Search
Menu

Press Release Details

View all news

REALNETWORKS ANNOUNCES FIRST QUARTER 2022 FINANCIAL RESULTS

May 04, 2022

SEATTLE, May 4, 2022 /PRNewswire/ -- RealNetworks, Inc. (Nasdaq: RNWK), an emerging leader in AI-based software and solutions, today announced its financial results for the first quarter ended March 31, 2022.

  • Revenue was $13.3 million, net loss of $(5.2) million and Adjusted EBITDA loss of $(3.8) million
  • Launched SAFR SCAN, the company's first integrated hardware-software product
  • Appointed Mike Cooley as President for KONTXT, Messaging, and Telecom

Management Commentary

"In March, we launched SAFR SCAN, a video door station for access control which is the company's first integrated hardware-software product in our 27-year history. SAFR SCAN delivers excellent performance, security, and reliability at less than half the price of previous competitive products. We're very encouraged by the early feedback we're hearing from industry partners and experts and we're excited to begin commercial shipments later this quarter," said Rob Glaser, Founder, Chairman, and Chief Executive Officer of RealNetworks.

"A second major development I'm excited about is the appointment of Mike Cooley as President for KONTXT, Messaging, and Telecom. Mike has an outstanding track record of growing and building businesses in the carrier market and I believe he's the right person to drive growth and take KONTXT to the next level."

First Quarter 2022 Financial Results

  • Revenue was $13.3 million, compared to $13.4 million in the prior quarter and $15.9 million in the prior year period.
  • Net loss attributable to RealNetworks was $(5.2) million, or $(0.11) per diluted share, compared to a net loss of $(1.8) million, or $(0.04) per diluted share, in the prior quarter and a net loss of $(10.4) million, or $(0.27) per diluted share, in the prior year period.
  • Adjusted EBITDA was a loss of $(3.8) million compared to Adjusted EBITDA loss of $(3.7) million in the prior quarter and Adjusted EBITDA loss of $(3.0) million in the prior year period.
  • Strong balance sheet with unrestricted cash and cash equivalents of $21.8 million and no debt as of March 31, 2022.

Business Outlook

For the second quarter ending June 30, 2022, RealNetworks expects to achieve the following results:

  • Total revenue is expected to be in the range of $11.0 million to $12.5 million.
  • Adjusted EBITDA loss is expected to be in the range of $(6.0) million to $(4.5) million.

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 can access the conference call by dialing 1-888-221-3881 (United States) or 1-646-828-8193 (international). A telephonic replay of the call will also be available shortly after the completion of the call, until 11:59 p.m. ET on Wednesday, May 18, 2022, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (international) and entering the replay pin number: 7077659.

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 rich history 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. Real's portfolio includes SAFR, the world's premier computer vision platform for live video; KONTXT, an industry leading NLP (Natural Language Processing) platform for text and multi-media analysis; and leveraging its digital media expertise, a mobile games business focused on the large free-to-play segment. For information about all of our 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, Scener's current and future activities, and certain remaining 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; issues with the use of AI; potential outcomes and effects of claims and legal proceedings; risks associated with key customer or strategic relationships and business acquisitions and dispositions; challenges caused by the COVID-19 pandemic; disruptions in the global financial markets, including changes in consumer spending and impacts to credit availability, and fluctuations in foreign currencies; volatility of our stock price; material asset impairment; continued declines in subscription revenue; difficulty recruiting and retaining key personnel; regulatory, tax, accounting, and cross-border risks; and risks related to our governance structure. More information about potential risk factors that could affect our business and financial results is included in RealNetworks' latest annual report on Form 10-K for year ended December 31, 2021, 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
Brian M. Prenoveau, CFA
MZ North America
561-489-5315
IR@realnetworks.com
RNWK-F

 

RealNetworks, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)



Quarter Ended March 31,



2022


2021






 (in thousands, except
per share data)





 Net revenue

$         13,276


$         15,888

 Cost of revenue

2,736


3,679

           Gross profit

10,540


12,209





 Operating expenses:




       Research and development

5,798


6,238

       Sales and marketing

4,582


5,137

       General and administrative

4,827


4,898

       Fair value adjustments to contingent consideration liability


(1,040)

       Restructuring and other charges

290


3,171





           Total operating expenses

15,497


18,404





 Operating loss

(4,957)


(6,195)





 Other income (expenses):




