SEATTLE, Feb. 6, 2019 /PRNewswire/ -- RealNetworks,
Inc. (Nasdaq: RNWK), a leader in digital media software and
services, today announced results for the fourth quarter and full
year ended December 31, 2018.
- 2018 revenue of $69.5 million, compared to $78.7 million in 2017
- Commercializing four key growth initiatives: SAFR,
Kontxt, RMHD and mobile games
- Reduced 2018 operating expenses by 3%
year-over-year
- Subsequent to year-end, doubled stake to become 84%
majority owner of Napster at compelling economic terms for
RealNetworks
Management Commentary
"In 2018 we did not achieve our financial goals.
Nonetheless, 2018 was a solid year strategically, in which we made
progress on our key growth initiatives, especially SAFR, our
world-class facial recognition platform," said Rob Glaser, Chairman and CEO of RealNetworks.
"2019 will also be an important year of commercial progress for
SAFR, as well as our other key growth initiatives: Kontxt, our
anti-spam and classification platform for messaging; RMHD, our
video codec in China; and
GameHouse, our casual mobile games business."
Mr. Glaser added, "We are also delighted to welcome Napster more
fully back into the RealNetworks family through our recent
acquisition of an additional 42% stake, bringing our ownership to
84%. Bill Patrizio and his
team have done an outstanding job of refocusing Napster around B2B
and returning Napster to profitability. Through the first
nine months of 2018, Napster generated over $14 million in operating income. The addition of
Napster significantly increases our scale, with combined full-year
revenue of over $200 million."
Fourth Quarter 2018 Financial Highlights from Continuing
Operations
- Revenue was $16.6 million
compared to $17.6 million in the
prior quarter and $18.9 million in
the prior year period.
- Gross margin from continuing operations was 77%, up from 76% in
the prior quarter and 74% in the prior year period.
- Operating expenses were flat from the prior quarter and
decreased by $0.3 million, or 1%,
from the prior year period.
- Net loss was $(6.9) million, or
$(0.18) per share, compared to net
loss of $(6.0) million, or
$(0.16) per share, in the prior
quarter and a net income of $0.4
million, or $0.01 per share,
in the prior year period. In the prior year period, net income
included the $4.5 million gain on the
final receipt of cash from the 2015 sale of the Slingo and social
casino business.
- Adjusted EBITDA was a loss of $(4.1)
million compared to a loss of $(3.4)
million in the prior quarter and a loss of $(3.6) million in the prior year period. A
reconciliation of GAAP net income (loss) to adjusted EBITDA, a
non-GAAP measure, is provided in the financial tables that
accompany this release.
Full Year 2018 Financial Highlights from Continuing
Operations
- Revenue was $69.5 million, down
from $78.7 million in the prior
year.
- Operating expenses declined by $2.1
million, or 3%, from the prior year.
- Net loss was $(25.0) million, or
$(0.66) per share, compared to
$(17.4) million, or $(0.47) per share in the prior year.
- Adjusted EBITDA was a loss of $(16.3)
million, compared to a loss of $(12.0) million in the prior year. A
reconciliation of GAAP net income (loss) to adjusted EBITDA, a
non-GAAP measure, is provided in the financial tables that
accompany this release.
- At December 31, 2018, the Company
had $35.6 million in unrestricted
cash, cash equivalents and short-term investments, compared to
$39.1 million at September 30, 2018.
Business Outlook
Following its acquisition of an additional 42% interest in
Rhapsody International (dba Napster), RealNetworks will include
100% of Napster in its consolidated financial statements, which
will include a 16% noncontrolling interest. As a result, as of the
acquisition date forward, Napster is reflected in the Company's
financial outlook for the first quarter of 2019. The Company's
outlook also accounts for one-time transaction related costs.
For the first quarter of 2019, RealNetworks expects to achieve
the following results including noncontrolling interest:
- Total revenue is expected to be in the range of $40.0 million to $43.0
million.
- Adjusted EBITDA loss is expected to be in the range of
$(5.0) million to $(8.0) million.
