Press Releases
RealNetworks Announces Third Quarter 2012 Results
Quarterly Summary:
- Revenue of
$59.1 million - Net loss of
$(22.2) million or$(0.63) per share - Adjusted EBITDA of
$(6.0) million - Cash and short term investments of
$273.7 million as ofSept. 30, 2012
"We are working hard to put RealNetworks on a path to growth and profitability," said
Third Quarter Results
For the third quarter of 2012, revenue was
Net loss for the third quarter of 2012 was
Adjusted EBITDA loss for the third quarter was
As of
Segment Operating Results
| ||||||||
2012 |
2012 |
2011 |
||||||
Q3 |
Q2 |
Q3 |
||||||
(in thousands) |
||||||||
Revenue |
||||||||
Core Products |
$ 34,078 |
$ 38,250 |
|
|||||
Emerging Products |
10,134 |
9,913 |
10,764 |
|||||
Games |
14,876 |
17,363 |
22,945 |
|||||
Corporate |
- |
- |
- |
|||||
Total |
$ 59,088 |
$ 65,526 |
|
|||||
Operating Income (loss) |
||||||||
Core Products |
$ 1,180 |
$ 4,140 |
$ 8,815 |
|||||
Emerging Products |
(152) |
1,021 |
(2,033) |
|||||
Games |
(1,708) |
(1,302) |
1,589 |
|||||
Corporate |
(22,495) |
100,309 |
(11,854) |
|||||
Total |
|
|
|
|||||
Adjusted EBITDA |
||||||||
Core Products |
$ 3,736 |
$ 6,628 |
|
|||||
Emerging Products |
158 |
1,266 |
(1,711) |
|||||
Games |
(894) |
(619) |
2,275 |
|||||
Corporate |
(9,042) |
(13,784) |
(8,094) |
|||||
Total |
$ (6,042) |
$ (6,509) |
$ 4,087 |
Business Outlook
For the fourth quarter of 2012,
The foregoing forward-looking statements reflect
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 third quarter at
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
Dial in:
888-790-3162 Domestic
415-228-4854 International
Passcode: Third Quarter Earnings
Leader:
Telephonic replay will be available until
Replay dial in:
866-425-0182 Domestic
203-369-0874 International
About
About Non-GAAP Financial Measures:
To supplement
In the financial tables of our earnings press release,
The rationale for management's use of non-GAAP measures is included in the supplementary materials presented with the third 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
Forward-Looking Statements: This press release contains forward-looking statements that involve risks and uncertainties, including statements relating to
RealNetworks, Inc. and Subsidiaries | |||||||||
Condensed Consolidated Statements of Operations | |||||||||
(Unaudited) | |||||||||
Quarters Ended |
Nine Months Ended |
||||||||
2012 |
2011 |
2012 |
2011 |
||||||
(in thousands, except per share data) |
|||||||||
Net revenue |
$ 59,088 |
|
|
|
|||||
Cost of revenue |
25,244 |
31,816 |
78,633 |
94,548 |
|||||
Gross profit |
33,844 |
52,598 |
112,945 |
160,919 |
|||||
Sale of patents and other technology assets, net of costs (A) |
- |
- |
116,353 |
- |
|||||
Operating expenses: |
|||||||||
Research and development |
15,321 |
16,496 |
49,167 |
54,200 |
|||||
Sales and marketing |
21,972 |
28,625 |
68,462 |
85,958 |
|||||
General and administrative |
8,759 |
10,522 |
35,103 |
27,018 |
|||||
Restructuring and other charges |
10,724 |
438 |
13,872 |
7,850 |
|||||
Loss (gain) on excess office facilities |
243 |
- |
243 |
(174) |
|||||
Total operating expenses |
57,019 |
56,081 |
166,847 |
174,852 |
|||||
Operating income (loss) |
(23,175) |
(3,483) |
62,451 |
(13,933) |
|||||
Other income (expenses): |
|||||||||
Interest income, net |
164 |
672 |
1,033 |
1,362 |
|||||
