Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - REALNETWORKS INC | d392065d8k.htm |
| EX-99.2 - INFORMATION REGARDING NON-GAAP FINANACIAL MEASURES - REALNETWORKS INC | d392065dex992.htm |
Exhibit 99.1
REALNETWORKS ANNOUNCES SECOND QUARTER 2012 RESULTS
SEATTLE – August 8, 2012 – RealNetworks, Inc. (Nasdaq: RNWK) today announced results for the second quarter ended June 30, 2012.
Quarterly Summary:
| • | Revenue of $65.5 million |
| • | Net income of $81.0 million or $2.32 per diluted share |
| • | Adjusted EBITDA of $(6.5) million |
| • | Cash and short term investments of $282.9 million as of June 30, 2012 |
| • | Results reflect $120.0 million sale of patent assets to Intel on April 5, 2012 |
“It’s clear that there’s a lot of work to do to get RealNetworks back on track,” said Rob Glaser, Chairman and interim CEO of RealNetworks. “We are moving quickly to put a plan in place to do so.”
Second Quarter Results
For the second quarter of 2012, revenue was $65.5 million, a sequential decrease of 2% from the first quarter of 2012, and a decrease of 22% compared with the second quarter of 2011. Revenue trends in each of RealNetworks’ businesses in the second quarter of 2012 compared with the year-earlier quarter were: a 22% decline in Emerging Products revenue to $9.9 million, a 16% decrease in Core Products revenue to $38.3 million, and a 31% decrease in Games revenue to $17.4 million.
Net income for the second quarter of 2012 was $81.0 million, or $2.32 per diluted share, compared with a net loss of $(6.8) million, or $(0.20) per share, in the second quarter of 2011. Net income for the most-recent quarter included the net gain on the sale of patent assets to Intel Corp. of approximately $117.9 million, and $3.1 million in gains on the sale of other assets, including a portion of the company’s investment in LoEn Entertainment, Inc. RealNetworks’ share of Rhapsody losses increased to $(2.1) million in the second quarter of 2012 from $(1.0) million in the second quarter of 2011. Tax expense of $(24.3) million in the second quarter of 2012, compared with $(1.0) million in the year-ago quarter, included taxes associated with the gain from the sale of patent assets.
Adjusted EBITDA loss for the second quarter was $(6.5) million, compared with adjusted EBITDA income of $2.2 million for the second quarter of 2011. A reconciliation of GAAP operating income and loss to adjusted EBITDA is provided in the financial tables that accompany this release.
As of June 30, 2012, RealNetworks had $282.9 million in unrestricted cash, cash equivalents and short-term investments, of which approximately $37.8 million is held in foreign jurisdictions,
1
compared with cash of $185.1 million at Dec. 31, 2011. The increase in the cash balance reflects the proceeds from the sale of patent assets to Intel and other asset sales. In addition, RealNetworks had $42.5 million in restricted cash and available-for-sale securities as of June 30, 2012.
Segment Operating Results
| 2012 | 2012 | 2011 | ||||||||||
| Q2 | Q1 | Q2 | ||||||||||
| (in thousands) | ||||||||||||
| Revenue |
||||||||||||
| Core Products |
$ | 38,250 | $ | 37,697 | $ | 45,735 | ||||||
| Emerging Products |
9,913 | 10,159 | 12,717 | |||||||||
| Games |
17,363 | 19,108 | 25,300 | |||||||||
| Corporate |
— | — | — | |||||||||
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| Total |
$ | 65,526 | $ | 66,964 | $ | 83,752 | ||||||
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| Operating Income (loss) |
||||||||||||
| Core Products |
$ | 4,140 | $ | 1,801 | $ | 7,208 | ||||||
| Emerging Products |
1,021 | 508 | 370 | |||||||||
| Games |
(1,302 | ) | (983 | ) | 2,049 | |||||||
| Corporate |
100,309 | (19,868 | ) | (14,411 | ) | |||||||
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| Total |
$ | 104,168 | $ | (18,542 | ) | $ | (4,784 | ) | ||||
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| Adjusted EBITDA |
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| Core Products |
$ | 6,628 | $ | 4,400 | $ | 9,900 | ||||||
| Emerging Products |
1,266 | 754 | 707 | |||||||||
| Games |
(619 | ) | (324 | ) | 2,748 | |||||||
| Corporate |
(13,784 | ) | (12,247 | ) | (11,133 | ) | ||||||
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| Total |
$ | (6,509 | ) | $ | (7,417 | ) | $ | 2,222 | ||||
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Business Outlook
For the third quarter of 2012, RealNetworks expects revenue of $59 million to $62 million. The company expects revenue from Games, Core Products and Emerging Products to decline sequentially and year over year. RealNetworks expects to report a third-quarter adjusted EBITDA loss of $(9) million to $(12) million.
