Exhibit 99.1
REALNETWORKS ANNOUNCES FOURTH QUARTER AND FULL YEAR 2015 RESULTS
| |
| • | Revenue of $29.9 million for Fourth Quarter and $125.3 million for Full Year; |
| |
| • | EBITDA Loss improves to $(4.2) million for Fourth Quarter from $(12.2) million in Third Quarter; |
| |
| • | New mobile carrier partnerships for RealTimes with Verizon and KDDI; |
| |
| • | Rhapsody paid subscribers grew 45% in 2015; and |
| |
| • | Cash and short-term investments of $99.1 million |
SEATTLE - February 9, 2016 - RealNetworks, Inc. (Nasdaq: RNWK), a leader in personal digital entertainment, today announced results for the fourth quarter ended December 31, 2015.
For the fourth quarter of 2015, revenue was $29.9 million compared to $30.8 million in the previous quarter and $35.5 million in the fourth quarter of 2014. Excluding revenue from the Slingo and social casino games business, which was sold during the third quarter of 2015, revenue for the previous quarter was $29.8 million and for the fourth quarter of 2014 was $33.7 million. For the full year 2015, revenue was $125.3 million, compared to $156.2 million in 2014. Excluding the Slingo and social casino games business, revenue for the full year 2015 was $120.4 million, compared to $149.4 million in 2014.
“2015 was an important transition year for RealNetworks, with significant successes,” said Rob Glaser, Chairman and CEO of RealNetworks. “Our revenue is stabilizing and we’ve set the stage for growth in 2016. By rationalizing our costs and cutting our losses significantly, we are also positioned for a return to profitability.
“We’ve signed up major new partners, such as KDDI and Verizon, and we’re gaining traction with big tier 1 carriers around the world for our carrier-oriented products, such as RealTimes and Listen Ring Back Tones. At the same time, we’ve simplified and focused our games business, going back to our roots in Casual Games and setting it up for sustained growth.
“We are also pleased with 45% subscriber growth in 2015 at the Rhapsody music service, in which we play a significant role and have a large ownership stake.
“While it’s taken longer and required more capital to achieve these results than I had hoped when I came back to run RealNetworks three and a half years ago, I’m confident that we’re on a path to succeed and create value in each of our businesses and for the company as a whole.”
GAAP net loss for the fourth quarter of 2015 was $(8.4) million or $(0.23) per share, compared to $(20.8) million or $(0.58) per share in the fourth quarter of 2014. GAAP net loss for 2015 was $(81.8) million or $(2.26) per share, compared to $(71.8) million or $(2.00) per share in 2014.
Adjusted EBITDA for the fourth quarter of 2015 was a loss of $(4.2) million, compared to $(12.2) million for the previous quarter and $(15.2) million for the fourth quarter of 2014. Adjusted EBITDA for the full year 2015 was a loss of $(45.8) million, compared to $(56.6) million for the prior year. A reconciliation of GAAP operating income (loss) to adjusted EBITDA is provided in the financial tables that accompany this release.
As of December 31, 2015, the company had $99.1 million in unrestricted cash, cash equivalents and short-term investments, compared to $112.2 million as of September 30, 2015.
Business Outlook
For the first quarter of 2016, RealNetworks expects total revenue in the range of $26 million to $29 million and an adjusted EBITDA loss for the first quarter in the range of $(6.0) million to $(9.0) million.
Webcast and Conference Call Information
The company will host a conference call today to review results and discuss the company’s performance at 5 p.m. ET/2 p.m. PT. You may join the conference call by calling 888-790-3440 or +1-517-308-9350 (Passcode: Fourth quarter Earnings). A live webcast of the call will be available at http://investor.realnetworks.com/ and an on-demand webcast will be available approximately one hour following the conclusion of the conference call. A telephonic replay will be available until 11:59 p.m. PT, March 1, 2016 by calling 866-421-5931 or +1-203-369-0814 (Passcode: 2092016).
For More Information
Michael Newman, StreetConnect
Investor Relations for RealNetworks
+1-206-729-3625
IR@realnetworks.com
RNWK-F
About RealNetworks
RealNetworks creates innovative applications and services that make it easy to connect with and enjoy digital media. RealNetworks invented the streaming media category in 1995 and continues to connect consumers with their digital media both directly and through partners, aiming to support every network, device, media type and social network. RealNetworks’ corporate information is located at www.realnetworks.com/about-us.
