |
Net current period other comprehensive income | 397 | 178 | (2,282) | (3,422) |
Accumulated other comprehensive income (loss) balance, end of period | (57,534) | (51,117) | (57,534) | (51,117) |
Investments | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Accumulated other comprehensive income (loss), beginning of period | 2,158 | 2,822 | 2,252 | 6,397 |
Unrealized gains (losses), net of tax effects of $(60), $0, $56 and $0 | (97) | (38) | 108 | (1,242) |
Reclassification adjustments for losses (gains) included in other income (expense) | (94) | 0 | (393) | (2,371) |
Net current period other comprehensive income | (191) | (38) | (285) | (3,613) |
Accumulated other comprehensive income (loss) balance, end of period | 1,967 | 2,784 | 1,967 | 2,784 |
Accumulated Other Comprehensive Income (Loss), Tax [Abstract] | ||||
Unrealized gains (losses), tax effects | (60) | 0 | 56 | 0 |
Reclassification adjustments for losses (gains) included in other income (expense), tax effects | 0 | 0 | (1) | (4) |
Foreign currency translation | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Accumulated other comprehensive income (loss), beginning of period | (60,089) | (54,117) | (57,504) | (54,092) |
Translation adjustments | 588 | 216 | (1,997) | 239 |
Reclassification adjustments for losses (gains) included in other income (expense) | 0 | 0 | 0 | (48) |
Net current period other comprehensive income | 588 | 216 | (1,997) | 191 |
Accumulated other comprehensive income (loss) balance, end of period | $ (59,501) | $ (53,901) | $ (59,501) | $ (53,901) |
Income Taxes Income Taxes (Deta
Income Taxes Income Taxes (Details) $ in Millions | Jun. 30, 2015USD ($) |
Income Tax Disclosure [Abstract] | |
Anticipated decrease in the unrecognized tax benefits | $ 3.3 |
Earnings Per Share (Calculation
Earnings Per Share (Calculation of Basic and Diluted Earnings Per Share) (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) available to common shareholders | $ (27,781) | $ (21,029) | $ (52,250) | $ (28,799) |
Weighted average common shares outstanding used to compute basic EPS | 36,106 | 35,890 | 36,105 | 35,865 |
Dilutive effect of stock based awards | 0 | 0 | 0 | 0 |
Weighted average common shares outstanding used to compute diluted EPS | 36,106 | 35,890 | 36,105 | 35,865 |
Basic EPS (USD per share) | $ (0.77) | $ (0.59) | $ (1.45) | $ (0.80) |
Diluted EPS (USD per share) | $ (0.77) | $ (0.59) | $ (1.45) | $ (0.80) |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Earnings Per Share [Abstract] | ||||
Shares of common stock excluded from the calculation of diluted net income per share because of antidilutive effect | 6 | 6.3 | 6.1 | 6.2 |
Guarantees (Additional Informat
Guarantees (Additional Information) (Details) $ in Millions | Apr. 30, 2015USD ($) |
Senior Notes | Rhapsody America LLC | |
Guarantor Obligations [Line Items] | |
Guarantee of related party debt | $ 5 |
Segment Information (Additional
Segment Information (Additional Information) (Detail) | 6 Months Ended |
Jun. 30, 2015Segment | |
Segment Reporting [Abstract] | |
Number of reporting segments | 3 |
Segment Information (Segment Re
Segment Information (Segment Results) (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |||
Segment Reporting Information [Line Items] | ||||||
Revenue | $ 33,954 | $ 40,825 | [1] | $ 64,551 | $ 86,549 | |
Cost of revenue | 19,832 | [2] | 20,786 | [2] | 36,379 | 39,572 |
Extinguishment of liability | 0 | 0 | 0 | (10,580) | ||
Gross profit | 14,122 | 20,039 | 28,172 | 57,557 | ||
Operating expenses | 34,829 | 38,871 | 67,891 | 85,265 | ||
Operating income (loss) | (20,707) | (18,832) | (39,719) | (27,708) | ||