Anticipating significant restructuring activities in the second half of 2012, RealNetworks is not providing full-year guidance for 2012.
The foregoing forward-looking statements reflect RealNetworks’ expectations as of August 8, 2012. It is not RealNetworks’ general practice to update these forward-looking statements until its next quarterly results announcement.
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Webcast and Conference Call Information
The company will host an audio Webcast conference call to review results and discuss the company’s operations for the second quarter at 5:00 p.m. ET on August 8. The Webcast will be available at: http://investor.realnetworks.com.
Webcast participants will need RealPlayer® to hear the webcast, which can be downloaded at www.real.com.
The on-demand Webcast will be available beginning approximately two hours following the conclusion of the live Webcast.
Conference Call Details
5 p.m. ET / 2 p.m. PT
Dial in: 888-790-3162 Domestic
415-228-4854 International
Passcode: Second Quarter Earnings
Leader: Rob Glaser
Telephonic replay will be available until 8 p.m. ET, August 22, 2012.
Replay dial in:
866-425-0182 Domestic
203-369-0874 International
For More Information:
Marj Charlier, Investor Relations at RealNetworks, Inc.
206-892-6785 or mcharlier@realnetworks.com
Press Only:
Barbara Krause, Krause Taylor Associates for RealNetworks, Inc.
408-981-2429 or barbara@krause-taylor.com.
About RealNetworks:
RealNetworks creates innovative applications and services that make it easy to connect with and enjoy digital media. RealNetworks invented the streaming media category in 1995 and continues to connect consumers with their digital media both directly and through partners, aiming to support every network, device, media type and social network. RealNetworks’ corporate information is located at http://www.realnetworks.com.
About Non-GAAP Financial Measures:
To supplement RealNetworks’ condensed consolidated financial statements presented in accordance with GAAP in this press release, the company also discloses certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA by reporting segment, which management believes provide investors with useful information.
In the financial tables of our earnings press release, RealNetworks has included reconciliations of GAAP operating income (loss) to adjusted EBITDA and to adjusted EBITDA by reporting segment.
The rationale for management’s use of non-GAAP measures is included in the supplementary materials presented with the second quarter 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.
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Forward-Looking Statements: This press release contains forward-looking statements that involve risks and uncertainties, including statements relating to RealNetworks’ current expectations for revenue; adjusted EBITDA; the development of its business plans; and plans to undertake restructuring activities. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements. Actual results may differ materially from the results predicted. Factors that could cause actual results to differ from the results predicted include: fluctuations in foreign currencies; RealNetworks’ ability to realize operating efficiencies, growth and other benefits from the implementation of its strategic initiatives; the emergence of new entrants and competition in the market for digital media products and services; other competitive risks, including the growth of competing technologies, products and services; the potential outcomes and effects of claims and legal proceedings on RealNetworks’ business, prospects, financial condition or results of operations; risks associated with key customer or strategic relationships, business acquisitions and the introduction of new products and services; changes in consumer and advertising spending in response to disruptions in the global financial markets; and changes in RealNetworks’ effective tax rate. More information about potential risk factors that could affect RealNetworks’ business and financial results is included in RealNetworks’ annual report on Form 10-K for the most recent year ended December 31, its quarterly reports on Form 10-Q and in other reports and documents filed by RealNetworks from time to time with the Securities and Exchange Commission. The preparation of RealNetworks’ financial statements and forward-looking financial guidance requires the company to make estimates and assumptions that affect the reported amount of assets and liabilities and the reported amounts of revenues and expenses during the reported period. Actual results may differ materially from these estimates under different assumptions or conditions. The company assumes no obligation to update any forward-looking statements or information, which are in effect as of their respective dates.
