TAIPEI, Taiwan, Aug. 1, 2018 /PRNewswire/ -- GigaMedia Limited
(NASDAQ: GIGM) today announced its second-quarter 2018 unaudited
financial results.
Comments from Management
In the past one year, the Company has steadfastly implemented a
prudent strategy in selecting, publishing and operating licensed
games as well as developing its own digital entertainment services.
While the second quarter saw a decrease in the Company's revenues,
the components of the revenues were more robust than a year ago
when the CEO James Huang was newly
appointed.
"In online games, we continue to make progress in shifting our
product mix, terminating products that are short-lived or
nonperforming, and devoting to product line that comprises of
long-lifespan games," said GigaMedia Limited CEO James Huang. "Games like Dragon indeed
had brought surges in revenues in the prior quarters, but their
short lifecycle made the initial investment in them highly risky
when their revenues began dwindling a few months soon after
launch.
"In executing the new strategic stability initiatives, we now
made it essential to consider a product's long-term sustainability
before investing in it," continued CEO James Huang, "In this manner, we launched in
last December 'Akaseka', a romance-based game in which
players assume the role of a sacred shrine maiden; and another new
title 'Sengoku Night Blood' in July
2018, featuring werewolf/vampire romances in Japan Warring States period. In following
quarters, we expect to launch one or two more licensed games that
are with high customer stickiness. Meanwhile, we are also
endeavoring to cultivate and build a stronger customer base, and to
enhance the suite of our self-developed casual games, aiming for
more balanced growth for GigaMedia."
"And no large amount of licensing, marketing or development
expenditures is to be committed now before a product's
profitability is proven. While launching a new title in the
increasingly competitive game industry is more and more risky and
expensive, we elect to adopt such an approach that mitigates the
risks significantly," continued CEO James
Huang.
"And while our business strategies always include expanding
through mergers and acquisitions, the recent rapid developments in
world economy certainly caution against any haste.
"Overall, we are confident that we are on the right track to
deliver solid financial performance and balanced growth, starting
2018 and on," stated GigaMedia Limited CEO James Huang.
Second Quarter Overview
- Operating revenues decreased by approximately 23.2%
quarter-on-quarter, to $1.7 million
from $2.2 million last quarter, and
46.8% year-over-year from $3.1
million the same period last year. The decrease was mainly
attributable to Dragon. This title was launched at the end
of 2016 and brought revenue surges in the first half of 2017, but
has entered the end of its lifecycle, and efforts to reviving it
would not be cost-effective.
- Gross profit decreased by approximately 40.0% to $0.7 million from $1.2
million in the first quarter of 2018. The gross margin rate
appeared to be lower as certain costs for new games were incurred
in this quarter.
- Operating expenses decreased slightly by 5.4% from prior
quarter and by 16.7% comparing to the same period of last
year.
- Consolidated loss from operations for the second quarter of
2018 amounted to $1.3 million, an
increase in loss by 37.6% from a loss of $1.0 million last quarter.
- Current assets decreased $1.4
million comparing to the last quarter of 2018, and the total
assets amounted to $64.2 million,
decreasing from $65.6 million at the
end of the first quarter of 2018.
- The net asset value was $5.39 per
share.
Unaudited Consolidated Financial Results
GigaMedia Limited is a diversified provider of digital
entertainment services. GigaMedia's digital entertainment service
business FunTown develops and operates a suite of digital
entertainments in Taiwan and
Hong Kong, with focus on
browser/mobile games and casual games.
Unaudited consolidated results of GigaMedia are summarized in
the table below.
