Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Jul. 29, 2016 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
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 | 36,799,536 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 36,133 | $ 47,315 |
Short-term investments | 42,656 | 51,814 |
Trade accounts receivable, net of allowances | 24,617 | 22,511 |
Deferred costs, current portion | 889 | 460 |
Prepaid expenses and other current assets | 4,716 | 7,140 |
Total current assets | 109,011 | 129,240 |
Equipment, software, and leasehold improvements, at cost: | ||
Equipment and software | 60,383 | 66,702 |
Leasehold improvements | 3,607 | 3,122 |
Total equipment, software, and leasehold improvements, at cost | 63,990 | 69,824 |
Less accumulated depreciation and amortization | 56,887 | 61,024 |
Net equipment, software, and leasehold improvements | 7,103 | 8,800 |
Restricted cash equivalents and investments | 3,000 | 2,890 |
Available for sale securities | 1,920 | 1,721 |
Other assets | 2,243 | 2,307 |
Deferred costs, non-current portion | 1,136 | 212 |
Deferred tax assets, net | 1,006 | 957 |
Other intangible assets, net | 1,545 | 2,136 |
Goodwill | 12,973 | 13,080 |
Total assets | 139,937 | 161,343 |
Current liabilities: | ||
Accounts payable | 17,442 | 17,050 |
Accrued and other current liabilities | 15,566 | 17,320 |
Deferred revenue, current portion | 3,278 | 3,497 |
Total current liabilities | 36,286 | 37,867 |
Deferred revenue, non-current portion | 466 | 105 |
Deferred rent | 665 | 620 |
Deferred tax liabilities, net | 89 | 88 |
Other long-term liabilities | 1,511 | 1,980 |
Total liabilities | 39,017 | 40,660 |
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 36,798 shares in 2016 and 36,298 shares in 2015 | 37 | 36 |
Additional paid-in capital | 630,848 | 627,316 |
Accumulated other comprehensive loss | (59,258) | (59,480) |
Retained deficit | (470,707) | (447,189) |
Total shareholders’ equity | 100,920 | 120,683 |
Total liabilities and shareholders’ equity | 139,937 | 161,343 |
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 | Jun. 30, 2016 | Dec. 31, 2015 |
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 | 250,000,000 | 250,000,000 |
Common stock, issued | 36,799,000 | 36,298,000 |
Common stock, outstanding | 36,799,000 | 36,298,000 |
Preferred stock, Series A | ||
Preferred stock, authorized | 200,000 | 200,000 |
Preferred stock, Undesignated series | ||
Preferred stock, authorized | 59,800,000 | 59,800,000 |
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, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |||
Income Statement [Abstract] | ||||||
Net revenue (A) | $ 29,734 | [1] | $ 33,954 | [1] | $ 57,964 | $ 64,551 |
Cost of revenue (B) | 15,698 | [2] | 19,832 | [2] | 30,870 | 36,379 |
Gross profit | 14,036 | 14,122 | 27,094 | 28,172 | ||
Operating expenses: | ||||||
Research and development | 7,167 | 11,801 | 16,486 | 24,180 | ||
Sales and marketing | 7,749 | 14,047 | 16,974 | 26,884 | ||
General and administrative | 6,217 | 7,008 | 14,294 | 14,291 | ||
Restructuring and other charges | 413 | 1,964 | 798 | 2,449 | ||
Lease exit and related charges | 127 | 9 | 958 | 87 | ||
Total operating expenses | 21,673 | 34,829 | 49,510 | 67,891 | ||
Operating income (loss) | (7,637) | (20,707) | (22,416) | (39,719) | ||
Other income (expenses): | ||||||
Interest income, net | 80 | 250 | 197 | 450 | ||
Gain (loss) on investments, net | (46) | 94 | (43) | 393 | ||
Equity in net loss of Rhapsody investment | (396) | (6,916) | (396) | (13,096) | ||
Other income (expense), net | 15 | (112) | (272) | 331 | ||
Total other income (expenses), net | (347) | (6,684) | (514) | (11,922) | ||
Income (loss) before income taxes | (7,984) | (27,391) | (22,930) | (51,641) | ||
Income tax expense (benefit) | 363 | 390 | 588 | 609 | ||
Net income (loss) | $ (8,347) | $ (27,781) | $ (23,518) | $ (52,250) | ||
Basic net income (loss) per share (USD per share) | $ (0.23) | $ (0.77) | $ (0.64) | $ (1.45) | ||
Diluted net income (loss) per share (USD per share) | $ (0.23) | $ (0.77) | $ (0.64) | $ (1.45) | ||
Shares used to compute basic net income (loss) per share (shares) | 36,755 | 36,106 | 36,637 | 36,105 | ||
Shares used to compute diluted net income (loss) per share (shares) | 36,755 | 36,106 | 36,637 | 36,105 | ||
Comprehensive income (loss): | ||||||
Unrealized investment holding gains (losses), net of reclassification adjustments | $ 16 | $ (191) | $ 167 | $ (285) | ||
Foreign currency translation adjustments, net of reclassification adjustments | (645) | 588 | 55 | (1,997) | ||
Total other comprehensive income (loss) | (629) | 397 | 222 | (2,282) | ||
Net income (loss) | (8,347) | (27,781) | (23,518) | (52,250) | ||
Comprehensive income (loss) | $ (8,976) | $ (27,384) | $ (23,296) | $ (54,532) | ||
[1] | Quarters ended June 30, 2016 quarter ended June 30, 2016Components of Revenue License Fees6,678 6,921Service Revenue23,056 27,033Net Revenue29,734 33,954 6 months ended June 30, 2016 June 30, 2015Components of Revenue License Fees$12,455 $14,210Service Revenue45,509 50,341Net Revenue$57,964 $64,551 | |||||
[2] | Components of Cost of RevenueJune 30, 2016 June 30, 2015 License Fees1,399 1,428 Service Revenue14,299 18,404 Net Revenue Costs15,698 19,832 6 months ended June 30, 2016 June 30, 2015Components of Cost of Revenue License Fees$2,703 $3,171Service Revenue28,167 33,208Net Revenue Costs$30,870 $36,379 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |||
Components of net revenue: | ||||||
License fees | $ 6,678 | $ 6,921 | $ 12,455 | $ 14,210 | ||
Service revenue | 23,056 | 27,033 | 45,509 | 50,341 | ||
Net revenue | 29,734 | [1] | 33,954 | [1] | 57,964 | 64,551 |
Components of cost of revenue: | ||||||
License fees | 1,399 | 1,428 | 2,703 | 3,171 | ||
Service revenue | 14,299 | 18,404 | 28,167 | 33,208 | ||
Cost of revenue | $ 15,698 | [2] | $ 19,832 | [2] | $ 30,870 | $ 36,379 |
[1] | Quarters ended June 30, 2016 quarter ended June 30, 2016Components of Revenue License Fees6,678 6,921Service Revenue23,056 27,033Net Revenue29,734 33,954 6 months ended June 30, 2016 June 30, 2015Components of Revenue License Fees$12,455 $14,210Service Revenue45,509 50,341Net Revenue$57,964 $64,551 | |||||
[2] | Components of Cost of RevenueJune 30, 2016 June 30, 2015 License Fees1,399 1,428 Service Revenue14,299 18,404 Net Revenue Costs15,698 19,832 6 months ended June 30, 2016 June 30, 2015Components of Cost of Revenue License Fees$2,703 $3,171Service Revenue28,167 33,208Net Revenue Costs$30,870 $36,379 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (23,518) | $ (52,250) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 4,224 | 4,894 |
Stock-based compensation | 3,779 | 2,583 |
Equity in net loss of Rhapsody | 396 | 13,096 |
Deferred income taxes, net | (148) | (23) |
Loss (gain) on investments, net | 43 | (393) |
Fair value of warrants granted in 2015, net of subsequent mark to market adjustments in 2016 and 2015 | 82 | (1,128) |
Interest receivable on advance to Rhapsody | 0 | (121) |
Trade accounts receivable | (1,813) | (7,091) |
Prepaid expenses and other assets | 1,162 | 429 |
Accounts payable | (150) | (26) |
Accrued and other liabilities | (2,408) | (3,542) |
Net cash provided by (used in) operating activities | (18,351) | (43,572) |
