RealNetworks Announces Fourth Quarter And Full Year 2019 Financial Results

MNI stock

This Post Was Syndicated Under License Via QuoteMedia

SEATTLE, Feb. 5, 2020 /PRNewswire/ — RealNetworks, Inc. (Nasdaq: RNWK), a leader in digital media software and services, today announced its financial results for the fourth quarter and full year ended December 31, 2019.

  • 2019 revenue of $172.1 million
  • 2019 Games revenue up 18% year-over-year driven by success of free-to-play strategy
  • Continued traction with SAFR™ with new customers and partners around the world

Management Commentary

“Strategically, I consider 2019 to be a very successful year,” said Rob Glaser, Chairman and CEO of RealNetworks. “We achieved significant traction on two of our key growth initiatives: free-to-play casual mobile games and SAFR. Our free-to-play strategy drove significant topline growth in our Games business. Delicious World is already our highest revenue generating game ever despite having launched globally in mid-2019. SAFR also remains a top growth focus of the Company. We continue to get good initial traction with customers and partners around the world.”

Mr. Glaser added, “Our focus for 2020 will be to continue to drive these key initiatives forward while also running our operations efficiently. While we will make ongoing investments to support our key growth initiatives, we are committed to thoughtfully managing costs along the way as we did during 2019. Our progress in this regard can be seen in our significant improvement in adjusted EBITDA loss in the second half of 2019 as compared to the first half of 2019.”

Full Year 2019 Financial Highlights

  • Revenue was $172.1 million (inclusive of $106.3 million from Napster) compared to $69.5 million in 2018.
  • Games revenue was $25.5 million, up 18% compared to $21.7 million in 2018.
  • Operating expenses increased by $27.4 million, or 37%, from 2018. Napster’s operating expenses were $25.8 million in 2019.
  • Net loss attributable to RealNetworks was $(20.0) million, or $(0.53) per diluted share, compared to net loss of $(25.0) million, or $(0.66) per diluted share in 2018. Included in net income attributable to RealNetworks was a gain of $12.3 million in the first quarter of 2019 related to the acquisition of Napster.
  • Adjusted EBITDA was a loss of $(20.1) million compared to a loss of $(16.2) million in 2018. 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 December 31, 2019, the Company had $16.8 million in unrestricted cash and cash equivalents compared to $18.1 million at September 30, 2019.

Fourth Quarter 2019 Financial Highlights

  • Revenue was $43.4 million (inclusive of $26.1 million from Napster) compared to $45.0 million (inclusive of $27.3 million from Napster) in the prior quarter and $16.6 million in the prior year period.
  • Games revenue was $6.6 million, down 8% compared to $7.2 million in the prior quarter and up 17% compared to $5.6 million in the prior year period.
  • Gross profit margin was 43%, up from 42% in the prior quarter and down from 77% in the prior year period. Napster’s gross profit margin for the fourth quarter of 2019 was 21%, while RealNetworks’ gross profit margin without Napster was 76%.
  • Operating expenses decreased $0.4 million, or 2%, from the prior quarter and increased $6.2 million, or 34%, from the prior year period. Napster’s operating expenses were $7.1 million for the fourth quarter of 2019.
  • Net loss attributable to RealNetworks was $(6.4) million, or $(0.17) per diluted share, compared to net loss of $(6.0) million, or $(0.16) per diluted share, in the prior quarter and a net loss of $(6.9) million, or $(0.18) per diluted share, in the prior year period.
  • Adjusted EBITDA was a loss of $(2.7) million compared to a loss of $(3.2) million in the prior quarter and a loss of $(4.1) million in the prior year period.

