SEATTLE, Nov. 3, 2020 /PRNewswire/ -- RealNetworks, Inc.
(Nasdaq: RNWK), a leader in digital media software and services,
today announced its financial results for the third quarter ended
September 30, 2020. This release
refers to "continuing" and "discontinued" operations due to the
pending sale of Napster, RealNetworks' 84%-owned subsidiary, to
MelodyVR Group PLC, which is expected to close in the fourth
quarter of 2020. Effective as of the signing date, August 25, 2020, Napster is treated as a
discontinued operation for accounting and disclosure purposes;
therefore, unless otherwise noted, results presented in this
release relate to the continuing operations of RealNetworks, which
exclude Napster.
- Revenue from continuing operations of $16.6 million and net loss of $(3.2) million
-
- Games revenue was up 6% year-over-year and 2%
quarter-over-quarter driven by success of free-to-play strategy,
which grew 60% year-over-year
- Adjusted EBITDA loss of $(1.9)
million, our 5th consecutive quarter of year-over-year
improvement
- Significant progress with SAFR initiative
-
- Appointed Brad Donaldson as Vice
President, Computer Vision to lead the strategic development and
market expansion of SAFR
- Launched SAFR Version 3.0 featuring enhanced COVID-19 response
features and a new high-sensitivity face detector
- Awarded contract for SAFR with Tijuana International Airport's Cross Border
Xpress™ (CBX)
- Progress with monetizing and scaling assets
-
- Sale of Napster to MelodyVR expected to close in Q4 2020 in a
transaction valued at approximately $70
million, which includes the assumption of approximately
$44 million in Napster liabilities
and $26.3 million in a mix of cash
and equity consideration
- Spun-out and raised $2.1 million
in external funding for Scener after incubating the RealNetworks'
startup for two years
Management Commentary
"In Q3 we continued to make
solid progress on several fronts" said Rob
Glaser, Founder, Chairman, and Chief Executive Officer of
RealNetworks. "Our commitment to improving business performance led
to our fifth consecutive quarter of year-over-year improvement in
our adjusted EBITDA loss. Our two largest growth opportunities
remain our free-to-play Games, which grew 60% year-over-year, and
the SAFR platform. We also made great progress in streamlining,
optimizing and monetizing other parts of Real, as demonstrated by
the pending sale of Napster to MelodyVR and the successful capital
raise for Scener. Finally, we also significantly strengthened our
management team by bringing in Mike
Ensing as President and COO, and Brad Donaldson as VP, Computer Vision to lead
the strategic development and market expansion of SAFR."
Third Quarter 2020 Financial Highlights from Continuing
Operations
- Revenue was $16.6 million
compared to $17.1 million in the
prior quarter and $17.7 million in
the prior year period.
- Games revenue was $7.6 million,
up 2% compared to $7.5 million in the
prior quarter and up 6% compared to $7.2
million in the prior year period.
- Gross profit margin was 75%, unchanged from 75% in the prior
quarter and down from 76% in the prior year period.
- Operating expenses decreased $0.3
million, or 2%, from the prior quarter and decreased
$3.2 million, or 17%, from the prior
year period.
- Net loss attributable to RealNetworks was $(3.2) million, or $(0.08) per diluted share, compared to a net loss
of $(3.1) million, or $(0.08) per diluted share, in the prior quarter
and a net loss of $(5.2) million, or
$(0.14) per diluted share, in the
prior year period.
- Adjusted EBITDA was a loss of $(1.9)
million compared to a loss of $(1.4)
million in the prior quarter and a loss of $(3.2) million in the prior year period.
- At September 30, 2020, the
Company had $13.2 million in
unrestricted cash and cash equivalents compared to $14.4 million at June 30,
2020 and $8.5 million at
December 31, 2019.
Corporate Developments
- On August 25, 2020, Napster
signed a definitive agreement to be sold to MelodyVR, subject to
closing conditions, with a total transaction value of approximately
$70 million. Terms of the merger
require payment by MelodyVR of $26.3
million in combined cash and MelodyVR stock at closing, and
MelodyVR will assume approximately $44
million in Napster liabilities. The final value to
RealNetworks from the transaction is subject to several factors
including deal costs, Napster's repayment of $3.9 million in debt, an escrow of $3.0 million, the mix of cash and MelodyVR stock
and the market value of that stock, and payment by RealNetworks to
Columbus Nova for the January 2019 acquisition of its interest in
Napster. The transaction is expected to close in the fourth quarter
of 2020, at which point RealNetworks will provide further
details.
