SEATTLE, May 2, 2019 /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, 2019. The results below reflect the
consolidation of Napster's financial results into RealNetworks'
financial statements for the first quarter of 2019 following the
closing of the acquisition on January 18,
2019. Napster is reported as a new segment in RealNetworks'
financial statements and related disclosures for the first quarter
of 2019.
- First quarter revenue of $39.5
million
- Positive net income of $1.5
million, driven by one-time gain associated with acquisition
of Napster to 84% majority owner
- Announced SAFR™ for Security, integrating
Real's best-of-breed video facial recognition product with leading
Video Management Systems
Management Commentary
"We continued to drive forward with SAFR, which we believe is
our single largest growth opportunity," said Rob Glaser, Chairman and CEO of RealNetworks.
"Most notably, we launched SAFR for Security, which delivers
tremendous value to security professionals by integrating our
best-of-breed facial recognition solution with market leading Video
Management Systems such as Genetec, Milestone Systems, and
Digifort. We also significantly strengthened our senior management
team by bringing in Jay Burrell as
RealNetworks' Chief Revenue Officer for Computer Vision."
Mr. Glaser added, "Our majority stake in Napster adds
significant scale to our business. We look forward to continuing to
work closely with Napster's CEO, Bill
Patrizio, and the rest of the Napster management team to
build on the great work they have done in the past year-and-a-half
turning Napster around."
First Quarter 2019 Financial Highlights
- Revenue was $39.5 million
(inclusive of $24.3 million from
Napster) and compared to $16.6
million in the prior quarter and $19.7 million in the prior year period. Revenue
for the first quarter of 2019 included a $0.6 million reduction to Napster's revenue as a
result of purchase accounting.
- Gross margin was 37%, down from 77% in the prior quarter and
74% in the prior year period. Napster's gross margin for the first
quarter of 2019 was 16%.
- Operating expenses increased $7.1
million, or 39%, from the prior quarter and increased
$6.0 million, or 31%, from the prior
year period. Napster's operating expenses were $5.5 million for the first quarter of 2019.
Included in total operating expenses were $0.8 million of transaction costs related to the
acquisition of Napster.
- Net income attributable to RealNetworks was $1.5 million, or $0.04 per share, compared to net loss of
$(6.9) million, or $(0.18) per share, in the prior quarter and a net
loss of $(5.2) million, or
$(0.14) per share, in the prior year
period. Included in net income attributable to RealNetworks was of
a gain of $12.3 million in the first
quarter of 2019 related to the acquisition of Napster.
- Adjusted EBITDA was a loss of $(7.9)
million compared to a loss of $(4.1)
million in the prior quarter and a loss of $(3.0) million in the prior year period. A
reconciliation of GAAP net income (loss) including noncontrolling
interests to adjusted EBITDA, a non-GAAP measure, is provided in
the financial tables that accompany this release.
- At March 31, 2019, the Company
had $36.9 million in unrestricted
cash and cash equivalents compared to $35.6
million at December 31, 2018.
Napster's cash and cash equivalents were $10.1 million at the time of acquisition.
Business Outlook
For the second quarter of 2019, RealNetworks expects to achieve
the following results including noncontrolling interests:
- Total revenue is expected to be in the range of $43.0 million to $46.0
million.
- Adjusted EBITDA loss is expected to be in the range of
$(4.5) million to $(7.5) million.
Acquisition of Napster
As previously disclosed, on January 18,
2019, RealNetworks completed the acquisition of additional
debt and equity interests in Rhapsody International, Inc., which
does business as Napster, bringing RealNetworks' interest in
Napster to 84% following the acquisition. RealNetworks committed to
pay $1.0 million cash in connection
with the closing and, subject to certain conditions, up to an
additional $14.0 million over the
following five years, with additional consideration depending on
subsequent events, for a potential total of up to $40.0 million. Napster will continue to run as an
independent subsidiary of RealNetworks with its own board of
directors, strategy, and management team.