Corporate Developments

  • On January 9, 2020, the Company announced the hiring of Mike Ensing as interim Chief Financial Officer following Cary Baker’s resignation to pursue a new opportunity. Mr. Ensing joined RealNetworks as a full-time strategic advisor on January 10, 2020 and will succeed Mr. Baker as interim CFO on February 15, 2020. The Company has retained an executive search firm and has commenced a formal search for a permanent CFO.
  • On December 3, 2019, the Company strengthened its Board of Directors with the appointment of two new directors, Tim Wan and Erik Prusch. Mr. Wan has 20 years of financial and business experience, including 15 years with RealNetworks, and is currently the Chief Financial Officer at Asana, Inc., a privately held company that develops and offers a SaaS-based work management platform. Mr. Prusch has over 25 years of executive experience, having successfully led several technology and consumer-facing businesses through periods of innovation and adaptation.

Business Outlook

For the first quarter ending March 31, 2020, RealNetworks expects to achieve the following results including noncontrolling interests:

  • Total revenue is expected to be in the range of $40.0 million to $43.0 million.
  • Adjusted EBITDA loss is expected to be in the range of $(4.0) million to $(1.0) million.

Conference Call and Webcast Information

The Company will host a conference call today to review its results and discuss its performance at approximately 4:30 p.m. ET / 1:30 p.m. PT. Participants may join the conference call by dialing 1-877-451-6152 (United States) or 1-201-389-0879 (International). A telephonic replay of the call will also be available shortly after the completion of the call, until 11:59 pm ET on Wednesday, February 26, 2020, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (International) and entering the replay pin number: 13697915.

A live webcast will be available on RealNetworks’ Investor Relations site under the Events & Presentations section at http://investor.realnetworks.com and will be archived online upon completion of the conference call.

About RealNetworks

Building on a legacy of digital media expertise and innovation, RealNetworks has created a new generation of products that employ best-in-class artificial intelligence and machine learning to enhance and secure our daily lives. SAFR (www.safr.com) is the world’s premier facial recognition platform for live video. Leading in real-world performance and accuracy as evidenced in testing by NIST, SAFR enables new applications for security, convenience, and analytics. 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 financial condition and liquidity, 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 and restructuring efforts; cash usage and conservation, and the pursuit of additional funding sources; successful monetization of our products and services; competitive risks, including the emergence or growth of competing technologies, products and services; potential outcomes and effects of claims and legal proceedings; risks associated with key customer or strategic relationships and business acquisitions; 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
[email protected]
RNWK-F

RealNetworks, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

 
 

Quarter Ended

 

Twelve Months Ended

 

December 31,

 

December 31,

 

2019

 

2018

 

2019

 

2018

 

 (in thousands, except per share data)

               

 Net revenue

$

43,400

   

$

16,557

   

$

172,113

   

$

69,510

 

 Cost of revenue

24,697

   

3,727

   

103,127

   

17,727

 

           Gross profit

18,703

   

12,830

   

68,986

   

51,783

 
               

 Operating expenses:

             

       Research and development

8,452

   

7,391

   

34,848

   

30,789

 

       Sales and marketing

7,806

   

5,262

   

32,778

   

21,140

 

       General and administrative

7,417

   

5,180

   

31,305

   

20,706

 

       Restructuring and other charges

911

   

553

   

2,498

   

1,873

 

       Lease exit and related benefit

   

   

   

(454)

 
               

           Total operating expenses

24,586

   

18,386

   

101,429

   

74,054

 
               

 Operating loss

(5,883)

   

(5,556)

   

(32,443)

   

(22,271)

 
               

 Other income (expenses):

             

       Interest expense

(207)

   

   

(636)

   

 

       Interest income

14

   

74

   

131

   

344

 

       Gain (loss) on equity investment, net

   

   

12,338

   

 

       Equity in net loss of Napster

   

(20)

   

   

(757)

 

       Other income (expenses), net

(431)

   

92

   

420

   

(103)

 
               

           Total other income (expenses), net

(624)

   

146

   

12,253

   

(516)

 
               

 Income (loss) before income taxes

(6,507)

   

(5,410)

   

(20,190)

   

(22,787)

 

 Income tax expense

256

   

1,494

   

1,068

   

2,202

 
               

Net income (loss) including noncontrolling interests

(6,763)

   

(6,904)

   

(21,258)

   

(24,989)

 