New Revenue Recognition Accounting Standard
As of January 1, 2018, we adopted
Accounting Standards Codification 606 (Topic 606), Revenue from
Contracts with Customers, which affects the accounting for our
revenue. We adopted Topic 606 using the modified retrospective
transition method, under which the prior periods presented have not
been recast to reflect adoption of the new standard.
For additional details on the impact of the standard, see our
Annual Report on Form 10-K for the year ended December 31, 2017, and our 2018 Quarterly Reports
on Form 10-Q.
Conference Call and Webcast Information
The company will host a conference call today to review results
and discuss the company's performance shortly after 4:30 p.m. ET/1:30 p.m.
PT. You may join the conference call by calling
1-877-451-6152 (United States) or
1-201-389-0879 (International). A telephonic replay of the call
will also be available shortly after the completion of the call,
until 11:59 pm ET on Wednesday, February 27,
2019, by dialing 1-844-512-2921 (United States) or 1-412-317-6671
(International) and entering the replay pin number: 13686405.
A live webcast will be available on RealNetworks' Investor
Relations site under Events at http://investor.realnetworks.com and
will be archived online upon completion of the conference call.
For More Information
Investor Relations for RealNetworks
Laura Bainbridge, Addo IR
310-829-5400
IR@realnetworks.com
RNWK-F
About RealNetworks
RealNetworks creates innovative technology products and services
that make it easy to connect with and enjoy digital media.
RealNetworks invented the streaming media category and continues to
connect consumers with their digital media both directly and
through partners, aiming to support every network, device, media
type and social network. Find RealNetworks' corporate information
at www.realnetworks.com.
RealNetworks® and the company's respective logos are trademarks,
registered trademarks, or service marks of RealNetworks, Inc. Other
products and company names mentioned are the trademarks of their
respective owners.
About Non-GAAP Financial Measures
To supplement RealNetworks' consolidated financial information
presented in accordance with GAAP in this press release, the
company also discloses certain non-GAAP financial measures,
including adjusted EBITDA and contribution margin by reportable
segment, which management believes provide investors with useful
information.
In the financial tables of our earnings press release,
RealNetworks has included reconciliations of GAAP net income (loss)
from continuing operations to adjusted EBITDA and operating income
(loss) by reportable segment to contribution margin by reportable
segment.
The rationale for management's use of non-GAAP measures is
included in the supplementary materials presented with the
quarterly earnings materials. Please refer to Exhibit 99.2
("Information Regarding Non-GAAP Financial Measures") to the
company's report on Form 8-K, which is being submitted today
to the SEC.
Forward-Looking Statements
This press release contains forward-looking statements that
involve risks and uncertainties, including statements relating to
RealNetworks' current expectations regarding future revenue and
adjusted EBITDA, our future growth, profitability, and market
position, our strategic focus and initiatives, agreements with
partners, and the growth and future prospects relating to our
Rhapsody d/b/a Napster affiliate. All statements contained in this
press release that do not relate to matters of historical fact
should be considered forward-looking statements. These
statements reflect RealNetworks' expectations as of today, and
actual results may differ materially from the results predicted.
Factors that could cause actual results to differ from the results
predicted include: RealNetworks' ability to realize operating
efficiencies, growth and other benefits from the implementation of
its growth plan, strategic initiatives, and restructuring efforts;
the impact of Napster's financial condition and results of
operations upon consolidation with those of RealNetworks; the
emergence of new entrants and competition in the market for digital
media products and services; other competitive risks, including the
growth of competing technologies, products and services; the
potential outcomes and effects of claims and legal proceedings on
RealNetworks' business, prospects, financial condition or results
of operations; risks associated with key customer or strategic
relationships, business acquisitions and the introduction of new
products and services; changes in consumer and advertising spending
in response to disruptions in the global financial markets;
fluctuations in foreign currencies; and changes in RealNetworks'
effective tax rate. More information about potential risk factors
that could affect RealNetworks' business and financial results is
included in RealNetworks' annual report on Form 10-K for the most
recent year ended December 31, its
quarterly reports on Form 10-Q and in other reports and documents
filed by RealNetworks from time to time with the Securities and
Exchange Commission. The preparation of RealNetworks' financial
statements and forward-looking financial guidance requires the
company to make estimates and assumptions that affect the reported
amount of assets and liabilities, and revenues and expenses during
the reported period. Actual results may differ materially
from these estimates under different assumptions or
conditions. The company assumes no obligation to update any
forward-looking statements or information, which are in effect as
of their respective dates.