RealPlayer Group | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 7,344 | 8,556 | 15,357 | 23,771 | ||
Cost of revenue | 4,317 | 3,620 | 8,429 | 7,138 | ||
Gross profit | 3,027 | 4,936 | 6,928 | 16,633 | ||
Operating expenses | 13,001 | 12,489 | 25,376 | 30,276 | ||
Operating income (loss) | (9,974) | (7,553) | (18,448) | (13,643) | ||
Mobile Entertainment | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 18,515 | 23,182 | 32,995 | 43,095 | ||
Cost of revenue | 13,079 | 14,298 | 22,585 | 26,248 | ||
Gross profit | 5,436 | 8,884 | 10,410 | 16,847 | ||
Operating expenses | 5,301 | 9,424 | 10,934 | 19,040 | ||
Operating income (loss) | 135 | (540) | (524) | (2,193) | ||
Games | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 8,095 | 9,087 | 16,199 | 19,683 | ||
Cost of revenue | 2,286 | 2,717 | 5,080 | 5,846 | ||
Gross profit | 5,809 | 6,370 | 11,119 | 13,837 | ||
Operating expenses | 8,719 | 8,769 | 17,402 | 18,535 | ||
Operating income (loss) | (2,910) | (2,399) | (6,283) | (4,698) | ||
Corporate | ||||||
Segment Reporting Information [Line Items] | ||||||
Cost of revenue | 150 | 151 | 285 | 340 | ||
Extinguishment of liability | 0 | |||||
Operating expenses | 7,808 | 8,189 | 14,179 | 17,414 | ||
Operating income (loss) | $ (7,958) | $ (8,340) | $ (14,464) | $ (7,174) | ||
[1] | Quarters ended June 30, 2015 quarter ended June 30, 2015Components of Revenue License Fees6,921 6,664Service Revenue27,033 34,161Net Revenue33,954 40,825 6 months ended June 30, 2015 June 30, 2014Components of Revenue License Fees$14,210 $15,243Service Revenue50,341 71,306Net Revenue$64,551 $86,549 | |||||
[2] | Components of Cost of RevenueJune 30, 2015 June 30, 2014 License Fees1,428 2,170 Service Revenue18,404 18,616 Net Revenue Costs19,832 20,786 6 months ended June 30, 2015 June 30, 2014Components of Cost of Revenue License Fees$3,171 $4,382Service Revenue33,208 35,190Net Revenue Costs$36,379 $39,572 |
Segment Information (Revenue by
Segment Information (Revenue by Geographic Region) (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenue | $ 33,954 | $ 40,825 | [1] | $ 64,551 | $ 86,549 |
United States | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenue | 12,303 | 15,092 | 24,652 | 35,520 | |
Europe | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenue | 3,728 | 6,968 | 7,891 | 15,380 | |
Republic of Korea | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenue | 12,375 | 11,092 | 18,699 | 21,386 | |
Rest of the World | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenue | $ 5,548 | $ 7,673 | $ 13,309 | $ 14,263 | |
[1] | Quarters ended June 30, 2015 quarter ended June 30, 2015Components of Revenue License Fees6,921 6,664Service Revenue27,033 34,161Net Revenue33,954 40,825 6 months ended June 30, 2015 June 30, 2014Components of Revenue License Fees$14,210 $15,243Service Revenue50,341 71,306Net Revenue$64,551 $86,549 |
Segment Information (Long-Lived
Segment Information (Long-Lived Assets by Geographic Region) (Detail) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 39,585 | $ 43,712 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 30,198 | 33,421 |
Europe | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 6,172 | 6,696 |
Republic of Korea | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 438 | 547 |
Rest of the World | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 2,777 | $ 3,048 |
Subsequent Event (Details)
Subsequent Event (Details) - Subsequent Event - Slingo and Social Casino $ in Millions | Jul. 24, 2015USD ($) |
Subsequent Event [Line Items] | |
Consideration to be received | $ 18 |
Cash to be received at closing | $ 10 |