RealNetworks and RealTimes are trademarks or registered trademarks of RealNetworks, Inc. or its subsidiaries. All other companies or products listed herein are trademarks or registered trademarks of their respective owners.
About Non-GAAP Financial Measures
To supplement RealNetworks' consolidated financial information presented in accordance with GAAP in this press release, the company also discloses certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA by reportable segment, which management believes provide investors with useful information.
In the financial tables of our earnings press release, RealNetworks has included reconciliations of GAAP operating income (loss) to adjusted EBITDA and to adjusted EBITDA by reportable segment.
The rationale for management's use of non-GAAP measures is included in the supplementary materials presented with the quarterly earnings materials. Please refer to Exhibit 99.2 (“Information Regarding Non-GAAP Financial Measures”) to the company's report on Form 8-K, which is being submitted today to the SEC.
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties, including statements relating to RealNetworks' current expectations regarding future revenue and adjusted EBITDA, our future growth, profitability, and market position, our strategic focus and initiatives, agreements with partners, and the growth and future prospects relating to our Rhapsody affiliate. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements. These statements reflect RealNetworks’ expectations as of today, and actual results may differ materially from the results predicted. Factors that could cause actual results to differ from the results predicted include: RealNetworks' ability to realize operating efficiencies, growth and other benefits from the implementation of its growth plan, strategic initiatives, and restructuring efforts; the emergence of new entrants and competition in the market for digital media products and services; other competitive risks, including the growth of competing technologies, products and services; the potential outcomes and effects of claims and legal proceedings on RealNetworks' business, prospects, financial condition or results of operations; risks associated with key customer or strategic relationships, business acquisitions and the introduction of new products and services; changes in consumer and advertising spending in response to disruptions in the global financial markets; fluctuations in foreign currencies; and changes in RealNetworks' effective tax rate. More information about potential risk factors that could affect RealNetworks' business and financial results is included in RealNetworks' annual report on Form 10-K for the most recent year ended December 31, its quarterly reports on Form 10-Q and in other reports and documents filed by RealNetworks from time to time with the Securities and Exchange Commission. The preparation of RealNetworks' financial statements and forward-looking financial guidance requires the company to make estimates and assumptions that affect the reported amount of assets and liabilities, and revenues and expenses during the reported period. Actual results may differ materially from these estimates under different assumptions or conditions. The company assumes no obligation to update any forward-looking statements or information, which are in effect as of their respective dates.
RealNetworks, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
|
| | | | | | | | | | | | | | | | |
| | | Quarters Ended