Cash flows from investing activities: | ||
Purchases of equipment, software, and leasehold improvements | (1,512) | (859) |
Proceeds from sale of available for sale securities | 0 | 459 |
Purchases of short-term investments | (33,359) | (8,514) |
Proceeds from sales and maturities of short-term investments | 42,517 | 48,630 |
Decrease (increase) in restricted cash equivalents and investments, net | (110) | 0 |
Acquisitions | (150) | (161) |
Advance to Rhapsody | 0 | (5,000) |
Net cash provided by (used in) investing activities | 7,386 | 34,555 |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock (stock options and stock purchase plan) | 166 | 276 |
Tax payments from shares withheld upon vesting of restricted stock | (808) | (10) |
Net cash provided by (used in) financing activities | (642) | 266 |
Effect of exchange rate changes on cash and cash equivalents | 425 | (1,839) |
Net increase (decrease) in cash and cash equivalents | (11,182) | (10,590) |
Cash and cash equivalents, beginning of period | 47,315 | 103,253 |
Cash and cash equivalents, end of period | 36,133 | 92,663 |
Supplemental disclosure of cash flow information: | ||
Cash received from income tax refunds | 494 | 965 |
Cash paid for income taxes | 1,139 | 872 |
Non-cash investing activities: | ||
Increase (decrease) in accrued purchases of equipment, software, and leasehold improvements | 290 | (39) |
Acquisition of intangible assets | $ 0 | $ 312 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2016 | |
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 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, 2016 are not necessarily indicative of the results that may be expected for any subsequent period or for the year ending December 31, 2016 . 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, 2015 (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. Reportable Segments. In the first quarter of 2016, we reorganized the management of our businesses and as a result, we changed our reportable segments. See Note 18 , Segment Information , for details. The historical financial information presented has been recast to reflect the new segments and the new corporate expense presentation. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2016 | |
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 the first annual period ending after December 15, 2016 and interim periods therafter. 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. In February 2016, the FASB issued new guidance related to the accounting for leases by lessees. A major change in the new guidance is that lessees will be required to present right-of-use assets and lease liabilities on the balance sheet. The new guidance will be effective for us on January 1, 2019, including interim periods within 2019. We will be evaluating the effect that the guidance will have on our consolidated financial statements and related disclosures. In March 2016, the FASB issued new guidance that is intended to simplify several aspects of the accounting for stock-based compensation, including the treatment of forfeitures, income taxes and statutory tax withholding requirements. The new guidance will be effective for us on January 1, 2017, including interim periods within 2017; with early adoption permitted beginning January 1, 2016. We will be evaluating the effect that the guidance will have on our consolidated financial statements and related disclosures. 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. |
Acquisitions and Disposals
Acquisitions and Disposals | 6 Months Ended |
Jun. 30, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Acquisitions and Disposals | Note 3 Acquisitions & Disposals 2015 Sale of Slingo and social casino business. On July 24, 2015, we entered into an agreement to sell the Slingo and social casino portion of our games business to Gaming Realms plc for $18.0 million . Of this amount, $10.0 million of the total consideration was paid in cash at closing on August 10, 2015 and the remaining $8.0 million will be payable either all in cash or a mix of cash and Gaming Realms plc stock, at our election, on the first and second anniversaries of the closing. With the transaction, Gaming Realms plc assumed the operations of our Slingo and social casino businesses, including substantially all of the related assets and liabilities, as well as the stock of Backstage Technologies Incorporated. Based on several factors, including the timing of the receipt of the remaining $8.0 million consideration, we deferred the remaining gain of $8.0 million and will recognize that gain upon realization. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Note 4 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, and employee stock purchase plans and was as follows (in thousands): Quarters Ended Six Months Ended 2016 2015 2016 2015 Total stock-based compensation expense $ 608 $ 1,254 $ 3,779 $ 2,583 The fair value of options granted determined using the Black-Scholes model used the following weighted-average assumptions: Quarters Ended Six Months Ended 2016 2015 2016 2015 Expected dividend yield 0 % 0 % 0 % 0 % Risk-free interest rate 1.05 % 1.70 % 1.38 % 1.26 % Expected life (years) 3.8 5.5 4.9 4.4 Volatility 32 % 42 % 36 % 37 % The total stock-based compensation amounts for 2016 and 2015 disclosed above are recorded in their respective line items within operating expenses in the unaudited condensed consolidated statements of operations and comprehensive income (loss). Included in the expense for the six months ended June 30, 2016 was stock compensation expense recorded in the first quarter of 2016 related to our 2015 incentive bonuses paid in fully vested restricted stock units which were authorized and granted in the first quarter of 2016. As of June 30, 2016 , $4.6 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, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Rhapsody Joint Venture | Note 5 Rhapsody Joint Venture As of June 30, 2016 we owned approximately 42% 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 $0.4 million for the quarter and six months ended June 30, 2016 and $6.9 million and $13.1 million for the quarter and six months ended June 30, 2015 . 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 . This occurred in the first quarter of 2015. As of June 30, 2016 , 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. Summarized financial information for Rhapsody, which represents 100% of their financial information, is as follows (in thousands): Quarters Ended Six Months Ended 2016 2015 2016 2015 Net revenue $ 53,456 $ 50,063 $ 105,963 $ 96,387 Gross profit 6,850 7,753 14,093 15,843 Net loss (7,905 ) (12,061 ) (13,053 ) (20,985 ) |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 6 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, 2016 and December 31, 2015 , 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, 2016 June 30, 2016 Level 1 Level 2 Level 3 Total Cash and cash equivalents: Cash $ 21,546 $ — $ — $ 21,546 $ 21,546 Money market funds 5,290 — — 5,290 5,290 Corporate notes and bonds — 9,297 — 9,297 9,297 Total cash and cash equivalents 26,836 9,297 — 36,133 36,133 Short-term investments: Corporate notes and bonds — 42,656 — 42,656 42,638 Total short-term investments — 42,656 — 42,656 42,638 Restricted cash equivalents