RNWK - Earnings call transcript Q3 2020

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Operator

Greetings and welcome to RealNetworks, Inc.

Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

conference recorded. this reminder, a is being As I to your like to conference over turn this host, would now Ms. Kim Orlando with Addo Investor Relations. Please begin.

Kimberly Orlando

welcome and results you to quarter third Thank XXXX conference call. RealNetworks' financial

that I'd products strategy, for and and to forward-looking, begin, include future statements operating statements and growth and consolidated RealNetworks' liquidity profitability, and on these invest company's regarding to well discussed businesses trends in we Before implement affecting including remind Other you its activities. today its growth, other some like as financial efforts, are the a its expected profitability basis expenses initiatives plans matters and restructuring forward-looking the benefits condition. as and prospects from

portion our be involve in XX-K, and SEC facts from are and statements. of operation filings, on Relations the recent does of Inc, periods as of most than In our XXXX as Form expectations forward-looking that Rhapsody purposes, International set differ in as pending XX-Q historical and presented risks materially that express from can business of reports owned our A of Form Napster these all disclosure risks website. addition, Group beliefs cause call relate or corporate a recast sale the discontinued certain today's the this Statements the of uncertainties XX% other PLC. including obtained for which forth copy contains and to number to in other risk forward-looking forward-looking a and statements those our Napster actual MelodyVR statements been quarter conform filings SEC have of and Investor accounting in reports. could Effective and presentation. third is from to these to factors historical that statements and comparable results We other the and to describe

update duty future new company forward-looking or call, XXXX. as other Forward-looking of today any of today, X, during or November this no as made undertakes information, statements statements made events, expectations to The whether revise result reasons. reflect RealNetworks’ a any

present call considered In certain SEC's non-GAAP we'll addition, measures will on Regulation that G. under be financial the this

For CFO. reconciliations progress of today financial quarter and company's be measure, CEO; the the Rob included most will our Judd to made found and release which discuss to will and Form and that, answer will be financial are the call please the in refer tab. comparable of corporate of today's review With the each President over Judd investors.realnetworks.com directly GAAP non-GAAP Rob Vice remarks, our I under can After will information SEC provide XXXX. the to and Rob quarter submitted third the strategy financial and and Senior at website With X-K prepared measure more both the today, to your press XXXX. during Judd the a Chairman Lee, of third questions. me on then pleased detailed our in to the of company Financials Glaser, hand dated Rob.

Robert Glaser

I today. us to topics. joining for want thanks and about everyone, afternoon, Good talk Kim. Thanks three

financial I'll results. our summarize First,

progress Second, and are momentum and games I'll our primary our casual free-to-play discuss growth mobile initiatives which SAFR. in

regarding assets; our cover forward. I'll the goals A, B, drive capital non-strategic success initiatives in Real; simplifying these interlinked Third, C, of monetizing to and bringing

Media our our operations, Services continuing sold Games, following includes Mobile a very QX business. Napster The First, to and also Consumer which results. our quarter. had numbers pertain

will significantly with financial being was discontinued go our discuss profile detail now the through XX%, in of results presented higher and sold was Napster's shortly margin continuing numbers of operations in than being QX later. Napster will revenue are line I is and the MelodyVR, Napster little Napster. continuing Napster's which million. this was prior pending gross results In $XX.X operations more a The including quarter operation. as transaction process As to in Judd the

minutes. business Our fifth this million. which of our loss the XXXX, $X.X numbers. performance in but the our quarter Judd financials our expenses accounted prior through consistency, forma loss These to go numbers we've commitment for will negative time both included to $XXX,XXX EBITDA out include our for current in led will detail continuing year consecutive in a to and improving more of from pro quarter operations, XXXX our Scener’s year-over-year adjusted Scener, in in improvement roughly likely In period. we EBITDA Scener, few in

& represents will Breakfast. games SAFR free-to-play and of primary X% success our growth This Computer the growth be XX%, games We Vision by year our over initiatives, our that our the an by increased to which that over free-to-play revenue on confident and primary about for XXXX games Bed of to of Delicious revenue. the remain in continue half two the and understates growth GameHouse compared X% main progress business. ago third GameHouse’s driven our free-to-play be the our Next, quarter platform. free-to-play games, and World increased game, our update continues engine to quarter prior Delicious period. games two

I'll to our Next, turn SAFR, platform. Vision Computer

to are see parts from opportunities would and SAFR we're certain While commercial affected of by new the emerge. sectors closed pandemic, which starting

the improve Tijuana CBX and the critical to track mask recently International gather optimize Border flow. to compliance passenger Airport's within data operations or operations instance, chose terminal Xpress Cross For SAFR and

we’ve federal making year In sector. addition, with been pleased within the this progress the we're very