December 31, | | Years Ended
December 31, |
| | | |
| | 2015 | | 2014 | | 2015 | | 2014 |
| | | (in thousands, except per share data) |
| | | | | | | | | |
| Net revenue | | $ | 29,922 |
| | $ | 35,506 |
| | $ | 125,296 |
| | $ | 156,212 |
|
| Cost of revenue | | 15,828 |
| | 17,881 |
| | 70,297 |
| | 76,381 |
|
| Extinguishment of liability | | — |
| | — |
| | — |
| | (10,580 | ) |
| Gross profit | | 14,094 |
| | 17,625 |
| | 54,999 |
| | 90,411 |
|
| | | | | | | | | |
| Operating expenses: | | | |
|
| |
| |
|
| Research and development | | 8,945 |
| | 12,655 |
| | 43,626 |
| | 52,765 |
|
| Sales and marketing | | 9,409 |
| | 15,904 |
| | 48,231 |
| | 66,926 |
|
| General and administrative | | 3,237 |
| | 8,384 |
| | 24,549 |
| | 34,001 |
|
| Restructuring and other charges | | (284 | ) | | 1,187 |
| | 5,279 |
| | 4,992 |
|
| Lease exit and related charges | | 293 |
| | 177 |
| | 2,501 |
| | 880 |
|
| | | | | | | | | |
| Total operating expenses | | 21,600 |
| | 38,307 |
| | 124,186 |
| | 159,564 |
|
| | | | | | | | | |
| Operating income (loss) | | (7,506 | ) | | (20,682 | ) | | (69,187 | ) | | (69,153 | ) |
| | | | | | | | | |
| Other income (expenses): | | | | | | | | |
| Interest income, net | | 83 |
| | 160 |
| | 680 |
| | 556 |
|
| Gain (loss) on investments, net | | 63 |
| | — |
| | (159 | ) | | 2,371 |
|
| Equity in net loss of Rhapsody | | (690 | ) | | (282 | ) | | (14,521 | ) | | (4,452 | ) |
| Other income (expense), net | | (122 | ) | | (10 | ) | | 506 |
| | 143 |
|
| | | | | | | | | |
| Total other income (expense), net | | (666 | ) | | (132 | ) | | (13,494 | ) | | (1,382 | ) |
| | | | | | | | | |
| Income (loss) before income taxes | | (8,172 | ) | | (20,814 | ) | | (82,681 | ) | | (70,535 | ) |
| Income tax expense (benefit) | | 241 |
| | 24 |
| | (834 | ) | | 1,280 |
|
| | | | | | | | | |
| Net income (loss) | | $ | (8,413 | ) | | $ | (20,838 | ) | | $ | (81,847 | ) | | $ | (71,815 | ) |
| | | | | | | | | |
| Basic net income (loss) per share | | $ | (0.23 | ) | | $ | (0.58 | ) | | $ | (2.26 | ) | | $ | (2.00 | ) |
| Diluted net income (loss) per share | | $ | (0.23 | ) | | $ | (0.58 | ) | | $ | (2.26 | ) | | $ | (2.00 | ) |
| | | | | | | | | |
| Shares used to compute basic net income (loss) per share | | 36,257 |
| | 36,052 |
| | 36,165 |
| | 35,947 |
|
| Shares used to compute diluted net income (loss) per share | | 36,257 |
| | 36,052 |
| | 36,165 |
| | 35,947 |
|
| | | | | | | | | |
| | | | | | | | | |
RealNetworks, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
|
| | | | | | | |
| | December 31,
2015 | | December 31,
2014 |
| | (in thousands) |
| ASSETS |
| Current assets: | | | |
| Cash and cash equivalents | $ | 47,315 |
| | $ | 103,253 |
|
| Short-term investments | 51,814 |
| | 58,453 |
|
| Trade accounts receivable, net | 22,511 |
| | 15,257 |
|
| Deferred costs, current portion | 460 |
| | 702 |
|
| Deferred tax assets, current | — |
| | 652 |
|
| Prepaid expenses and other current assets | 7,140 |
| | 8,980 |
|
| Total current assets | 129,240 |
| | 187,297 |
|
| | | | |
| Equipment, software, and leasehold improvements, at cost: | | | |
| Equipment and software | 66,702 |
| | 74,100 |
|
| Leasehold improvements | 3,122 |
| | 3,590 |
|
| Total equipment, software, and leasehold improvements | 69,824 |
| | 77,690 |
|
| Less accumulated depreciation and amortization | 61,024 |
| | 61,442 |
|
| Net equipment, software, and leasehold improvements | 8,800 |
| | 16,248 |
|
| | | | |
| Restricted cash equivalents and investments | 2,890 |
| | 3,000 |
|