and investments — 3,000 — 3,000 3,000 Equity investment in publicly traded securities 1,920 — — 1,920 362 Warrant issued by Rhapsody (included in Other assets) — — 971 971 — Total $ 28,756 $ 54,953 $ 971 $ 84,680 $ 82,133 Fair Value Measurements as of Amortized Cost as of December 31, 2015 December 31, 2015 Level 1 Level 2 Level 3 Total Cash and cash equivalents: Cash $ 23,152 $ — $ — $ 23,152 $ 23,152 Money market funds 5,061 — — 5,061 5,061 Corporate notes and bonds — 19,102 — 19,102 19,102 Total cash and cash equivalents 28,213 19,102 — 47,315 47,315 Short-term investments: Corporate notes and bonds — 51,814 — 51,814 51,862 Total short-term investments — 51,814 — 51,814 51,862 Restricted cash equivalents and investments — 2,890 — 2,890 2,890 Equity investment in publicly traded securities 1,721 — — 1,721 362 Warrant issued by Rhapsody (included in Other assets) — — 1,053 1,053 — Total $ 29,934 $ 73,806 $ 1,053 $ 104,793 $ 102,429 Restricted cash equivalents and investments as of June 30, 2016 and December 31, 2015 relate to cash pledged as collateral against letters of credit in connection with lease agreements. Realized gains or losses on sales of short-term investment securities for the quarters and six months ended June 30, 2016 and 2015 were not significant. Gross unrealized gains and gross unrealized losses on short-term investment securities as of June 30, 2016 and December 31, 2015 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, 2016 (in thousands): Estimated Fair Value Within one year $ 39,751 Between one year and five years 2,905 Total short-term investments $ 42,656 Our equity investment in a publicly traded company as of June 30, 2016 and December 31, 2015 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 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. 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 six months ended June 30, 2016 , the decrease in the fair value of the warrants from December 31, 2015 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, 2016 and 2015 , we did not record any impairments on those assets required to be measured at fair value on a non-recurring basis. See Note 12 , Lease Exit and Related Charges , for a discussion of the losses related to reductions in the use of RealNetworks' office space, which were recorded at the estimated fair value of remaining lease obligations, less expected sub-lease income. |
Allowance for Doubtful Accounts
Allowance for Doubtful Accounts Receivable and Sales Returns | 6 Months Ended |
Jun. 30, 2016 | |
Receivables [Abstract] | |
Allowance for Doubtful Accounts Receivable and Sales Returns | Note 7 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, 2015 $ 765 $ 158 Addition (reduction) to allowance (15 ) 15 Amounts written off (3 ) (3 ) Foreign currency translation 13 — Balances, June 30, 2016 $ 760 $ 170 One customer accounted for 56% and one other customer accounted for 11% of trade accounts receivable as of June 30, 2016 . At December 31, 2015 , one customer accounted for 52% and one other customer accounted for 12% of trade accounts receivable. One customer accounted for 33% or $9.7 million of consolidated revenue during the quarter ended June 30, 2016 and 31% or $18.1 million during the six months ended June 30, 2016 , which is reflected in our Mobile Services segment. One customer accounted for 30% of consolidated revenue, or $10.2 million , and one customer accounted for 11% or $3.8 million during the quarter ended June 30, 2015 , both of which are reflected in our Mobile Services 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 Services segment. |
Other Intangible Assets
Other Intangible Assets | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other Intangible Assets | Note 8 Other Intangible Assets Other intangible assets (in thousands): June 30, 2016 December 31, 2015 Gross Amount Accumulated Amortization Net Gross Amount Accumulated Amortization Net Amortizing intangible assets: Customer relationships $ 30,443 $ 29,734 $ 709 $ 30,182 $ 29,236 $ 946 Developed technology 24,203 23,582 621 24,047 23,244 803 Patents, trademarks and tradenames 3,750 3,535 215 3,717 3,398 319 Service contracts 5,333 5,333 — 5,269 5,201 68 Total $ 63,729 $ 62,184 $ 1,545 $ 63,215 $ 61,079 $ 2,136 An asset purchase relating to our Games business was completed in the second quarter of 2016 and resulted in an intangible asset of $0.2 million . No impairments of other intangible assets were recognized in either of the six months ended June 30, 2016 or 2015 . |
Goodwill
Goodwill | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Note 9 Goodwill Changes in goodwill (in thousands): Balance, December 31, 2015 $ 13,080 Effects of foreign currency translation (107 ) Balance, June 30, 2016 $ 12,973 Goodwill by segment (in thousands): June 30, Consumer Media $ 580 Mobile Services 2,095 Games 10,298 Total goodwill $ 12,973 No impairment of goodwill was recognized in either of the six months ended June 30, 2016 or in 2015 . |
Accrued and Other Current Liabi
Accrued and Other Current Liabilities | 6 Months Ended |
Jun. 30, 2016 | |
Payables and Accruals [Abstract] | |
Accrued and Other Current Liabilities | Note 10 Accrued and Other Current Liabilities Accrued and other current liabilities (in thousands): June 30, 2016 December 31, 2015 Royalties and other fulfillment costs $ 2,401 $ 3,094 Employee compensation, commissions and benefits 4,948 5,958 Sales, VAT and other taxes payable 3,209 2,976 Other 5,008 5,292 Total accrued and other current liabilities $ 15,566 $ 17,320 |
Restructuring Charges
Restructuring Charges | 6 Months Ended |
Jun. 30, 2016 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Charges | Note 11 Restructuring Charges Restructuring and other charges in 2016 and 2015 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, 2016 $ 798 Costs incurred and charged to expense for the six months ended June 30, 2015 $ 2,449 Changes to the accrued restructuring liability (which is included in Accrued and other current liabilities) for 2016 (in thousands) are as follows: Employee Separation Costs Accrued liability at December 31, 2015 $ 1,404 Costs incurred and charged to expense for the six months ended June 30, 2016 798 Cash payments (1,472 ) Accrued liability at June 30, 2016 $ 730 |
Lease Exit and Related Charges
Lease Exit and Related Charges | 6 Months Ended |
Jun. 30, 2016 | |
Disclosure Changes To Accrued Loss On Excess Office Facilities [Abstract] | |
Lease Exit and Related Charges | Note 12 Lease Exit and Related Charges As a result of the reduction in use of RealNetworks' office space, lease exit and related charges have been recognized representing rent and contractual operating expenses over the remaining life of the leases, including estimates of sublease income expected to be received. For the six months ended June 30, 2016, we recorded additional losses primarily due to a change in estimate for sublease income for which we identified a subtenant in the first quarter of 2016 relating to the approximate 43% reduction of office space at our corporate headquarters in Seattle, Washington in the third quarter of 2015. We continue to regularly evaluate the market for office space. If the market for such space changes further in future periods, we may have to revise our estimates which may result in future adjustments to expense for excess office facilities. Changes to accrued lease exit and related charges (which is included in Accrued and other current liabilities) for 2016 (in thousands) are as follows: Accrued loss at December 31, 2015 $ 2,595 Additions and adjustments to the lease loss accrual, including estimated sublease income 831 Less amounts paid, net of sublease amounts (877 ) Accrued loss at June 30, 2016 2,549 Less current portion (included in Accrued and other current liabilities) (1,227 ) Accrued loss, non-current portion (included in Other long term liabilities) $ 1,322 |