For the Second Quarter
GIGAMEDIA 2Q18 UNAUDITED CONSOLIDATED
FINANCIAL RESULTS
|
(unaudited, all
figures in US$ thousands, except
per share amounts)
|
|
2Q18
|
|
1Q18
|
|
Change
(%)
|
|
2Q18
|
|
2Q17
|
|
Change
(%)
|
Revenues
|
|
1,659
|
|
2,160
|
|
-23.19%
|
|
1,659
|
|
3,117
|
|
-46.78%
|
Gross
Profit
|
|
728
|
|
1,214
|
|
-40.03%
|
|
728
|
|
1,751
|
|
-58.42%
|
Loss from
Operations
|
|
(1,342)
|
|
(975)
|
|
NM
|
|
(1,342)
|
|
(734)
|
|
NM
|
Net (Loss) income
Attributable to
GigaMedia
|
|
(755)
|
|
(853)
|
|
NM
|
|
(755)
|
|
904
|
|
NM
|
Earnings (Loss)
Per Share Attributable
to GigaMedia, Diluted
|
|
(0.07)
|
|
(0.08)
|
|
NM
|
|
(0.07)
|
|
0.08
|
|
NM
|
EBITDA
(A)
|
|
(1,056)
|
|
(1,104)
|
|
NM
|
|
(1,056)
|
|
812
|
|
NM
|
Cash,
Restricted Cash and Cash
Equivalents
|
|
61,244
|
|
62,618
|
|
-2.19%
|
|
61,244
|
|
66,953
|
|
-8.53%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM= Not
Meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)
EBITDA (earnings before interest, taxes, depreciation, and
amortization) is provided as a supplement to
results provided in accordance with U.S. generally accepted
accounting principles ("GAAP"). (See, "Use
of Non-GAAP Measures," for more details.)
|
Second-Quarter Financial Results
- Consolidated revenues for the second quarter of 2018 decreased
by 23.2% quarter-on-quarter to $1.7million from $2.2
million in last quarter, and by 46.8% year-over-year from
$3.1 million the same period last
year, as revenues from Dragon, a star last year, has
declined in past months.
- Consolidated gross profit was a decrease of 40.0%
quarter-on-quarter to $0.7 million
from $1.2 million last quarter, and a
decrease of 58.4% year-over-year from $1.8
million in the second quarter of 2017. The gross margin rate
appeared to be lower as certain costs for new games were incurred
in this quarter.
- Consolidated operating expenses were $2.1 million in the second quarter of 2018,
comparable to that in last quarter, and decreased by 16.7% if
compared to that in the same period last year, reflecting scaled
back spending on selling and marketing expenses.
- Consolidated loss from operation of the second quarter of 2018
was $1.3 million, increased by 37.6%
from the first quarter of 2018.
- Consolidated non-operating income during the second quarter of
2018 was $0.6 million compared to
$0.1 million in the first quarter of
2018 and $1.6 million in the same
period last year. Results in the second quarter of 2017 primarily
included gains from the transaction of ArcheAge.
- Consolidated net loss (income) of the second quarter of 2018
was a net loss of $0.8 million,
compared to a net loss of $0.9
million in the first quarter of 2018 and a net income of
$0.9 million in the second quarter of
2017. The period variations primarily reflected the factors
affecting consolidated loss from operations and non-operating
income.
- Cash, restricted cash and cash equivalents at the end of the
second quarter of 2018 amounted to $61.2
million, slightly decreased by 2.2% from the end of the
first quarter of 2018.
Financial Position
GigaMedia maintained its solid financial position, with cash,
restricted cash and cash equivalents amounted to $61.2 million, or $5.54 per share, as of June 30, 2018.
Business Outlook
The following forward-looking statements reflect GigaMedia's
expectations as of August
1, 2018. Given potential changes in
economic conditions and consumer spending, the evolving nature
of digital entertainments, and various other risk
factors, including those discussed in the Company's
2017 Annual Report on Form 20-F
filed with the U.S. Securities and Exchange
Commission as referenced below, actual results may
differ materially.
Digital Entertainment Business
The management team has
done a magnificent work executing new strategic stability
initiatives. A strong product line made up of long-lifespan games
is gradually built up, and initial steps taken to create a stable
and profitable business model. A new title "Sengoku Night
Blood" has been successfully launched on July 5, 2018, and another female-oriented title
is expected later this year.