RealNetworks, Inc.
and Subsidiaries
|
Condensed
Consolidated Statements of Operations
|
(Unaudited)
|
|
|
Quarter
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
(in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
Net
revenue
|
$
|
16,557
|
|
|
$
|
18,865
|
|
|
$
|
69,510
|
|
|
$
|
78,718
|
|
Cost of
revenue
|
3,727
|
|
|
4,965
|
|
|
17,727
|
|
|
23,164
|
|
Gross profit
|
12,830
|
|
|
13,900
|
|
|
51,783
|
|
|
55,554
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
7,391
|
|
|
7,625
|
|
|
30,789
|
|
|
29,710
|
|
Sales and
marketing
|
5,262
|
|
|
5,419
|
|
|
21,140
|
|
|
22,953
|
|
General and
administrative
|
5,180
|
|
|
5,358
|
|
|
20,706
|
|
|
20,996
|
|
Restructuring
and other charges
|
553
|
|
|
255
|
|
|
1,873
|
|
|
2,526
|
|
Lease exit and
related benefit
|
—
|
|
|
—
|
|
|
(454)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
18,386
|
|
|
18,657
|
|
|
74,054
|
|
|
76,185
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
(5,556)
|
|
|
(4,757)
|
|
|
(22,271)
|
|
|
(20,631)
|
|
|
|
|
|
|
|
|
|
Other income
(expenses):
|
|
|
|
|
|
|
|
Interest income,
net
|
74
|
|
|
83
|
|
|
344
|
|
|
436
|
|
Gain (loss) on
investments, net
|
—
|
|
|
4,500
|
|
|
—
|
|
|
4,500
|
|
Equity in net
loss of Napster
|
(20)
|
|
|
(2,894)
|
|
|
(757)
|
|
|
(3,991)
|
|
Other income
(expense), net
|
92
|
|
|
(217)
|
|
|
(103)
|
|
|
(506)
|
|
|
|
|
|
|
|
|
|
Total other income (expense), net
|
146
|
|
|
1,472
|
|
|
(516)
|
|
|
439
|
|
|
|
|
|
|
|
|
|
Loss from
continuing operations before income taxes
|
(5,410)
|
|
|
(3,285)
|
|
|
(22,787)
|
|
|
(20,192)
|
|
Income tax
expense (benefit)
|
1,494
|
|
|
(3,732)
|
|
|
2,202
|
|
|
(2,778)
|
|
|
|
|
|
|
|
|
|
Net income (loss)
from continuing operations
|
(6,904)
|
|
|
447
|
|
|
(24,989)
|
|
|
(17,414)
|
|
Net income from
discontinued operations, net of tax
|
—
|
|
|
392
|
|
|
—
|
|
|
1,109
|
|
Net income
(loss)
|
$
|
(6,904)
|
|
|
$
|
839
|
|
|
$
|
(24,989)
|
|
|
$
|
(16,305)
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share - Basic:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
(0.18)
|
|
|
$
|
0.01
|
|
|
$
|
(0.66)
|
|
|
$
|
(0.47)
|
|
Discontinued
operations
|
—
|
|
|
0.01
|
|
|
—
|
|
|
0.03
|
|
Net income (loss) per
share - Basic
|
$
|
(0.18)
|
|
|
$
|
0.02
|
|
|
$
|
(0.66)
|
|
|
$
|
(0.44)
|
|
Net income (loss) per
share - Diluted:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
(0.18)
|
|
|
$
|
0.01
|
|
|
$
|
(0.66)
|
|
|
$
|
(0.47)
|
|
Discontinued
operations
|
—
|
|
|
0.01
|
|
|
—
|
|
|
0.03
|
|
Net income (loss) per
share - Diluted
|
$
|
(0.18)
|
|
|
$
|
0.02
|
|
|
$
|
(0.66)
|
|
|
$
|
(0.44)
|
|
|
|
|
|
|
|
|
|
Shares used to
compute basic net income (loss) per share
|
37,680
|
|
|
37,315
|
|
|
37,582
|
|
|
37,163
|
|
Shares used to
compute diluted net income (loss) per share
|
37,680
|
|
|
37,383
|
|
|
37,582
|
|
|
37,163
|
|
RealNetworks, Inc.
