SEATTLE, May 6, 2020 /PRNewswire/ -- RealNetworks, Inc.
(Nasdaq: RNWK), a leader in digital media software and services,
today announced its financial results for the first quarter ended
March 31, 2020.
- Generated consolidated revenue of $43.1 million
- Games revenue up 16% year-over-year driven by success of
free-to-play strategy
- Pivoting SAFR strategy to focus on the intersection of
public health and public safety
- CEO Rob Glaser invested
$10.0 million into the
Company
- Judd Lee Named Senior Vice President, Chief Financial
Officer and Treasurer
Management Commentary
"The new decade is off to a completely unexpected start, as
everyone knows. We mourn the loss of a quarter of a million people
around the world due to COVID-19. We're also very mindful that, for
most of the world, including our home country, the pandemic
continues to be massively disruptive to our daily lives," said
Rob Glaser, Chairman and CEO of
RealNetworks.
Mr. Glaser continued, "In that context, at RealNetworks, we have
four primary areas of focus:
(1) The safety and
well-being of our employees and their families, our customers, and
our communities;
(2) Running Real in a fundamentally different way than
we have run the company before;
(3) Operating with mission, focus, and excellence;
and
(4) Finding new ways for us to contribute with our
products and services to the new challenges the world is
facing."
"I'm very impressed by how well our team is responding to these
challenges with purpose, focus, clarity, and creativity. Our first
quarter financial performance reflects this, especially in the
third month of the quarter. I am grateful to our team members for
their excellent work, and am hopeful that the impact of the team's
great work will become even more significant and impactful in the
weeks and months ahead," concluded Mr. Glaser.
First Quarter 2020 Financial Highlights
- Revenue was $43.1 million
(inclusive of $26.3 million from
Napster) compared to $43.4 million
(inclusive of $26.1 million from
Napster) in the prior quarter and $39.51 million (inclusive of
$24.3 million from Napster) in the
prior year period.
- Games revenue was $6.6 million,
consistent with the prior quarter and up 16% compared to
$5.7 million in the prior year
period.
- Gross profit margin was 44%, up from 43% in the prior quarter
and 37% in the prior year period.
- Operating expenses decreased $0.5
million, or 2%, from the prior quarter and decreased
$1.4 million, or 6%, from the prior
year period.
- Net loss attributable to RealNetworks was $(4.6) million, or $(0.12) per diluted share, compared to a net loss
of $(6.4) million, or $(0.17) per diluted share, in the prior quarter
and net income of $1.5 million, or
$0.04 per diluted share, in the prior
year period. Net income in the first quarter of 2019 included a
$12.3 million gain from the
acquisition of Napster.
- Adjusted EBITDA was a loss of $(3.3)
million compared to a loss of $(2.7)
million in the prior quarter and a loss of $(7.9) million in the prior year period.
- At March 31, 2020, the Company
had $19.0 million in unrestricted
cash and cash equivalents compared to $16.8
million at December 31,
2019.
1The first quarter of 2019 included a partial
quarter of revenue from Napster following the acquisition by
RealNetworks on January 18, 2019 of
an additional 42% interest in Napster.
Corporate Developments
- On February 10, 2020, the Company
entered into a purchase agreement with Rob
Glaser, RealNetworks' Founder, Chairman of the Board, Chief
Executive Officer, and largest shareholder by which Mr. Glaser
acquired approximately 8 million shares of RealNetworks Series B
Preferred Stock, for aggregate gross proceeds to RealNetworks of
approximately $10.0 million.
- As planned, on April 20, 2020, Judd Lee succeeded Michael Ensing as Senior Vice President, Chief
Financial Officer and Treasurer. Mr. Lee has served as Chief
Financial Officer and in senior leadership roles for technology
companies and investment firms for over two decades and brings to
RealNetworks an extensive background in financial management,
strategic planning, and operational accounting and finance.
- On April 24, 2020, RealNetworks
received $2.9 million in funding
pursuant to the Paycheck Protection Program ("PPP") established as
part of the Coronavirus Aid, Relief, and Economic Security (or
CARES) Act. RealNetworks intends to use the proceeds from the loan
to cover payroll costs, rent and utilities, in accordance with
program guidelines. In early May
2020, Napster expects to receive $1.7
million pursuant to the program.
