DivX (DIVX) 8-K Results of Operations and Financial Condition

Exhibit 99.1

( BW)(CA-DIVX)(DIVX) DivX, Inc. Reports First Quarter 2007 Financial
Results

     Business Editors/High-Tech Writers

     SAN DIEGO—(BUSINESS WIRE)—May 1, 2007—DivX, Inc. (NASDAQ:DIVX) today announced results for the quarter ended March 31, 2007.

     In the first quarter of 2007, consolidated revenue was $20.2 million, an increase of 43 percent from the first quarter of 2006. Net income in the first quarter of 2007 was $3.7 million, or $0.10 per diluted share, compared to net income of $3.3 million, or $0.11 per diluted share, in the first quarter of 2006. Stock-based compensation charges for the first quarter totaled $944,000 compared to $366,000 for the same quarter a year ago.

     Jordan Greenhall, CEO and co-founder of DivX, Inc., said, “DivX continued to build on a successful 2006 with a very strong first quarter. As more and more consumers and consumer electronics manufacturers embrace DivX to improve the media experience, we move consistently closer to our goal of creating a common media language. The media world is in the earliest stages of a digital revolution, and we believe DivX is well-positioned to play a significant role as the future of the industry takes shape.”

     John Tanner, chief financial officer of DivX, Inc., added, “Our success in the first quarter was driven by the continuing growth in technology licensing from CE devices around the world. Technology licensing revenue represented the highest quarterly revenue in the company’s history, leading to 95% gross margins and strong cash from operations. Our balance sheet improved again in the quarter with cash and equivalents of approximately $157 million, an increase of approximately $8 million from the previous quarter.”

     Guidance

     For the second quarter of 2007, revenue is anticipated to be in the range of $16.7 to $18.7 million, reflecting the company’s
historical seasonality.

     Quarterly Conference Call

     DivX, Inc. will discuss its quarterly results via teleconference at 1:30 p.m. PDT today, May 1, 2007. To access the call, please dial (800) 562-8369, or outside the U.S. (913) 312-1299, at least five minutes prior to the start time. A live webcast and replay will also be available at http://investors.divx.com. An audio replay of today’s conference call will be available from 4:30 p.m. PDT on May 1, 2007 until 9:00 p.m. PDT May 8, 2007 by dialing (719) 457-0820 or (888) 203-1112 with the replay pass code 460319.

     About DivX, Inc.

     DivX creates products and services designed to improve the experience of media. Our first product offering was a video compression-decompression software library, or codec, which has been actively sought out and downloaded over 200 million times since January 2003, including over 60 million times during the last twelve months. We have since built on the success of our codec with other consumer software, including the DivX Player application, which is

distributed from our website, www.divx.com. We also license our technologies to consumer hardware device manufacturers and certify their products to ensure the interoperable support of DivX-encoded content. In addition to technology licensing to consumer hardware device manufacturers, we currently generate revenue from software licensing, advertising and content distribution.

     Forward-Looking Statements

     Statements in this press release that are not strictly historical in nature constitute “forward-looking statements.” Such statements include, but are not limited to, statements regarding the future development of digital media, DivX’s role in the development of the media industry and expectations regarding revenue for the second quarter of 2007. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause DivX’s actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements. These factors include, but are not limited to, the risk that customer use of DivX technology may not grow as anticipated, the risk that anticipated market opportunities may not materialize at expected levels, or at all, the risk that the Company’s activities may not result in the growth of profitable revenue, risks and uncertainties related to the maintenance and strength of the DivX brand; the risk that revenue for the second quarter of 2007 may be lower than expected; DivX’s ability to penetrate existing and new markets; the effects of competition; DivX’s dependence on its licensees and partners; the effect of intellectual property rights claims; and other factors discussed in the “Risk Factors” section of DivX’s annual report on Form 10-K filed with the SEC on March 29, 2007. All forward-looking statements are qualified in their entirety by this cautionary statement. DivX is providing this information as of the date of this release and does not undertake any obligation to update any forward-looking statements contained in this release as a result of new information, future events or otherwise.

DivX, Inc.
Consolidated Condensed Statement of Income
(in thousands, except per share data)

	Three months ended March 31,
	2006			2007
	(unaudited)
Net revenues:
Technology licensing	$	11,068		$	16,702
Media and other distribution and services		3,031			3,516
Total net revenues		14,099			20,218
Cost of revenue:
Cost of technology licensing		731			848
Cost of media and other distribution and services (1)		221			261
Total cost of revenue		952			1,109
Gross margin		13,147			19,109
Operating expenses:
Selling, general and administrative (1)		5,929			10,796
Product development (1)		3,225			4,156
Total operating expenses		9,154			14,952
Income from operations		3,993			4,157
Interest income		290			1,909
Interest expense and other		(23	)		(6	)
Income before income taxes		4,260			6,060
Income tax provision		981			2,400
Net income	$	3,279		$	3,660
Basic net income per share	$	0.14		$	0.11
Diluted net income per share	$	0.11		$	0.10
Shares used to compute basic net income per share		8,196			33,151
Shares used to compute diluted net income per share		10,482			35,413
(1) Includes stock-based compensation as follows:
Cost of revenues	$	1		$	1
Selling, general and administrative		275			513
Product development		90			430
Total stock-based compensation	$	366		$	944

DivX, Inc.
Consolidated Condensed Balance Sheets
(in thousands)

	December 31,		March 31,
	2006		2007
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	86,310	$	47,291
Restricted cash		270		—
Short-term investments		62,331		109,581
Accounts receivable, net of allowance of $1,424 and $2,001, respectively		6,939		6,054
Prepaid expenses		1,419		1,028
Deferred tax assets, current		937		937
Other current assets		615		850
Total current assets		158,821		165,741
Property and equipment, net		3,488		3,950
Deferred tax assets, long term		1,363		1,319
Other assets		714		890
Total assets	$	164,386	$	171,900
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	2,189	$	2,095
Accrued liabilities		1,038		1,494
Accrued compensation and benefits		2,279		3,220
Accrued patent royalties		742		839
Income taxes payable		486		4,304
Deferred revenue, current		4,654		3,265
Current portion of capital lease obligations		36		36
Notes payable, current portion		378		259
Total current liabilities		11,802		15,512
Capital lease, net of current portion		73		64
Notes payable, net of current portion		15		—
Deferred revenue, long term		768		832
Deferred rent		461		441
Liability for unvested portion of early stock option exercises		356		298
Total liabilities		13,475		17,147
Stockholders’ equity		150,911		154,753
Total liabilities and stockholders’ equity	$	164,386	$	171,900

DivX, Inc.
Consolidated Condensed Statement of Cash Flows
(in thousands)

	Three months ended
	March 31,
	2006			2007
	(unaudited)
Net cash provided by operating activities	$	7,233		$	7,239
Net cash used in investing activities		(707	)		(47,183	)
Net cash (used in) provided by financing activities		(50	)		925
Net increase (decrease) in cash and cash equivalents		6,476			(39,019	)
Cash and cash equivalents at beginning of period		25,035			86,310
Cash and cash equivalents at end of periods	$	31,511		$	47,291

     CONTACT: DivX, Inc.
Tom Huntington, 858-882-0672 (Media)
thuntington@divxcorp.com
or
The Blueshirt Group
Todd Friedman or Stacie Bosinoff, 415-217-7722(Investors)
todd@blueshirtgroup.com
stacie@blueshirtgroup.com