       Interest expense

(22)


(95)

       Interest income

7


13

       Loss on equity and other investments, net

(189)


(4,272)

       Other income, net

19


104





           Total other expenses, net

(185)


(4,250)





Loss before income taxes

(5,142)


(10,445)

Income tax expense

83


109





Net loss

(5,225)


(10,554)

Net loss attributable to noncontrolling interests


(106)

Net loss attributable to RealNetworks

$          (5,225)


$        (10,448)





Net loss per share attributable to RealNetworks- Basic

$            (0.11)


$            (0.27)





Net loss per share attributable to RealNetworks- Diluted

$            (0.11)


$            (0.27)





 Shares used to compute basic net loss per share

47,276


38,502

 Shares used to compute diluted net loss per share

47,276


38,502

 

RealNetworks, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)



March 31,
2022


December 31,
2021


 (in thousands)

ASSETS

 Current assets:




      Cash and cash equivalents

$                      21,775


$                      27,109

      Trade accounts receivable, net

8,182


9,556

      Deferred costs, current portion

28


49

      Investments


1,755

      Prepaid expenses and other current assets

5,456


3,166

           Total current assets

35,441


41,635





 Equipment and software

28,246


29,464

 Leasehold improvements

2,085


2,750

      Total equipment, software, and leasehold improvements

30,331


32,214

 Less accumulated depreciation and amortization

28,958


30,744

      Net equipment, software, and leasehold improvements

1,373


1,470





 Operating lease assets

4,135


3,992

 Restricted cash equivalents

1,630


1,630

 Other assets

2,716


2,878

 Deferred tax assets, net

709


727

 Goodwill

16,875


16,976





           Total assets

$                      62,879


$                      69,308





 LIABILITIES AND SHAREHOLDERS' EQUITY





 Current liabilities:




      Accounts payable

$                         2,272


$                         2,578

      Accrued and other current liabilities

12,487


13,286

      Deferred revenue, current portion

3,437


2,614

           Total current liabilities

18,196


18,478





 Deferred revenue, non-current portion

34


183

 Deferred tax liabilities, net

1,115


1,132

 Long-term lease liabilities

2,393


2,300

 Other long-term liabilities

22


1,142





           Total liabilities

21,760


23,235









           Total equity

41,119


46,073





           Total liabilities and equity

$                      62,879


$                      69,308

 

RealNetworks, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)



Three Months Ended March 31,


2022


2021


 (in thousands)


Cash flows from operating activities:




     Net loss

$                         (5,225)


$                       (10,554)

     Adjustment to reconcile net loss to net cash used in operating activities:




          Depreciation and amortization

190


204

          Stock-based compensation

695


836

          Loss on equity and other investments, net

189


4,272

          Loss on impairment of operating lease assets


2,461

          Foreign currency gain

(3)


(103)

          Fair value adjustments to contingent consideration liability


(1,040)

          Net change in certain operating assets and liabilities

(819)


(3,052)

               Net cash used in operating activities

(4,973)


(6,976)

Cash flows from investing activities:




     Purchases of equipment, software, and leasehold improvements

(101)


(56)

               Net cash used in investing activities

(101)


(56)

Cash flows from financing activities:




     Proceeds from issuance of common stock (stock options)


468

     Tax payments from shares withheld upon vesting of restricted stock

(19)


(110)

               Net cash provided by (used in) financing activities

(19)


358

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(241)


(251)

               Net decrease in cash, cash equivalents and restricted cash

(5,334)


(6,925)

Cash, cash equivalents, and restricted cash, beginning of period

28,739


25,570

Cash, cash equivalents, and restricted cash, end of period

$                        23,405


$                        18,645

 

RealNetworks, Inc. and Subsidiaries

Supplemental Financial Information

(Unaudited)




2022


2021



Q1


 Q4


 Q3


 Q2


 Q1



 (in thousands)

Net Revenue by Segment










Consumer Media (A)


$             2,111


$          2,168


$          2,763


$          2,061


$          3,309

Mobile Services (B)


5,640


5,680


5,772


6,356


5,980

Games (C)


5,525


5,554


5,797


6,144


6,599

     Total net revenue


$          13,276


$        13,402


$        14,332


$        14,561


$        15,888












Net Revenue by Product











Consumer Media











- Software License (D)


$               987


$             854


$          1,506


$             841


$          1,875

- Subscription Services (E)