- On September 18, 2020, the
Company announced the appointment of Brad
Donaldson as Vice President, Computer Vision to lead the
strategic development and market expansion of the SAFR product
line.
Business Outlook
Given the ongoing uncertainty surrounding the global economy and
the future impact of COVID-19, RealNetworks is not providing
guidance for the fourth quarter ending December 31, 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 Tuesday, November
24, 2020, by dialing 1-844-512-2921 (United States) or 1-412-317-6671
(International) and entering the replay pin number: 13711759.
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. 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)
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
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, and expectations and contingencies
relating to the sale of Napster. 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
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
(in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
Net
revenue
|
$
|
16,554
|
|
|
$
|
17,691
|
|
|
$
|
50,461
|
|
|
$
|
48,491
|
|
Cost of
revenue
|
4,062
|
|
|
4,292
|
|
|
12,429
|
|
|
13,022
|
|
Gross profit
|
12,492
|
|
|
13,399
|
|
|
38,032
|
|
|
35,469
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
5,781
|
|
|
6,931
|
|
|
18,375
|
|
|
21,439
|
|
Sales and
marketing
|
5,130
|
|
|
5,644
|
|
|
15,969
|
|
|
17,501
|
|
General and
administrative
|
4,124
|
|
|
5,242
|
|
|
13,063
|
|
|
17,674
|
|
Restructuring
and other charges
|
307
|
|
|
691
|
|
|
1,097
|
|
|
1,587
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
15,342
|
|
|
18,508
|
|
|
48,504
|
|
|
58,201
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
(2,850)
|
|
|
(5,109)
|
|
|
(10,472)
|
|
|
(22,732)
|
|
|
|
|
|
|
|
|
|
Other income
(expenses):
|
|
|
|
|
|
|
|
Interest
expense
|
(7)
|
|
|
—
|
|
|
(12)
|
|
|
—
|
|
Interest
income
|
6
|
|
|
—
|
|
|
31
|
|
|
89
|
|
Gain (loss) on
equity investments, net
|
(37)
|
|
|
—
|
|
|
(90)
|
|
|
12,338
|
|
Other income
(expenses), net
|
(104)
|
|
|
85
|
|
|
63
|
|
|
197
|
|
|
|
|
|
|
|
|
|
Total other income (expenses), net
|
(142)
|
|
|
85
|
|
|
(8)
|
|
|
12,624
|
|
|
|
|
|
|
|
|
|
Loss from
continuing operations before income taxes
|
(2,992)
|
|
|
(5,024)
|
|
|
(10,480)
|
|
|
(10,108)
|
|
Income tax
expense
|
316
|
|
|
233
|
|
|
606
|
|
|
515
|
|
|
|
|
|
|
|
|
|
Net loss from
continuing operations
|
(3,308)
|
|
|
(5,257)
|
|
|
(11,086)
|
|
|
(10,623)
|
|
Net loss from
discontinued operations, net of tax
|
(1)
|
|
|
(997)
|
|
|
(2,466)
|
|
|
(3,872)
|
|
Net loss
|
(3,309)
|
|
|
(6,254)
|
|
|
(13,552)
|
|
|
(14,495)
|
|
Net loss attributable
to noncontrolling interests of continuing operations
|
(77)
|
|
|
(54)
|
|
|
(196)
|
|
|
(106)
|
|
Net income (loss)
attributable to noncontrolling interests of discontinued
operations
|
6
|
|
|
(232)
|
|
|
(364)
|
|
|
(752)
|
|
Net loss attributable
to RealNetworks
|
$
|
(3,238)
|
|
|
$
|
(5,968)
|
|
|
$
|
(12,992)
|
|
|
$
|
(13,637)
|
|
|
|
|
|
|
|
|
|
Net loss from
continuing operations attributable to RealNetworks
|
$
|
(3,231)
|
|
|
$
|
(5,203)
|
|
|
$
|
(10,890)
|
|
|
$
|
(10,517)
|
|
Net loss from
discontinued operations attributable to RealNetworks
|
(7)
|
|
|
(765)
|
|
|
(2,102)
|
|
|
(3,120)
|
|
Net loss attributable
to RealNetworks