RealNetworks, RealPlayer and GameHouse are trademarks or registered trademarks of RealNetworks, Inc. or its subsidiaries. All other companies or products listed herein are trademarks or registered trademarks of their respective owners.
4
RealNetworks, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
| Quarters Ended June 30, |
Six Months Ended June 30, |
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| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
| Net revenue |
$ | 65,526 | $ | 83,752 | $ | 132,490 | $ | 171,053 | ||||||||
| Cost of revenue |
25,962 | 30,666 | 53,389 | 62,732 | ||||||||||||
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| Gross profit |
39,564 | 53,086 | 79,101 | 108,321 | ||||||||||||
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| Sale of patents and other technology assets, net of costs (A) |
117,933 | — | 116,353 | — | ||||||||||||
| Operating expenses: |
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| Research and development |
16,028 | 17,809 | 33,846 | 37,704 | ||||||||||||
| Sales and marketing |
22,694 | 28,853 | 46,490 | 57,333 | ||||||||||||
| General and administrative |
13,068 | 10,874 | 26,344 | 16,496 | ||||||||||||
| Restructuring and other charges |
1,539 | 508 | 3,148 | 7,412 | ||||||||||||
| Loss (gain) on excess office facilities |
— | (174 | ) | — | (174 | ) | ||||||||||
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| Total operating expenses |
53,329 | 57,870 | 109,828 | 118,771 | ||||||||||||
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| Operating income (loss) |
104,168 | (4,784 | ) | 85,626 | (10,450 | ) | ||||||||||
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| Other income (expenses): |
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| Interest income, net |
225 | 311 | 869 | 690 | ||||||||||||
| Gain (loss) on sale of equity and other investments, net |
3,078 | — | 3,078 | — | ||||||||||||
| Equity in net loss of Rhapsody investment |
(2,114 | ) | (1,018 | ) | (2,482 | ) | (4,299 | ) | ||||||||
| Other income (expense), net |
(49 | ) | (311 | ) | 1,426 | (433 | ) | |||||||||
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| Total other income (expense), net |
1,140 | (1,018 | ) | 2,891 | (4,042 | ) | ||||||||||
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| Income (loss) before income taxes |
105,308 | (5,802 | ) | 88,517 | (14,492 | ) | ||||||||||
| Income tax (expense) benefit |
(24,311 | ) | (1,047 | ) | (24,535 | ) | (4,662 | ) | ||||||||
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| Net income (loss) |
$ | 80,997 | $ | (6,849 | ) | $ | 63,982 | $ | (19,154 | ) | ||||||
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| Basic net income (loss) per share |
$ | 2.33 | $ | (0.20 | ) | $ | 1.85 | $ | (0.56 | ) | ||||||
| Diluted net income (loss) per share |
$ | 2.32 | $ | (0.20 | ) | $ | 1.83 | $ | (0.56 | ) | ||||||
| Shares used to compute basic net income (loss) per share |
34,752 | 34,135 | 34,620 | 34,067 | ||||||||||||
| Shares used to compute diluted net income (loss) per share |
34,900 | 34,135 | 34,914 | 34,067 | ||||||||||||
| (A) | On April 5, 2012, RealNetworks completed the sale of certain patents and other technology assets to Intel for a cash purchase of $120.0 million. |
RealNetworks, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
| June 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
| (in thousands) | ||||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 199,540 | $ | 106,333 | ||||
| Short-term investments |
83,406 | 78,739 | ||||||
| Trade accounts receivable, net |
38,512 | 41,165 | ||||||
| Deferred costs, current portion |
1,701 | 1,424 | ||||||
| Prepaid expenses and other current assets |
