DivX, Inc. (NASDAQ:DIVX), a digital media company, today announced
results for the fourth quarter and fiscal year ended December 31,
2007. The Company reported record revenue for the fourth quarter of
$24.5 million, an increase of 47% compared to revenue of $16.7
million reported in the fourth quarter of last year. GAAP net
income in the fourth quarter of 2007 was approximately $3.7
million, or $0.11 per diluted share. DivX generated non-GAAP net
income of $5.6 million, or $0.16 per diluted share. Non-GAAP net
income and EPS excludes (1) non-cash share-based compensation of
approximately $6.4 million ($3.8 million, or $0.11 per diluted
share, net of related taxes); (2) Stage6 operating costs of
approximately $3.5 million ($2.1 million, or $0.06 per diluted
share, net of related taxes); (3) impairment of acquired intangible
assets attributable to the write-off of additional milestones
related to Veatros of approximately $750,000 ($450,000, or $0.01
per diluted share, net of related taxes); and (4) amortization of
purchased intangible assets related to MainConcept of $271,000
($163,000, net of related taxes). These four items were offset by
an income tax benefit during the fourth quarter from the release of
valuation allowances of approximately $4.6 million, or $0.13 per
diluted share. �During 2007, we experienced significant growth
across all areas of our business and made real strides toward
creating a global standard for high-quality digital video on any
device or platform,� said Kevin Hell, Chief Executive Officer of
DivX. �Specifically, we extended our footprint into key emerging
product categories including Blu-ray and mobile devices, launched
DivX Connected, and secured format approval from a major Hollywood
studio. In 2008, our focus will be on execution as we prudently
invest to extend these exciting wins while closely managing
profitability. DivX is emerging as the open alternative to Apple,
giving consumers the freedom and control to enjoy digital video
anywhere they choose.� �2007 was a solid year for DivX, highlighted
by strong revenue growth and record operating cash flows,� said Dan
Halvorson, DivX�s Chief Financial Officer. �The focus for 2008 will
be our highly profitable core licensing business and other key
growth strategies balanced with managing our investments for growth
and delivering shareholder value.� For the fiscal year ended
December 31, 2007, the Company reported record revenue of $84.9
million, an increase of 43% compared to revenue of $59.3 million
reported in the 2006 fiscal year. GAAP net income for the 2007
fiscal year was approximately $9.2 million, or $0.26 per diluted
share. DivX generated non-GAAP net income in the 2007 fiscal year
of $20.1 million, or $0.57 per diluted share. Non-GAAP EPS excludes
(1) non-cash share-based compensation of approximately $11.8
million ($7.1 million, or $0.20 per diluted share, net of related
taxes); (2) Stage6 operating costs of approximately $10.9 million
($6.5 million, or $0.18 per diluted share, net of related taxes);
(3) impairment of acquired intangible assets attributable to the
write-off of additional milestones related to Veatros of
approximately $3.0 million ($1.8 million, or $0.05 per diluted
share, net of related taxes); and (4) amortization of purchased
intangible assets related to MainConcept of $271,000 ($163,000, net
of related taxes). These four items were offset by an income tax
benefit during the fourth quarter from the release of valuation
allowances of approximately $4.6 million, or $0.13 per diluted
share. Q1 and 2008 Outlook �Let me address guidance for the first
quarter 2008, as well as guidance for the full year,� said
Halvorson. �We have less visibility in the back half of the year
and therefore are taking a measured approach toward our annual
guidance, but we do expect our non-GAAP projected EBITDA to be
approximately 25 to 30 percent for the full year 2008.� The
following table summarizes the Company's financial guidance for the
first quarter and the full 2008 fiscal year. These estimates are
based on the Company's current business outlook as of the date of
this press release and are based on: 1. � A projected effective tax
rate of 40% for the first quarter and the full 2008 fiscal year
which is dependant on the effective tax rates in various domestic
and foreign jurisdictions; � 2. Anticipated non-cash share-based
compensation of approximately $2.5 million ($1.5 million, or $0.04
per diluted share, net of related taxes) for the first quarter
2008; and approximately $10 million ($6 million, or $0.16 per
diluted share, net of related taxes) for the full 2008 fiscal year;
� 3. Stage6 operating costs and related accruals of approximately
$4.0 million ($2.4 million, or $0.07 per diluted share, net of
related taxes) for the first quarter and the full 2008 fiscal year;
� 4. Impairment of acquired intangible assets attributable to the
write-off of additional milestones related to Veatros of
approximately $1.0 million ($0.6 million, or $0.02 per diluted
share, net of related taxes) for the first quarter 2008; and
approximately $300,000 ($180,000, or less than a penny per diluted
share, net of related taxes) for the balance of the 2008 fiscal
year; � 5. Amortization of purchased intangible assets related to
MainConcept of approximately $550,000 ($330,000, or $0.01 per
diluted share, net of related taxes) for the first quarter 2008;
and approximately $2.2 million ($1.3 million, or $0.04 per diluted
share, net of related taxes) for the full 2008 fiscal year; � 6.