- RealNetworks received a notification from The Nasdaq Stock
Market that as of April 23, 2020, the
company no longer meets Nasdaq's minimum bid price requirement.
Amid the extreme market uncertainty, Nasdaq recently implemented a
grace period through June 30, 2020
for compliance with its bid price rule, allowing companies to focus
on managing their businesses through the challenges caused by the
COVID-19 pandemic. RealNetworks has until December 28, 2020 to regain compliance with the
minimum bid price requirement and expects to take action well
before then to bring the company back into compliance.
Business Outlook
Given the ongoing uncertainty surrounding the global economy and
the future impact of COVID-19, RealNetworks is not providing
guidance for the second quarter ending June
30, 2020.
Conference Call and Webcast Information
RealNetworks will host a conference call today to review its
results and discuss its performance at approximately 4:30 p.m. ET / 1:30 p.m.
PT. Participants may join the conference call by dialing
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, May
27, 2020, by dialing 1-844-512-2921 (United States) or 1-412-317-6671
(International) and entering the replay pin number: 13701794.
A live webcast will be available on RealNetworks' Investor
Relations site under the Events & Presentations section at
http://investor.realnetworks.com and will be archived online
upon completion of the conference call.
About RealNetworks
Building on a legacy of digital media expertise and innovation,
RealNetworks has created a new generation of products that employ
best-in-class artificial intelligence and machine learning to
enhance and secure our daily lives. SAFR (www.safr.com) is the
world's premier facial recognition platform for live video. Leading
in real-world performance and accuracy as evidenced in testing by
NIST, SAFR enables new applications for security, convenience, and
analytics. Kontxt (www.kontxt.com) is the foremost platform for
categorizing A2P messages to help mobile carriers build customer
loyalty and drive new revenue through text message classification
and antispam. For information about our other products, visit
www.realnetworks.com.
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)
including noncontrolling interests 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
our current expectations regarding our future growth,
profitability, and market position, our financial condition and
liquidity, our strategic focus and initiatives, product plans,
agreements with partners, use of loan proceeds, our ability to
regain compliance with Nasdaq listing standards, and the growth and
future prospects relating to our Napster segment. 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 our expectations as of
today, and actual results may differ materially from the results
predicted. Factors that could cause actual results for
RealNetworks, on a consolidated basis, to differ from the results
predicted include: our ability to realize operating efficiencies,
growth and other benefits from the implementation of our growth
initiatives and restructuring efforts; cash usage and conservation,
and the pursuit of additional funding sources; successful
monetization of our products and services; competitive risks,
including the emergence or growth of competing technologies,
products and services; potential outcomes and effects of claims and
legal proceedings; risks associated with key customer or strategic
relationships and business acquisitions; challenges caused by the
COVID-19 pandemic; disruptions in the global financial markets,
including changes in consumer spending and impacts to credit
availability; fluctuations in foreign currencies; and unique risk
factors that relate to our Napster segment, such as risks stemming
from its streaming music service and related music royalties. More
information about potential risk factors that could affect our
business and financial results is included in RealNetworks' annual
report on Form 10-K for the most recent year ended December 31, 2019, 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 our financial statements and forward-looking
financial guidance requires us 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. RealNetworks assumes no obligation to
update any forward-looking statements or information, which are in
effect as of their respective dates.
For More Information:
Investor Relations for
RealNetworks
Kimberly Orlando, Addo Investor
Relations
310-829-5400
IR@realnetworks.com
RNWK-F
RealNetworks, Inc.