742


768


779


793


818

- Product Sales (F)


163


268


270


330


438

- Advertising & Other (G)


219


278


208


97


178












Mobile Services











- Software License (H)


1,531


1,616


1,459


1,931


1,391

- Subscription Services (I)


4,109


4,064


4,313


4,425


4,589












Games











- Subscription Services (J)


2,219


2,286


2,361


2,431


2,528

- Product Sales (K)


2,377


2,453


2,612


2,830


3,163

- Advertising & Other (L)


929


815


824


883


908























     Total net revenue


$        13,276


$       13,402


$        14,332


$        14,561


$       15,888












Net Revenue by Geography











United States


$          8,187


$         8,126


$          9,227


$          9,209


$         9,932

Rest of world


5,089


5,276


5,105


5,352


5,956

     Total net revenue


$        13,276


$       13,402


$        14,332


$        14,561


$       15,888












 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 facial recognition platform, SAFR, and our integrated RealTimes platform.

(I) Subscription services revenue within Mobile Services includes revenue from our messaging products, including Metcalf intercarrier messaging services and KONTXT, as well as ringback tones and 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, as well as 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)



2022


2021



Q1


Q4


Q1


 (in thousands)

Consumer Media














Net revenue


$   2,111


$   2,168


$      3,309

Cost of revenue


388


423


478

     Gross profit


1,723


1,745


2,831








     Gross margin


82 %


80 %


86 %








Operating expenses


1,472


1,399


2,201

Operating income, a GAAP measure


$      251


$      346


$         630

Depreciation and amortization


16


(15)


16








     Contribution margin, a non-GAAP measure


$      267


$      331


$         646








Mobile Services














Net revenue


$   5,640


$   5,680


$      5,980

Cost of revenue


1,045


1,429


1,492

     Gross profit


4,595


4,251


4,488








     Gross margin


81 %


75 %


75 %








Operating expenses


6,666


5,932


6,145

Operating loss, a GAAP measure


$  (2,071)


$  (1,681)


$     (1,657)

Depreciation and amortization


84


78


84








     Contribution margin, a non-GAAP measure


$  (1,987)


$  (1,603)


$     (1,573)








Games














Net revenue


$   5,525


$   5,554


$      6,599

Cost of revenue


1,295


1,521


1,705

     Gross profit


4,230


4,033


4,894








     Gross margin


77 %


73 %


74 %








Operating expenses


3,999


4,672


5,098

Operating income (loss), a GAAP measure


$      231


$     (639)


$        (204)

Depreciation and amortization


61


58


76








     Contribution margin, a non-GAAP measure


$      292


$     (581)


$        (128)








Corporate














Cost of revenue


$          8


$        13


$             4

     Gross profit


(8)


(13)


(4)








     Gross margin


N/A


N/A


N/A








Operating expenses


3,360


538


4,960

Operating loss, a GAAP measure


$  (3,368)


$     (551)


$     (4,964)

Other income (expense), net


19


(43)


104

Foreign currency (gain) loss


(3)


40


(103)

Depreciation and amortization


29


29


28

Fair value adjustments to contingent consideration liability




(1,040)

Restructuring and other charges


290


(1,777)


3,171

Stock-based compensation


695


435


836








     Contribution margin, a non-GAAP measure


$  (2,338)


$  (1,867)


$     (1,968)

 

RealNetworks, Inc. and Subsidiaries

Reconciliation of Net loss to adjusted EBITDA, a non-GAAP measure

(Unaudited)




2022


2021



 Q1


 Q4


 Q1



(in thousands)








Reconciliation of GAAP Net loss to adjusted EBITDA:












Net loss


$     (5,225)


$     (1,785)


$   (10,554)

Income tax expense


83


346


109

Interest expense


22


22


95

Interest income


(7)


(7)


(13)

Loss on equity and other investments, net


189


(1,143)


4,272

Foreign currency (gain) loss


(3)


40


(103)

Depreciation and amortization


190


149


204

Fair value adjustments to contingent consideration liability




(1,040)

Restructuring and other charges


290


(1,777)


3,171

Stock-based compensation


695


435


836

   Adjusted EBITDA, a non-GAAP measure


$     (3,766)


$     (3,720)


$     (3,023)

 

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/realnetworks-announces-first-quarter-2022-financial-results-301539973.html

SOURCE RealNetworks, Inc.

Categories: Press Releases
View all news