Expected revenue for technology licensing of approximately 75% for
the first quarter and between 75% and 85% for the balance of the
2008 fiscal year; expected revenue for media and other distribution
and services of approximately 25% for the first quarter and between
15% and 25% for the balance of the 2008 fiscal year. The full 2008
fiscal year guidance does not include any impact from the Company�s
recently announced stock repurchase program which allows for the
Company to repurchase up to $20 million of its common stock. � Q1
'08 Guidance � FY '08 Guidance � Revenue (in millions) $24.5 -
$25.5 � $95 - $100 � GAAP Earnings Per Share $(0.01) - $0.01 $0.14
- $0.22 � Adjustments: � Non-cash share-based compensation, net of
income tax $0.04 $0.16 � Stage6 related costs, net of income tax
$0.07 $0.07 � Impairment of intangible asset, net of income tax
$0.02 $0.03 � Amortization of purchased intangibles, net of income
tax $0.01 $0.04 � � � DivX Core Non-GAAP EPS, Diluted $0.13 - $0.15
� $0.44 - $0.52 Added Halvorson, �We anticipate that product
development expenses in 2008 will increase as a percentage of
revenue given our investment in new emerging product categories. In
addition, we expect revenue and deferred revenue to fluctuate from
quarter-to-quarter as we integrate and adjust the form of
MainConcept�s customer terms to traditional DivX terms and
conditions.� Quarterly Conference Call DivX, Inc. will discuss its
fourth quarter and annual 2007 results via teleconference at 4:30
p.m. ET or 1:30 p.m. PT today, March 11, 2008. To access the call,
please dial (877)-548-7914, or outside the U.S. (719) 325-4934, 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 7:30
p.m. ET or 4:30 p.m. PT on March 11, 2008 until midnight March 25,
2008 by dialing (888) 203-1112 or (719) 457-0820 with the replay
passcode 8353481. About DivX DivX, Inc. is a digital media company
that enables consumers to enjoy a high-quality video experience
across any kind of device. DivX creates, distributes and licenses
digital video technologies that span the "three screens" comprising
today's consumer media environment -- the PC, the television and
mobile devices. Over 100 million DivX Certified devices have
shipped into the market from leading consumer electronics
manufacturers. DivX also offers content providers and publishers a
complete solution for the distribution of secure, high-quality
digital video content. Driven by a globally recognized brand and a
passionate community of hundreds of millions of consumers, DivX is
simplifying the video experience to enable the digital home.
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,
reference to the Company�s focus for 2008, the Company's position
in the digital media space, plans for expanding the Company's core
licensing business, expectations for DivX Connected, plans for
extending the Company's content licensing partnerships, and
anticipated financial results for the first quarter and full year
2008. 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; the
risk that the Company's financial performance in the first quarter
and full year 2008 may not meet expectations; risks and
uncertainties related to the maintenance and strength of the DivX
brand; 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
quarterly report on Form 10-Q filed with the SEC on November 14,
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, other than as required under applicable securities laws.
Non-GAAP Financial Measures; GAAP EPS DivX has provided in this
release financial information that has not been prepared in
accordance with GAAP. This information includes non-GAAP net income
and diluted earnings per share, which excludes non-cash share-based
compensation expense, costs related to the operation of Stage6,
asset impairment charges, amortization of purchased intangible
assets and income tax benefits on adjustments to tax reserves and
the elimination of the valuation allowance on deferred tax assets.