17,933 | 21,902 | ||||||
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| Total current assets |
341,092 | 249,563 | ||||||
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| Equipment, software, and leasehold improvements, at cost: |
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| Equipment and software |
106,391 | 104,352 | ||||||
| Leasehold improvements |
26,130 | 25,947 | ||||||
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| Total equipment, software, and leasehold improvements |
132,521 | 130,299 | ||||||
| Less accumulated depreciation and amortization |
94,975 | 92,825 | ||||||
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| Net equipment, software, and leasehold improvements |
37,546 | 37,474 | ||||||
| Restricted cash equivalents and investments |
10,174 | 10,168 | ||||||
| Equity method investments |
5,316 | 7,798 | ||||||
| Available for sale securities |
32,296 | 37,204 | ||||||
| Other assets |
3,088 | 2,954 | ||||||
| Deferred costs, non-current portion |
276 | 843 | ||||||
| Deferred tax assets, net, non-current portion |
4,535 | 18,419 | ||||||
| Other intangible assets, net |
5,050 | 7,169 | ||||||
| Goodwill |
6,188 | 6,198 | ||||||
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| Total assets |
$ | 445,561 | $ | 377,790 | ||||
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| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
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| Accounts payable |
$ | 22,443 | $ | 17,151 | ||||
| Accrued and other liabilities |
63,053 | 59,194 | ||||||
| Deferred revenue, current portion |
10,187 | 11,835 | ||||||
| Accrued loss on excess office facilities, current portion |
593 | 596 | ||||||
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| Total current liabilities |
96,276 | 88,776 | ||||||
| Deferred revenue, non-current portion |
185 | 195 | ||||||
| Accrued loss on excess office facilities, non-current portion |
1,536 | 2,151 | ||||||
| Deferred rent |
2,692 | 2,944 | ||||||
| Deferred tax liabilities, net, non-current portion |
1,132 | 1,443 | ||||||
| Other long-term liabilities |
9,871 | 10,994 | ||||||
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| Total liabilities |
111,692 | 106,503 | ||||||
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| Shareholders’ equity |
333,869 | 271,287 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 445,561 | $ | 377,790 | ||||
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RealNetworks, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Six Months Ended June 30, | ||||||||
| 2012 | 2011 | |||||||
| (in thousands) | ||||||||
| Cash flows from operating activities: |
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| Net income (loss) |
$ | 63,982 | $ | (19,154 | ) | |||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: |
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| Depreciation and amortization |
8,162 | 8,116 | ||||||
| Stock-based compensation |
4,065 | 6,129 | ||||||
| Equity in net loss of Rhapsody investment |
2,482 | 4,299 | ||||||
| Excess tax benefit from stock option exercises |
— | (57 | ) | |||||
| Deferred income taxes, net |
22,496 | (351 | ) | |||||
| Gain on sale of patent and other technology assets, net of costs |
(116,353 | ) | — | |||||
| Gain on sale of equity and other investments, net |
(3,078 | ) | — | |||||
| Realized translation gain |
(1,611 | ) | — | |||||
| Other |
(79 | ) | 147 | |||||
| Net change in certain operating assets and liabilities |
2,493 | (4,619 | ) | |||||
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| Net cash provided by (used in) operating activities |
(17,441 | ) | (5,490 | ) | ||||
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| Cash flows from investing activities: |