Net income (loss) attributable to noncontrolling interests

(399)

   

   

(1,257)

   

 

Net income (loss) attributable to RealNetworks

$

(6,364)

   

$

(6,904)

   

$

(20,001)

   

$

(24,989)

 
               

Net income (loss) per share attributable to RealNetworks- Basic:

$

(0.17)

   

$

(0.18)

   

$

(0.53)

   

$

(0.66)

 

Net income (loss) per share attributable to RealNetworks- Diluted:

$

(0.17)

   

$

(0.18)

   

$

(0.53)

   

$

(0.66)

 
               

 Shares used to compute basic net income (loss) per share

38,142

   

37,680

   

37,994

   

37,582

 

 Shares used to compute diluted net income (loss) per share

38,142

   

37,680

   

37,994

   

37,582

 

 

RealNetworks, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

 
 

December 31,
2019

 

December 31,
2018

 

 (in thousands)

ASSETS

 Current assets:

     

 Cash and cash equivalents

$

16,805

   

$

35,561

 

 Short-term investments

   

24

 

 Trade accounts receivable, net

29,507

   

11,751

 

 Deferred costs, current portion

823

   

331

 

 Prepaid expenses and other current assets

7,445

   

5,911

 

 Total current assets

54,580

   

53,578

 
       

 Equipment and software

32,167

   

37,458

 

 Leasehold improvements

3,311

   

3,292

 

 Total equipment, software, and leasehold improvements

35,478

   

40,750

 

 Less accumulated depreciation and amortization

32,657

   

37,996

 

 Net equipment, software, and leasehold improvements

2,821

   

2,754

 
       

 Operating lease assets

11,592

   

 

 Restricted cash equivalents

5,374

   

1,630

 

 Other assets

1,891

   

3,997

 

 Deferred costs, non-current portion

1,021

   

528

 

 Deferred tax assets, net

761

   

851

 

 Other intangible assets, net

19,286

   

26

 

 Goodwill

62,428

   

16,955

 
       

 Total assets

$

159,754

   

$

80,319

 
       

 LIABILITIES AND SHAREHOLDERS’ EQUITY

       

 Current liabilities:

     

 Accounts payable

$

4,927

   

$

3,910

 

 Accrued royalties, fulfillment and other current liabilities

77,303

   

11,312

 

 Commitment to Napster

   

2,750

 

 Deferred revenue, current portion

6,620

   

2,125

 

 Notes payable

7,331

   

 

 Total current liabilities

96,181

   

20,097

 
       

 Deferred revenue, non-current portion

96

   

268

 

 Deferred rent

   

986

 

 Deferred tax liabilities, net

1,172

   

1,168

 

 Long-term lease liabilities

8,466

   

 

 Long-term debt

3,900

   

 

 Other long-term liabilities

11,666

   

960

 
       

 Total liabilities

121,481

   

23,479

 
       

 Total shareholders’ equity

38,775

   

56,840

 
       

Noncontrolling interests

(502)

   

 
       

 Total equity

38,273

   

56,840

 
       

 Total liabilities and equity

$

159,754

   

$

80,319

 

 

RealNetworks, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 
 

Twelve Months Ended
December 31,

 

2019

 

2018

 

 (in thousands)

 

 Cash flows from operating activities:

     

Net income (loss) including noncontrolling interests

$

(21,258)

   

$

(24,989)

 

Adjustments to reconcile net income (loss) including noncontrolling interests to net cash used in operating activities:

     

Depreciation and amortization

5,834

   

2,135

 

Stock-based compensation

2,881

   

2,508

 

Equity in net loss of Napster

   

757

 

Deferred income taxes, net

(6)

   

1,170

 

(Gain) loss on equity investment, net

(12,338)

   

 

Foreign currency (gain) loss

(310)

   

 

Fair value adjustments to contingent consideration liability

1,000

   

 

Mark to market adjustment of warrants

   

124

 

Net change in certain operating assets and liabilities

(1,149)

   

(926)

 

  Net cash used in operating activities

(25,346)