Moreover, a series of events in this autumn are planned to
celebrate the 20th anniversary of GigaMedia's casual games, and the
events are expected to re-active the old customer base, bring in
new members and give a boost to the revenues. Also a celebration in
this autumn, for the third anniversary of GigaMedia's first
female-oriented Yume100, is also under preparation.
"We forecast a solid revenue growth to begin in the following
quarters, driven by the newly launched games and the promotions,"
said GigaMedia Limited CEO James
Huang, "And effective control over the operating expenses
and precision marketing and advertising will help us heading to a
healthier growth path."
Investment
The Company continues looking for
investment targets with high potentials to expand the business.
"While we continue seeking suitable strategic investment and
acquisition targets to increase corporate growth and maximize
shareholders' value, we believe a profitable entertainment business
of ours would certainly give us more leverage and present more
possibilities of synergies when we are entering into a strategic
cooperation and acquisition," stated CEO James Huang.
Use of Non-GAAP Measures
To supplement GigaMedia's consolidated financial statements
presented in accordance with US GAAP, the Company uses the
following measure defined as non-GAAP by the SEC: EBITDA.
Management believes that EBITDA (earnings before interest, taxes,
depreciation, and amortization) is a useful supplemental measure of
performance because it excludes certain non-cash items such as
depreciation and amortization and that EBITDA is a measure of
performance used by some investors, equity analysts and others to
make informed investment decisions. EBITDA is not a recognized
earnings measure under GAAP and does not have a standardized
meaning. Non-GAAP measures such as EBITDA should be considered in
addition to results prepared in accordance with GAAP, but should
not be considered a substitute for, or superior to, other financial
measures prepared in accordance with GAAP. A limitation of using
EBITDA is that it does not include all items that impact the
company's net income for the period. Reconciliations to the GAAP
equivalents of the non-GAAP financial measures are provided on the
attached unaudited financial statements.
About the Numbers in This Release
Quarterly results
All quarterly results referred to in
the text, tables and attachments to this release are unaudited. The
financial statements from which the financial results reported in
this press release are derived have been prepared in accordance
with U.S. GAAP, unless otherwise noted as "non-GAAP," and are
presented in U.S. dollars.
Q&A
For Q&A regarding the second quarter 2018 performance upon
the release, investors may send the questions via email to
IR@gigamedia.com.tw, and the responses will be replied
individually.
About GigaMedia
Headquartered in Taipei,
Taiwan, GigaMedia Limited (Singapore registration number: 199905474H) is
a diversified provider of digital entertainment services in
Taiwan and Hong Kong. GigaMedia's digital entertainment
service business is an innovative leader in Asia with growing capabilities of development,
distribution and operation of digital entertainments, as well as
platform services for games with a focus on mobile games and casual
games. More information on GigaMedia can be obtained from
www.gigamedia.com.tw.
The statements included above and elsewhere in this press
release that are not historical in nature are "forward-looking
statements" within the meaning of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include statements regarding expected
financial performance (as described without limitation in the
"Business Outlook" section and in quotations from management in
this press release) and GigaMedia's strategic and operational
plans. These statements are based on management's current
expectations and are subject to risks and uncertainties and changes
in circumstances. There are important factors that could cause
actual results to differ materially from those anticipated in the
forward looking statements, including but not limited to, our
ability to license, develop or acquire additional online games that
are appealing to users, our ability to retain existing online game
players and attract new players, and our ability to launch online
games in a timely manner and pursuant to our anticipated schedule.
Further information on risks or other factors that could cause
results to differ is detailed in GigaMedia's Annual Report on Form
20-F filed in April 2018 and its
other filings with the United States Securities and Exchange
Commission.