RealNetworks recorded 100% of the estimated fair value of the
assets acquired and liabilities assumed as of January 18, 2019, with the 16% of Napster that it
does not own accounted for as a noncontrolling interest in the
consolidated financial statements. Napster's results of operations
and cash flows are included in the Company's consolidated results
from the acquisition date forward. As part of this consolidation,
the acquisition accounting treatment resulted in a non-cash gain of
$12.3 million in the first quarter of
2019. RealNetworks' consolidated balance sheet reflects the
estimated fair value of recognized intangibles (after amortization
post-acquisition) totaling $22.7
million and residual goodwill of $48.5 million at March 31,
2019, and Napster's working capital deficit, which results
in a consolidated working capital deficit.
Due to the limited time since the closing of the transaction and
the complexity of the transaction, the purchase price allocation is
preliminary and subject to change, which may result from additional
information becoming available and additional analyses being
performed on these acquired assets and assumed liabilities. Such
changes could impact the estimated fair value of any of the assets
and liabilities assumed, noncontrolling interests, and gain
recognized from consolidation.
For additional details on the Napster acquisition, see
RealNetworks' Annual Report on Form 10-K for the year ended
December 31, 2018 and its upcoming
10-Q for the quarter ended March 31,
2019.
New Lease Accounting Standard
As of January 1, 2019,
RealNetworks adopted the new accounting guidance related to leases,
using the modified retrospective transition method, under which
prior periods presented have not been recast to reflect adoption of
the new guidance. As a result of this new guidance, the Company now
capitalizes its operating leases, which previously were off-balance
sheet obligations subject to disclosure but not recognition.
Capitalization of the operating leases resulted in the recognition
of a material amount of Operating lease assets and related
Operating lease liabilities on its consolidated balance sheet, but
did not impact its consolidated statement of operations.
For additional details on the impact of the new guidance, see
the Company's upcoming 10-Q for the quarter ended March 31, 2019.
Conference Call and Webcast Information
The Company will host a conference call today to review results
and discuss its 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 Thursday, May
23, 2019, by dialing 1-844-512-2921 (United States) or 1-412-317-6671
(International) and entering the replay pin number: 13689686.
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.
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 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 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; 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; 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, 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,
|
|
2019
|
|
2018
|
|
(in
thousands, except per
share data)
|
|
|
|
|
Net
revenue
|
$
|
39,472
|
|
|
$
|
19,650
|
|
Cost of
revenue
|
24,870
|
|
|
5,136
|
|
Gross profit
|
14,602
|
|
|
14,514
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
Research and
development
|
8,833
|
|
|
7,694
|
|
Sales and
marketing
|
8,142
|
|
|
5,997
|
|
General and
administrative
|
8,364
|
|
|
5,601
|
|
Restructuring
and other charges
|
167
|
|
|
501
|
|
Lease exit and
related benefit
|
—
|
|
|
(325)
|
|
|
|
|
|
Total operating expenses
|
25,506
|
|
|
19,468
|
|
|
|
|
|
Operating
loss
|
(10,904)
|
|
|
(4,954)
|
|
|
|
|
|
Other income
(expenses):
|
|
|
|
Interest
expense
|
(166)
|
|
|
—
|
|
Interest
income
|
77
|
|
|
87
|
|
Gain (loss) on
equity investment, net
|
12,338
|
|
|
—
|
|
Other income
(expenses), net
|
127
|
|
|
(41)
|
|
|
|
|
|
Total other income (expenses), net
|
12,376
|
|
|
46
|
|
|
|
|
|
Income (loss)
before income taxes
|
1,472
|
|
|
(4,908)
|
|
Income tax
expense
|
258
|
|
|
270
|
|
|
|
|
|
Net income (loss)
including noncontrolling interests
|
1,214
|
|
|
(5,178)
|
|
Net income (loss)
attributable to noncontrolling interests
|
(319)
|
|
|
—
|
|
Net income (loss)
attributable to RealNetworks
|
$
|
1,533
|
|
|
$
|
(5,178)
|
|
|
|
|
|
Net income (loss) per
share attributable to RealNetworks- Basic:
|
$
|
0.04
|
|
|
$
|
(0.14)
|
|
Net income (loss) per
share attributable to RealNetworks- Diluted:
|
$
|
0.04
|
|
|
$
|
(0.14)
|
|
|
|
|
|
Shares used to
compute basic net income (loss) per share
|
37,820
|
|
|
37,449
|
|
Shares used to
compute diluted net income (loss) per share
|
37,912
|
|
|
37,449
|
|
RealNetworks, Inc.