   

(19,221)

 

 Cash flows from investing activities:

     

Purchases of equipment, software, and leasehold improvements

(1,192)

   

(765)

 

Proceeds from sales and maturities of short-term investments

24

   

8,755

 

Acquisition, net of cash acquired

12,249

   

(4,192)

 

 Net cash provided by investing activities

11,081

   

3,798

 

 Cash flows from financing activities:

     

Proceeds from issuance of common stock (stock options and stock purchase plan)

199

   

199

 

Tax payments from shares withheld upon vesting of restricted stock

(309)

   

(261)

 

Proceeds from notes payable and revolving credit facility

41,201

   

 

Repayments of notes payable and revolving credit facility

(41,992)

   

 

Payment of financing fees

(622)

   

 

Other financing activities

900

   

 

 Net cash used in financing activities

(623)

   

(62)

 

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

(124)

   

(920)

 

 Net increase (decrease) in cash, cash equivalents and restricted cash

(15,012)

   

(16,405)

 

 Cash, cash equivalents and restricted cash, beginning of period

37,191

   

53,596

 

 Cash, cash equivalents and restricted cash, end of period

$

22,179

   

$

37,191

 

 

RealNetworks, Inc. and Subsidiaries

Supplemental Financial Information

(Unaudited)

 
 

2019

 

2018

 

 YTD

 

 Q4

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 Q3

 

 Q2

 

Q1

 

 YTD

 

 Q4

 

 Q3

 

 Q2

 

 Q1

 

 (in thousands)

Net Revenue by Segment

                                     

Consumer Media (A)

$

13,170

   

$

4,432

   

$

3,632

   

$

2,620

   

$

2,486

   

$

18,168

   

$

4,068

   

$

4,733

   

$

3,884

   

$

5,483

 

Mobile Services (B)

27,143

   

6,312

   

6,895

   

6,997

   

6,939

   

29,670

   

6,899

   

7,348

   

6,719

   

8,704

 

Games (C)

25,489

   

6,567

   

7,164

   

6,048

   

5,710

   

21,672

   

5,590

   

5,498

   

5,121

   

5,463

 

Napster (D)

106,311

   

26,089

   

27,302

   

28,583

   

24,337

   

   

   

   

   

 

     Total net revenue

$

172,113

   

$

43,400

   

$

44,993

   

$

44,248

   

$

39,472

   

$

69,510

   

$

16,557

   

$

17,579

   

$

15,724

   

$

19,650

 
                                       

Net Revenue by Product

                                     

Consumer Media

                                     

– Software License (E)

$

6,522

   

$

2,856

   

$

1,987

   

$

944

   

$

735

   

$

9,940

   

$

2,049

   

$

2,746

   

$

1,808

   

$

3,337

 

– Subscription Services (F)

4,148

   

992

   

1,028

   

1,040

   

1,088

   

4,895

   

1,153

   

1,232

   

1,225

   

1,285

 

– Product Sales (G)

825

   

193

   

207

   

206

   

219

   

1,177

   

257

   

281

   

299

   

340

 

– Advertising & Other (H)

1,675

   

391

   

410

   

430

   

444

   

2,156

   

609

   

474

   

552

   

521

 
                                       

Mobile Services

                                     

– Software License (I)

3,101

   

657

   

888

   

957

   

599

   

2,838

   

514

   

520

   

469

   

1,335

 

– Subscription Services (J)

24,042

   

5,655

   

6,007

   

6,040

   

6,340

   

26,832

   

6,385

   

6,828

   

6,250

   

7,369

 
                                       

Games

                                     

– Subscription Services (K)

12,121

   

3,007

   

3,056

   

3,073

   

2,985

   

11,141

   

3,014

   

2,745

   

2,689

   

2,693

 

– Product Sales (L)

9,823

   

2,580

   

3,078

   

2,177

   

1,988

   

8,647

   

2,013

   

2,279

   

1,953

   

2,402

 

– Advertising & Other (M)

3,545

   

980

   

1,030

   

798

   