| Investment in and advances to Rhapsody | — |
| | 10,000 |
|
| Available for sale securities | 1,721 |
| | 2,676 |
|
| Other assets | 2,307 |
| | 2,299 |
|
| Deferred costs, non-current portion | 212 |
| | 316 |
|
| Deferred tax assets, net, non-current portion | 957 |
| | 999 |
|
| Other intangible assets, net | 2,136 |
| | 10,109 |
|
| Goodwill | 13,080 |
| | 17,355 |
|
| | | | |
| Total assets | $ | 161,343 |
| | $ | 250,299 |
|
| | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY |
| | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 17,050 |
| | $ | 18,653 |
|
| Accrued and other current liabilities | 17,320 |
| | 25,286 |
|
| Deferred tax liabilities, net, current portion | — |
| | 1,628 |
|
| Deferred revenue, current portion | 3,497 |
| | 5,301 |
|
| Total current liabilities | 37,867 |
| | 50,868 |
|
| | | | |
| Deferred revenue, non-current portion | 105 |
| | 235 |
|
| Deferred rent | 620 |
| | 1,215 |
|
| Deferred tax liabilities, net, non-current portion | 88 |
| | 702 |
|
| Other long-term liabilities | 1,980 |
| | 81 |
|
| | | | |
| Total liabilities | 40,660 |
| | 53,101 |
|
| | | | |
| | | | |
| Shareholders' equity | 120,683 |
| | 197,198 |
|
| | | | |
| Total liabilities and shareholders' equity | $ | 161,343 |
| | $ | 250,299 |
|
RealNetworks, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
| | | | | | | |
| | Year Ended
December 31, |
| | 2015 | | 2014 |
| | (in thousands) |
| |
| Cash flows from operating activities: | | | |
| Net income (loss) | $ | (81,847 | ) | | $ | (71,815 | ) |
| Adjustments to reconcile net income (loss) to net cash used in operating activities: |
| Depreciation and amortization | 10,410 |
| | 11,959 |
|
| Stock-based compensation | 4,698 |
| | 5,204 |
|
| Extinguishment of liability | — |
| | (10,580 | ) |
| Equity in net loss of Rhapsody | 14,521 |
| | 4,452 |
|
| Accrued loss (gain) on excess office facilities | 2,501 |
| | 668 |
|
| Deferred income taxes, net | (1,558 | ) | | (237 | ) |
Loss (gain) on investments, net
| 159 |
| | (2,371 | ) |
| Realized translation gain | (264 | ) | | (48 | ) |
| Fair value of warrants, net of mark to market adjustments | (1,053 | ) | | — |
|
| Net change in certain operating assets and liabilities | (16,549 | ) | | 2,524 |
|
| Net cash provided by (used in) operating activities | (68,982 | ) | | (60,244 | ) |
| Cash flows from investing activities: | | | |
| Purchases of equipment, software, and leasehold improvements | (1,319 | ) | | (2,460 | ) |
| Proceeds from sale of available for sale securities | 459 |
| | 2,754 |
|
| Purchases of short-term investments | (72,136 | ) | | (81,216 | ) |
| Proceeds from sales and maturities of short-term investments | 78,775 |
| | 97,683 |
|
| Decrease (increase) in restricted cash equivalents and investments, net | 110 |
| | — |
|
| Acquisitions, net of cash acquired | (161 | ) | | (733 | ) |
| Advance to Rhapsody | (5,000 | ) | | — |
|
| Receipt of payment from Rhapsody | 5,000 |
| | — |
|
| Proceeds from the sale of Slingo and Social Casino business | 10,000 |
| | — |
|
| Other | — |
| | (467 | ) |
| Net cash provided by (used in) investing activities | 15,728 |
| | 15,561 |
|
| Cash flows from financing activities: | | | |
| Proceeds from issuance of common stock (stock options and stock purchase plan) | 426 |
| | 812 |
|
| Tax payments from shares withheld upon vesting of restricted stock | (85 | ) | | (407 | ) |
| Payment of contingent consideration | — |
| | (1,042 | ) |
| Net cash provided by (used in) financing activities | 341 |
| | (637 | ) |