This non-GAAP information is provided to enhance the reader's
overall understanding of the Company's current financial
performance and prospects for the future. Specifically, DivX
believes this information provides useful comparative data by
excluding non-cash share-based compensation expense, which is not
consistent from period to period. Also, DivX believes that the
exclusion of Stage6 expenses, asset impairment charges,
amortization of purchased intangible assets and income tax benefits
provides useful comparative data by reflecting DivX's business
operations in a manner that is consistent with expected future
operations. Management has historically used non-GAAP net income
and non-GAAP net income per share when evaluating operating
performance because we believe the exclusion of the items described
above provides an additional measure of our core operating results
and facilitates comparisons of our core operating performance
against prior periods and our business model objectives. The
presentation of this additional information should not be
considered in isolation or as a substitute for results prepared in
accordance with accounting principles generally accepted in the
United States. The Company continues to evaluate the factors that
might impact non-cash share-based compensation expense and accruals
for income tax expense. The non-cash share-based compensation
expense is expected to vary depending on the number of new grants
issued to both current and new employees, and changes in the
Company's stock price, stock market volatility, expected option
life, and risk-free interest rates (all of which are difficult to
estimate). In addition, the factors that impact the Company's
deferred tax assets are expected to vary from period to period,
also making the Company's effective tax rate difficult to estimate.
DivX, Inc. CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands) � �
December 31, December 31, � 2006 � 2007 (unaudited) Assets Current
assets: Cash and cash equivalents $ 86,310 $ 14,532 Restricted cash
270 - Marketable securities 62,331 126,503 Accounts receivable, net
6,939 10,397 Deferred tax assets, net 937 2,699 Prepaid expenses
and other current assets � 2,034 � 5,317 Total current assets
158,821 159,448 � Property and equipment, net 3,488 5,402 Deferred
tax assets, net 1,363 5,354 Acquired intangible assets - 14,261
Goodwill - 12,150 Other assets � 714 � 5,423 Total assets $ 164,386
$ 202,038 � Liabilities and stockholders'equity Current
liabilities: Accounts payable $ 2,189 $ 2,808 Accrued expenses
4,959 11,061 Deferred revenue 4,654 7,170 Deferred tax liability �
- � 4,269 Total current liabilities 11,802 25,308 � Long-term
liabilities � 1,673 � 1,290 Total liabilities 13,475 26,598 �
Stockholders' equity � 150,911 � 175,440 Total liabilities and
stockholders' equity $ 164,386 $ 202,038 DivX, Inc. CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS (in thousands, except per share
data) (unaudited) � � � � Three months ended December 31, Year
ended December 31, � 2006 � � 2007 � � 2006 � � 2007 � � Net
revenues: Technology licensing $ 13,433 $ 18,344 $ 47,324 $ 66,345
Media and other distribution and services � 3,224 � � 6,126 � �
12,001 � � 18,517 � � Total net revenues 16,657 24,470 59,325
84,862 � Cost of revenue: Cost of technology licensing 757 1,236
2,995 3,778 Cost of media and other distribution and services (1) �
316 � � 149 � � 993 � � 701 � Total cost of revenues � 1,073 � �
1,385 � � 3,988 � � 4,479 � � Gross margin 15,584 23,085 55,337
80,383 � Operating expenses: Selling, general and administrative
(1) (2) 7,597 19,368 25,971 58,315 Product development (1) (2)
4,321 5,647 15,353 18,738 Impairment of acquired intangibles � - �
� 750 � � - � � 2,973 � Total operating expenses � 11,918 � �
25,765 � � 41,324 � � 80,026 � � Income (loss) from operations
3,666 (2,680 ) 14,013 357 � Interest income 1,911 1,927 3,060 7,883
� Interest expense and other � (14 ) � (5 ) � (71 ) � (6 ) � Income
before income taxes 5,563 (758 ) 17,002 8,234 � Income tax
provision � (1,832 ) � (4,487 ) � 562 � � (974 ) � Net income $