and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
|
|
December 31,
2018
|
|
December 31,
2017
|
|
(in
thousands)
|
ASSETS
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
35,561
|
|
|
$
|
51,196
|
|
Short-term
investments
|
24
|
|
|
8,779
|
|
Trade accounts
receivable, net
|
11,751
|
|
|
12,689
|
|
Deferred costs,
current portion
|
331
|
|
|
426
|
|
Prepaid
expenses and other current assets
|
5,911
|
|
|
3,715
|
|
Current assets of
discontinued operations
|
—
|
|
|
17,456
|
|
Total current
assets
|
53,578
|
|
|
94,261
|
|
|
|
|
|
Equipment and
software
|
37,458
|
|
|
46,417
|
|
Leasehold
improvements
|
3,292
|
|
|
3,536
|
|
Total
equipment, software, and leasehold improvements
|
40,750
|
|
|
49,953
|
|
Less
accumulated depreciation and amortization
|
37,996
|
|
|
46,093
|
|
Net equipment,
software, and leasehold improvements
|
2,754
|
|
|
3,860
|
|
|
|
|
|
Restricted cash
equivalents
|
1,630
|
|
|
2,400
|
|
Other
assets
|
3,997
|
|
|
5,588
|
|
Deferred costs,
non-current portion
|
528
|
|
|
955
|
|
Deferred tax
assets, net
|
851
|
|
|
1,047
|
|
Other
intangible assets, net
|
26
|
|
|
325
|
|
Goodwill
|
16,955
|
|
|
13,060
|
|
|
|
|
|
Total
assets
|
$
|
80,319
|
|
|
$
|
121,496
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
3,910
|
|
|
$
|
3,785
|
|
Accrued and
other current liabilities
|
11,312
|
|
|
12,365
|
|
Commitment to
Napster
|
2,750
|
|
|
2,750
|
|
Deferred
revenue, current portion
|
2,125
|
|
|
3,097
|
|
Current liabilities
of discontinued operations
|
—
|
|
|
17,107
|
|
Total current
liabilities
|
20,097
|
|
|
39,104
|
|
|
|
|
|
Deferred
revenue, non-current portion
|
268
|
|
|
443
|
|
Deferred
rent
|
986
|
|
|
982
|
|
Deferred tax
liabilities, net
|
1,168
|
|
|
19
|
|
Other long-term
liabilities
|
960
|
|
|
1,775
|
|
|
|
|
|
Total
liabilities
|
23,479
|
|
|
42,323
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
56,840
|
|
|
79,173
|
|
|
|
|
|
Total
liabilities and shareholders' equity
|
$
|
80,319
|
|
|
$
|
121,496
|
|
RealNetworks, Inc.
and Subsidiaries
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
|
Year Ended
December 31,
|
|
2018
|
|
2017
|
|
(in
thousands)
|
|
Cash flows from
operating activities:
|
|
|
|
Net
loss
|
$
|
(24,989)
|
|
|
$
|
(16,305)
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
Depreciation
and amortization
|
2,135
|
|
|
2,936
|
|
Stock-based
compensation
|
2,508
|
|
|
3,675
|
|
Equity in net
loss of Napster
|
757
|
|
|
3,991
|
|
Deferred
income taxes, net
|
1,170
|
|
|
(3,871)
|
|
Loss (gain) on
investments, net
|
—
|
|
|
(4,500)
|
|
Fair value of
warrants granted in 2015 and 2017, net of subsequent mark to market
adjustments in 2018 and 2017
|
124
|
|
|
(216)
|
|
Net change in
certain operating assets and liabilities
|
(926)
|
|
|
(7,060)
|
|
Net cash
used in operating activities
|
(19,221)
|
|
|
(21,350)
|
|
Cash flows from
investing activities:
|
|
|
|
Purchases of
equipment, software, and leasehold improvements
|
(765)
|
|
|
(734)
|
|
Purchases of
short-term investments
|
—
|
|
|
(13,905)
|
|
Proceeds from
sales and maturities of short-term investments
|
8,755
|
|
|
48,457
|
|
Acquisition,
net of cash acquired
|
(4,192)
|
|
|
—
|
|
Advance to
Napster
|
—
|
|
|
(1,500)
|
|
Proceeds from
the sale of Slingo and social casino business
|
—
|
|
|
4,500
|
|
Net cash
provided by investing activities
|
3,798
|
|
|
36,818
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
issuance of common stock (stock options and stock purchase
plan)
|
199
|
|
|
239
|
|
Tax payments
from shares withheld upon vesting of restricted stock
|
(261)
|
|
|
(356)
|
|
Net cash
used in financing activities
|
(62)
|
|
|
(117)
|
|
Effect of
exchange rate changes on cash, cash equivalents and restricted
cash
|
(920)
|
|
|
1,824
|
|
Net
increase (decrease) in cash, cash equivalents and restricted
cash
|
(16,405)
|
|
|
17,175
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
53,596
|
|
|
36,421
|
|
Cash, cash
equivalents and restricted cash, end of period
|
$
|
37,191
|
|
|
$
|
53,596
|
|
RealNetworks, Inc.