|
$
|
(3,238)
|
|
|
$
|
(5,968)
|
|
|
$
|
(12,992)
|
|
|
$
|
(13,637)
|
|
|
|
|
|
|
|
|
|
Net loss per share
attributable to RealNetworks- Basic:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
(0.08)
|
|
|
$
|
(0.14)
|
|
|
$
|
(0.28)
|
|
|
$
|
(0.28)
|
|
Discontinued
operations
|
—
|
|
|
(0.02)
|
|
|
(0.06)
|
|
|
(0.08)
|
|
Net loss per share attributable to RealNetworks- Basic
|
$
|
(0.08)
|
|
|
$
|
(0.16)
|
|
|
$
|
(0.34)
|
|
|
$
|
(0.36)
|
|
|
|
|
|
|
|
|
|
Net loss per share
attributable to RealNetworks- Diluted:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
(0.08)
|
|
|
$
|
(0.14)
|
|
|
$
|
(0.28)
|
|
|
$
|
(0.28)
|
|
Discontinued
operations
|
—
|
|
|
(0.02)
|
|
|
(0.06)
|
|
|
(0.08)
|
|
Net loss per share attributable to RealNetworks- Diluted
|
$
|
(0.08)
|
|
|
$
|
(0.16)
|
|
|
$
|
(0.34)
|
|
|
$
|
(0.36)
|
|
|
|
|
|
|
|
|
|
Shares used to
compute basic net loss per share
|
38,270
|
|
|
38,062
|
|
|
38,247
|
|
|
37,944
|
|
Shares used to
compute diluted net loss per share
|
38,270
|
|
|
38,062
|
|
|
38,247
|
|
|
37,944
|
|
RealNetworks, Inc.
and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
|
|
|
September
30,
2020
|
|
December
31,
2019
|
|
(in
thousands)
|
ASSETS
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
13,245
|
|
|
$
|
8,472
|
|
Trade accounts
receivable, net
|
13,015
|
|
|
12,767
|
|
Deferred costs,
current portion
|
364
|
|
|
537
|
|
Prepaid expenses
and other current assets
|
3,552
|
|
|
4,428
|
|
Current assets
of discontinued operations
|
89,547
|
|
|
28,376
|
|
Total
current assets
|
119,723
|
|
|
54,580
|
|
|
|
|
|
Equipment and
software
|
30,675
|
|
|
31,699
|
|
Leasehold
improvements
|
2,720
|
|
|
3,071
|
|
Total
equipment, software, and leasehold improvements
|
33,395
|
|
|
34,770
|
|
Less accumulated
depreciation and amortization
|
31,459
|
|
|
32,350
|
|
Net
equipment, software, and leasehold improvements
|
1,936
|
|
|
2,420
|
|
|
|
|
|
Operating lease
assets
|
8,726
|
|
|
10,198
|
|
Restricted cash
equivalents
|
4,630
|
|
|
4,880
|
|
Other
assets
|
973
|
|
|
1,808
|
|
Deferred costs,
non-current portion
|
71
|
|
|
388
|
|
Deferred tax
assets, net
|
781
|
|
|
761
|
|
Goodwill
|
17,073
|
|
|
16,908
|
|
Non-current
assets of discontinued operations
|
—
|
|
|
67,811
|
|
|
|
|
|
Total
assets
|
$
|
153,913
|
|
|
$
|
159,754
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
3,398
|
|
|
$
|
4,042
|
|
Accrued and
other current liabilities
|
25,272
|
|
|
17,495
|
|
Deferred
revenue, current portion
|
2,302
|
|
|
2,003
|
|
Current
debt
|
3,900
|
|
|
—
|
|
Current
liabilities of discontinued operations
|
70,713
|
|
|
72,641
|
|
Total
current liabilities
|
105,585
|
|
|
96,181
|
|
|
|
|
|
Deferred
revenue, non-current portion
|
46
|
|
|
96
|
|
Deferred tax
liabilities, net
|
1,076
|
|
|
1,076
|
|
Long-term lease
liabilities
|
6,672
|
|
|
8,234
|
|
Long-term
debt
|
2,883
|
|
|
3,900
|
|
Other long-term
liabilities
|
2,243
|
|
|
10,151
|
|
Non-current
liabilities of discontinued operations
|
—
|
|
|
1,843
|
|
|
|
|
|
Total
liabilities
|
118,505
|
|
|
121,481
|
|
|
|
|
|
Total
shareholders' equity
|
36,470
|
|
|
38,775
|
|
|
|
|
|
Noncontrolling
interests
|
(1,062)
|
|
|
(502)
|
|
|
|
|
|
Total
equity
|
35,408
|
|
|
38,273
|
|
|
|
|
|
Total
liabilities and equity
|
$
|
153,913
|
|
|
$
|
159,754
|
|
RealNetworks, Inc.