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| Purchases of equipment, software, and leasehold improvements |
(4,989 | ) | (3,134 | ) | ||||
| Proceeds from sale of patents and other technology assets, net of costs |
116,353 | — | ||||||
| Proceeds from sale of equity and other investments |
4,165 | — | ||||||
| Purchases of short-term investments |
(18,637 | ) | (54,844 | ) | ||||
| Proceeds from sales and maturities of short-term investments |
13,970 | 62,005 | ||||||
| Decrease (increase) in restricted cash equivalents and investments, net |
(5 | ) | (141 | ) | ||||
| Payment of acquisition costs, net of cash acquired |
— | (2,888 | ) | |||||
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| Net cash provided by (used in) investing activities |
110,857 | 998 | ||||||
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| Cash flows from financing activities: |
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| Proceeds from issuance of common stock (stock options and stock purchase plan) |
1,221 | 1,610 | ||||||
| Tax payments from shares withheld upon vesting of restricted stock |
(884 | ) | — | |||||
| Excess tax benefit from stock option exercises |
— | 57 | ||||||
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| Net cash provided by (used in) financing activities |
337 | 1,667 | ||||||
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| Effect of exchange rate changes on cash and cash equivalents |
(546 | ) | 3,537 | |||||
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| Net increase (decrease) in cash and cash equivalents |
93,207 | 712 | ||||||
| Cash and cash equivalents, beginning of period |
106,333 | 236,018 | ||||||
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| Cash and cash equivalents, end of period |
$ | 199,540 | $ | 236,730 | ||||
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RealNetworks, Inc. and Subsidiaries
Supplemental Financial Information
(Unaudited)
| 2012 | 2011 | |||||||||||||||||||||||
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Net Revenue by Line of Business: |
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| Core Products (A) |
$ | 38,250 | $ | 37,697 | $ | 46,693 | $ | 50,705 | $ | 45,735 | $ | 48,107 | ||||||||||||
| Emerging Products (B) |
9,913 | 10,159 | 11,974 | 10,764 | 12,717 | 11,135 | ||||||||||||||||||
| Games (C) |
17,363 | 19,108 | 21,552 | 22,945 | 25,300 | 28,059 | ||||||||||||||||||
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| Total net revenue |
$ | 65,526 | $ | 66,964 | $ | 80,219 | $ | 84,414 | $ | 83,752 | $ | 87,301 | ||||||||||||
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| Core Products Revenue by Product: |
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| SaaS (D) |
$ | 23,286 | $ | 23,463 | $ | 28,255 | $ | 30,381 | $ | 30,216 | $ | 30,526 | ||||||||||||
| Systems Integration / Professional Services (E) |
965 | 426 | 771 | 3,844 | 388 | 1,840 | ||||||||||||||||||
| Technology Licensing (F) |
7,189 | 6,207 | 9,246 | 6,250 | 6,508 | 6,425 | ||||||||||||||||||
| Consumer Subscriptions (G) |
6,810 | 7,601 | 8,421 | 10,230 | 8,623 | 9,316 | ||||||||||||||||||
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| Total Core Products net revenue |
$ | 38,250 | $ | 37,697 | $ | 46,693 | $ | 50,705 | $ | 45,735 | $ | 48,107 | ||||||||||||
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| Net Revenue by Geography: |
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| United States |
$ | 28,614 | $ | 31,814 | $ | 37,298 | $ | 38,969 | $ | 41,984 | $ | 44,469 | ||||||||||||
| Rest of world |
36,912 | 35,150 | 42,921 | 45,445 | 41,768 | 42,832 | ||||||||||||||||||