and Subsidiaries
|
Supplemental
Financial Information
|
(Unaudited)
|
|
|
2018
|
|
2017
|
|
YTD
|
|
Q4
|
|
Q3
|
|
Q2
|
|
Q1
|
|
YTD
|
|
Q4
|
|
Q3
|
|
Q2
|
|
Q1
|
|
(in
thousands)
|
Net Revenue by
Line of Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Media
(A)
|
$
|
18,168
|
|
|
$
|
4,068
|
|
|
$
|
4,733
|
|
|
$
|
3,884
|
|
|
$
|
5,483
|
|
|
$
|
22,569
|
|
|
$
|
5,752
|
|
|
$
|
4,197
|
|
|
$
|
6,951
|
|
|
$
|
5,669
|
|
Mobile Services
(B)
|
29,670
|
|
|
6,899
|
|
|
7,348
|
|
|
6,719
|
|
|
8,704
|
|
|
30,752
|
|
|
7,155
|
|
|
7,678
|
|
|
7,720
|
|
|
8,199
|
|
Games (C)
|
21,672
|
|
|
5,590
|
|
|
5,498
|
|
|
5,121
|
|
|
5,463
|
|
|
25,397
|
|
|
5,958
|
|
|
6,682
|
|
|
6,934
|
|
|
5,823
|
|
Total net
revenue
|
$
|
69,510
|
|
|
$
|
16,557
|
|
|
$
|
17,579
|
|
|
$
|
15,724
|
|
|
$
|
19,650
|
|
|
$
|
78,718
|
|
|
$
|
18,865
|
|
|
$
|
18,557
|
|
|
$
|
21,605
|
|
|
$
|
19,691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue by
Product
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
Media
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Software License
(D)
|
$
|
9,940
|
|
|
$
|
2,049
|
|
|
$
|
2,746
|
|
|
$
|
1,808
|
|
|
$
|
3,337
|
|
|
$
|
13,643
|
|
|
$
|
3,595
|
|
|
$
|
2,012
|
|
|
$
|
4,741
|
|
|
$
|
3,295
|
|
- Subscription
Services (E)
|
4,895
|
|
|
1,153
|
|
|
1,232
|
|
|
1,225
|
|
|
1,285
|
|
|
5,891
|
|
|
1,362
|
|
|
1,434
|
|
|
1,531
|
|
|
1,564
|
|
- Product Sales
(F)
|
1,177
|
|
|
257
|
|
|
281
|
|
|
299
|
|
|
340
|
|
|
1,310
|
|
|
350
|
|
|
322
|
|
|
261
|
|
|
377
|
|
- Advertising &
Other (G)
|
2,156
|
|
|
609
|
|
|
474
|
|
|
552
|
|
|
521
|
|
|
1,725
|
|
|
445
|
|
|
429
|
|
|
418
|
|
|
433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mobile
Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Software License
(H)
|
2,838
|
|
|
514
|
|
|
520
|
|
|
469
|
|
|
1,335
|
|
|
2,337
|
|
|
388
|
|
|
688
|
|
|
642
|
|
|
619
|
|
- Subscription
Services (I)
|
26,832
|
|
|
6,385
|
|
|
6,828
|
|
|
6,250
|
|
|
7,369
|
|
|
28,415
|
|
|
6,767
|
|
|
6,990
|
|
|
7,078
|
|
|
7,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Games
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Subscription
Services (J)
|
11,141
|
|
|
3,014
|
|
|
2,745
|
|
|
2,689
|
|
|
2,693
|
|
|
11,024
|
|
|
2,707
|
|
|
2,708
|
|
|
2,781
|
|
|
2,828
|
|
- Product Sales
(K)
|
8,647
|
|
|
2,013
|
|
|
2,279
|
|
|
1,953
|
|
|
2,402
|
|
|
13,806
|
|
|
3,086
|
|
|
3,851
|
|
|
4,007
|
|
|
2,862
|
|
- Advertising &
Other (L)
|
1,884
|
|
|
563
|
|
|
474
|
|
|
479
|
|
|
368
|
|
|
567
|
|
|
165
|
|
|
123
|
|
|
146
|
|
|
133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net
revenue
|
$