Gain (loss) on sale of equity and other investments, net |
2,210 |
- |
5,288 |
- |
|||||
Equity in net loss of Rhapsody investment |
(1,613) |
(1,440) |
(4,095) |
(5,739) |
|||||
Other income (expense), net |
248 |
(228) |
1,674 |
(661) |
|||||
Total other income (expense), net |
1,009 |
(996) |
3,900 |
(5,038) |
|||||
Income (loss) before income taxes |
(22,166) |
(4,479) |
66,351 |
(18,971) |
|||||
Income tax (expense) benefit |
(48) |
(703) |
(24,583) |
(5,365) |
|||||
Net income (loss) |
|
|
$ 41,768 |
|
|||||
Basic net income (loss) per share |
$ (0.63) |
$ (0.15) |
$ 1.20 |
$ (0.71) |
|||||
Diluted net income (loss) per share |
$ (0.63) |
$ (0.15) |
$ 1.19 |
$ (0.71) |
|||||
Shares used to compute basic net income (loss) per share |
34,998 |
34,199 |
34,747 |
34,081 |
|||||
Shares used to compute diluted net income (loss) per share |
34,998 |
34,199 |
35,000 |
34,081 |
|||||
(A) On |
RealNetworks, Inc. and Subsidiaries | |||
Condensed Consolidated Balance Sheets | |||
(Unaudited) | |||
September 30, |
December 31, | ||
2012 |
2011 | ||
(in thousands) | |||
ASSETS | |||
Current assets: |
|||
Cash and cash equivalents |
$ 170,702 |
$ 106,333 | |
Short-term investments |
103,046 |
78,739 | |
Trade accounts receivable, net |
35,716 |
41,165 | |
Deferred costs, current portion |
1,910 |
1,424 | |
Prepaid expenses and other current assets |
19,901 |
21,902 | |
Total current assets |
331,275 |
249,563 | |
Equipment, software, and leasehold improvements, at cost: |
|||
Equipment and software |
100,053 |
104,352 | |
Leasehold improvements |
26,184 |
25,947 | |
Total equipment, software, and leasehold improvements |
126,237 |
130,299 | |
Less accumulated depreciation and amortization |
93,287 |
92,825 | |
Net equipment, software, and leasehold improvements |
32,950 |
37,474 | |
Restricted cash equivalents and investments |
10,064 |
10,168 | |
Equity method investments |
3,703 |
7,798 | |
Available for sale securities |
36,819 |
37,204 | |
Other assets |
3,197 |
2,954 | |
Deferred costs, non-current portion |
170 |
843 | |
Deferred tax assets, net, non-current portion |
4,566 |
18,419 | |
Other intangible assets, net |
4,085 |
7,169 | |
Goodwill |
6,375 |
6,198 | |
Total assets |
$ 433,204 |
$ 377,790 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
Current liabilities: |
|||
Accounts payable |
$ 21,350 |
$ 17,151 | |
Accrued and other liabilities |
62,215 |
59,194 | |
Deferred revenue, current portion |
11,558 |
11,835 | |
Accrued loss on excess office facilities, current portion |
747 |
596 | |
Total current liabilities |
95,870 |
88,776 | |
Deferred revenue, non-current portion |
159 |
195 | |
Accrued loss on excess office facilities, non-current portion |
1,229 |
2,151 | |
Deferred rent |
2,712 |
2,944 | |
Deferred tax liabilities, net, non-current portion |
1,085 |
1,443 | |
Other long-term liabilities |
10,290 |
10,994 | |
Total liabilities |
111,345 |
106,503 | |
Shareholders' equity |
321,859 |
271,287 | |
Total liabilities and shareholders' equity |
$ 433,204 |
$ 377,790 |
RealNetworks, Inc. and Subsidiaries | |||
Condensed Consolidated Statements of Cash Flows | |||
(Unaudited) | |||
Nine Months Ended September 30, | |||
2012 |
2011 | ||
(in thousands) | |||
Cash flows from operating activities: |
|||
Net income (loss) |
$ 41,768 |
$ (24,336) | |
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
|||
Depreciation and amortization |