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| Total net revenue |
$ | 65,526 | $ | 66,964 | $ | 80,219 | $ | 84,414 | $ | 83,752 | $ | 87,301 | ||||||||||||
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| Product Metrics (subscribers and ICM presented as greater than): |
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| Addressable subscribers of mobile operators under contract (H) |
725,000 | 725,000 | 725,000 | 700,000 | 775,000 | 775,000 | ||||||||||||||||||
| SaaS subscribers (I) |
30,600 | 30,500 | 30,050 | 34,000 | 34,550 | 35,900 | ||||||||||||||||||
| Monthly SaaS ARPU (in cents) (J) |
$ | 0.16 | $ | 0.15 | $ | 0.19 | $ | 0.17 | $ | 0.18 | $ | 0.18 | ||||||||||||
| ICM delivered in billions (K) |
162 | 166 | 165 | 162 | 157 | 151 | ||||||||||||||||||
| Consumer subscribers(L) |
350 | 400 | 425 | 500 | 475 | 500 | ||||||||||||||||||
Net Revenue by Line of Business:
| (A) | The Core Products segment primarily includes revenue from SaaS services, system integration and professional services to carriers and mobile handset companies, sales of technology licenses of our software products such as Helix for handsets, consumer subscriptions such as SuperPass and our international radio subscription services. |
| (B) | The Emerging Products segment primarily includes revenue from RealPlayer and related products, such as the distribution of third party software products, advertising on RealPlayer websites and sales of RealPlayerPlus software licenses to consumers. |
| (C) | The Games segment primarily includes revenue from sales of games licenses, online games subscription services, advertising on game sites and social network sites, games syndication services, microtransactions from online and social games and sales of mobile games. |
Core Products Revenue by Product:
| (D) | Software as a Service (SaaS) revenue includes revenue from music on demand (MOD), video on demand (VOD), ringtones, ringback tones (RBT) and intercarrier messaging services provided to network service providers, who are largely mobile phone networks. |
| (E) | Systems Integrations / Professional Services revenue includes professional services, other than those associated with software sales, provided to mobile carriers and handset manufacturers. |
| (F) | Technology Licensing includes revenue from sales of software and other intellectual property licenses such as Helix server licenses and Helix software licenses for handsets. |
| (G) | Consumer Subscriptions includes revenue from SuperPass as well as our international radio subscription services. |
Product Metrics:
| (H) | Total subscribers reported at the end of the quarter of mobile carriers that offer one or more of our SaaS services, other than intercarrier messaging services, to their customers. |
| (I) | SaaS subscribers include RBT, MOD and VOD services, measured at the end of the quarter. |
| (J) | Monthly SaaS ARPU (Average Revenue Per User) is calculated by dividing (a) the total quarterly revenue from SaaS subscription services, including RBT, MOD, VOD, by (b) the number of SaaS subscribers at the end of the quarter, and dividing the resulting quotient by three. |
| (K) | ICM (Intercarrier message) represents the total number of messages delivered across our messaging platform during the quarter. |
| (L) | Consumer subscribers primarily includes our SuperPass and GamePass products. |
RealNetworks, Inc. and Subsidiaries
Segment Results of Operations
(Unaudited)
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||||
| Q2 | Q1 | Q2 | YTD | YTD | ||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Core Products |
||||||||||||||||||||
| Net revenue |
$ | 38,250 | $ | 37,697 | $ | 45,735 | $ | 75,947 | $ | 93,842 | ||||||||||
| Cost of revenue |