|
69,510
|
|
|
$
|
16,557
|
|
|
$
|
17,579
|
|
|
$
|
15,724
|
|
|
$
|
19,650
|
|
|
$
|
78,718
|
|
|
$
|
18,865
|
|
|
$
|
18,557
|
|
|
$
|
21,605
|
|
|
$
|
19,691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue by
Geography
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United
States
|
$
|
35,803
|
|
|
$
|
7,697
|
|
|
$
|
9,026
|
|
|
$
|
7,646
|
|
|
$
|
11,434
|
|
|
$
|
40,833
|
|
|
$
|
10,120
|
|
|
$
|
10,084
|
|
|
$
|
10,889
|
|
|
$
|
9,740
|
|
Rest of
world
|
33,707
|
|
|
8,860
|
|
|
8,553
|
|
|
8,078
|
|
|
8,216
|
|
|
37,885
|
|
|
8,745
|
|
|
8,473
|
|
|
10,716
|
|
|
9,951
|
|
Total net
revenue
|
$
|
69,510
|
|
|
$
|
16,557
|
|
|
$
|
17,579
|
|
|
$
|
15,724
|
|
|
$
|
19,650
|
|
|
$
|
78,718
|
|
|
$
|
18,865
|
|
|
$
|
18,557
|
|
|
$
|
21,605
|
|
|
$
|
19,691
|
|
|
Net Revenue by
Line of Business
|
(A) The Consumer
Media division primarily includes revenue from the licensing of our
portfolio of video codec technologies. Also included is RealPlayer
and related products, such as the distribution of third-party
software products, advertising on RealPlayer websites, sales of
RealPlayer Plus software to consumers, and consumer subscriptions
such as RealPlayer Plus and SuperPass.
|
(B) The Mobile
Services division primarily includes revenue from SaaS services and
sales of professional services provided to mobile
carriers.
|
(C) The Games
division primarily includes revenue from sales of mobile and PC
games, online games subscription services, and advertising on games
sites and social network sites.
|
Net Revenue by
Product
|
(D) Software
licensing revenue within Consumer Media includes revenues from
licenses of our video codec technologies.
|
(E) Subscriptions
revenue within Consumer Media includes revenue from subscriptions
such as our RealPlayer Plus and SuperPass offerings.
|
(F) Product sales
within Consumer Media includes sales of RealPlayer Plus software to
consumers.
|
(G) Advertising &
other revenue within Consumer Media includes distribution of
third-party software products and advertising on RealPlayer
websites.
|
(H) Software license
revenue within Mobile Services includes revenue from our integrated
RealTimes platform.
|
(I) Subscription
services revenue within Mobile Services includes revenue from
ringback tones and our intercarrier messaging services, as well as
from related professional services provided to mobile
carriers.
|
(J) Subscription
services revenue within Games includes revenue from online games
subscriptions.
|
(K) Product sales
revenue within Games includes revenue from retail and wholesale
games-related revenue and sales of mobile games.