(Tables to
follow)
|
|
|
|
|
GIGAMEDIA
LIMITED
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
Three months
ended
|
|
|
6/30/2018
|
|
03/31/2018
|
|
6/30/2017
|
|
|
unaudited
|
|
unaudited
|
|
unaudited
|
|
|
USD
|
|
USD
|
|
USD
|
Operating
revenues
|
|
|
|
|
|
|
|
|
|
Digital entertainment
service revenues
|
|
|
1,658,914
|
|
|
2,160,466
|
|
|
3,117,035
|
Other
revenues
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
|
1,658,914
|
|
|
2,160,466
|
|
|
3,117,035
|
Operating
costs
|
|
|
|
|
|
|
|
|
|
Cost of Digital
entertainment service revenues
|
|
|
930,421
|
|
|
946,688
|
|
|
1,366,009
|
Cost of other
revenues
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
|
930,421
|
|
|
946,688
|
|
|
1,366,009
|
Gross
profit
|
|
|
728,493
|
|
|
1,213,778
|
|
|
1,751,026
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
Product development
and engineering expenses
|
|
|
300,635
|
|
|
289,171
|
|
|
288,371
|
Selling and marketing
expenses
|
|
|
760,185
|
|
|
996,751
|
|
|
1,174,915
|
General and
administrative expenses
|
|
|
1,003,359
|
|
|
896,504
|
|
|
982,438
|
Other
|
|
|
6,555
|
|
|
6,494
|
|
|
39,186
|
|
|
|
2,070,734
|
|
|
2,188,920
|
|
|
2,484,910
|
Loss from
operations
|
|
|
(1,342,241)
|
|
|
(975,142)
|
|
|
(733,884)
|
Non-operating
income (expense)
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
338,602
|
|
|
278,943
|
|
|
108,580
|
Interest
expense
|
|
|
--
|
|
|
--
|
|
|
(11,717)
|
Foreign exchange
(loss) gain - net
|
|
|
246,830
|
|
|
(158,912)
|
|
|
(74,523)
|
(Loss) Gain on
disposal of property, plant and equipment
|
|
|
31
|
|
|
--
|
|
|
965
|
Equity in net loss on
equity method investments
|
|
|
--
|
|
|
--
|
|
|
(311)
|
Impairment loss on
marketable securities and investments
|
|
|
--
|
|
|
--
|
|
|
(52,242)
|
Other -
net
|
|
|
2,122
|
|
|
2,346
|
|
|
1,667,257
|
|
|
|
587,585
|
|
|
122,377
|
|
|
1,638,009
|
(Loss) Income from
continuing operations before income
taxes
|
|
|
(754,656)
|
|
|
(852,765)
|
|
|
904,125
|
Income tax benefit
(expense)
|
|
|
--
|
|
|
0
|
|
|
--
|
(Loss) Income from
continuing operations
|
|
|
(754,656)
|
|
|
(852,765)
|
|
|
904,125
|
Net (loss)
income
|
|
|
(754,656)
|
|
|
(852,765)
|
|
|
904,125
|
Less: Net loss
attributable to noncontrolling interest
|
|
|
--
|
|
|
--
|
|
|
--
|
Net (loss) income
attributable to shareholders of GigaMedia
|
|
|
(754,656)
|
|
|
(852,765)
|
|
|
904,125
|
(Loss) Earnings per
share attributable to GigaMedia
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations
|
|
|
(0.07)
|
|
|
(0.08)
|
|
|
0.08
|
Loss from discontinued
operations
|
|
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
|
|
(0.07)
|
|
|
(0.08)
|
|
|
0.08
|
Diluted:
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations
|
|
|
(0.07)
|
|
|
(0.08)
|
|
|
0.08
|
Loss from discontinued
operations
|
|
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
|
|
(0.07)
|
|
|
(0.08)
|
|
|
0.08
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
11,052,235
|
|