and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
|
|
March 31,
2019
|
|
December
31,
2018
|
|
(in
thousands)
|
ASSETS
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
36,897
|
|
|
$
|
35,561
|
|
Short-term
investments
|
—
|
|
|
24
|
|
Trade accounts
receivable, net
|
32,427
|
|
|
11,751
|
|
Deferred costs,
current portion
|
299
|
|
|
331
|
|
Prepaid
expenses and other current assets
|
21,210
|
|
|
5,911
|
|
Total current
assets
|
90,833
|
|
|
53,578
|
|
|
|
|
|
Equipment and
software
|
35,779
|
|
|
37,458
|
|
Leasehold
improvements
|
3,207
|
|
|
3,292
|
|
Total
equipment, software, and leasehold improvements
|
38,986
|
|
|
40,750
|
|
Less
accumulated depreciation and amortization
|
35,923
|
|
|
37,996
|
|
Net equipment,
software, and leasehold improvements
|
3,063
|
|
|
2,754
|
|
|
|
|
|
Operating lease
assets
|
13,943
|
|
|
—
|
|
Restricted cash
equivalents
|
4,045
|
|
|
1,630
|
|
Other
assets
|
2,687
|
|
|
3,997
|
|
Deferred costs,
non-current portion
|
372
|
|
|
528
|
|
Deferred tax
assets, net
|
846
|
|
|
851
|
|
Other
intangible assets, net
|
22,692
|
|
|
26
|
|
Goodwill
|
65,368
|
|
|
16,955
|
|
|
|
|
|
Total
assets
|
$
|
203,849
|
|
|
$
|
80,319
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
4,564
|
|
|
$
|
3,910
|
|
Accrued
royalties, fulfillment and other current liabilities
|
97,890
|
|
|
11,312
|
|
Commitment to
Napster
|
—
|
|
|
2,750
|
|
Deferred
revenue, current portion
|
6,031
|
|
|
2,125
|
|
Notes
payable
|
13,313
|
|
|
—
|
|
Total current
liabilities
|
121,798
|
|
|
20,097
|
|
|
|
|
|
Deferred
revenue, non-current portion
|
225
|
|
|
268
|
|
Deferred
rent
|
—
|
|
|
986
|
|
Deferred tax
liabilities, net
|
1,268
|
|
|
1,168
|
|
Long-term lease
liabilities
|
10,929
|
|
|
—
|
|
Other long-term
liabilities
|
10,875
|
|
|
960
|
|
|
|
|
|
Total
liabilities
|
145,095
|
|
|
23,479
|
|
|
|
|
|
Total
shareholders' equity
|
58,415
|
|
|
56,840
|
|
|
|
|
|
Noncontrolling
interests
|
339
|
|
|
—
|
|
|
|
|
|
Total
equity
|
58,754
|
|
|
56,840
|
|
|
|
|
|
Total
liabilities and equity
|
$
|
203,849
|
|
|
$
|
80,319
|
|
RealNetworks, Inc.
and Subsidiaries
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
|
Three Months
Ended
March 31,
|
|
2019
|
|
2018
|
|
(in
thousands)
|
|
Cash flows from
operating activities:
|
|
|
|
Net income
(loss) including noncontrolling interests
|
$
|
1,214
|
|
|
$
|
(5,178)
|
|
Adjustments to
reconcile net income (loss) including noncontrolling interests to
net cash used in operating activities:
|
|
|
|
Depreciation and
amortization
|
1,482
|
|
|
620
|
|
Stock-based
compensation
|
1,384
|
|
|
1,157
|
|
Deferred income taxes,
net
|
—
|
|
|
(40)
|
|
(Gain) loss on equity
investment, net
|
(12,338)
|
|
|
—
|
|
Foreign currency (gain)
loss
|
(151)
|
|
|
—
|
|
Mark to market
adjustment of warrants
|
—
|
|
|
21
|
|
Net change in certain
operating assets and liabilities
|
(910)
|
|
|
(2,005)
|
|
Net cash used in
operating activities
|
(9,319)
|
|
|
(5,425)
|
|
Cash flows from
investing activities:
|
|
|
|
Purchases of equipment,
software, and leasehold improvements
|
(482)
|
|
|
(316)
|
|
Proceeds from sales and
maturities of short-term investments
|
24
|
|
|
4,231
|
|
Acquisition, net of
cash acquired
|
12,260
|
|
|
—
|
|
Net cash provided
by investing activities
|
11,802
|
|
|
3,915
|
|
Cash flows from
financing activities:
|
|
|
|
Tax payments from
shares withheld upon vesting of restricted stock
|
(271)
|
|
|
(232)
|
|
Proceeds from notes
payable
|
9,733
|
|
|
—
|
|
Repayments of notes
payable
|
(8,437)
|
|
|
—
|
|
Other financing
activities
|
450
|
|
|
—
|
|
Net cash provided
by (used in) financing activities
|
1,475
|
|
|
(232)
|
|
Effect of
exchange rate changes on cash, cash equivalents and restricted
cash
|
(207)
|
|
|
331
|
|
Net increase
(decrease) in cash, cash equivalents and restricted cash
|
3,751
|
|
|
(1,411)
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
37,191
|
|
|
53,596
|
|
Cash, cash
equivalents and restricted cash, end of period
|
$
|
40,942
|
|
|
$
|
52,185
|
|
RealNetworks, Inc.