Shareholders_ Equity
Shareholders’ Equity | 6 Months Ended |
Jun. 30, 2016 | |
Equity [Abstract] | |
Shareholders’ Equity | Note 13 Shareholders’ Equity Accumulated Other Comprehensive Income (Loss) Changes in components of accumulated other comprehensive income (in thousands): Quarters Ended Six Months Ended 2016 2015 2016 2015 Investments Accumulated other comprehensive income (loss), beginning of period $ 1,448 $ 2,158 $ 1,297 $ 2,252 Unrealized gains (losses), net of tax effects of $9, $(60), $99 and $56 16 (97 ) 167 108 Reclassification adjustments for losses (gains) included in other income (expense), net of tax effects of $0, $0, $0 and $(1) — (94 ) — (393 ) Net current period other comprehensive income (loss) 16 (191 ) 167 (285 ) Accumulated other comprehensive income (loss) balance, end of period $ 1,464 $ 1,967 $ 1,464 $ 1,967 Foreign currency translation Accumulated other comprehensive income (loss), beginning of period $ (60,077 ) $ (60,089 ) $ (60,777 ) $ (57,504 ) Translation adjustments (645 ) 588 55 (1,997 ) Net current period other comprehensive income (loss) (645 ) 588 55 (1,997 ) Accumulated other comprehensive income (loss) balance, end of period $ (60,722 ) $ (59,501 ) $ (60,722 ) $ (59,501 ) Total accumulated other comprehensive income (loss), end of period $ (59,258 ) $ (57,534 ) $ (59,258 ) $ (57,534 ) |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 14 Income Taxes As of June 30, 2016 , there have been no material changes to RealNetworks’ uncertain tax positions disclosures as provided in Note 14 of the 2015 10-K. We do not anticipate that the total amount of unrecognized tax benefits will significantly change within the next twelve months. 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 (Loss) Per Share
Earnings (Loss) Per Share | 6 Months Ended |
Jun. 30, 2016 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | Note 15 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 2016 2015 2016 2015 Net income (loss) $ (8,347 ) $ (27,781 ) $ (23,518 ) $ (52,250 ) Weighted average common shares outstanding used to compute basic EPS 36,755 36,106 36,637 36,105 Dilutive effect of stock based awards — — — — Weighted average common shares outstanding used to compute diluted EPS 36,755 36,106 36,637 36,105 Basic EPS $ (0.23 ) $ (0.77 ) $ (0.64 ) $ (1.45 ) Diluted EPS $ (0.23 ) $ (0.77 ) $ (0.64 ) $ (1.45 ) During the quarter and six months ended June 30, 2016 , 4.8 million and 4.9 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, 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. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 16 Commitments and Contingencies We could in the future 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, 2016 | |
Guarantees [Abstract] | |
Guarantees | Note 17 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 some of our carrier customers. In relation to certain 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, 2016 | |
Segment Reporting [Abstract] | |
Segment Information | Note 18 Segment Information In the first quarter of 2016, we reorganized the management of our businesses and as a result, we now report three segments: (1) Consumer Media, which includes our PC-based RealPlayer products, including RealPlayer Plus and related products and intellectual property licensing; (2) Mobile Services, which includes our SaaS services, our LISTEN ® product, and our mobile RealTimes ® product that is primarily sold through mobile carriers; and (3) Games, which includes all our games-related businesses, including 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. We allocate certain corporate expenses which are directly attributable to supporting our businesses, including but not limited to a portion of finance, legal, human resources and headquarters facilities, to our reportable segments. Remaining expenses, which are not directly attributable to supporting the business, are reported as corporate items. Also reported in our corporate segment are restructuring charges, lease exit and related charges, as well as stock compensation charges. Concurrent with the first quarter of 2016 segment change described above, we also changed our corporate expense allocation methodology to increase accountability, resulting in an increase in costs allocated to the Consumer Media and Mobile Services businesses. RealNetworks reports three reportable segments based on factors such as how we manage our operations and how our Chief Operating Decision Maker (CODM) reviews results. The CODM 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. The historical financial information presented has been recast to reflect the new segments and the new corporate expense presentation. Segment results for the quarters and six months ended June 30, 2016 and 2015 (in thousands): Consumer Media Quarters Ended Six Months Ended 2016 2015 2016 2015 Revenue $ 6,400 $ 7,281 $ 12,126 $ 15,270 Cost of revenue 1,561 3,567 3,978 7,031 Gross profit 4,839 3,714 8,148 8,239 Operating expenses 4,293 6,867 9,669 13,461 Operating income (loss) $ 546 $ (3,153 ) $ (1,521 ) $ (5,222 ) Mobile Services Quarters Ended Six Months Ended 2016 2015 2016 2015 Revenue $ 17,297 $ 18,578 $ 33,762 $ 33,082 Cost of revenue 12,404 13,982 23,321 24,290 Gross profit 4,893 4,596 10,441 8,792 Operating expenses 8,784 12,099 18,578 24,060 Operating income (loss) $ (3,891 ) $ (7,503 ) $ (8,137 ) $ (15,268 ) Games Quarters Ended Six Months Ended 2016 2015 2016 2015 Revenue $ 6,037 $ 8,095 $ 12,076 $ 16,199 Cost of revenue 1,817 2,286 3,662 5,080 Gross profit 4,220 5,809 8,414 11,119 Operating expenses 4,725 8,719 10,020 17,402 Operating income (loss) $ (505 ) $ (2,910 ) $ (1,606 ) $ (6,283 ) Corporate Quarters Ended Six Months Ended 2016 2015 2016 2015 Cost of revenue $ (84 ) $ (3 ) $ (91 ) $ (22 ) Operating expenses 3,871 7,144 11,243 12,968 Operating income (loss) $ (3,787 ) $ (7,141 ) $ (11,152 ) $ (12,946 ) 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 2016 2015 2016 2015 United States $ 10,354 $ 12,303 $ 20,737 $ 24,652 Europe 3,330 3,728 6,714 7,891 Republic of Korea 10,411 12,375 19,645 18,699 Rest of the World 5,639 5,548 10,868 13,309 Total net revenue $ 29,734 $ 33,954 $ 57,964 $ 64,551 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 $ 14,508 $ 16,821 Europe 4,473 4,898 Republic of Korea 232 282 Rest of the World 2,408 2,015 Total long-lived assets $ 21,621 $ 24,016 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 19 Related Party Transactions See Note 5 , Rhapsody Joint Venture , and Note 6 , Fair Value Measurements , for details on transactions involving Rhapsody. |
Description of Business and S26