|
(L) Advertising &
other revenue within Games includes advertising on games sites and
social network sites.
|
RealNetworks, Inc.
and Subsidiaries
|
Segment Results of
Operations and Reconciliation to non-GAAP Contribution
Margin
|
(Unaudited)
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Q4
|
|
Q3
|
|
Q4
|
|
YTD
|
|
YTD
|
|
(in
thousands)
|
Consumer
Media
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
$
|
4,068
|
|
|
$
|
4,733
|
|
|
$
|
5,752
|
|
|
$
|
18,168
|
|
|
$
|
22,569
|
|
Cost of
revenue
|
882
|
|
|
955
|
|
|
915
|
|
|
3,858
|
|
|
4,460
|
|
Gross
profit
|
3,186
|
|
|
3,778
|
|
|
4,837
|
|
|
14,310
|
|
|
18,109
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
78
|
%
|
|
80
|
%
|
|
84
|
%
|
|
79
|
%
|
|
80
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
3,614
|
|
|
3,448
|
|
|
3,573
|
|
|
14,419
|
|
|
14,530
|
|
Operating income
(loss), a GAAP measure
|
$
|
(428)
|
|
|
$
|
330
|
|
|
$
|
1,264
|
|
|
$
|
(109)
|
|
|
$
|
3,579
|
|
Depreciation and
amortization
|
49
|
|
|
49
|
|
|
42
|
|
|
195
|
|
|
410
|
|
|
|
|
|
|
|
|
|
|
|
Contribution
margin, a non-GAAP measure
|
$
|
(379)
|
|
|
$
|
379
|
|
|
$
|
1,306
|
|
|
$
|
86
|
|
|
$
|
3,989
|
|
|
|
|
|
|
|
|
|
|
|
Mobile
Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
$
|
6,899
|
|
|
$
|
7,348
|
|
|
$
|
7,155
|
|
|
$
|
29,670
|
|
|
$
|
30,752
|
|
Cost of
revenue
|
2,121
|
|
|
2,052
|
|
|
2,271
|
|
|
8,623
|
|
|
10,021
|
|
Gross
profit
|
4,778
|
|
|
5,296
|
|
|
4,884
|
|
|
21,047
|
|
|
20,731
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
69
|
%
|
|
72
|
%
|
|
68
|
%
|
|
71
|
%
|
|
67
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
6,906
|
|
|
6,825
|
|
|
6,709
|
|
|
28,066
|
|
|
27,970
|
|
Operating income
(loss), a GAAP measure
|
$
|
(2,128)
|
|
|
$
|
(1,529)
|
|
|
$
|
(1,825)
|
|
|
$
|
(7,019)
|
|
|
$
|
(7,239)
|
|
Acquisitions related
intangible asset amortization
|
69
|
|
|
70
|
|
|
89
|
|
|
322
|
|
|
574
|
|
Depreciation and
amortization
|
116
|
|
|
165
|
|
|
174
|
|
|
616
|
|
|
732
|
|
|
|
|
|
|
|
|
|
|
|
Contribution margin,
a non-GAAP measure
|
$
|
(1,943)
|
|
|
$
|
(1,294)
|
|
|
$
|
(1,562)
|
|
|
$
|
(6,081)
|
|
|
$
|
(5,933)
|
|
|
|
|
|
|
|
|
|
|
|
Games
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
$
|
5,590
|
|
|
$
|
5,498
|
|
|
$
|
5,958
|
|
|
$
|
21,672
|
|
|
$
|
25,397
|
|
Cost of
revenue
|
1,622
|
|
|
1,228
|
|
|
1,868
|
|
|
6,123
|
|
|
8,710
|
|
Gross
profit
|
3,968
|
|
|
4,270
|
|
|
4,090
|
|
|
15,549
|
|
|
16,687
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
71
|
%
|
|
78
|
%
|
|
69
|
%
|
|
72
|
%
|
|
66
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
4,865
|
|
|
5,447
|
|
|
5,293
|
|
|
20,324
|
|
|
20,401
|
|
Operating income
(loss), a GAAP measure
|
$
|
(897)
|
|
|
$
|
(1,177)
|
|
|
$
|
(1,203)
|
|
|
$
|
(4,775)
|
|
|
$
|
(3,714)
|
|
Acquisitions related