QX first deliver Phase on these Air continue generated contracts these and revenue to Research to look we quarters we is We from with come. II two to to the continuing awarded that which Innovation in direct SBIR execute contracts Small Business or forward contracts to quarter U.S. were we the QX on Force. in

includes with executing our quickly the Brad customer strengthen efforts as Version for enhanced SAFR’s new Vision. ability Donaldson faces. deploy detection mask enables default better contactless industry. leading from product Just given important usage Much been last Brad detection rates. for SAFR dashboard to during pleased and most pandemic. in already to mask face-based Computer SAFR notably strategic for of benefitting that new customers enable to secure of a access will team's has continue team, SAFR. address the move X.X success detector. X.X, business new recent our of removal face our to requiring masked be emerged President Vice accuracy that and have and anonymously release we’ve this and track achieved primarily customers face responsible under improved to launched high response experienced improvements detector very This Brad’s will week without addition SAFR we and in accuracy the to I'm features development also mask. a sensitivity COVID-XX the features both inside, with We're needs recognition unmasked face which enables

tied these regard I'd RealNetworks music comprises to capital combination creator value stock. to of QX Scener. thrive to monetizing enable virtual from factors, Nova assumed subject progress in that $X.X to own The we $X and our acquired simplifying will Napster which of consideration that’s Napster escrow the which the XX, total payment in cash million of August both adding million XXXX costs, a a of of Notable our and Napster, Columbus including stock about $XX mix not million, and off final about an MelodyVR going versus core Third, is that and we in through to market in businesses Napster. Real, January that assets cost announced CN acquisition and reality and like live future transaction On deal debt, to experiences. value XX%, the Group, is The to leading outside in that in scale were of deal of this be by to million, Melody cash repaying resources the will talk spin stake liabilities, million are our MelodyVR value our thrive and several $XX $XX.X forward.

close fourth and team We that past stewardship quarter, at We're transaction of Rhapsody Napster over further detail. carrying forward. business Anthony the brand years. during MelodyVR expect Matchett at which the a we'll discuss of do our confident We're job point the XX and the iconic to will company proud the the great of the

Scener watch by an led a real estate of Real’s incubated out. Else are investments and total investments. we investment process significant fund in for spinning of independent is also financial paid remain is The transact. become investors called platform. Eventually, business nascent second SeaChange the a our in $X.X two Seattle firm in limited its and that a and now consolidated but raised and transaction external the Scener Scener Scener will operation, will from Scener affiliated a years is we for from party results. million expect service in short-term funding in LAUNCH

equity equity, new outstanding September XX% that XX, we at were date. note because approximately convert will XXXX, Scener’s a restructured a of of owned into later proceeds As as the

by continue priority. led normal. have XXXX which that two all and their like this partners primary sincerest challenging monetizing into virtually our for staff the remains I initiatives, successfully a conclude, growth In has would pleased Before I'd our future, and strong who productivity vast we've our to our team to I'm I pleased our of progress pandemic am in and us. customers, throughout out and my of other prospects majority this continues part employees, on made like optimistic to on period. games assets. briefly foreseeable work to that our of SAFR. challenge of I first to members and of remained remain through paramount the extend stress our very closing, A the thanks Real’s XXXX. and health, extremely families, I new And spinning to wellbeing The safety the communities, all with future free-to-play business touch also and adapted

to the growth in Going manage on now over call Judd? through cost and focusing detail. biggest our keep to turn to I'll targets. go effectively, Judd forward, we'll the continue numbers

Judd Lee

Certain our business variability my I impacts review And followed continue sequential results, comparisons including discussion Media remarks Rob. timing Consumer part and these of note year-over-year business due update first that their business, will within you Games to a good periodic quarter implications. quarter-to-quarter, in are we will but of our our businesses, of the and licensing Please our can and IP detailed segments’ on In third by games revenues. more mobile not to our fluctuate afternoon, today, our consolidated apples-to-apples Thanks, performance. always everyone.

of as operations our otherwise Napster. Rob In the continuing results operations being relate treated Therefore, purposes. is today for to highlighted, exclude presented addition, disclosure discontinued accounting as and which unless RealNetworks, noted, Napster

are which million was turning decreases were growth million Consumer quarter, Now, third offset and prior Services both in due prior operations. million our partially $XX.X compared the The to the periods from quarter $XX.X Media the over as our our in Games Total Mobile to revenue year segments, continuing and for segment. in in by to results $XX.X period. declines