17,681 | 17,828 | 19,353 | 35,509 | 40,337 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Gross profit |
20,569 | 19,869 | 26,382 | 40,438 | 53,505 | |||||||||||||||
| Gross margin |
54 | % | 53 | % | 58 | % | 53 | % | 57 | % | ||||||||||
| Operating expenses |
16,429 | 18,068 | 19,174 | 34,497 | 38,560 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating income (loss) |
$ | 4,140 | $ | 1,801 | $ | 7,208 | $ | 5,941 | $ | 14,945 | ||||||||||
| Adjusted EBITDA |
$ | 6,628 | $ | 4,400 | $ | 9,900 | $ | 11,028 | $ | 20,160 | ||||||||||
| Emerging Products |
||||||||||||||||||||
| Net revenue |
$ | 9,913 | $ | 10,159 | $ | 12,717 | $ | 20,072 | $ | 23,852 | ||||||||||
| Cost of revenue |
1,800 | 2,105 | 2,978 | 3,905 | 4,518 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Gross profit |
8,113 | 8,054 | 9,739 | 16,167 | 19,334 | |||||||||||||||
| Gross margin |
82 | % | 79 | % | 77 | % | 81 | % | 81 | % | ||||||||||
| Operating expenses |
7,092 | 7,546 | 9,369 | 14,638 | 19,260 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating income (loss) |
$ | 1,021 | $ | 508 | $ | 370 | $ | 1,529 | $ | 74 | ||||||||||
| Adjusted EBITDA |
$ | 1,266 | $ | 754 | $ | 707 | $ | 2,020 | $ | 519 | ||||||||||
| Games |
||||||||||||||||||||
| Net revenue |
$ | 17,363 | $ | 19,108 | $ | 25,300 | $ | 36,471 | $ | 53,359 | ||||||||||
| Cost of revenue |
5,572 | 6,661 | 8,040 | 12,233 | 16,574 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Gross profit |
11,791 | 12,447 | 17,260 | 24,238 | 36,785 | |||||||||||||||
| Gross margin |
68 | % | 65 | % | 68 | % | 66 | % | 69 | % | ||||||||||
| Operating expenses |
13,093 | 13,430 | 15,211 | 26,523 | 32,025 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating income (loss) |
$ | (1,302 | ) | $ | (983 | ) | $ | 2,049 | $ | (2,285 | ) | $ | 4,760 | |||||||
| Adjusted EBITDA |
$ | (619 | ) | $ | (324 | ) | $ | 2,748 | $ | (943 | ) | $ | 6,088 | |||||||
| Corporate |
||||||||||||||||||||
| Net revenue |
$ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Cost of revenue |
909 | 833 | 295 | 1,742 | 1,303 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Gross profit |
(909 | ) | (833 | ) | (295 | ) | (1,742 | ) | (1,303 | ) | ||||||||||
| Gross margin |
N/A | N/A | N/A | N/A | N/A | |||||||||||||||
| Gain on sale of patents and other technology assets, net of costs |
117,933 | (1,580 | ) | — | 116,353 | — | ||||||||||||||
| Operating expenses |
16,715 | 17,455 | 14,116 | 34,170 | 28,926 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating income (loss) |
$ | 100,309 | $ | (19,868 | ) | $ | (14,411 | ) | $ | 80,441 | $ | (30,229 | ) | |||||||
| Adjusted EBITDA |
$ | (13,784 | ) | $ | (12,247 | ) | $ | (11,133 | ) | $ | (26,031 | ) | $ | (17,003 | ) | |||||
| Total |
||||||||||||||||||||
| Net revenue |
$ | 65,526 | $ | 66,964 | $ | 83,752 | $ | 132,490 | $ | 171,053 | ||||||||||
| Cost of revenue |
25,962 | 27,427 | 30,666 | 53,389 | 62,732 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Gross profit |
39,564 | 39,537 | 53,086 | 79,101 | 108,321 | |||||||||||||||
| Gross margin |
60 | % | 59 | % | 63 | % | 60 | % | 63 | % | ||||||||||
| Gain on sale of patents and other technology assets, net of costs |
117,933 | (1,580 | ) | — | 116,353 | — | ||||||||||||||
| Operating expenses |
53,329 | 56,499 | 57,870 | 109,828 | 118,771 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating income (loss) |
$ | 104,168 | $ | (18,542 | ) | $ | (4,784 | ) | $ | 85,626 | $ | (10,450 | ) | |||||||
| Adjusted EBITDA |
$ | (6,509 | ) | $ | (7,417 | ) | $ | 2,222 | $ | (13,926 | ) | $ | 9,764 | |||||||
RealNetworks, Inc. and Subsidiaries
Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment
(Unaudited)