| Effect of exchange rate changes on cash and cash equivalents | (3,025 | ) | | (2,662 | ) |
| Net increase (decrease) in cash and cash equivalents | (55,938 | ) | | (47,982 | ) |
| Cash and cash equivalents, beginning of period | 103,253 |
| | 151,235 |
|
| Cash and cash equivalents, end of period | $ | 47,315 |
| | $ | 103,253 |
|
RealNetworks, Inc. and Subsidiaries
Supplemental Financial Information
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 2015 | | | | 2014 |
| | YTD | | Q4 | | Q3 | | Q2 | | Q1 | | YTD | | Q4 | | Q3 | | Q2 | | Q1 |
| | (in thousands) |
| Net Revenue by Line of Business | | | | | | | | | | | | | | | | | | | |
| RealPlayer Group (A) | $ | 29,141 |
| | $ | 7,219 |
| | $ | 6,565 |
| | $ | 7,344 |
| | $ | 8,013 |
| | $ | 39,201 |
| | $ | 8,865 |
| | $ | 6,565 |
| | $ | 8,556 |
| | $ | 15,215 |
|
| Mobile Entertainment (B) | 65,407 |
| | 15,998 |
| | 16,414 |
| | 18,515 |
| | 14,480 |
| | 79,901 |
| | 17,616 |
| | 19,190 |
| | 23,182 |
| | 19,913 |
|
| Games (C) | 30,748 |
| | 6,705 |
| | 7,844 |
| | 8,095 |
| | 8,104 |
| | 37,110 |
| | 9,025 |
| | 8,402 |
| | 9,087 |
| | 10,596 |
|
| Total net revenue | $ | 125,296 |
| | $ | 29,922 |
| | $ | 30,823 |
| | $ | 33,954 |
| | $ | 30,597 |
| | $ | 156,212 |
| | $ | 35,506 |
| | $ | 34,157 |
| | $ | 40,825 |
| | $ | 45,724 |
|
| | | | | | | | | | | | | | | | | | | | |
| Net Revenue by Product | | | | | | | | | | | | | | | | | | | |
| RealPlayer Group | | | | | | | | | | | | | | | | | | | |
| - License (D) | $ | 16,475 |
| | $ | 3,967 |
| | $ | 3,628 |
| | $ | 4,208 |
| | $ | 4,672 |
| | $ | 16,042 |
| | $ | 4,496 |
| | $ | 3,255 |
| | $ | 3,273 |
| | $ | 5,018 |
|
| - Subscriptions (E) | 9,485 |
| | 2,425 |
| | 2,217 |
| | 2,435 |
| | 2,408 |
| | 10,717 |
| | 2,691 |
| | 2,680 |
| | 2,569 |
| | 2,777 |
|
| - Media Properties (F) | 3,181 |
| | 827 |
| | 720 |
| | 701 |
| | 933 |
| | 12,442 |
| | 1,678 |
| | 630 |
| | 2,714 |
| | 7,420 |
|
| | | | | | | | | | | | | | | | | | | | |
| Mobile Entertainment | | | | | | | | | | | | | | | | | | | |
| - SaaS (G) | 63,386 |
| | 15,786 |
| | 16,147 |
| | 18,155 |
| | 13,298 |
| | 73,284 |
| | 16,727 |
| | 17,919 |
| | 20,175 |
| | 18,463 |
|
| - Technology License & Other (H) | 2,021 |
| | 212 |
| | 267 |
| | 360 |
| | 1,182 |
| | 6,617 |
| | 889 |
| | 1,271 |
| | 3,007 |
| | 1,450 |
|
| | | | | | | | | | | | | | | | | | | | |
| Games | | | | | | | | | | | | | | | | | | | |
| - License (I) | 15,174 |
| | 3,268 |
| | 4,128 |
| | 3,943 |
| | 3,835 |
| | 14,090 |
| | 3,854 |
| | 2,988 |
| | 3,399 |
| | 3,849 |
|
| - Subscriptions (J) | 13,300 |
| | 3,126 |
| | 3,231 |
| | 3,373 |
| | 3,570 |
| | 17,948 |
| | 3,947 |
| | 4,320 |
| | 4,440 |
| | 5,241 |
|
| - Media Properties (K) | 2,274 |
| | 311 |
| | 485 |
| | 779 |
| | 699 |
| | 5,072 |
| | 1,224 |
| | 1,094 |
| | 1,248 |
| | 1,506 |
|
| | | | | | | | | | | | | | | | | | | | |
| Total net revenue | $ | 125,296 |
| | $ | 29,922 |
| | $ | 30,823 |
| | $ | 33,954 |
| | $ | 30,597 |
| | $ | 156,212 |
| | $ | 35,506 |
| | $ | 34,157 |
| | $ | 40,825 |
| | $ | 45,724 |
|
| | | | | | | | | | | | | | | | | | | | |
| Net Revenue by Geography | | | | | | | | | | | | | | | | | | | |
| United States | $ | 46,893 |
| | $ | 10,781 |
| | $ | 11,460 |
| | $ | 12,303 |
| | $ | 12,349 |
| | $ | 61,660 |
| | $ | 13,860 |
| | $ | 12,280 |
| | $ | 15,092 |
| | $ | 20,428 |
|
| Rest of world | 78,403 |
| | 19,141 |
| | 19,363 |
| | 21,651 |
| | 18,248 |
| | 94,552 |
| | 21,646 |
| | 21,877 |
| | 25,733 |
| | 25,296 |
|
| Total net revenue | $ | 125,296 |