|
11,052,235
|
|
|
11,052,332
|
Diluted
|
|
|
11,052,235
|
|
|
11,052,235
|
|
|
11,052,235
|
GIGAMEDIA
LIMITED
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
6/30/2018
|
|
3/31/2018
|
|
6/30/2017
|
|
|
unaudited
|
|
unaudited
|
|
unaudited
|
|
|
USD
|
|
USD
|
|
USD
|
Assets
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
60,732,757
|
|
|
62,111,308
|
|
|
66,449,544
|
Marketable securities
- current
|
|
|
--
|
|
|
--
|
|
|
2,617
|
Accounts receivable -
net
|
|
|
672,143
|
|
|
626,225
|
|
|
724,508
|
Prepaid
expenses
|
|
|
309,952
|
|
|
384,051
|
|
|
510,432
|
Restricted
cash
|
|
|
511,710
|
|
|
506,981
|
|
|
503,640
|
Other
receivables
|
|
|
335,119
|
|
|
314,331
|
|
|
913,366
|
Other current
assets
|
|
|
121,693
|
|
|
140,241
|
|
|
146,242
|
Total current
assets
|
|
|
62,683,374
|
|
|
64,083,137
|
|
|
69,250,349
|
|
|
|
|
|
|
|
|
|
|
Property, plant &
equipment - net
|
|
|
173,051
|
|
|
203,992
|
|
|
29,445
|
Intangible assets -
net
|
|
|
48,473
|
|
|
9,353
|
|
|
4,848
|
Prepaid licensing and
royalty fees
|
|
|
1,043,823
|
|
|
993,833
|
|
|
389,886
|
Other
assets
|
|
|
279,616
|
|
|
289,821
|
|
|
384,468
|
Total
assets
|
|
|
64,228,337
|
|
|
65,580,136
|
|
|
70,058,996
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
|
--
|
|
|
--
|
|
|
2,629,849
|
Accounts
payable
|
|
|
244,240
|
|
|
364,977
|
|
|
291,215
|
Accrued
compensation
|
|
|
405,416
|
|
|
207,524
|
|
|
375,393
|
Accrued
expenses
|
|
|
2,098,418
|
|
|
2,148,836
|
|
|
2,628,643
|
Unearned
revenue
|
|
|
1,756,877
|
|
|
1,845,355
|
|
|
2,111,474
|
Other current
liabilities
|
|
|
176,174
|
|
|
336,062
|
|
|
169,352
|
Total current
liabilities
|
|
|
4,681,125
|
|
|
4,902,754
|
|
|
8,205,926
|
Other
liabilities
|
|
|
--
|
|
|
--
|
|
|
1,671,511
|
Total
liabilities
|
|
|
4,681,125
|
|
|
4,902,754
|
|
|
9,877,437
|
GigaMedia's
shareholders' equity
|
|
|
59,547,212
|
|
|
60,677,382
|
|
|
60,181,559
|
Noncontrolling
interest
|
|
|
--
|
|
|
--
|
|
|
--
|
Total
equity
|
|
|
59,547,212
|
|
|
60,677,382
|
|
|
60,181,559
|
Total liabilities and
equity
|
|
|
64,228,337
|
|
|
65,580,136
|
|
|
70,058,996
|
GIGAMEDIA
LIMITED
|
RECONCILIATIONS OF
NON-GAAP RESULTS OF OPERATIONS
|
|
|
Three months
ended
|
|
|
6/30/2018
|
|
3/31/2018
|
|
6/30/2017
|
|
|
unaudited
|
|
unaudited
|
|
unaudited
|
|
|
USD
|
|
USD
|
|
USD
|
Reconciliation of
Net Income (Loss) to EBITDA
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to GigaMedia
|
|
|
(754,656)
|
|
|
(852,765)
|
|
|
904,125
|
Depreciation
|
|
|
25,563
|
|
|
23,454
|
|
|
1,657
|
Amortization
|
|
|
11,532
|
|
|
3,828
|
|
|
3,005
|
Interest
income
|
|
|
(338,602)
|
|
|
(278,943)
|
|
|
(108,580)
|
Interest
expense
|
|
|
--
|
|
|
--
|
|
|
11,717
|
Income tax (benefit)
expense
|
|
|
--
|
|
|
--
|
|
|
--
|
EBITDA
|
|
|
(1,056,163)
|
|
|
(1,104,426)
|
|
|
811,924
|
View original
content:http://www.prnewswire.com/news-releases/gigamedia-announces-second-quarter-2018-financial-results-300690076.html
SOURCE GigaMedia Limited