737

   

1,884

   

563

   

474

   

479

   

368

 
                                       

Napster

                                     

– Subscription Services (N)

106,311

   

26,089

   

27,302

   

28,583

   

24,337

   

   

   

   

   

 
                                       

     Total net revenue

$

172,113

   

$

43,400

   

$

44,993

   

$

44,248

   

$

39,472

   

$

69,510

   

$

16,557

   

$

17,579

   

$

15,724

   

$

19,650

 
                                       

Net Revenue by Geography

                                     

United States

$

83,360

   

$

21,053

   

$

22,015

   

$

21,322

   

$

18,970

   

$

35,803

   

$

7,697

   

$

9,026

   

$

7,646

   

$

11,434

 

Rest of world

88,753

   

22,347

   

22,978

   

22,926

   

20,502

   

33,707

   

8,860

   

8,553

   

8,078

   

8,216

 

     Total net revenue

$

172,113

   

$

43,400

   

$

44,993

   

$

44,248

   

$

39,472

   

$

69,510

   

$

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 January 18, 2019 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 and our facial recognition platform, SAFR.

(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

 

2019

 

2018

 

Q4

 

Q3

 

Q4

 

YTD

 

YTD

 

 (in thousands)

Consumer Media

                 
                   

Net revenue

$

4,432

   

$

3,632

   

$

4,068

   

$

13,170

   

$

18,168

 

Cost of revenue

690

   

705

   

882

   

3,031

   

3,858

 

Gross profit

3,742

   

2,927

   

3,186

   

10,139

   

14,310

 
                   

Gross margin

84

%

 

81

%

 

78

%

 

77

%

 

79

%

                   

Operating expenses

2,498

   

2,692

   

3,614

   

11,186

   

14,419

 

Operating income (loss), a GAAP measure

$

1,244

   

$

235

   

$

(428)

   

$

(1,047)

   

$

(109)

 

Depreciation and amortization

34

   

34

   

49

   

178

   

195

 
                   

Contribution margin, a non-GAAP measure

$

1,278

   

$

269

   

$

(379)

   

$

(869)

   

$

86

 
                   

Mobile Services

                 
                   

Net revenue

$

6,312

   

$

6,895

   

$

6,899

   

$

27,143

   

$

29,670

 

Cost of revenue

1,866

   

1,721

   

2,121

   

7,500

   

8,623

 

Gross profit

4,446

   

5,174

   

4,778

   

19,643

   

21,047

 
                   

Gross margin

70

%

 

75

%

 

69

%

 

72

%

 

71

%

                   

Operating expenses

7,198

   

7,143

   

6,906

   

29,340

   

28,066

 

Operating income (loss), a GAAP measure

$

(2,752)

   

$

(1,969)

   

$

(2,128)

   

$

(9,697)

   

$

(7,019)

 

Acquisitions related intangible asset amortization

   

   

69

   

   

322

 

Depreciation and amortization

100

   

81

   

116

   

518

   

616

 
                   

Contribution margin, a non-GAAP measure

$

(2,652)

   

$

(1,888)

   

$

(1,943)

   

$

(9,179)

   

$

(6,081)

 
                   

Games

                 
                   

Net revenue

$

6,567

   

$

7,164

   

$

5,590

   

$

25,489

   

$

21,672

 

Cost of revenue

1,716

   

1,934

   

1,622

   

6,975

   

6,123

 

Gross profit

4,851

   

5,230

   

3,968

   

18,514

   

15,549

 
                   

Gross margin

74

%

 

73

%

 

71

%

 

73

%

 

72

%

                   

Operating expenses

4,744

   

5,151

   

4,865

   

20,220

   

20,324

 

Operating income (loss), a GAAP measure

$

107

   

$

79

   

$

(897)

   

$

(1,706)

   

$

(4,775)

 

Acquisitions related intangible asset amortization

   

4

   

23

   

27

   

66

 

Depreciation and amortization

85

   

89

   

82

   

341

   

484

 
                   

Contribution margin, a non-GAAP measure

$

192

   