| | $ | 29,922 |
| | $ | 30,823 |
| | $ | 33,954 |
| | $ | 30,597 |
| | $ | 156,212 |
| | $ | 35,506 |
| | $ | 34,157 |
| | $ | 40,825 |
| | $ | 45,724 |
|
| | | | | | | | | | | | | | | | | | | | |
| Net Revenue by Line of Business | | | | | | | | | | | | | | | | | | |
(A) The RealPlayer Group primarily includes revenue from RealPlayer and related products, such as the distribution of third-party software products, advertising on RealPlayer websites, and sales of RealPlayer Plus software licenses to consumers, sales of intellectual property licenses, and consumer subscriptions such as RealPlayer Cloud, RealTimesTM, and SuperPass. |
| (B) The Mobile Entertainment division primarily includes revenue from SaaS services and sales of professional services provided to mobile carriers. |
| (C) The Games division primarily includes revenue from sales of games licenses, online games subscription services, advertising on games sites and social network sites, microtransactions from online and social games, and sales of mobile games. |
| Net Revenue by Product | | | | | | | | | | | | | | | | | | | |
| (D) Licensing revenue within the RealPlayer Group includes sales of intellectual property licenses and RealPlayer Plus software licenses to consumers. |
| (E) Subscriptions revenue within the RealPlayer Group includes revenue from subscriptions such as our RealPlayer Cloud, RealTimes and SuperPass offerings. |
| (F) Media Properties revenue within the RealPlayer Group includes distribution of third-party software products and advertising on RealPlayer websites. |
| (G) SaaS revenue within Mobile Entertainment includes revenue from music on demand, ringback tones, intercarrier messaging services provided to network services providers who are largely mobile phone networks. |
| (H) Technology licensing and other revenue within Mobile Entertainment includes revenue from professional services provided to mobile carriers. |
| (I) Licensing revenue within Games includes retail games-related revenue and sales of mobile games. |
| (J) Subscriptions revenue within Games includes revenue from online games subscriptions as well as microtransactions from mobile and social games. |
| (K) Media Properties revenue within Games includes distribution of third-party software products and advertising on games sites and social network sites. |
RealNetworks, Inc. and Subsidiaries
Segment Results of Operations
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | |
| | | 2015 | | 2014 | | 2015 | | 2014 |
| | | Q4 | | Q3 | | Q4 | | YTD | | YTD |
| | | (in thousands) |
| RealPlayer Group | | | | | | | | | | |
| | | | | | | | | | | |
| Net revenue | | $ | 7,219 |
| | $ | 6,565 |
| | $ | 8,865 |
| | $ | 29,141 |
| | $ | 39,201 |
|
| Cost of revenue | | 3,840 |
| | 3,902 |
| | 3,804 |
| | 16,171 |
| | 14,508 |
|
| Gross profit | | 3,379 |
| | 2,663 |
| | 5,061 |
| | 12,970 |
| | 24,693 |
|
| | | | | | | | | | | |
| Gross margin | | 47 | % | | 41 | % | | 57 | % | | 45 | % | | 63 | % |
| | | | | | | | | | | |
| Operating expenses | | 10,281 |
| | 11,492 |
| | 13,074 |
| | 47,149 |
| | 55,742 |
|
| Operating income (loss) | | $ | (6,902 | ) | | $ | (8,829 | ) | | $ | (8,013 | ) | | $ | (34,179 | ) | | $ | (31,049 | ) |
| | | | | | | | | | | |
| Adjusted EBITDA | | $ | (5,780 | ) | | $ | (8,224 | ) | | $ | (7,320 | ) | | $ | (31,290 | ) | | $ | (28,474 | ) |
| | | | | | | | | | | |
| Mobile Entertainment | | | | | | | | | | |
| | | | | | | | | | | |
| Net revenue | | $ | 15,998 |
| | $ | 16,414 |
| | $ | 17,616 |
| | $ | 65,407 |