12,478 |
12,519 | |
Stock-based compensation |
6,419 |
9,086 | |
Loss (gain) on disposal of equipment, software, and leasehold improvements |
1,965 |
81 | |
Equity in net loss of Rhapsody investment |
4,095 |
5,739 | |
Excess tax benefit from stock option exercises |
- |
(57) | |
Deferred income taxes, net |
22,399 |
(429) | |
Gain on sale of patent and other technology assets, net of costs |
(116,353) |
- | |
Gain on sale of equity and other investments, net |
(5,288) |
- | |
Realized translation gain |
(1,968) |
- | |
Other |
- |
(19) | |
Net change in certain operating assets and liabilities |
3,735 |
(9,960) | |
Net cash provided by (used in) operating activities |
(30,750) |
(7,376) | |
Cash flows from investing activities: |
|||
Purchases of equipment, software, and leasehold improvements |
(6,478) |
(6,013) | |
Proceeds from sale of patents and other technology assets, net of costs |
116,353 |
- | |
Proceeds from sale of equity and other investments |
7,244 |
- | |
Purchases of short-term investments |
(76,191) |
(77,078) | |
Proceeds from sales and maturities of short-term investments |
51,885 |
95,104 | |
Decrease (increase) in restricted cash equivalents and investments, net |
103 |
(141) | |
Payment of acquisition costs, net of cash acquired |
- |
(2,888) | |
Net cash provided by (used in) investing activities |
92,916 |
8,984 | |
Cash flows from financing activities: |
|||
Proceeds from issuance of common stock (stock options and stock purchase plan) |
3,240 |
1,940 | |
Tax payments from shares withheld upon vesting of restricted stock |
(964) |
- | |
Excess tax benefit from stock option exercises |
- |
57 | |
Payment of common stock cash dividend |
- |
(136,793) | |
Net cash provided by (used in) financing activities |
2,276 |
(134,796) | |
Effect of exchange rate changes on cash and cash equivalents |
(73) |
(19) | |
Net increase (decrease) in cash and cash equivalents |
64,369 |
(133,207) | |
Cash and cash equivalents, beginning of period |
106,333 |
236,018 | |
Cash and cash equivalents, end of period |
$ 170,702 |
$ 102,811 |
RealNetworks, Inc. and Subsidiaries | ||||||||||||||
Supplemental Financial Information | ||||||||||||||
(Unaudited) | ||||||||||||||
2012 |
2011 | |||||||||||||
Q3 |
Q2 |
Q1 |
Q4 |
Q3 |
Q2 |
Q1 | ||||||||
(in thousands) | ||||||||||||||
Net Revenue by Line of Business: |
||||||||||||||
Core Products (A) |
|
|
|
|
|
|
| |||||||
Emerging Products (B) |
10,134 |
9,913 |
10,159 |
11,974 |
10,764 |
12,717 |
11,135 | |||||||
Games (C) |
14,876 |
17,363 |
19,108 |
21,552 |
22,945 |
25,300 |
28,059 | |||||||
Total net revenue |
|
|
|
|
|
|
| |||||||
Core Products Revenue by Product: |
||||||||||||||
SaaS (D) |
|
|
|
|
|
|
| |||||||
Systems Integration / Professional Services (E) |
247 |
965 |
426 |
771 |
3,844 |
388 |
1,840 | |||||||
Technology Licensing (F) |
6,079 |
7,189 |
6,207 |
9,246 |
6,250 |
6,508 |
6,425 | |||||||
Consumer Subscriptions (G) |
7,055 |
6,810 |
7,601 |
8,421 |
10,230 |
8,623 |
9,316 | |||||||
Total Core Products net revenue |
|
|
|
|
|
|
| |||||||
Net Revenue by Geography: |
||||||||||||||
United States |
|
|
|
|
|
|
| |||||||
Rest of world |
29,987 |
36,912 |
35,150 |
42,921 |
45,445 |
41,768 |
42,832 | |||||||
Total net revenue |
|
|
|
|
|
|
| |||||||
Product Metrics (subscribers and ICM presented as greater than): |
||||||||||||||