and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
Nine Months
Ended
September
30,
|
|
2020
|
|
2019
|
|
(in
thousands)
|
|
Cash flows from
operating activities:
|
|
|
|
Net loss from
continuing operations
|
$
|
(11,086)
|
|
|
$
|
(10,623)
|
|
Adjustments to
reconcile net income (loss) from continuing operations to net
cash
used in operating activities:
|
|
|
|
Depreciation and
amortization
|
697
|
|
|
943
|
|
Stock-based
compensation
|
1,093
|
|
|
2,420
|
|
(Gain) loss on equity
investments, net
|
90
|
|
|
(12,338)
|
|
Foreign currency
(gain) loss
|
25
|
|
|
(150)
|
|
Fair value adjustments
to contingent consideration liability
|
(200)
|
|
|
700
|
|
Net change in certain
operating assets and liabilities
|
(652)
|
|
|
739
|
|
Net cash
provided by (used in) operating activities- continuing
operations
|
(10,033)
|
|
|
(18,309)
|
|
Net cash
provided by (used in) operating activities- discontinued
operations
|
(4,086)
|
|
|
(1,988)
|
|
Net cash
provided by (used in) operating activities
|
(14,119)
|
|
|
(20,297)
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Purchases of
equipment, software, and leasehold improvements
|
(261)
|
|
|
(831)
|
|
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- continuing
operations
|
(261)
|
|
|
11,453
|
|
Net cash
provided by (used in) investing activities- discontinued
operations
|
(192)
|
|
|
(237)
|
|
Net cash
provided by (used in) investing activities
|
(453)
|
|
|
11,216
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from issuance
of common stock (stock options and stock purchase plan)
|
—
|
|
|
144
|
|
Proceeds from issuance
of preferred stock
|
10,000
|
|
|
—
|
|
Tax payments from
shares withheld upon vesting of restricted stock
|
(12)
|
|
|
(289)
|
|
Proceeds from notes
payable and long-term debt
|
2,876
|
|
|
3,900
|
|
Payment of financing
fees
|
—
|
|
|
(569)
|
|
Other financing
activities
|
2,106
|
|
|
900
|
|
Net cash
provided by (used in) financing activities- continuing
operations
|
14,970
|
|
|
4,086
|
|
Net cash
provided by (used in) financing activities- discontinued
operations
|
2,007
|
|
|
(8,331)
|
|
Net cash
provided by (used in) financing activities
|
16,977
|
|
|
(4,245)
|
|
|
|
|
|
Effect of
exchange rate changes on cash, cash equivalents and restricted
cash
|
32
|
|
|
(390)
|
|
Net increase
(decrease) in cash, cash equivalents and restricted cash
|
2,437
|
|
|
(13,716)
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
22,179
|
|
|
37,191
|
|
Cash, cash
equivalents and restricted cash, end of period
|
24,616
|
|
|
23,475
|
|
Less: Cash, cash
equivalents and restricted cash from discontinued
operations
|
6,741
|
|
|
6,724
|
|
Cash and cash
equivalents from continuing operations, end of period
|
$
|
17,875
|
|
|
$
|
16,751
|
|
RealNetworks, Inc.