Description of Business and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business. RealNetworks, Inc. and subsidiaries is a 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 | 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, 2016 are not necessarily indicative of the results that may be expected for any subsequent period or for the year ending December 31, 2016 . 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, 2015 (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. |
Reportable Segments | Reportable Segments. In the first quarter of 2016, we reorganized the management of our businesses and as a result, we changed our reportable segments. See Note 18 , Segment Information , for details. The historical financial information presented has been recast to reflect the new segments and the new corporate expense presentation. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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, and employee stock purchase plans and was as follows (in thousands): Quarters Ended Six Months Ended 2016 2015 2016 2015 Total stock-based compensation expense $ 608 $ 1,254 $ 3,779 $ 2,583 |
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 2016 2015 2016 2015 Expected dividend yield 0 % 0 % 0 % 0 % Risk-free interest rate 1.05 % 1.70 % 1.38 % 1.26 % Expected life (years) 3.8 5.5 4.9 4.4 Volatility 32 % 42 % 36 % 37 % |
Rhapsody Joint Venture (Tables)
Rhapsody Joint Venture (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 2016 2015 2016 2015 Net revenue $ 53,456 $ 50,063 $ 105,963 $ 96,387 Gross profit 6,850 7,753 14,093 15,843 Net loss (7,905 ) (12,061 ) (13,053 ) (20,985 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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, 2016 and December 31, 2015 , 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, 2016 June 30, 2016 Level 1 Level 2 Level 3 Total Cash and cash equivalents: Cash $ 21,546 $ — $ — $ 21,546 $ 21,546 Money market funds 5,290 — — 5,290 5,290 Corporate notes and bonds — 9,297 — 9,297 9,297 Total cash and cash equivalents 26,836 9,297 — 36,133 36,133 Short-term investments: Corporate notes and bonds — 42,656 — 42,656 42,638 Total short-term investments — 42,656 — 42,656 42,638 Restricted cash equivalents and investments — 3,000 — 3,000 3,000 Equity investment in publicly traded securities 1,920 — — 1,920 362 Warrant issued by Rhapsody (included in Other assets) — — 971 971 — Total $ 28,756 $ 54,953 $ 971 $ 84,680 $ 82,133 Fair Value Measurements as of Amortized Cost as of December 31, 2015 December 31, 2015 Level 1 Level 2 Level 3 Total Cash and cash equivalents: Cash $ 23,152 $ — $ — $ 23,152 $ 23,152 Money market funds 5,061 — — 5,061 5,061 Corporate notes and bonds — 19,102 — 19,102 19,102 Total cash and cash equivalents 28,213 19,102 — 47,315 47,315 Short-term investments: Corporate notes and bonds — 51,814 — 51,814 51,862 Total short-term investments — 51,814 — 51,814 51,862 Restricted cash equivalents and investments — 2,890 — 2,890 2,890 Equity investment in publicly traded securities 1,721 — — 1,721 362 Warrant issued by Rhapsody (included in Other assets) — — 1,053 1,053 — Total $ 29,934 $ 73,806 $ 1,053 $ 104,793 $ 102,429 |
Schedule of Contractual Maturity Date | Contractual maturities of short-term investments as of June 30, 2016 (in thousands): Estimated Fair Value Within one year $ 39,751 Between one year and five years 2,905 Total short-term investments $ 42,656 |
Allowance for Doubtful Accoun30
Allowance for Doubtful Accounts Receivable and Sales Returns (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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, 2015 $ 765 $ 158 Addition (reduction) to allowance (15 ) 15 Amounts written off (3 ) (3 ) Foreign currency translation 13 — Balances, June 30, 2016 $ 760 $ 170 |
Other Intangible Assets (Tables
Other Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other Intangible Assets | Other intangible assets (in thousands): June 30, 2016 December 31, 2015 Gross Amount Accumulated Amortization Net Gross Amount Accumulated Amortization Net Amortizing intangible assets: Customer relationships $ 30,443 $ 29,734 $ 709 $ 30,182 $ 29,236 $ 946 Developed technology 24,203 23,582 621 24,047 23,244 803 Patents, trademarks and tradenames 3,750 3,535 215 3,717 3,398 319 Service contracts 5,333 5,333 — 5,269 5,201 68 Total $ 63,729 $ 62,184 $ 1,545 $ 63,215 $ 61,079 $ 2,136 |
Goodwill (Tables)
Goodwill (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in Goodwill | Changes in goodwill (in thousands): Balance, December 31, 2015 $ 13,080 Effects of foreign currency translation (107 ) Balance, June 30, 2016 $ 12,973 |
Goodwill Assigned by Segments | Goodwill by segment (in thousands): June 30, Consumer Media $ 580 Mobile Services 2,095 Games 10,298 Total goodwill $ 12,973 |
Accrued and Other Current Lia33
Accrued and Other Current Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Payables and Accruals [Abstract] | |
Accrued and Other Liabilities | Accrued and other current liabilities (in thousands): June 30, 2016 December 31, 2015 Royalties and other fulfillment costs $ 2,401 $ 3,094 Employee compensation, commissions and benefits 4,948 5,958 Sales, VAT and other taxes payable 3,209 2,976 Other 5,008 5,292 Total accrued and other current liabilities $ 15,566 $ 17,320 |
Restructuring Charges (Tables)
Restructuring Charges (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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, 2016 $ 798 Costs incurred and charged to expense for the six months ended June 30, 2015 $ 2,449 Changes to the accrued restructuring liability (which is included in Accrued and other current liabilities) for 2016 (in thousands) are as follows: Employee Separation Costs Accrued liability at December 31, 2015 $ 1,404 Costs incurred and charged to expense for the six months ended June 30, 2016 798 Cash payments (1,472 ) Accrued liability at June 30, 2016 $ 730 |
Lease Exit and Related Charges
Lease Exit and Related Charges (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 2016 (in thousands) are as follows: Accrued loss at December 31, 2015 $ 2,595 Additions and adjustments to the lease loss accrual, including estimated sublease income 831 Less amounts paid, net of sublease amounts (877 ) Accrued loss at June 30, 2016 2,549 Less current portion (included in Accrued and other current liabilities) (1,227 ) Accrued loss, non-current portion (included in Other long term liabilities) $ 1,322 |
Shareholders_ Equity (Tables)