| | $ | 79,901 |
|
| Cost of revenue | | 10,109 |
| | 11,518 |
| | 11,525 |
| | 44,212 |
| | 50,399 |
|
| Gross profit | | 5,889 |
| | 4,896 |
| | 6,091 |
| | 21,195 |
| | 29,502 |
|
| | | | | | | | | | | |
| Gross margin | | 37 | % | | 30 | % | | 35 | % | | 32 | % | | 37 | % |
| | | | | | | | | | | |
| Operating expenses | | 4,103 |
| | 5,219 |
| | 7,199 |
| | 20,256 |
| | 33,325 |
|
| Operating income (loss) | | $ | 1,786 |
| | $ | (323 | ) | | $ | (1,108 | ) | | $ | 939 |
| | $ | (3,823 | ) |
| | | | | | | | | | | |
| Adjusted EBITDA | | $ | 2,565 |
| | $ | 473 |
| | $ | 24 |
| | $ | 4,276 |
| | $ | 940 |
|
| | | | | | | | | | | |
| Games | | | | | | | | | | |
| | | | | | | | | | | |
| Net revenue | | $ | 6,705 |
| | $ | 7,844 |
| | $ | 9,025 |
| | $ | 30,748 |
| | $ | 37,110 |
|
| Cost of revenue | | 1,698 |
| | 2,513 |
| | 2,655 |
| | 9,291 |
| | 11,074 |
|
| Gross profit | | 5,007 |
| | 5,331 |
| | 6,370 |
| | 21,457 |
| | 26,036 |
|
| | | | | | | | | | | |
| Gross margin | | 75 | % | | 68 | % | | 71 | % | | 70 | % | | 70 | % |
| | | | | | | | | | | |
| Operating expenses | | 5,253 |
| | 6,431 |
| | 9,977 |
| | 29,086 |
| | 37,170 |
|
| Operating income (loss) | | $ | (246 | ) | | $ | (1,100 | ) | | $ | (3,607 | ) | | $ | (7,629 | ) | | $ | (11,134 | ) |
| | | | | | | | | | | |
| Adjusted EBITDA | | $ | (25 | ) | | $ | (716 | ) | | $ | (3,024 | ) | | $ | (5,878 | ) | | $ | (8,742 | ) |
| | | | | | | | | | | |
| Corporate | | | | | | | | | | |
| | | | | | | | | | | |
| Net revenue | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| Cost of revenue | | 181 |
| | 157 |
| | (103 | ) | | 623 |
| | 400 |
|
| Extinguishment of liability | | — |
| | — |
| | — |
| | — |
| | (10,580 | ) |
| Gross profit | | (181 | ) | | (157 | ) | | 103 |
| | (623 | ) | | 10,180 |
|
| | | | | | | | | | | |
| Gross margin | | N/A |
| | N/A |
| | N/A |
| | N/A |
| | N/A |
|
| | | | | | | | | | | |
| Operating expenses | | 1,963 |
| | 11,553 |
| | 8,057 |
| | 27,695 |
| | 33,327 |
|
| Operating income (loss) | | $ | (2,144 | ) | | $ | (11,710 | ) | | $ | (7,954 | ) | | $ | (28,318 | ) | | $ | (23,147 | ) |
| | | | | | | | | | | |
| Adjusted EBITDA | | $ | (984 | ) | | $ | (3,727 | ) | | $ | (4,879 | ) | | $ | (12,901 | ) | | $ | (20,279 | ) |
| | | | | | | | | | | |
| Total | | | | | | | | | | |
| | | | | | | | | | | |
| Net revenue | | $ | 29,922 |
| | $ | 30,823 |
| | $ | 35,506 |
| | $ | 125,296 |
| | $ | 156,212 |
|
| Cost of revenue | | 15,828 |
| | 18,090 |
| | 17,881 |
| | 70,297 |
| | 76,381 |
|
| Extinguishment of liability | | — |
| | — |
| | — |
| | — |
| | (10,580 | ) |
| Gross profit | | 14,094 |
| | 12,733 |
| | 17,625 |
| | 54,999 |
| | 90,411 |
|
| | | | | | | | | | | |
| Gross margin | | 47 | % | | 41 | % | | 50 | % | | 44 | % | | 58 | % |
| | | | | | | | | | | |
| Operating expenses | | 21,600 |
| | 34,695 |
| | 38,307 |
| | 124,186 |
| | 159,564 |
|
| Operating income (loss) | | $ | (7,506 | ) | | $ | (21,962 | ) | | $ | (20,682 | ) | | $ | (69,187 | ) | | $ | (69,153 | ) |
| | | | | | | | | | | |
| Adjusted EBITDA | | $ | (4,224 | ) | | $ | (12,194 | ) | | $ | (15,199 | ) | | $ | (45,793 | ) | | $ | (56,555 | ) |
RealNetworks, Inc. and Subsidiaries
Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| | 2015 | | 2014 | | 2015 | | 2014 |
| | Q4 | | Q3 | | Q4 | | YTD | | YTD |
| | (in thousands) |
| RealPlayer Group | | | | | | | | | |
| | | | | | | | | | |
| Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment: | | | | | |
| | | | | | | | | | |