and Subsidiaries
|
Supplemental
Financial Information
|
(Unaudited)
|
|
|
2019
|
|
2018
|
|
Q1
|
|
Q4
|
|
Q3
|
|
Q2
|
|
Q1
|
|
(in
thousands)
|
Net Revenue by
Segment
|
|
|
|
|
|
|
|
|
|
Consumer Media
(A)
|
$
|
2,486
|
|
|
$
|
4,068
|
|
|
$
|
4,733
|
|
|
$
|
3,884
|
|
|
$
|
5,483
|
|
Mobile Services
(B)
|
6,939
|
|
|
6,899
|
|
|
7,348
|
|
|
6,719
|
|
|
8,704
|
|
Games (C)
|
5,710
|
|
|
5,590
|
|
|
5,498
|
|
|
5,121
|
|
|
5,463
|
|
Napster
(D)
|
24,337
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total net revenue
|
$
|
39,472
|
|
|
$
|
16,557
|
|
|
$
|
17,579
|
|
|
$
|
15,724
|
|
|
$
|
19,650
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue by
Product
|
|
|
|
|
|
|
|
|
|
Consumer
Media
|
|
|
|
|
|
|
|
|
|
- Software License
(E)
|
$
|
735
|
|
|
$
|
2,049
|
|
|
$
|
2,746
|
|
|
$
|
1,808
|
|
|
$
|
3,337
|
|
- Subscription
Services (F)
|
1,088
|
|
|
1,153
|
|
|
1,232
|
|
|
1,225
|
|
|
1,285
|
|
- Product Sales
(G)
|
219
|
|
|
257
|
|
|
281
|
|
|
299
|
|
|
340
|
|
- Advertising &
Other (H)
|
444
|
|
|
609
|
|
|
474
|
|
|
552
|
|
|
521
|
|
|
|
|
|
|
|
|
|
|
|
Mobile
Services
|
|
|
|
|
|
|
|
|
|
- Software License
(I)
|
599
|
|
|
514
|
|
|
520
|
|
|
469
|
|
|
1,335
|
|
- Subscription
Services (J)
|
6,340
|
|
|
6,385
|
|
|
6,828
|
|
|
6,250
|
|
|
7,369
|
|
|
|
|
|
|
|
|
|
|
|
Games
|
|
|
|
|
|
|
|
|
|
- Subscription
Services (K)
|
2,985
|
|
|
3,014
|
|
|
2,745
|
|
|
2,689
|
|
|
2,693
|
|
- Product Sales
(L)
|
1,988
|
|
|
2,013
|
|
|
2,279
|
|
|
1,953
|
|
|
2,402
|
|
- Advertising &
Other (M)
|
737
|
|
|
563
|
|
|
474
|
|
|
479
|
|
|
368
|
|
|
|
|
|
|
|
|
|
|
|
Napster
|
|
|
|
|
|
|
|
|
|
- Subscription
Services (N)
|
24,337
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Total net
revenue
|
$
|
39,472
|
|
|
$
|
16,557
|
|
|
$
|
17,579
|
|
|
$
|
15,724
|
|
|
$
|
19,650
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue by
Geography
|
|
|
|
|
|
|
|
|
|
United
States
|
$
|
18,970
|
|
|
$
|
7,697
|
|
|
$
|
9,026
|
|
|
$
|
7,646
|
|
|
$
|
11,434
|
|
Rest of
world
|
20,502
|
|
|
8,860
|
|
|
8,553
|
|
|
8,078
|
|
|
8,216
|
|
Total net revenue
|
$
|
39,472
|
|
|
$
|
16,557
|
|
|
$
|
17,579
|
|
|
$
|
15,724
|
|
|
$
|
19,650
|
|
|
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 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.