Shareholders’ Equity (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | Changes in components of accumulated other comprehensive income (in thousands): Quarters Ended Six Months Ended 2016 2015 2016 2015 Investments Accumulated other comprehensive income (loss), beginning of period $ 1,448 $ 2,158 $ 1,297 $ 2,252 Unrealized gains (losses), net of tax effects of $9, $(60), $99 and $56 16 (97 ) 167 108 Reclassification adjustments for losses (gains) included in other income (expense), net of tax effects of $0, $0, $0 and $(1) — (94 ) — (393 ) Net current period other comprehensive income (loss) 16 (191 ) 167 (285 ) Accumulated other comprehensive income (loss) balance, end of period $ 1,464 $ 1,967 $ 1,464 $ 1,967 Foreign currency translation Accumulated other comprehensive income (loss), beginning of period $ (60,077 ) $ (60,089 ) $ (60,777 ) $ (57,504 ) Translation adjustments (645 ) 588 55 (1,997 ) Net current period other comprehensive income (loss) (645 ) 588 55 (1,997 ) Accumulated other comprehensive income (loss) balance, end of period $ (60,722 ) $ (59,501 ) $ (60,722 ) $ (59,501 ) Total accumulated other comprehensive income (loss), end of period $ (59,258 ) $ (57,534 ) $ (59,258 ) $ (57,534 ) |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 2016 2015 2016 2015 Net income (loss) $ (8,347 ) $ (27,781 ) $ (23,518 ) $ (52,250 ) Weighted average common shares outstanding used to compute basic EPS 36,755 36,106 36,637 36,105 Dilutive effect of stock based awards — — — — Weighted average common shares outstanding used to compute diluted EPS 36,755 36,106 36,637 36,105 Basic EPS $ (0.23 ) $ (0.77 ) $ (0.64 ) $ (1.45 ) Diluted EPS $ (0.23 ) $ (0.77 ) $ (0.64 ) $ (1.45 ) |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 2016 2015 2016 2015 United States $ 10,354 $ 12,303 $ 20,737 $ 24,652 Europe 3,330 3,728 6,714 7,891 Republic of Korea 10,411 12,375 19,645 18,699 Rest of the World 5,639 5,548 10,868 13,309 Total net revenue $ 29,734 $ 33,954 $ 57,964 $ 64,551 |
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 $ 14,508 $ 16,821 Europe 4,473 4,898 Republic of Korea 232 282 Rest of the World 2,408 2,015 Total long-lived assets $ 21,621 $ 24,016 |
Operating Segments | Consumer Media | |
Segment Reporting Information [Line Items] | |
Segment Results | Consumer Media Quarters Ended Six Months Ended 2016 2015 2016 2015 Revenue $ 6,400 $ 7,281 $ 12,126 $ 15,270 Cost of revenue 1,561 3,567 3,978 7,031 Gross profit 4,839 3,714 8,148 8,239 Operating expenses 4,293 6,867 9,669 13,461 Operating income (loss) $ 546 $ (3,153 ) $ (1,521 ) $ (5,222 ) |
Operating Segments | Mobile Services | |
Segment Reporting Information [Line Items] | |
Segment Results | Mobile Services Quarters Ended Six Months Ended 2016 2015 2016 2015 Revenue $ 17,297 $ 18,578 $ 33,762 $ 33,082 Cost of revenue 12,404 13,982 23,321 24,290 Gross profit 4,893 4,596 10,441 8,792 Operating expenses 8,784 12,099 18,578 24,060 Operating income (loss) $ (3,891 ) $ (7,503 ) $ (8,137 ) $ (15,268 ) |
Operating Segments | Games | |
Segment Reporting Information [Line Items] | |
Segment Results | Games Quarters Ended Six Months Ended 2016 2015 2016 2015 Revenue $ 6,037 $ 8,095 $ 12,076 $ 16,199 Cost of revenue 1,817 2,286 3,662 5,080 Gross profit 4,220 5,809 8,414 11,119 Operating expenses 4,725 8,719 10,020 17,402 Operating income (loss) $ (505 ) $ (2,910 ) $ (1,606 ) $ (6,283 ) |
Corporate | |
Segment Reporting Information [Line Items] | |
Segment Results | Corporate Quarters Ended Six Months Ended 2016 2015 2016 2015 Cost of revenue $ (84 ) $ (3 ) $ (91 ) $ (22 ) Operating expenses 3,871 7,144 11,243 12,968 Operating income (loss) $ (3,787 ) $ (7,141 ) $ (11,152 ) $ (12,946 ) |
Acquisitions and Disposals (Det
Acquisitions and Disposals (Details) - Slingo and Social Casino $ in Millions | Jul. 24, 2015USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Sale price | $ 18 |
Cash consideration received | 10 |
Consideration receivable | $ 8 |
Stock-Based Compensation (Recog
Stock-Based Compensation (Recognized Stock-Based Compensation Expense) (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Total stock-based compensation expense | $ 608 | $ 1,254 | $ 3,779 | $ 2,583 |
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, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Risk-free interest rate | 1.05% | 1.70% | 1.38% | 1.26% |
Expected life | 3 years 9 months | 5 years 6 months | 4 years 11 months | 4 years 5 months |
Volatility | 32.00% | 42.00% | 36.00% | 37.00% |
Stock-Based Compensation (Addit
Stock-Based Compensation (Additional Information) (Detail) $ in Millions | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Total unrecognized compensation cost | $ 4.6 |
Total unrecognized compensation cost, expected recognition period (in years) | 2 years |
Rhapsody Joint Venture (Additio
Rhapsody Joint Venture (Additional Information) (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2016 | Jun. 30, 2015 | Mar. 31, 2010 | Jun. 30, 2016 | Jun. 30, 2015 | Feb. 28, 2015 | |
Schedule of Equity Method Investments [Line Items] | ||||||
Losses recorded in the operations of Rhapsody | $ 396,000 | $ 6,916,000 | $ 396,000 | $ 13,096,000 | ||
Loan to investee | $ 0 | 5,000,000 | ||||
Rhapsody America LLC | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Percentage of ownership interest in Rhapsody | 42.00% | 42.00% | ||||
Payments for restructuring | $ 18,000,000 | |||||
Liquidation preference amount | $ 10,000,000 | $ 10,000,000 | ||||
Losses recorded in the operations of Rhapsody | 400,000 | $ 6,900,000 | 400,000 | $ 13,100,000 | ||
Carrying value | $ 0 | $ 0 | ||||
Rhapsody America LLC | Other Owner | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Percentage of ownership interest in Rhapsody held by third party | 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, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Schedule of Equity Method Investments [Line Items] | ||||
Net revenue | $ 53,456 | $ 50,063 | $ 105,963 | $ 96,387 |
Gross profit | 6,850 | 7,753 | 14,093 | 15,843 |
Net loss | $ (7,905) | $ (12,061) | $ (13,053) | $ (20,985) |
Fair Value Measurements (Financ
Fair Value Measurements (Financial Assets Measured at Fair Value on a Recurring Basis) (Detail) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | $ 84,680 | $ 104,793 |
Amortized Cost | 82,133 | 102,429 |
Cash and Cash Equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 36,133 | 47,315 |
Amortized Cost | 36,133 | 47,315 |
Cash and Cash Equivalents | Cash | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 21,546 | 23,152 |
Amortized Cost | 21,546 | 23,152 |
Cash and Cash Equivalents | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 5,290 | 5,061 |
Amortized Cost | 5,290 | 5,061 |
Cash and Cash Equivalents | Corporate notes and bonds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 9,297 | 19,102 |
Amortized Cost | 9,297 | 19,102 |
Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 42,656 | 51,814 |
Amortized Cost | 42,638 | 51,862 |
Short-term Investments | Corporate notes and bonds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 42,656 | 51,814 |
Amortized Cost | 42,638 | 51,862 |
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 | 2,890 |
Amortized Cost | 3,000 | 2,890 |
Equity investment in publicly traded securities | Publicly Traded Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 1,920 | 1,721 |
Amortized Cost | 362 | 362 |
Related Party Transaction | Warrants issued by Rhapsody | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 971 | 1,053 |
Amortized Cost | 0 | 0 |
Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 28,756 | 29,934 |
Level 1 | Cash and Cash Equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 26,836 | 28,213 |
Level 1 | Cash and Cash Equivalents | Cash | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 21,546 | 23,152 |
Level 1 | Cash and Cash Equivalents | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 5,290 | 5,061 |
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 | 0 |
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 | 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 | 1,920 | 1,721 |