| Operating income (loss) | $ | (6,902 | ) | | $ | (8,829 | ) | | $ | (8,013 | ) | | $ | (34,179 | ) | | $ | (31,049 | ) |
| Acquisitions related intangible asset amortization | 84 |
| | 86 |
| | 96 |
| | 343 |
| | 384 |
|
| Depreciation and amortization | 1,038 |
| | 519 |
| | 597 |
| | 2,546 |
| | 2,191 |
|
| Adjusted EBITDA | $ | (5,780 | ) |
| $ | (8,224 | ) |
| $ | (7,320 | ) | | $ | (31,290 | ) | | $ | (28,474 | ) |
| | | | | | | | | | |
| Mobile Entertainment | | | | | | | | | |
| | | | | | | | | | |
| Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment: | | | | | |
| | | | | | | | | | |
| Operating income (loss) | $ | 1,786 |
| | $ | (323 | ) | | $ | (1,108 | ) | | $ | 939 |
| | $ | (3,823 | ) |
| Acquisitions related intangible asset amortization | 295 |
| | 303 |
| | 271 |
| | 1,201 |
| | 1,793 |
|
| Depreciation and amortization | 484 |
| | 493 |
| | 861 |
| | 2,136 |
| | 2,970 |
|
| Adjusted EBITDA | $ | 2,565 |
|
| $ | 473 |
|
| $ | 24 |
| | $ | 4,276 |
| | $ | 940 |
|
| | | | | | | | | | |
| Games | | | | | | | | | |
| | | | | | | | | | |
| Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment: | | | | | |
| | | | | | | | | | |
| Operating income (loss) | $ | (246 | ) | | $ | (1,100 | ) | | $ | (3,607 | ) | | $ | (7,629 | ) | | $ | (11,134 | ) |
| Acquisitions related intangible asset amortization | 24 |
| | 170 |
| | 314 |
| | 799 |
| | 1,256 |
|
| Depreciation and amortization | 197 |
| | 214 |
| | 269 |
| | 952 |
| | 1,136 |
|
| Adjusted EBITDA | $ | (25 | ) |
| $ | (716 | ) |
| $ | (3,024 | ) | | $ | (5,878 | ) | | $ | (8,742 | ) |
| | | | | | | | | | |
| Corporate | | | | | | | | | |
| | | | | | | | | | |
| Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment: | | | | | |
| | | | | | | | | | |
| Operating income (loss) | $ | (2,144 | ) | | $ | (11,710 | ) | | $ | (7,954 | ) | | $ | (28,318 | ) | | $ | (23,147 | ) |
| Other income (expense), net | (122 | ) | | 297 |
| | (10 | ) | | 506 |
| | 143 |
|
| Depreciation and amortization | 336 |
| | 1,273 |
| | 675 |
| | 2,433 |
| | 2,229 |
|
| Lease exit and related charges | 293 |
| | 2,121 |
| | 177 |
| | 2,501 |
| | 880 |
|
| Restructuring and other charges | (284 | ) | | 3,114 |
| | 1,187 |
| | 5,279 |
| | 4,992 |
|
| Stock-based compensation | 937 |
| | 1,178 |
| | 1,046 |
| | 4,698 |
| | 5,204 |
|
| Extinguishment of liability | — |
| | — |
| | — |
| | — |
| | (10,580 | ) |
| Adjusted EBITDA | $ | (984 | ) |
| $ | (3,727 | ) |
| $ | (4,879 | ) | | $ | (12,901 | ) | | $ | (20,279 | ) |
| | | | | | | | | | |
| Total | | | | | | | | | |
| | | | | | | | | | |
| Reconciliation of GAAP operating income (loss) to adjusted EBITDA: | | | | | |
| | | | | | | | | | |
| Operating income (loss) | $ | (7,506 | ) | | $ | (21,962 | ) | | $ | (20,682 | ) | | $ | (69,187 | ) | | $ | (69,153 | ) |
| Other income (expense), net | (122 | ) | | 297 |
| | (10 | ) | | 506 |
| | 143 |
|
|
| | | | | | | | | | | | | | | | | | | |
| Acquisitions related intangible asset amortization | 403 |
| | 559 |
| | 681 |
| | 2,343 |
| | 3,433 |
|
| Depreciation and amortization | 2,055 |
| | 2,499 |
| | 2,402 |
| | 8,067 |
| | 8,526 |
|
| Lease exit and related charges | 293 |
| | 2,121 |
| | 177 |
| | 2,501 |
| | 880 |
|
| Restructuring and other charges | (284 | ) | | 3,114 |
| | 1,187 |
| | 5,279 |
| | 4,992 |
|
| Stock-based compensation | 937 |
| | 1,178 |
| | 1,046 |
| | 4,698 |
| | 5,204 |
|
| Extinguishment of liability | — |
| | — |
| | — |
| | — |
| | (10,580 | ) |
| Adjusted EBITDA | $ | (4,224 | ) |
| $ | (12,194 | ) |
| $ | (15,199 | ) | | $ | (45,793 | ) | | $ | (56,555 | ) |