and Subsidiaries
Supplemental Financial Information
(Unaudited)
|
|
|
2020
|
|
2019
|
|
Q3
|
|
Q2
|
|
Q1
|
|
Q4
|
|
Q3
|
|
Q2
|
|
Q1
|
|
(in
thousands)
|
Net Revenue by
Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Media
(A)
|
$
|
2,543
|
|
|
$
|
3,159
|
|
|
$
|
3,495
|
|
|
$
|
4,432
|
|
|
$
|
3,632
|
|
|
$
|
2,620
|
|
|
$
|
2,486
|
|
Mobile Services
(B)
|
6,400
|
|
|
6,461
|
|
|
6,690
|
|
|
6,312
|
|
|
6,895
|
|
|
6,997
|
|
|
6,939
|
|
Games (C)
|
7,611
|
|
|
7,465
|
|
|
6,637
|
|
|
6,567
|
|
|
7,164
|
|
|
6,048
|
|
|
5,710
|
|
Total net
revenue
|
$
|
16,554
|
|
|
$
|
17,085
|
|
|
$
|
16,822
|
|
|
$
|
17,311
|
|
|
$
|
17,691
|
|
|
$
|
15,665
|
|
|
$
|
15,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue by
Product
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
Media
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Software License
(D)
|
$
|
642
|
|
|
$
|
1,702
|
|
|
$
|
2,020
|
|
|
$
|
2,856
|
|
|
$
|
1,987
|
|
|
$
|
944
|
|
|
$
|
735
|
|
- Subscription
Services (E)
|
892
|
|
|
898
|
|
|
929
|
|
|
992
|
|
|
1,028
|
|
|
1,040
|
|
|
1,088
|
|
- Product Sales
(F)
|
193
|
|
|
261
|
|
|
222
|
|
|
193
|
|
|
207
|
|
|
206
|
|
|
219
|
|
- Advertising &
Other (G)
|
816
|
|
|
298
|
|
|
324
|
|
|
391
|
|
|
410
|
|
|
430
|
|
|
444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mobile
Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Software License
(H)
|
931
|
|
|
972
|
|
|
831
|
|
|
657
|
|
|
888
|
|
|
957
|
|
|
599
|
|
- Subscription
Services (I)
|
5,469
|
|
|
5,489
|
|
|
5,859
|
|
|
5,655
|
|
|
6,007
|
|
|
6,040
|
|
|
6,340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Games
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Subscription
Services (J)
|
2,705
|
|
|
2,730
|
|
|
2,770
|
|
|
3,007
|
|
|
3,056
|
|
|
3,073
|
|
|
2,985
|
|
- Product Sales
(K)
|
3,874
|
|
|
3,712
|
|
|
2,978
|
|
|
2,580
|
|
|
3,078
|
|
|
2,177
|
|
|
1,988
|
|
- Advertising &
Other (L)
|
1,032
|
|
|
1,023
|
|
|
889
|
|
|
980
|
|
|
1,030
|
|
|
798
|
|
|
737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net
revenue
|
$
|
16,554
|
|
|
$
|
17,085
|
|
|
$
|
16,822
|
|
|
$
|
17,311
|
|
|
$
|
17,691
|
|
|
$
|
15,665
|
|
|
$
|
15,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue by
Geography
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United
States
|
$
|
11,855
|
|
|
$
|
10,742
|
|
|
$
|
10,214
|
|
|
$
|
10,153
|
|
|
$
|
10,588
|
|
|
$
|
9,480
|
|
|
$
|
9,503
|
|
Rest of
world
|
4,699
|
|
|
6,343
|
|
|
6,608
|
|
|
7,158
|
|
|
7,103
|
|
|
6,185
|
|
|
5,632
|
|
Total net
revenue
|
$
|
16,554
|
|
|
$
|
17,085
|
|
|
$
|
16,822
|
|
|
$
|
17,311
|
|
|
$
|
17,691
|
|
|
$
|
15,665
|
|
|
$
|
15,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 player purchases of in-game virtual
goods within our free-to-play games, 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 and our facial recognition platform,
SAFR.
|
(I) 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.
|
(J) Subscription
services revenue within Games includes revenue from online games
subscriptions.