$

172

   

$

(792)

   

$

(1,338)

   

$

(4,225)

 
                   

Napster

                 
                   

Net revenue

$

26,089

   

$

27,302

   

$

   

$

106,311

   

$

 

Cost of revenue

20,493

   

21,986

   

   

85,901

   

 

Gross profit

5,596

   

5,316

   

   

20,410

   

 
                   

Gross margin

21

%

 

19

%

 

%

 

19

%

 

%

                   

Operating expenses

7,147

   

6,472

   

   

25,789

   

 

Operating income (loss), a GAAP measure

$

(1,551)

   

$

(1,156)

   

$

   

$

(5,379)

   

$

 

Acquisitions related intangible asset amortization

1,126

   

1,126

   

   

4,324

   

 

Depreciation and amortization

60

   

72

   

   

316

   

 

Restructuring and other charges

544

   

   

   

544

   

 
                   

Contribution margin, a non-GAAP measure

$

179

   

$

42

   

$

   

$

(195)

   

$

 
                   

Corporate

                 
                   

Cost of revenue

$

(68)

   

$

(68)

   

$

(898)

   

$

(280)

   

$

(877)

 

Gross profit

68

   

68

   

898

   

280

   

877

 
                   

Gross margin

N/A

   

N/A

   

N/A

   

N/A

   

N/A

 
                   

Operating expenses

2,999

   

3,522

   

3,001

   

14,894

   

11,245

 

Operating income (loss), a GAAP measure

$

(2,931)

   

$

(3,454)

   

$

(2,103)

   

$

(14,614)

   

$

(10,368)

 

Other income (expense), net

(431)

   

541

   

92

   

420

   

(103)

 

Foreign currency (gain) loss

494

   

(489)

   

(26)

   

(310)

   

72

 

Depreciation and amortization

32

   

32

   

58

   

130

   

452

 

Fair value adjustments to contingent consideration liability

300

   

400

   

   

1,000

   

 

Restructuring and other charges

367

   

691

   

553

   

1,954

   

1,873

 

Stock-based compensation

461

   

503

   

395

   

2,881

   

2,508

 

Lease exit and related benefit

   

   

   

   

(454)

 
                   

Contribution margin, a non-GAAP measure (1)

$

(1,708)

   

$

(1,776)

   

$

(1,031)

   

$

(8,539)

   

$

(6,020)

 
 

(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

 

2019

 

2018

 

 Q4

 

Q3

 

 Q4

 

 YTD

 

 YTD

     

(in thousands)

                   

Reconciliation of GAAP Net income (loss) including noncontrolling interests to adjusted EBITDA:

                   

Net income (loss) including noncontrolling interests

$

(6,763)

   

$

(6,254)

   

$

(6,904)

   

$

(21,258)

   

$

(24,989)

 

Income tax expense (benefit)

256

   

310

   

1,494

   

1,068

   

2,202

 

Interest expense

207

   

220

   

   

636

   

 

Interest income

(14)

   

   

(74)

   

(131)

   

(344)

 

(Gain) loss on equity investment, net

   

   

   

(12,338)

   

 

Foreign currency (gain) loss

494

   

(489)

   

(26)

   

(310)

   

72

 

Equity in net loss of Napster

   

   

20

   

   

757

 

Acquisitions related intangible asset amortization

1,126

   

1,130

   

92

   

4,351

   

388

 

Depreciation and amortization

311

   

308

   

305

   

1,483

   

1,747

 

Fair value adjustments to contingent consideration liability

300

   

400

   

 

   

1,000

   

 

Restructuring and other charges

911

   

691

   

553

   

2,498

   

1,873

 

Stock-based compensation

461

   

503

   

395

   

2,881

   

2,508

 

Lease exit and related benefit

   

   

   

   

(454)

 

   Adjusted EBITDA, a non-GAAP measure (1)

$

(2,711)

   

$

(3,181)

   

$

(4,145)

   

$

(20,120)

   

$

(16,240)

 
 

(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.

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