and Subsidiaries
|
Condensed
Consolidated Statements of Operations
|
(Unaudited)
|
|
|
Quarter Ended
March 31,
|
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
(in
thousands, except per share data)
|
|
|
|
|
|
Net
revenue
|
$
|
43,145
|
|
|
$
|
39,472
|
|
|
Cost of
revenue
|
24,176
|
|
|
24,870
|
|
|
Gross profit
|
18,969
|
|
|
14,602
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Research and
development
|
8,618
|
|
|
8.833
|
|
|
Sales and
marketing
|
8,117
|
|
|
8,142
|
|
|
General and
administrative
|
7,113
|
|
|
8,364
|
|
|
Restructuring
and other charges
|
209
|
|
|
167
|
|
|
|
|
|
|
|
Total operating expenses
|
24,057
|
|
|
25,506
|
|
|
|
|
|
|
|
Operating
loss
|
(5,088)
|
|
|
(10,904)
|
|
|
|
|
|
|
|
Other income
(expenses):
|
|
|
|
|
Interest
expense
|
(262)
|
|
|
(166)
|
|
|
Interest
income
|
5
|
|
|
77
|
|
|
Gain (loss) on
equity investment, net
|
—
|
|
|
12,338
|
|
|
Other income
(expenses), net
|
795
|
|
|
127
|
|
|
|
|
|
|
|
Total other income (expenses), net
|
538
|
|
|
12,376
|
|
|
|
|
|
|
|
Income (loss)
before income taxes
|
(4,550)
|
|
|
1,472
|
|
|
Income tax
expense
|
139
|
|
|
258
|
|
|
|
|
|
|
|
Net income (loss)
including noncontrolling interests
|
(4,689)
|
|
|
1,214
|
|
|
Net income (loss)
attributable to noncontrolling interests
|
(47)
|
|
|
(319)
|
|
|
Net income (loss)
attributable to RealNetworks
|
$
|
(4,642)
|
|
|
$
|
1,533
|
|
|
|
|
|
|
|
Net income (loss) per
share attributable to RealNetworks- Basic:
|
$
|
(0.12)
|
|
|
$
|
0.04
|
|
|
Net income (loss) per
share attributable to RealNetworks- Diluted:
|
$
|
(0.12)
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
Shares used to
compute basic net income (loss) per share
|
38,229
|
|
|
37,820
|
|
|
Shares used to
compute diluted net income (loss) per share
|
38,229
|
|
|
37,912
|
|
|
RealNetworks, Inc.
and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
|
|
March 31,
2020
|
|
December 31,
2019
|
|
(in
thousands)
|
ASSETS
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
19,046
|
|
|
$
|
16,805
|
|
Trade accounts
receivable, net
|
26,991
|
|
|
29,507
|
|
Deferred costs,
current portion
|
865
|
|
|
823
|
|
Prepaid expenses
and other current assets
|
8,873
|
|
|
7,445
|
|
Total current assets
|
55,775
|
|
|
54,580
|
|
|
|
|
|
Equipment and
software
|
30,419
|
|
|
32,167
|
|
Leasehold
improvements
|
2,903
|
|
|
3,311
|
|
Total equipment, software, and leasehold improvements
|
33,322
|
|
|
35,478
|
|
Less accumulated
depreciation and amortization
|
30,801
|
|
|
32,657
|
|
Net
equipment, software, and leasehold improvements
|
2,521
|
|
|
2,821
|
|
|
|
|
|
Operating lease
assets
|
10,961
|
|
|
11,592
|
|
Restricted cash
equivalents
|
5,374
|
|
|
5,374
|
|
Other
assets
|
1,150
|
|
|
1,891
|
|
Deferred costs,
non-current portion
|
1,156
|
|
|
1,021
|
|
Deferred tax
assets, net
|
752
|
|
|
761
|
|
Other
intangible assets, net
|
18,016
|
|
|
19,286
|
|
Goodwill
|
62,202
|
|
|
62,428
|
|
|
|
|
|
Total
assets
|
$
|
157,907
|
|
|
$
|
159,754
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
4,996
|
|
|
$
|
4,927
|
|
Accrued
royalties, fulfillment and other current liabilities
|
77,127
|
|
|
77,303
|
|
Deferred
revenue, current portion
|
6,437
|
|
|
6,620
|
|
Notes
payable
|
4,797
|
|
|
7,331
|
|
Total current liabilities
|
93,357
|
|
|
96,181
|
|
|
|
|
|
Deferred
revenue, non-current portion
|
287
|
|
|
96
|
|
Deferred tax
liabilities, net
|
1,116
|
|
|
1,172
|
|
Long-term lease
liabilities
|
7,770
|
|
|
8,466
|
|
Long-term
debt
|
3,900
|
|
|
3,900
|
|
Other long-term
liabilities
|
8,420
|
|
|
11,666
|
|
|
|
|
|
Total
liabilities
|
114,850
|
|
|
121,481
|
|
|
|
|
|
Total
shareholders' equity
|
43,606
|
|
|
38,775
|
|
|
|
|
|
Noncontrolling
interests
|
(549)
|
|
|
(502)
|
|
|
|
|
|
Total
equity
|
43,057
|
|
|
38,273
|
|
|
|
|
|
Total
liabilities and equity
|
$
|
157,907
|
|
|
$
|
159,754
|
|
RealNetworks, Inc.