7,395 � $ 3,729 � $ 16,440 � $ 9,208 � � Basic net income per share
$ 0.22 � $ 0.11 � $ 0.70 � $ 0.27 � � Diluted net income per share
$ 0.21 � $ 0.11 � $ 0.61 � $ 0.26 � � Shares used to compute basic
net income per share � 32,967 � � 34,587 � � 15,231 � � 33,939 � �
Shares used to compute diluted net income per share � 35,419 � �
35,476 � � 17,653 � � 35,415 � � � � � � � � � � � � � (1) Includes
stock-based compensation as follows: � Cost of revenues $ 1 $ - $ 4
$ 2 Selling, general and administrative 512 5,700 1,528 9,761
Product development � 387 � � 667 � � 822 � � 1,995 � Total
stock-based compensation $ 900 � $ 6,367 � $ 2,354 � $ 11,758 � �
(2) Includes Stage6 operating costs as follows: � Selling, general
and administrative $ - (a) $ 3,007 $ - (a) $ 9,824 Product
development � - � (a) � 476 � � - � (a) � 1,036 � � Total Stage6
operating costs $ - � $ 3,483 � $ - � $ 10,860 � � (a) Stage6
operating costs during the 2006 periods were not material. � �
DivX, Inc. UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS (in
thousands, except per share data) � Three months ended December 31,
Year ended December 31, � 2006 � � 2007 � � 2006 � � 2007 � � Net
Income: GAAP net income $ 7,395 $ 3,729 $ 16,440 $ 9,208
Share-based compensation 900 6,367 2,354 11,758 Stage6 operating
costs - (a) 3,482 - (a) 10,859 Impairment of acquired intangibles -
750 - 2,973 Amortization of purchased intangible assets - 271 - 271
Income tax benefit on adjustments to tax reserves and the
elimination of the valuation allowance on deferred tax assets
(4,099 ) (4,630 ) (7,652 ) (4,630 ) Income tax effects of pre-tax
adjustments � (351 ) � (4,348 ) � (918 ) � (10,345 ) � Non-GAAP net
income $ 3,845 � $ 5,621 � $ 10,224 � $ 20,095 � � Diluted earnings
per share: GAAP diluted earnings per share $ 0.21 $ 0.11 $ 0.61 $
0.26 Share-based compensation 0.03 0.18 0.13 0.33 Stage6 operating
costs - (a) 0.10 - (a) 0.31 Impairment of acquired intangibles -
0.02 - 0.08 Amortization of puchased intangible assets - 0.01 -
0.01 Income tax benefit on adjustments to tax reserves and the
elimination of the valuation allowance on deferred tax assets (0.12
) (0.13 ) (0.43 ) (0.13 ) Income tax effects of pre-tax adjustments
� (0.01 ) � (0.12 ) � (0.05 ) � (0.29 ) Non-GAAP diluted earnings
per share $ 0.11 � $ 0.16 � $ 0.26 � $ 0.57 � � Non-GAAP shares
used to compute diluted net income per share � 35,419 � � 35,476 �
� 17,653 � � 35,415 � � � The following table sets forth the
computation of Non-GAAP basic and diluted net income per share: �
Numerator: Net income $ 3,845 $ 5,621 $ 10,224 $ 20,095 Income
allocable to preferred stockholders � - � � - � � (5,704 ) � - � �
Net income allocable common stockholders $ 3,845 � $ 5,621 � $
4,520 � $ 20,095 � � Denominator: Weighted-average common shares
outstanding (basic) � 32,967 � � 34,587 � � 15,231 � � 33,939 � �
Weighted-average common shares outstanding (diluted) � 35,419 � �
35,476 � � 17,653 � � 35,415 � � Basic net income per share $ 0.12
� $ 0.16 � $ 0.30 � $ 0.59 � � Diluted net income per share $ 0.11
� $ 0.16 � $ 0.26 � $ 0.57 � - (a) Stage6 operating costs during
the 2006 periods were not material. DivX, Inc. CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS (in thousands) � � � � Three
months ended Year ended December 31, December 31, � 2006 � � 2007 �
� 2006 � � 2007 � (unaudited) (unaudited) � Net cash (used in)
provided by operating activities $ 4,353 $ (729 ) $ 16,775 $ 17,193
� Net cash used in investing activities (62,522 ) (24,381 ) (64,206
) (91,928 ) � Net cash (used in) provided by financing activities �
(1,914 ) � 672 � � 108,706 � � 2,957 � � Net increase (decrease) in
cash and cash equivalents (60,083 ) (24,438 ) 61,275 (71,778 ) Cash
and cash equivalents at beginning of period � 146,393 � � 38,970 �
� 25,035 � � 86,310 � � Cash and cash equivalents at end of period
$ 86,310 � $ 14,532 � $ 86,310 � $ 14,532 �
Divx, Inc. (MM) (NASDAQ:DIVX)
Historical Stock Chart
From Jun 2024 to Jul 2024
Divx, Inc. (MM) (NASDAQ:DIVX)
Historical Stock Chart
From Jul 2023 to Jul 2024