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||||
| Q2 | Q1 | Q2 | YTD | YTD | ||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Core Products | ||||||||||||||||||||
| Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment: |
||||||||||||||||||||
| Operating income (loss) |
$ | 4,140 | $ | 1,801 | $ | 7,208 | $ | 5,941 | $ | 14,945 | ||||||||||
| Acquisitions related intangible asset amortization |
786 | 802 | 710 | 1,588 | 1,184 | |||||||||||||||
| Depreciation and amortization |
1,702 | 1,797 | 1,982 | 3,499 | 4,031 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Adjusted EBITDA |
$ | 6,628 | $ | 4,400 | $ | 9,900 | $ | 11,028 | $ | 20,160 | ||||||||||
| Emerging Products | ||||||||||||||||||||
| Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment: |
||||||||||||||||||||
| Operating income (loss) |
$ | 1,021 | $ | 508 | $ | 370 | $ | 1,529 | $ | 74 | ||||||||||
| Acquisitions related intangible asset amortization |
79 | 79 | 53 | 158 | 53 | |||||||||||||||
| Depreciation and amortization |
166 | 167 | 284 | 333 | 392 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Adjusted EBITDA |
$ | 1,266 | $ | 754 | $ | 707 | $ | 2,020 | $ | 519 | ||||||||||
| Games | ||||||||||||||||||||
| Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment: |
||||||||||||||||||||
| Operating income (loss) |
$ | (1,302 | ) | $ | (983 | ) | $ | 2,049 | $ | (2,285 | ) | $ | 4,760 | |||||||
| Acquisitions related intangible asset amortization |
207 | 209 | 256 | 416 | 510 | |||||||||||||||
| Depreciation and amortization |
476 | 450 | 443 | 926 | 818 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Adjusted EBITDA |
$ | (619 | ) | $ | (324 | ) | $ | 2,748 | $ | (943 | ) | $ | 6,088 | |||||||
| Corporate | ||||||||||||||||||||
| Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment: |
||||||||||||||||||||
| Operating income (loss) |
$ | 100,309 | $ | (19,868 | ) | $ | (14,411 | ) | $ | 80,441 | $ | (30,229 | ) | |||||||
| Other income (expense), net |
(49 | ) | 1,475 | (311 | ) | 1,426 | (433 | ) | ||||||||||||
| Depreciation and amortization |
628 | 614 | 569 | 1,242 | 1,128 | |||||||||||||||
| Restructuring and other charges |
1,539 | 1,609 | 508 | 3,148 | 7,412 | |||||||||||||||
| Stock-based compensation |
1,722 | 2,343 | 2,686 | 4,065 | 5,293 | |||||||||||||||
| Gain on sale of patents and other technology assets, net of costs |
(117,933 | ) | 1,580 | — | (116,353 | ) | — | |||||||||||||
| Loss (Gain) on excess office facilities |
— | — | (174 | ) | — | (174 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Adjusted EBITDA |
$ | (13,784 | ) | $ | (12,247 | ) | $ | (11,133 | ) | $ | (26,031 | ) | $ | (17,003 | ) | |||||
| Total | ||||||||||||||||||||
| Reconciliation of GAAP operating income (loss) to adjusted EBITDA: |
||||||||||||||||||||
| Operating income (loss) |
$ | 104,168 | $ | (18,542 | ) | $ | (4,784 | ) | $ | 85,626 | $ | (10,450 | ) | |||||||
| Other income (expense), net |
(49 | ) | 1,475 | (311 | ) | 1,426 | (433 | ) | ||||||||||||
| Acquisitions related intangible asset amortization |
1,072 | 1,090 | 1,019 | 2,162 | 1,747 | |||||||||||||||
| Depreciation and amortization |
2,972 | 3,028 | 3,278 | 6,000 | 6,369 | |||||||||||||||
| Loss (Gain) on excess office facilities |
— | — | (174 | ) | — | (174 | ) | |||||||||||||
| Restructuring and other charges |
1,539 | 1,609 | 508 | 3,148 | 7,412 | |||||||||||||||
| Stock-based compensation |
1,722 | 2,343 | 2,686 | 4,065 | 5,293 | |||||||||||||||
| Gain on sale of patents and other technology assets, net of costs |
(117,933 | ) | 1,580 | — | (116,353 | ) | — | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Adjusted EBITDA |
$ | (6,509 | ) | $ | (7,417 | ) | $ | 2,222 | $ | (13,926 | ) | $ | 9,764 | |||||||