and Subsidiaries
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
|
Three Months
Ended
March 31,
|
|
2020
|
|
2019
|
|
|
|
|
|
(in
thousands)
|
|
Cash flows from
operating activities:
|
|
|
|
Net income (loss)
including noncontrolling interests
|
$
|
(4,689)
|
|
|
$
|
1,214
|
|
Adjustments to
reconcile net income (loss) including noncontrolling interests to
net cash used in operating activities:
|
|
|
|
Depreciation and
amortization
|
1,436
|
|
|
1,482
|
|
Stock-based
compensation
|
380
|
|
|
1,384
|
|
(Gain) loss on equity
investment, net
|
—
|
|
|
(12,338)
|
|
Foreign currency
(gain) loss
|
(767)
|
|
|
(151)
|
|
Fair value adjustments
to contingent consideration liability
|
(300)
|
|
|
—
|
|
Net change in certain
operating assets and liabilities
|
(684)
|
|
|
(910)
|
|
Net cash
used in operating activities
|
(4,624)
|
|
|
(9,319)
|
|
Cash flows from
investing activities:
|
|
|
|
Purchases of
equipment, software, and leasehold improvements
|
(94)
|
|
|
(482)
|
|
Proceeds from sales
and maturities of short-term investments
|
—
|
|
|
24
|
|
Acquisition, net of
cash acquired
|
—
|
|
|
12,260
|
|
|
|
|
|
Net cash (used
in) provided by investing activities
|
(94)
|
|
|
11,802
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from issuance
of preferred stock
|
10,000
|
|
|
—
|
|
Tax payments from
shares withheld upon vesting of restricted stock
|
—
|
|
|
(271)
|
|
Proceeds from notes
payable and revolving credit facility
|
8,768
|
|
|
9,733
|
|
Repayments of notes
payable and revolving credit facility
|
(11,172)
|
|
|
(8,437)
|
|
Other financing
activities
|
—
|
|
|
450
|
|
Net cash
provided by financing activities
|
7,596
|
|
|
1,475
|
|
Effect of
exchange rate changes on cash, cash equivalents and restricted
cash
|
(637)
|
|
|
(207)
|
|
Net increase in
cash, cash equivalents and restricted cash
|
2,241
|
|
|
3,751
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
22,179
|
|
|
37,191
|
|
Cash, cash
equivalents and restricted cash, end of period
|
$
|
24,420
|
|
|
$
|
40,942
|
|
RealNetworks, Inc.