|
(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)
|
|
|
2019
|
|
2018
|
|
Q1
|
|
Q4
|
|
Q1
|
|
(in
thousands)
|
Consumer
Media
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
$
|
2,486
|
|
|
$
|
4,068
|
|
|
$
|
5,483
|
|
Cost of
revenue
|
833
|
|
|
882
|
|
|
993
|
|
Gross
profit
|
1,653
|
|
|
3,186
|
|
|
4,490
|
|
|
|
|
|
|
|
Gross
margin
|
66
|
%
|
|
78
|
%
|
|
82
|
%
|
|
|
|
|
|
|
Operating
expenses
|
3,119
|
|
|
3,614
|
|
|
3,918
|
|
Operating income
(loss), a GAAP measure
|
$
|
(1,466)
|
|
|
$
|
(428)
|
|
|
$
|
572
|
|
Depreciation and
amortization
|
54
|
|
|
49
|
|
|
46
|
|
|
|
|
|
|
|
Contribution margin,
a non-GAAP measure
|
$
|
(1,412)
|
|
|
$
|
(379)
|
|
|
$
|
618
|
|
|
|
|
|
|
|
Mobile
Services
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
$
|
6,939
|
|
|
$
|
6,899
|
|
|
$
|
8,704
|
|
Cost of
revenue
|
2,048
|
|
|
2,121
|
|
|
2,316
|
|
Gross
profit
|
4,891
|
|
|
4,778
|
|
|
6,388
|
|
|
|
|
|
|
|
Gross
margin
|
70
|
%
|
|
69
|
%
|
|
73
|
%
|
|
|
|
|
|
|
Operating
expenses
|
7,561
|
|
|
6,906
|
|
|
7,366
|
|
Operating income
(loss), a GAAP measure
|
$
|
(2,670)
|
|
|
$
|
(2,128)
|
|
|
$
|
(978)
|
|
Acquisitions related
intangible asset amortization
|
—
|
|
|
69
|
|
|
92
|
|
Depreciation and
amortization
|
231
|
|
|
116
|
|
|
180
|
|
|
|
|
|
|
|
Contribution margin,
a non-GAAP measure
|
$
|
(2,439)
|
|
|
$
|
(1,943)
|
|
|
$
|
(706)
|
|
|
|
|
|
|
|
Games
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
$
|
5,710
|
|
|
$
|
5,590
|
|
|
$
|
5,463
|
|
Cost of
revenue
|
1,670
|
|
|
1,622
|
|
|
1,817
|
|
Gross
profit
|
4,040
|
|
|
3,968
|
|
|
3,646
|
|
|
|
|
|
|
|
Gross
margin
|
71
|
%
|
|
71
|
%
|
|
67
|
%
|
|
|
|
|
|
|
Operating
expenses
|
5,037
|
|
|
4,865
|
|
|
4,917
|
|
Operating income
(loss), a GAAP measure
|
$
|
(997)
|
|
|
$
|
(897)
|
|
|
$
|
(1,271)
|
|
Acquisitions related
intangible asset amortization
|
23
|
|
|
23
|
|
|
—
|
|
Depreciation and
amortization
|
83
|
|
|
82
|
|
|
165
|
|
|
|
|
|
|
|
Contribution margin,
a non-GAAP measure
|
$
|
(891)
|
|
|
$
|
(792)
|
|
|
$
|
(1,106)
|
|
|
|
|
|
|
|
Napster
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
$
|
24,337
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Cost of
revenue
|
20,396
|
|
|
—
|
|
|
—
|
|
Gross
profit
|
3,941
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
Gross
margin
|
16
|
%
|
|
—
|
%
|
|
—
|
%
|
|
|
|
|
|
|
Operating
expenses
|
5,532
|
|
|
—
|
|
|
—
|
|
Operating income
(loss), a GAAP measure
|
$
|
(1,591)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Acquisitions related
intangible asset amortization
|
943
|
|
|
—
|
|
|
—
|
|
Depreciation and
amortization
|
115
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
Contribution margin,
a non-GAAP measure
|
$
|