Level 1 | Related Party Transaction | Warrants issued by Rhapsody | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 54,953 | 73,806 |
Level 2 | Cash and Cash Equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 9,297 | 19,102 |
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 | 9,297 | 19,102 |
Level 2 | Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 42,656 | 51,814 |
Level 2 | Short-term Investments | Corporate notes and bonds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 42,656 | 51,814 |
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 | 2,890 |
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 | Warrants issued by Rhapsody | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 971 | 1,053 |
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 | 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 | Warrants issued by Rhapsody | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | $ 971 | $ 1,053 |
Fair Value Measurements (Short-
Fair Value Measurements (Short-term Investments) (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | $ 84,680 | $ 104,793 |
Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 42,656 | $ 51,814 |
Estimate of Fair Value Measurement | Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 42,656 | |
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 | 39,751 | |
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 | $ 2,905 |
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 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Proceeds from sale of investment | $ 0 | $ (459) | ||||
Gain on sale of investment | $ (46) | $ 94 | (43) | 393 | ||
Financial assets fair value | $ 84,680 | $ 84,680 | $ 104,793 | |||
J-Stream | ||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Proceeds from sale of investment | (100) | (500) | ||||
Gain on sale of investment | $ 100 | $ 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% | |||||
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 Accoun48
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, 2016USD ($) | |
Allowance for Doubtful Accounts Receivable | |
Movement in Valuation Allowances and Reserves [Roll Forward] | |
Beginning Balance | $ 765 |
Addition (reduction) to allowance | (15) |
Amounts written off | (3) |
Foreign currency translation | 13 |
Ending Balance | 760 |
Allowance for Sales Returns | |
Movement in Valuation Allowances and Reserves [Roll Forward] | |
Beginning Balance | 158 |
Addition (reduction) to allowance | 15 |
Amounts written off | (3) |
Foreign currency translation | 0 |
Ending Balance | $ 170 |
Allowance for Doubtful Accoun49
Allowance for Doubtful Accounts Receivable and Sales Returns (Additional Information) (Detail) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2016USD ($)Customer | Jun. 30, 2015USD ($)Customer | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($)Customer | Dec. 31, 2015Customer | |||
Concentration Risk [Line Items] | |||||||
Revenue | $ | $ 29,734 | [1] | $ 33,954 | [1] | $ 57,964 | $ 64,551 | |
Accounts Receivable | Company A | |||||||
Concentration Risk [Line Items] | |||||||
Number of customers | 1 | 1 | |||||
Percentage by major customer | 56.00% | 52.00% | |||||
Accounts Receivable | Company B | |||||||
Concentration Risk [Line Items] | |||||||
Number of customers | 1 | 1 | |||||
Percentage by major customer | 11.00% | 12.00% | |||||
Revenue by Segment | Mobile Services | Company A | |||||||
Concentration Risk [Line Items] | |||||||
Number of customers | 1 | 1 | 1 | ||||
Percentage by major customer | 33.00% | 30.00% | 31.00% | 24.00% | |||
Revenue | $ | $ 9,700 | $ 10,200 | $ 18,100 | $ 15,500 | |||
Revenue by Segment | Mobile Services | Company B | |||||||
Concentration Risk [Line Items] | |||||||
Number of customers | 1 | ||||||
Percentage by major customer | 11.00% | ||||||
Revenue | $ | $ 3,800 | ||||||
[1] | Quarters ended June 30, 2016 quarter ended June 30, 2016Components of Revenue License Fees6,678 6,921Service Revenue23,056 27,033Net Revenue29,734 33,954 6 months ended June 30, 2016 June 30, 2015Components of Revenue License Fees$12,455 $14,210Service Revenue45,509 50,341Net Revenue$57,964 $64,551 |
Other Intangible Assets (Detail
Other Intangible Assets (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2016 | Dec. 31, 2015 | |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Amount | $ 63,729 | $ 63,215 |
Accumulated Amortization | 62,184 | 61,079 |
Net | 1,545 | 2,136 |
Intangible assets acquired | 200 | |
Customer relationships | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Amount | 30,443 | 30,182 |
Accumulated Amortization | 29,734 | 29,236 |
Net | 709 | 946 |
Developed technology | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Amount | 24,203 | 24,047 |
Accumulated Amortization | 23,582 | 23,244 |
Net | 621 | 803 |
Patents, trademarks and tradenames | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Amount | 3,750 | 3,717 |
Accumulated Amortization | 3,535 | 3,398 |
Net | 215 | 319 |
Servicing contracts and other | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Amount | 5,333 | 5,269 |
Accumulated Amortization | 5,333 | 5,201 |
Net | $ 0 | $ 68 |
Goodwill (Changes in Goodwill)
Goodwill (Changes in Goodwill) (Detail) $ in Thousands | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Goodwill [Roll Forward] | |
Beginning Balance | $ 13,080 |
Effects of foreign currency translation | (107) |
Ending Balance | $ 12,973 |
Goodwill (Goodwill by Segments)
Goodwill (Goodwill by Segments) (Detail) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Goodwill [Line Items] | ||
Goodwill | $ 12,973 | $ 13,080 |
Consumer Media | ||
Goodwill [Line Items] | ||
Goodwill | 580 | |
Mobile Services | ||
Goodwill [Line Items] | ||
Goodwill | 2,095 | |
Games | ||
Goodwill [Line Items] | ||
Goodwill | $ 10,298 |
Accrued and Other Current Lia53
Accrued and Other Current Liabilities (Detail) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Payables and Accruals [Abstract] | ||
Royalties and other fulfillment costs | $ 2,401 | $ 3,094 |
Employee compensation, commissions and benefits | 4,948 | 5,958 |
Sales, VAT and other taxes payable | 3,209 | 2,976 |
Other | 5,008 | 5,292 |
Total accrued and other liabilities | $ 15,566 | $ 17,320 |
Restructuring Charges (Details)
Restructuring Charges (Details) - Employee Separation Costs - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Restructuring Cost and Reserve [Line Items] | ||
Costs incurred and charged to expense | $ 798 | $ 2,449 |
Restructuring Reserve [Roll Forward] | ||
Accrued liability beginning balance | 1,404 | |
Costs incurred and charged to expense | 798 | |
Cash payments | (1,472) | |
Accrued liability ending balance | $ 730 |
Lease Exit and Related Charge55
Lease Exit and Related Charges (Changes to Accrued Loss on Excess Office Facilities) (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Sep. 30, 2015 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Disclosure Changes To Accrued Loss On Excess Office Facilities [Abstract] | |||||
Lease exit and related charges | $ 127 | $ 9 | $ 958 | $ 87 | |
Percent reduction in office space | 43.00% | ||||
Accrued Loss on Excess Office Facilities [Roll Forward] | |||||
Accrued loss at December 31, 2015 | 2,595 | ||||