and Subsidiaries
|
Supplemental
Financial Information
|
(Unaudited)
|
|
|
|
2020
|
|
2019
|
|
|
Q1
|
|
Q4
|
|
Q3
|
|
Q2
|
|
Q1
|
|
|
(in
thousands)
|
Net Revenue by
Segment
|
|
|
|
|
|
|
|
|
|
Consumer Media
(A)
|
|
$
|
3,495
|
|
|
$
|
4,432
|
|
|
$
|
3,632
|
|
|
$
|
2,620
|
|
|
$
|
2,486
|
|
Mobile Services
(B)
|
|
6,690
|
|
|
6,312
|
|
|
6,895
|
|
|
6,997
|
|
|
6,939
|
|
Games (C)
|
|
6,637
|
|
|
6,567
|
|
|
7,164
|
|
|
6,048
|
|
|
5,710
|
|
Napster
(D)
|
|
26,323
|
|
|
26,089
|
|
|
27,302
|
|
|
28,583
|
|
|
24,337
|
|
Total net
revenue
|
|
$
|
43,145
|
|
|
$
|
43,400
|
|
|
$
|
44,993
|
|
|
$
|
44,248
|
|
|
$
|
39,472
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue by
Product
|
|
|
|
|
|
|
|
|
|
|
Consumer
Media
|
|
|
|
|
|
|
|
|
|
|
- Software License
(E)
|
|
$
|
2,020
|
|
|
$
|
2,856
|
|
|
$
|
1,987
|
|
|
$
|
944
|
|
|
$
|
735
|
|
- Subscription
Services (F)
|
|
929
|
|
|
992
|
|
|
1,028
|
|
|
1,040
|
|
|
1,088
|
|
- Product Sales
(G)
|
|
222
|
|
|
193
|
|
|
207
|
|
|
206
|
|
|
219
|
|
- Advertising &
Other (H)
|
|
324
|
|
|
391
|
|
|
410
|
|
|
430
|
|
|
444
|
|
|
|
|
|
|
|
|
|
|
|
|
Mobile
Services
|
|
|
|
|
|
|
|
|
|
|
- Software License
(I)
|
|
831
|
|
|
657
|
|
|
888
|
|
|
957
|
|
|
599
|
|
- Subscription
Services (J)
|
|
5,859
|
|
|
5,655
|
|
|
6,007
|
|
|
6,040
|
|
|
6,340
|
|
|
|
|
|
|
|
|
|
|
|
|
Games
|
|
|
|
|
|
|
|
|
|
|
- Subscription
Services (K)
|
|
2,770
|
|
|
3,007
|
|
|
3,056
|
|
|
3,073
|
|
|
2,985
|
|
- Product Sales
(L)
|
|
2,978
|
|
|
2,580
|
|
|
3,078
|
|
|
2,177
|
|
|
1,988
|
|
- Advertising &
Other (M)
|
|
889
|
|
|
980
|
|
|
1,030
|
|
|
798
|
|
|
737
|
|
|
|
|
|
|
|
|
|
|
|
|
Napster
|
|
|
|
|
|
|
|
|
|
|
- Subscription
Services (N)
|
|
26,323
|
|
|
26,089
|
|
|
27,302
|
|
|
28,583
|
|
|
24,337
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net
revenue
|
|
$
|
43,145
|
|
|
$
|
43,400
|
|
|
$
|
44,993
|
|
|
$
|
44,248
|
|
|
$
|
39,472
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue by
Geography
|
|
|
|
|
|
|
|
|
|
|
United
States
|
|
$
|
22,420
|
|
|
$
|
21,053
|
|
|
$
|
22,015
|
|
|
$
|
21,322
|
|
|
$
|
18,970
|
|
Rest of
world
|
|
20,725
|
|
|
22,347
|
|
|
22,978
|
|
|
22,926
|
|
|
20,502
|
|
Total net
revenue
|
|
$
|
43,145
|
|
|
$
|
43,400
|
|
|
$
|
44,993
|
|
|
$
|
44,248
|
|
|
$
|
39,472
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue by
Segment
|
(A) The Consumer
Media segment 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 segment primarily includes revenue from SaaS services and
sales of professional services provided to mobile
carriers.
|
(C) The Games segment
primarily includes revenue from sales of mobile and PC games,
online games subscription services, player purchases of in-game
virtual goods, and advertising on games sites and social network
sites.
|
(D) The Napster
segment primarily includes revenue from subscription music
offerings from on-demand streaming services and conditional
downloads. Napster revenues are included in our consolidated
results from the January 18, 2019 acquisition date
forward.
|
Net Revenue by
Product
|
(E) Software
licensing revenue within Consumer Media includes revenues from
licenses of our video codec technologies.
|
(F) Subscriptions
revenue within Consumer Media includes revenue from subscriptions
such as our RealPlayer Plus and SuperPass offerings.
|
(G) Product sales
within Consumer Media includes sales of RealPlayer Plus software to
consumers.
|
(H) Advertising &
other revenue within Consumer Media includes distribution of
third-party software products and advertising on RealPlayer
websites.
|
(I) Software license
revenue within Mobile Services includes revenue from our integrated
RealTimes platform and our facial recognition platform,
SAFR.