intangible asset amortization
|
23
|
|
|
23
|
|
|
18
|
|
|
66
|
|
|
97
|
|
Depreciation and
amortization
|
82
|
|
|
91
|
|
|
163
|
|
|
484
|
|
|
630
|
|
|
|
|
|
|
|
|
|
|
|
Contribution margin, a non-GAAP measure
|
$
|
(792)
|
|
|
$
|
(1,063)
|
|
|
$
|
(1,022)
|
|
|
$
|
(4,225)
|
|
|
$
|
(2,987)
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
$
|
(898)
|
|
|
$
|
4
|
|
|
$
|
(89)
|
|
|
$
|
(877)
|
|
|
$
|
(27)
|
|
Gross
profit
|
898
|
|
|
(4)
|
|
|
89
|
|
|
877
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
3,001
|
|
|
2,548
|
|
|
3,082
|
|
|
11,245
|
|
|
13,284
|
|
Operating income
(loss), a GAAP measure
|
$
|
(2,103)
|
|
|
$
|
(2,552)
|
|
|
$
|
(2,993)
|
|
|
$
|
(10,368)
|
|
|
$
|
(13,257)
|
|
Other income
(expense), net
|
92
|
|
|
(112)
|
|
|
(217)
|
|
|
(103)
|
|
|
(506)
|
|
Depreciation and
amortization
|
58
|
|
|
109
|
|
|
48
|
|
|
452
|
|
|
493
|
|
Restructuring and
other charges
|
553
|
|
|
632
|
|
|
255
|
|
|
1,873
|
|
|
2,526
|
|
Stock-based
compensation
|
395
|
|
|
499
|
|
|
630
|
|
|
2,508
|
|
|
3,675
|
|
Lease exit and
related benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
(454)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Contribution margin, a non-GAAP measure
|
$
|
(1,005)
|
|
|
$
|
(1,424)
|
|
|
$
|
(2,277)
|
|
|
$
|
(6,092)
|
|
|
$
|
(7,069)
|
|
RealNetworks, Inc.
and Subsidiaries
|
Reconciliation of
Net income (loss) from continuing operations to adjusted EBITDA, a
non-GAAP measure
|
(Unaudited)
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Q4
|
|
Q3
|
|
Q4
|
|
YTD
|
|
YTD
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
GAAP Net income (loss) from continuing operations to adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
from continuing operations
|
$
|
(6,904)
|
|
|
$
|
(5,977)
|
|
|
$
|
447
|
|
|
$
|
(24,989)
|
|
|
$
|
(17,414)
|
|
Income tax expense
(benefit)
|
1,494
|
|
|
272
|
|
|
(3,732)
|
|
|
2,202
|
|
|
(2,778)
|
|
Interest income,
net
|
(74)
|
|
|
(72)
|
|
|
(83)
|
|
|
(344)
|
|
|
(436)
|
|
(Gain) loss on
investments, net
|
—
|
|
|
—
|
|
|
(4,500)
|
|
|
—
|
|
|
(4,500)
|
|
Equity in net loss of
Napster
|
20
|
|
|
737
|
|
|
2,894
|
|
|
757
|
|
|
3,991
|
|
Acquisitions related
intangible asset amortization
|
92
|
|
|
93
|
|
|
107
|
|
|
388
|
|
|
671
|
|
Depreciation and
amortization
|
305
|
|
|
414
|
|
|
427
|
|
|
1,747
|
|
|
2,265
|
|
Restructuring and
other charges
|
553
|
|
|
632
|
|
|
255
|
|
|
1,873
|
|
|
2,526
|
|
Stock-based
compensation
|
395
|
|
|
499
|
|
|
630
|
|
|
2,508
|
|
|
3,675
|
|
Lease exit and
related benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
(454)
|
|
|
—
|
|
Adjusted
EBITDA, a non-GAAP measure
|
$
|
(4,119)
|
|
|
$
|
(3,402)
|
|
|
$
|
(3,555)
|
|
|
$
|
(16,312)
|
|
|
$
|
(12,000)
|
|
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SOURCE RealNetworks, Inc.