|
(K) Product sales
revenue within Games includes revenue from player purchases of
in-game virtual goods, retail and wholesale games-related revenue,
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)
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Q3
|
|
Q2
|
|
Q3
|
|
YTD
|
|
YTD
|
|
(in
thousands)
|
Consumer
Media
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
$
|
2,543
|
|
|
$
|
3,159
|
|
|
$
|
3,632
|
|
|
$
|
9,197
|
|
|
$
|
8,738
|
|
Cost of
revenue
|
593
|
|
|
519
|
|
|
705
|
|
|
1,723
|
|
|
2,341
|
|
Gross
profit
|
1,950
|
|
|
2,640
|
|
|
2,927
|
|
|
7,474
|
|
|
6,397
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
77
|
%
|
|
84
|
%
|
|
81
|
%
|
|
81
|
%
|
|
73
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
2,092
|
|
|
2,204
|
|
|
2,692
|
|
|
6,754
|
|
|
8,688
|
|
Operating income
(loss), a GAAP measure
|
$
|
(142)
|
|
|
$
|
436
|
|
|
$
|
235
|
|
|
$
|
720
|
|
|
$
|
(2,291)
|
|
Depreciation and
amortization
|
17
|
|
|
15
|
|
|
34
|
|
|
45
|
|
|
144
|
|
|
|
|
|
|
|
|
|
|
|
Contribution margin, a
non-GAAP measure
|
$
|
(125)
|
|
|
$
|
451
|
|
|
$
|
269
|
|
|
$
|
765
|
|
|
$
|
(2,147)
|
|
|
|
|
|
|
|
|
|
|
|
Mobile
Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
$
|
6,400
|
|
|
$
|
6,461
|
|
|
$
|
6,895
|
|
|
$
|
19,551
|
|
|
$
|
20,831
|
|
Cost of
revenue
|
1,511
|
|
|
1,782
|
|
|
1,721
|
|
|
4,989
|
|
|
5,634
|
|
Gross
profit
|
4,889
|
|
|
4,679
|
|
|
5,174
|
|
|
14,562
|
|
|
15,197
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
76
|
%
|
|
72
|
%
|
|
75
|
%
|
|
74
|
%
|
|
73
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
5,577
|
|
|
5,682
|
|
|
7,143
|
|
|
18,847
|
|
|
22,142
|
|
Operating income
(loss), a GAAP measure
|
$
|
(688)
|
|
|
$
|
(1,003)
|
|
|
$
|
(1,969)
|
|
|
$
|
(4,285)
|
|
|
$
|
(6,945)
|
|
Depreciation and
amortization
|
88
|
|
|
102
|
|
|
81
|
|
|
288
|
|
|
418
|
|
|
|
|
|
|
|
|
|
|
|
Contribution margin, a
non-GAAP measure
|
$
|
(600)
|
|
|
$
|
(901)
|
|
|
$
|
(1,888)
|
|
|
$
|
(3,997)
|
|
|
$
|
(6,527)
|
|
|
|
|
|
|
|
|
|
|
|
Games
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
$
|
7,611
|
|
|
$
|
7,465
|
|
|
$
|
7,164
|
|
|
$
|
21,713
|
|
|
$
|
18,922
|
|
Cost of
revenue
|
1,955
|
|
|
1,958
|
|
|
1,934
|
|
|
5,707
|
|
|
5,259
|
|
Gross
profit
|
5,656
|
|
|
5,507
|
|
|
5,230
|
|
|
16,006
|
|
|
13,663
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
74
|
%
|
|
74
|
%
|
|
73
|
%
|
|
74
|
%
|
|
72
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
5,152
|
|
|
4,976
|
|
|
5,151
|
|
|
15,051
|
|
|
15,476
|
|
Operating income
(loss), a GAAP measure
|
$
|
504
|
|
|
$
|
531
|
|
|
$
|
79
|
|
|
$
|
955
|
|
|
$
|
(1,813)
|
|
Acquisitions related
intangible asset amortization
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
27
|
|
Depreciation and
amortization