|
(J) Subscription
services revenue within Mobile Services includes revenue from
ringback tones and our messaging platform services, as well as from
related professional services provided to mobile
carriers.
|
(K) Subscription
services revenue within Games includes revenue from online games
subscriptions.
|
(L) Product sales
revenue within Games includes revenue from retail and wholesale
games-related revenue, sales of mobile games, and player purchases
of in-game virtual goods.
|
(M) Advertising &
other revenue within Games includes advertising on games sites and
social network sites.
|
(N) Subscription
services revenue within Napster includes music tracks by way of
on-demand streaming and conditional downloads offered directly to
end consumers and distribution partners.
|
RealNetworks, Inc.
and Subsidiaries
|
Segment Results of
Operations and Reconciliation to non-GAAP Contribution
Margin
|
(Unaudited)
|
|
|
|
2020
|
|
2019
|
|
|
Q1
|
|
Q4
|
|
Q1
|
|
|
(in
thousands)
|
Consumer
Media
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
|
$
|
3,495
|
|
|
$
|
4,432
|
|
|
$
|
2,486
|
|
Cost of
revenue
|
|
611
|
|
|
690
|
|
|
833
|
|
Gross
profit
|
|
2,884
|
|
|
3,742
|
|
|
1,653
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
83
|
%
|
|
84
|
%
|
|
66
|
%
|
|
|
|
|
|
|
|
Operating
expenses
|
|
2,458
|
|
|
2,498
|
|
|
3,119
|
|
Operating income
(loss), a GAAP measure
|
|
$
|
426
|
|
|
$
|
1,244
|
|
|
$
|
(1,466)
|
|
Depreciation and
amortization
|
|
13
|
|
|
34
|
|
|
54
|
|
|
|
|
|
|
|
|
Contribution margin, a
non-GAAP measure
|
|
$
|
439
|
|
|
$
|
1,278
|
|
|
$
|
(1,412)
|
|
|
|
|
|
|
|
|
Mobile
Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
|
$
|
6,690
|
|
|
$
|
6,312
|
|
|
$
|
6,939
|
|
Cost of
revenue
|
|
1,696
|
|
|
1,866
|
|
|
2,048
|
|
Gross
profit
|
|
4,994
|
|
|
4,446
|
|
|
4,891
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
75
|
%
|
|
70
|
%
|
|
70
|
%
|
|
|
|
|
|
|
|
Operating
expenses
|
|
7,588
|
|
|
7,198
|
|
|
7,561
|
|
Operating income
(loss), a GAAP measure
|
|
$
|
(2,594)
|
|
|
$
|
(2,752)
|
|
|
$
|
(2,670)
|
|
Depreciation and
amortization
|
|
98
|
|
|
100
|
|
|
231
|
|
|
|
|
|
|
|
|
Contribution margin, a
non-GAAP measure
|
|
$
|
(2,496)
|
|
|
$
|
(2,652)
|
|
|
$
|
(2,439)
|
|
|
|
|
|
|
|
|
Games
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
|
$
|
6,637
|
|
|
$
|
6,567
|
|
|
$
|
5,710
|
|
Cost of
revenue
|
|
1,794
|
|
|
1,716
|
|
|
1,670
|
|
Gross
profit
|
|
4,843
|
|
|
4,851
|
|
|
4,040
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
73
|
%
|
|
74
|
%
|
|
71
|
%
|
|
|
|
|
|
|
|
Operating
expenses
|
|
4,923
|
|
|
4,744
|
|
|
5,037
|
|
Operating income
(loss), a GAAP measure
|
|
$
|
(80)
|
|
|
$
|
107
|
|
|
$
|
(997)
|
|
Acquisitions related
intangible asset amortization
|
|
—
|
|
|
—
|
|
|
23
|
|
Depreciation and
amortization
|
|
138
|
|
|
85
|
|
|
83
|
|
|
|
|
|
|
|
|
Contribution margin, a
non-GAAP measure
|
|
$
|
58
|
|
|
$
|