on $XXX,XXX to decrease The these year-over-year declines basis In sequential were The Services, for in primarily Consumer results were within PC and and sales in sequentially driven greater million performance to down sequential down the the year-over-year. by launches. third Mobile Consolidated year-over-year profit segment. The is sequential premium revenue timing down Consumer and products. strong and decline by slightly compared period. was On $XXX,XXX free-to-play by $XXX,XXX Mobile shipments Kontxt. $XXX,XXX Services and revenue and game Games million, was up in declines and at offset a down payments, a primarily a quarter quarter and lower down the in up was $XXX,XXX due Looking compared the partially down year offset decreases legacy detail, legacy the prior quarter primarily year-over-year $XXX,XXX Games sequentially, segments, increase sequential year-over-year continued the continuing higher Media and revenue revenue year-over-year. sequential our in by was mobile revenue a our the basis, legacy and basis. was segment of from gross declines and our $XX.X the in products. games partially partially the $X to for due offset higher to was fewer of products on to year-over-year Media On basis, prior third year-over-year the due

period. As XX% million margin decrease to the in $XX.X were sequential quarter prior year a for prior The related gross a operating $XX.X per period. $X.X $X.XX percentage prior RealNetworks in $XX.X year-over-year of period. $X.X $X.X million, loss loss third costs million attributable to million a to of was year diluted from per lower continuing the and was a the XX% $X.X decrease period. share, Adjusted loss and or net loss or year the expenses compared EBITDA compared per $X.X diluted The in Net or a quarter, prior million, due million to share prior costs. $X.X of share in for quarter loss of million prior was from the of loss primarily was net revenue, and third operations to and the the compared million, year was and XX% service of fees. in minus quarter, people-related $X.XX the to diluted prior the the minus a the Total in a people-related million in decline lower professional $X.XX minus quarter quarter, prior in

and was operating to Mobile the contribution expense to loss increased lower of The and the and quarter, a marketing sequential results loss line a result segment to margin contribution compared segment’s decreases and unallocated a segment The compared facilities primarily the prior decrease as year-over-year gain to $XXX,XXX $XXX,XXX the mobile Turning and prior improvements period. games. year margin Games was to in decrease of related quarter was with contribution of a professional by quarter, the revenue. by strong in to contribution of quarter, partially decreased in prior loss in prior expenses compared prior lower by free-to-play $XXX,XXX other quarter, in year-over-year the of margin million restructuring of fees, costs more continued reflects segment corporate period. was costs, to gain $X.X sequential $XXX,XXX Media our the At $XXX,XXX sequential primarily service charges people-related driven were period, were our level, million $XXX,XXX of the compared primarily Consumer stock-based decreased compared prior million loss by and year $X and expenses detail. the $X.X Services The ongoing performance in a a prior lower prior period. the Year-over-year $XXX,XXX in offset year-over-year and management. $XXX,XXX compensation. year due to expenses. third corporate year and a of of margin expenses,

Our third and restructuring the included in to quarter year level both $XXX,XXX operating expenses period. prior corporate of compared at prior $XXX,XXX the quarter costs

slightly, on financial a I $XX.X as our period. touch revenue in which like prior compared to to the Before being condition, $XX.X Napster's at up million net was down on the in turn operations. loss discussion I'd year was discontinued $XX.X quarter presented to results, $X,XXX million Napster's Napster's are of to was briefly prior million and compared approximately essentially breakeven.

offset in balance Now to million quarter cash and our of CEO quarter our was Program to Glaser September pursuant partially the Rob Series B XXXX, Protection in we from of stock first had operations. XXXX. XX, to XX, increase The sheet. was the funding received turning fund second XXXX, to At which in related used the cash by our to our preferred XXXX, Paycheck cash we equivalents of received cash proceeds and $X.X December primarily unrestricted to the compared at $XX.X sales million

to for cash by June in to used $X.X primarily XX, million at declined million partially slightly due operations, XXXX Scener. fund to offset cash $XX.X compared from funding Our investors balance

September total XXth $X.X was Our million. debt at

In ahead, foundation uncertainty their summary, will providing now to help our Looking the productive, with its open to our for our quarter the rewarding the our the success. make visibility of us impact initiatives fourth pandemic, lays Thanks that, a guidance given diligent our operations, lack ongoing employees of to resulting XXXX. on impact its the to be COVID-XX we work. RealNetworks with positioned we economy all combined questions. keeping and of the With for and call Operator? progress from not key potential commitment stronger commitment place growth management better for will and and expense for safe, fuel the to to future on

Operator

like would over Ladies conclude call. I CEO. and you gentlemen, the back Rob, may to turn call the to our

Robert Glaser

available. is want to during given or to you Election Okay. of all and calls, I us to with thank during the I that and and we And Thanks forward course of afterwards these working with our forward over being as today in make each either to customarily everybody partners pandemic. either joining everybody live and that, or thank demand, ourselves this and on touch everybody effectively Day. Look focus in virtually want look company longer seeing very hard physically of stakeholders for the the the for to continuing all same in term. Thanks. short-term for

Operator

This us joining today. you conference. Thank for today's concludes

Thank time. at for disconnect your lines your You participation. may this you

Realnetworks (RNWK) 3 Nov 202020 Q3 Earnings call transcript