Additions and adjustments to the lease loss accrual, including estimated sublease income | 831 | ||||
Less amounts paid, net of sublease amounts | (877) | ||||
Accrued loss at June 30, 2016 | 2,549 | 2,549 | |||
Less current portion (included in Accrued and other current liabilities) | (1,227) | (1,227) | |||
Accrued loss, non-current portion (included in Other long term liabilities) | $ 1,322 | $ 1,322 |
Shareholders_ Equity (Accumulat
Shareholders’ Equity (Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Accumulated other comprehensive income (loss), beginning of period | $ 120,683 | |||
Unrealized gains (losses), net of tax effects of $9, $(60), $99 and $56 | $ 16 | $ (191) | 167 | $ (285) |
Total other comprehensive income (loss) | (629) | 397 | 222 | (2,282) |
Accumulated other comprehensive income (loss) balance, end of period | 100,920 | 100,920 | ||
Accumulated other comprehensive income (loss) balance, end of period | (59,258) | (57,534) | (59,258) | (57,534) |
Investments | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Accumulated other comprehensive income (loss), beginning of period | 1,448 | 2,158 | 1,297 | 2,252 |
Unrealized gains (losses), net of tax effects of $9, $(60), $99 and $56 | 16 | (97) | 167 | 108 |
Reclassification adjustments for losses (gains) included in other income (expense) | 0 | (94) | 0 | (393) |
Total other comprehensive income (loss) | 16 | (191) | 167 | (285) |
Accumulated other comprehensive income (loss) balance, end of period | 1,464 | 1,967 | 1,464 | 1,967 |
Accumulated Other Comprehensive Income (Loss), Tax [Abstract] | ||||
Unrealized gains (losses), tax effects | 9 | (60) | 99 | 56 |
Reclassification adjustments for losses (gains) included in other income (expense), tax effects | 0 | 0 | 0 | (1) |
Foreign currency translation | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Accumulated other comprehensive income (loss), beginning of period | (60,077) | (60,089) | (60,777) | (57,504) |
Translation adjustments | (645) | 588 | 55 | (1,997) |
Reclassification adjustments for losses (gains) included in other income (expense) | 0 | 0 | 0 | 0 |
Total other comprehensive income (loss) | (645) | 588 | 55 | (1,997) |
Accumulated other comprehensive income (loss) balance, end of period | $ (60,722) | $ (59,501) | $ (60,722) | $ (59,501) |
Earnings (Loss) Per Share (Calc
Earnings (Loss) 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, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) | $ (8,347) | $ (27,781) | $ (23,518) | $ (52,250) |
Weighted average common shares outstanding used to compute basic EPS | 36,755 | 36,106 | 36,637 | 36,105 |
Dilutive effect of stock based awards | 0 | 0 | 0 | 0 |
Weighted average common shares outstanding used to compute diluted EPS | 36,755 | 36,106 | 36,637 | 36,105 |
Basic EPS (USD per share) | $ (0.23) | $ (0.77) | $ (0.64) | $ (1.45) |
Diluted EPS (USD per share) | $ (0.23) | $ (0.77) | $ (0.64) | $ (1.45) |
Earnings (Loss) Per Share (Addi
Earnings (Loss) Per Share (Additional Information) (Detail) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Earnings Per Share [Abstract] | ||||
Shares of common stock excluded from the calculation of diluted net income per share because of antidilutive effect | 4.8 | 6 | 4.9 | 6.1 |
Segment Information (Additional
Segment Information (Additional Information) (Detail) | 6 Months Ended |
Jun. 30, 2016Segment | |
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, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |||
Segment Reporting Information [Line Items] | ||||||
Revenue | $ 29,734 | [1] | $ 33,954 | [1] | $ 57,964 | $ 64,551 |
Cost of revenue | 15,698 | [2] | 19,832 | [2] | 30,870 | 36,379 |
Gross profit | 14,036 | 14,122 | 27,094 | 28,172 | ||
Operating expenses | 21,673 | 34,829 | 49,510 | 67,891 | ||
Operating income (loss) | (7,637) | (20,707) | (22,416) | (39,719) | ||
Operating Segments | Consumer Media | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 6,400 | 7,281 | 12,126 | 15,270 | ||
Cost of revenue | 1,561 | 3,567 | 3,978 | 7,031 | ||
Gross profit | 4,839 | 3,714 | 8,148 | 8,239 | ||
Operating expenses | 4,293 | 6,867 | 9,669 | 13,461 | ||
Operating income (loss) | 546 | (3,153) | (1,521) | (5,222) | ||
Operating Segments | Mobile Services | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 17,297 | 18,578 | 33,762 | 33,082 | ||
Cost of revenue | 12,404 | 13,982 | 23,321 | 24,290 | ||
Gross profit | 4,893 | 4,596 | 10,441 | 8,792 | ||
Operating expenses | 8,784 | 12,099 | 18,578 | 24,060 | ||
Operating income (loss) | (3,891) | (7,503) | (8,137) | (15,268) | ||
Operating Segments | Games | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 6,037 | 8,095 | 12,076 | 16,199 | ||
Cost of revenue | 1,817 | 2,286 | 3,662 | 5,080 | ||
Gross profit | 4,220 | 5,809 | 8,414 | 11,119 | ||
Operating expenses | 4,725 | 8,719 | 10,020 | 17,402 | ||
Operating income (loss) | (505) | (2,910) | (1,606) | (6,283) | ||
Corporate | ||||||
Segment Reporting Information [Line Items] | ||||||
Cost of revenue | (84) | (3) | (91) | (22) | ||
Operating expenses | 3,871 | 7,144 | 11,243 | 12,968 | ||
Operating income (loss) | $ (3,787) | $ (7,141) | $ (11,152) | $ (12,946) | ||
[1] | Quarters ended June 30, 2016 quarter ended June 30, 2016Components of Revenue License Fees6,678 6,921Service Revenue23,056 27,033Net Revenue29,734 33,954 6 months ended June 30, 2016 June 30, 2015Components of Revenue License Fees$12,455 $14,210Service Revenue45,509 50,341Net Revenue$57,964 $64,551 | |||||
[2] | Components of Cost of RevenueJune 30, 2016 June 30, 2015 License Fees1,399 1,428 Service Revenue14,299 18,404 Net Revenue Costs15,698 19,832 6 months ended June 30, 2016 June 30, 2015Components of Cost of Revenue License Fees$2,703 $3,171Service Revenue28,167 33,208Net Revenue Costs$30,870 $36,379 |
Segment Information (Revenue by
Segment Information (Revenue by Geographic Region) (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Revenue | $ 29,734 | [1] | $ 33,954 | [1] | $ 57,964 | $ 64,551 |
United States | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Revenue | 10,354 | 12,303 | 20,737 | 24,652 | ||
Europe | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Revenue | 3,330 | 3,728 | 6,714 | 7,891 | ||
Republic of Korea | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Revenue | 10,411 | 12,375 | 19,645 | 18,699 | ||
Rest of the World | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Revenue | $ 5,639 | $ 5,548 | $ 10,868 | $ 13,309 | ||
[1] | Quarters ended June 30, 2016 quarter ended June 30, 2016Components of Revenue License Fees6,678 6,921Service Revenue23,056 27,033Net Revenue29,734 33,954 6 months ended June 30, 2016 June 30, 2015Components of Revenue License Fees$12,455 $14,210Service Revenue45,509 50,341Net Revenue$57,964 $64,551 |
Segment Information (Long-Lived
Segment Information (Long-Lived Assets by Geographic Region) (Detail) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 21,621 | $ 24,016 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 14,508 | 16,821 |
Europe | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 4,473 | 4,898 |
Republic of Korea | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 232 | 282 |
Rest of the World | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 2,408 | $ 2,015 |