192
|
|
|
$
|
(891)
|
|
|
|
|
|
|
|
|
Napster
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
|
$
|
26,323
|
|
|
$
|
26,089
|
|
|
$
|
24,337
|
|
Cost of
revenue
|
|
20,072
|
|
|
20,493
|
|
|
20,396
|
|
Gross
profit
|
|
6,251
|
|
|
5,596
|
|
|
3,941
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
24
|
%
|
|
21
|
%
|
|
16
|
%
|
|
|
|
|
|
|
|
Operating
expenses
|
|
6,461
|
|
|
7,147
|
|
|
5,532
|
|
Operating income
(loss), a GAAP measure
|
|
$
|
(210)
|
|
|
$
|
(1,551)
|
|
|
$
|
(1,591)
|
|
Acquisitions related
intangible asset amortization
|
|
1,125
|
|
|
1,126
|
|
|
943
|
|
Depreciation and
amortization
|
|
32
|
|
|
60
|
|
|
115
|
|
Restructuring and
other charges
|
|
122
|
|
|
544
|
|
|
—
|
|
|
|
|
|
|
|
|
Contribution margin, a
non-GAAP measure
|
|
$
|
1,069
|
|
|
$
|
179
|
|
|
$
|
(533)
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
$
|
3
|
|
|
$
|
(68)
|
|
|
$
|
(77)
|
|
Gross
profit
|
|
(3)
|
|
|
68
|
|
|
77
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
2,627
|
|
|
2,999
|
|
|
4,257
|
|
Operating income
(loss), a GAAP measure
|
|
$
|
(2,630)
|
|
|
$
|
(2,931)
|
|
|
$
|
(4,180)
|
|
Other income
(expense), net
|
|
795
|
|
|
(431)
|
|
|
127
|
|
Foreign currency
(gain) loss
|
|
(767)
|
|
|
494
|
|
|
(151)
|
|
Depreciation and
amortization
|
|
30
|
|
|
32
|
|
|
33
|
|
Fair value
adjustments to contingent consideration liability
|
|
(300)
|
|
|
300
|
|
|
—
|
|
Restructuring and
other charges
|
|
87
|
|
|
367
|
|
|
167
|
|
Stock-based
compensation
|
|
380
|
|
|
461
|
|
|
1,384
|
|
|
|
|
|
|
|
|
Contribution margin, a
non-GAAP measure
|
|
$
|
(2,405)
|
|
|
$
|
(1,708)
|
|
|
$
|
(2,620)
|
|
RealNetworks, Inc.
and Subsidiaries
|
Reconciliation of
Net income (loss) including noncontrolling interests to adjusted
EBITDA, a non-GAAP measure
|
(Unaudited)
|
|
|
|
2020
|
|
2019
|
|
|
Q1
|
|
Q4
|
|
Q1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
GAAP Net income (loss) including noncontrolling interests to
adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
including noncontrolling interests
|
|
$
|
(4,689)
|
|
|
$
|
(6,763)
|
|
|
$
|
1,214
|
|
Income tax expense
(benefit)
|
|
139
|
|
|
256
|
|
|
258
|
|
Interest
expense
|
|
262
|
|
|
207
|
|
|
166
|
|
Interest
income
|
|
(5)
|
|
|
(14)
|
|
|
(77)
|
|
(Gain) loss on equity
investment, net
|
|
—
|
|
|
—
|
|
|
(12,338)
|
|
Foreign currency
(gain) loss
|
|
(767)
|
|
|
494
|
|
|
(151)
|
|
Acquisitions related
intangible asset amortization
|
|
1,125
|
|
|
1,126
|
|
|
966
|
|
Depreciation and
amortization
|
|
311
|
|
|
311
|
|
|
516
|
|
Fair value
adjustments to contingent consideration liability
|
|
(300)
|
|
|
300
|
|
|
—
|
|
Restructuring and
other charges
|
|
209
|
|
|
911
|
|
|
167
|
|
Stock-based
compensation
|
|
380
|
|
|
461
|
|
|
1,384
|
|
Adjusted
EBITDA, a non-GAAP measure
|
|
$
|
(3,335)
|
|
|
$
|
(2,711)
|
|
|
$
|
(7,895)
|
|
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SOURCE RealNetworks, Inc.