(533)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
Corporate
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
$
|
(77)
|
|
|
$
|
(898)
|
|
|
$
|
10
|
|
Gross
profit
|
77
|
|
|
898
|
|
|
(10)
|
|
|
|
|
|
|
|
Gross
margin
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
|
|
Operating
expenses
|
4,257
|
|
|
3,001
|
|
|
3,267
|
|
Operating income
(loss), a GAAP measure
|
$
|
(4,180)
|
|
|
$
|
(2,103)
|
|
|
$
|
(3,277)
|
|
Other income
(expense), net
|
127
|
|
|
92
|
|
|
(41)
|
|
Foreign currency
(gain) loss
|
(151)
|
|
|
(26)
|
|
|
22
|
|
Depreciation and
amortization
|
33
|
|
|
58
|
|
|
137
|
|
Restructuring and
other charges
|
167
|
|
|
553
|
|
|
501
|
|
Stock-based
compensation
|
1,384
|
|
|
395
|
|
|
1,157
|
|
Lease exit and
related benefit
|
—
|
|
|
—
|
|
|
(325)
|
|
|
|
|
|
|
|
Contribution margin,
a non-GAAP measure (1)
|
$
|
(2,620)
|
|
|
$
|
(1,031)
|
|
|
$
|
(1,826)
|
|
|
(1)2018
Corporate contribution margin was revised to exclude the impact of
realized and unrealized foreign currency (gain) loss incurred in
each respective period. Foreign currency (gain) loss is reported in
Other income (expense), net, in our consolidated statement of
operations.
|
RealNetworks, Inc.
and Subsidiaries
|
Reconciliation of
Net income (loss) including noncontrolling interests to adjusted
EBITDA, a non-GAAP measure
|
(Unaudited)
|
|
|
2019
|
|
2018
|
|
Q1
|
|
Q4
|
|
Q1
|
|
(in
thousands)
|
|
|
|
|
|
|
Reconciliation of
GAAP Net income (loss) including noncontrolling interests to
adjusted EBITDA:
|
|
|
|
|
|
|
Net income (loss)
including noncontrolling interests
|
$
|
1,214
|
|
|
$
|
(6,904)
|
|
|
$
|
(5,178)
|
|
Income tax expense
(benefit)
|
258
|
|
|
1,494
|
|
|
270
|
|
Interest
expense
|
166
|
|
|
—
|
|
|
—
|
|
Interest
income
|
(77)
|
|
|
(74)
|
|
|
(87)
|
|
(Gain) loss on equity
investment, net
|
(12,338)
|
|
|
—
|
|
|
—
|
|
Foreign currency
(gain) loss
|
(151)
|
|
|
(26)
|
|
|
22
|
|
Equity in net loss of
Napster
|
—
|
|
|
20
|
|
|
—
|
|
Acquisitions related
intangible asset amortization
|
966
|
|
|
92
|
|
|
92
|
|
Depreciation and
amortization
|
516
|
|
|
305
|
|
|
528
|
|
Restructuring and
other charges
|
167
|
|
|
553
|
|
|
501
|
|
Stock-based
compensation
|
1,384
|
|
|
395
|
|
|
1,157
|
|
Lease exit and
related benefit
|
—
|
|
|
—
|
|
|
(325)
|
|
Adjusted
EBITDA, a non-GAAP measure (1)
|
$
|
(7,895)
|
|
|
$
|
(4,145)
|
|
|
$
|
(3,020)
|
|
|
(1)2018
adjusted EBITDA was revised to exclude the impact of realized and
unrealized foreign currency (gain) loss incurred in each respective
period. Foreign currency (gain) loss is reported in Other income
(expense), net, in our consolidated statement of
operations.
|
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SOURCE RealNetworks, Inc.