Addressable subscribers of mobile operators under contract (H) |
700,000 |
725,000 |
725,000 |
725,000 |
700,000 |
775,000 |
775,000 | |||||||
SaaS subscribers (I) |
26,500 |
30,600 |
30,500 |
30,050 |
34,000 |
34,550 |
35,900 | |||||||
Monthly SaaS ARPU (in cents) (J) |
$ 0.17 |
$ 0.16 |
$ 0.15 |
$ 0.19 |
$ 0.17 |
$ 0.18 |
$ 0.18 | |||||||
ICM delivered in billions (K) |
173 |
162 |
166 |
165 |
162 |
157 |
151 | |||||||
Consumer subscribers(L) |
350 |
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) | ||||||||||||||
(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 | |||||||
Q3 |
Q2 |
Q3 |
YTD |
YTD | ||||||
(in thousands) | ||||||||||
Core Products |
||||||||||
Net revenue |
$ 34,078 |
$ 38,250 |
$ 50,705 |
|
| |||||
Cost of revenue |
17,323 |
17,681 |
22,492 |
52,832 |
62,829 | |||||
Gross profit |
16,755 |
20,569 |
28,213 |
57,193 |
81,718 | |||||
Gross margin |
49% |
54% |
56% |
52% |
57% | |||||
Operating expenses |
15,575 |
16,429 |
19,398 |
50,072 |
57,958 | |||||
Operating income (loss) |
$ 1,180 |
$ 4,140 |
$ 8,815 |
$ 7,121 |
$ 23,760 | |||||
Adjusted EBITDA |
$ 3,736 |
$ 6,628 |
$ 11,617 |
$ 14,764 |
$ 31,777 | |||||
Emerging Products |
||||||||||
Net revenue |
$ 10,134 |
$ 9,913 |
$ 10,764 |
$ 30,206 |
$ 34,616 | |||||
Cost of revenue |
2,041 |
1,800 |
3,913 |
5,946 |
8,431 | |||||
Gross profit |
8,093 |
8,113 |
6,851 |
24,260 |
26,185 | |||||
Gross margin |
80% |
82% |
64% |
80% |
76% | |||||
Operating expenses |
8,245 |
7,092 |
8,884 |
22,883 |
28,144 | |||||
Operating income (loss) |
$ (152) |
$ 1,021 |
$ (2,033) |
$ 1,377 |
$ (1,959) | |||||
Adjusted EBITDA |
$ 158 |
$ 1,266 |
$ (1,711) |
$ 2,178 |
$ (1,192) | |||||
Games |
||||||||||
Net revenue |
$ 14,876 |
$ 17,363 |
$ 22,945 |
$ 51,347 |
$ 76,304 | |||||
Cost of revenue |
4,936 |
5,572 |
7,197 |
17,169 |
23,771 | |||||
Gross profit |
9,940 |
11,791 |
15,748 |
34,178 |
52,533 | |||||
Gross margin |
67% |
68% |
69% |
67% |
69% | |||||
Operating expenses |
11,648 |
13,093 |
14,159 |
38,171 |
46,184 | |||||
Operating income (loss) |
$ (1,708) |
$ (1,302) |
$ 1,589 |
$ (3,993) |
$ 6,349 | |||||
Adjusted EBITDA |
$ (894) |
$ (619) |
$ 2,275 |
$ (1,837) |
$ 8,363 | |||||
Corporate |
||||||||||
Net revenue |
$ - |
$ - |
$ - |
$ - |
$ - | |||||
Cost of revenue |
944 |
909 |
(1,786) |
2,686 |
(483) | |||||
Gross profit |
(944) |
(909) |
1,786 |
(2,686) |
483 | |||||
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 |
- |
116,353 |
- | |||||
Operating expenses |
21,551 |
16,715 |
13,640 |
55,721 |
42,566 | |||||
Operating income (loss) |
$ (22,495) |
$ 100,309 |
$ (11,854) |
$ 57,946 |
$ (42,083) | |||||
Adjusted EBITDA |
$ (9,042) |
$ (13,784) |
$ (8,094) |
$ (35,073) |
$ (25,097) | |||||
Total |
||||||||||
Net revenue |
$ 59,088 |
$ 65,526 |
$ 84,414 |
|
| |||||
Cost of revenue |
25,244 |
25,962 |
31,816 |
78,633 |
94,548 | |||||
Gross profit |
33,844 |
39,564 |
52,598 |
112,945 |
160,919 | |||||
Gross margin |
57% |
60% |
62% |
59% |
63% | |||||
Gain on sale of patents and other technology assets, net of costs |
- |
117,933 |
- |
116,353 |
- | |||||
Operating expenses |
57,019 |
53,329 |
56,081 |
166,847 |
174,852 | |||||
Operating income (loss) |
$ (23,175) |
$ 104,168 |
$ (3,483) |
$ 62,451 |
$ (13,933) | |||||
Adjusted EBITDA |
$ (6,042) |
$ (6,509) |
$ 4,087 |
$ (19,968) |
$ 13,851 | |||||
RealNetworks, Inc. and Subsidiaries | ||||||||||||
Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment | ||||||||||||
(Unaudited) | ||||||||||||
2012 |
2011 |
2012 |
2011 | |||||||||
Q3 |
Q2 |
Q3 |
YTD |
YTD | ||||||||
(in thousands) | ||||||||||||
Core Products |
||||||||||||
Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment: |
||||||||||||
Operating income (loss) |
$ 1,180 |
$ 4,140 |
$ 8,815 |
$ 7,121 |
$ 23,760 | |||||||
Acquisitions related intangible asset amortization |
796 |
786 |
833 |
2,384 |
2,017 | |||||||
Depreciation and amortization |
1,760 |
1,702 |
1,969 |
5,259 |
6,000 | |||||||
Adjusted EBITDA |
$ 3,736 |
$ 6,628 |
$ 11,617 |
$ 14,764 |
$ 31,777 | |||||||
Emerging Products |
||||||||||||
Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment: |
||||||||||||
Operating income (loss) |
$ (152) |
$ 1,021 |
$ (2,033) |
$ 1,377 |
$ (1,959) | |||||||
Acquisitions related intangible asset amortization |
62 |
79 |
79 |
220 |
132 | |||||||
Depreciation and amortization |
248 |
166 |
243 |
581 |
635 | |||||||
Adjusted EBITDA |
$ 158 |
$ 1,266 |
$ (1,711) |
$ 2,178 |
$ (1,192) | |||||||
Games |
||||||||||||
Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment: |
||||||||||||
Operating income (loss) |
$ (1,708) |
$ (1,302) |
$ 1,589 |
$ (3,993) |
$ 6,349 | |||||||
Acquisitions related intangible asset amortization |
171 |
207 |
257 |
587 |
767 | |||||||
Depreciation and amortization |
643 |
476 |
429 |
1,569 |
1,247 | |||||||
Adjusted EBITDA |
$ (894) |
$ (619) |
$ 2,275 |
$ (1,837) |
$ 8,363 | |||||||
Corporate |
||||||||||||
Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment: |
||||||||||||
Operating income (loss) |
$ (22,495) |
$ 100,309 |
$ (11,854) |
$ 57,946 |
$ (42,083) | |||||||
Other income (expense), net |
248 |
(49) |
(228) |
1,674 |
(661) | |||||||
Depreciation and amortization |
636 |
628 |
593 |
1,878 |
1,721 | |||||||
Restructuring and other charges |
10,724 |
1,539 |
438 |
13,872 |
7,850 | |||||||
Stock-based compensation |
1,602 |
1,722 |
2,957 |
5,667 |
8,250 | |||||||
Gain on sale of patents and other technology assets, net of costs |
- |
(117,933) |
- |
(116,353) |
- | |||||||
Loss (Gain) on excess office facilities |
243 |
- |
- |
243 |
(174) | |||||||
Adjusted EBITDA |
$ (9,042) |
$ (13,784) |
$ (8,094) |
$ (35,073) |
$ (25,097) | |||||||
Total |
||||||||||||
Reconciliation of GAAP operating income (loss) to adjusted EBITDA: |
||||||||||||
Operating income (loss) |
$ (23,175) |
$ 104,168 |
$ (3,483) |
$ 62,451 |
$ (13,933) | |||||||
Other income (expense), net |
248 |
(49) |
(228) |
1,674 |
(661) | |||||||
Acquisitions related intangible asset amortization |
1,029 |
1,072 |
1,169 |
3,191 |
2,916 | |||||||
Depreciation and amortization |
3,287 |
2,972 |
3,234 |
9,287 |
9,603 | |||||||
Loss (Gain) on excess office facilities |
243 |
- |
- |
243 |
(174) | |||||||
Restructuring and other charges |
10,724 |
1,539 |
438 |
13,872 |
7,850 | |||||||
Stock-based compensation |
1,602 |
1,722 |
2,957 |
5,667 |
8,250 | |||||||
Gain on sale of patents and other technology assets, net of costs |
- |
(117,933) |
- |
(116,353) |
- | |||||||
Adjusted EBITDA |
$ (6,042) |
$ (6,509) |
$ 4,087 |
$ (19,968) |
$ 13,851 |
SOURCE
News Provided by Acquire Media
Delayed at least 20 minutes.
Provided by eSignal.
Shareholder Tools
Electronic Delivery
Register for electronic delivery of our future annual reports, proxy statements and proxy ballots.