|
71
|
|
|
66
|
|
|
89
|
|
|
275
|
|
|
256
|
|
|
|
|
|
|
|
|
|
|
|
Contribution margin, a
non-GAAP measure
|
$
|
575
|
|
|
$
|
597
|
|
|
$
|
172
|
|
|
$
|
1,230
|
|
|
$
|
(1,530)
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
(68)
|
|
|
$
|
10
|
|
|
$
|
(212)
|
|
Gross
profit
|
(3)
|
|
|
(4)
|
|
|
68
|
|
|
(10)
|
|
|
212
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
2,521
|
|
|
2,747
|
|
|
3,522
|
|
|
7,852
|
|
|
11,895
|
|
Operating income
(loss), a GAAP measure
|
$
|
(2,524)
|
|
|
$
|
(2,751)
|
|
|
$
|
(3,454)
|
|
|
$
|
(7,862)
|
|
|
$
|
(11,683)
|
|
Other income
(expense), net
|
(104)
|
|
|
(71)
|
|
|
85
|
|
|
63
|
|
|
197
|
|
Foreign currency
(gain) loss
|
143
|
|
|
92
|
|
|
(33)
|
|
|
25
|
|
|
(150)
|
|
Depreciation and
amortization
|
28
|
|
|
30
|
|
|
32
|
|
|
89
|
|
|
98
|
|
Fair value
adjustments to contingent consideration liability
|
—
|
|
|
100
|
|
|
400
|
|
|
(200)
|
|
|
700
|
|
Restructuring and
other charges
|
307
|
|
|
704
|
|
|
691
|
|
|
1,097
|
|
|
1,587
|
|
Stock-based
compensation
|
390
|
|
|
323
|
|
|
503
|
|
|
1,093
|
|
|
2,420
|
|
|
|
|
|
|
|
|
|
|
|
Contribution margin, a
non-GAAP measure
|
$
|
(1,760)
|
|
|
$
|
(1,573)
|
|
|
$
|
(1,776)
|
|
|
$
|
(5,695)
|
|
|
$
|
(6,831)
|
|
RealNetworks, Inc.
and Subsidiaries
Reconciliation of Net income (loss) from continuing operations
to adjusted EBITDA, a non-GAAP measure
(Unaudited)
|
|
|
2020
|
|
2019
|
2020
|
|
2019
|
|
Q3
|
|
Q2
|
|
Q3
|
|
YTD
|
|
YTD
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
GAAP Net income (loss) from continuing operations to adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from
continuing operations
|
$
|
(3,308)
|
|
|
$
|
(3,162)
|
|
|
$
|
(5,257)
|
|
|
$
|
(11,086)
|
|
|
$
|
(10,623)
|
|
Income tax expense
(benefit)
|
316
|
|
|
265
|
|
|
233
|
|
|
606
|
|
|
515
|
|
Interest
expense
|
7
|
|
|
5
|
|
|
—
|
|
|
12
|
|
|
—
|
|
Interest
income
|
(6)
|
|
|
(19)
|
|
|
—
|
|
|
(31)
|
|
|
(89)
|
|
(Gain) loss on equity
investments, net
|
37
|
|
|
53
|
|
|
—
|
|
|
90
|
|
|
(12,338)
|
|
Foreign currency
(gain) loss
|
143
|
|
|
92
|
|
|
(33)
|
|
|
25
|
|
|
(150)
|
|
Acquisitions related
intangible asset amortization
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
27
|
|
Depreciation and
amortization
|
204
|
|
|
213
|
|
|
236
|
|
|
697
|
|
|
916
|
|
Fair value
adjustments to contingent consideration liability
|
—
|
|
|
100
|
|
|
400
|
|
|
(200)
|
|
|
700
|
|
Restructuring and
other charges
|
307
|
|
|
704
|
|
|
691
|
|
|
1,097
|
|
|
1,587
|
|
Stock-based
compensation
|
390
|
|
|
323
|
|
|
503
|
|
|
1,093
|
|
|
2,420
|
|
Adjusted
EBITDA, a non-GAAP measure
|
$
|
(1,910)
|
|
|
$
|
(1,426)
|
|
|
$
|
(3,223)
|
|
|
$
|
(7,697)
|
|
|
$
|
(17,035)
|
|
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SOURCE RealNetworks, Inc.