Company Announces Definitive Merger Agreement
with CEO Rob Glaser, Subject to
Shareholder Approval
SEATTLE, July 28,
2022 /PRNewswire/ -- RealNetworks, Inc. (Nasdaq:
RNWK), an emerging leader in AI-based software and solutions, today
announced its financial results for the second quarter ended
June 30, 2022.
- Revenue was $11.9 million, net
loss of $(5.1) million and Adjusted
EBITDA loss of $(4.2) million
- Appointed Paul DiPeso to the
newly created position of President, SAFR
- Announced CFO leadership transition; Brian McClain to serve as Interim CFO and
Treasurer beginning on August
1st
Management Commentary
"The second quarter was a period
of transition and transformation for Real. We brought in two new
senior executives and are moving to a new decentralized structure
with senior leaders running each of our businesses reporting
directly to the CEO," said Rob
Glaser, Founder, Chairman, and Chief Executive Officer of
RealNetworks. "We added Paul DiPeso,
a proven leader in the access control industry to drive our SAFR
business, and Brian McClain, a
professional with over 25 years of financial and business
leadership as interim CFO and Treasurer."
Glaser continued: "While SAFR's results were disappointing,
we've received very positive feedback on SAFR SCAN, which began
shipping in May. We are confident that under Paul's leadership we
can build a successful business."
Second Quarter 2022 Financial Results
- Revenue was $11.9 million,
compared to $13.3 million in the
prior quarter and $14.6 million in
the prior year period.
- Net loss attributable to RealNetworks was ($5.1) million, or $(0.11) per diluted share, compared to a net loss
of ($5.2) million, or $(0.11) per diluted share, in the prior quarter
and a net loss of ($1.3) million, or
($0.03) per diluted share, in the
prior year period.
- Adjusted EBITDA was a loss of $(4.2)
million compared to Adjusted EBITDA loss of $(3.8) million in the prior quarter and Adjusted
EBITDA loss of $(4.3) million in the
prior year period.
Corporate Developments
Earlier today, it was
announced that RealNetworks and Founder, Chairman and CEO
Rob Glaser entered into a definitive
merger agreement pursuant to which the Company will merge with and
into Greater Heights LLC, an affiliate of Mr. Glaser, and each
outstanding share of common stock of the Company will be converted
into the right to receive cash consideration of $0.73 per share. The Company's shareholders will
be asked to vote upon the adoption of the Merger Agreement and
approval of the merger at a shareholders meeting called for such
purpose on a date to be announced. The transaction is expected to
close in the fourth quarter of 2022.
Commenting on the announcement, Mr. Glaser said, "I believe that
Machine Learning-based Artificial Intelligence represents a
transformational opportunity, albeit one that will also take time
and resources to fully realize. I'm happy that the RealNetworks
Board and I could reach agreement on a path to pursue that
transformation with focus, efficiency, and speed by turning Real
back into a private company, and in a way that is fair to all
shareholders."
Given the pending merger, the Company will not be providing any
forward-looking guidance, and is withdrawing any previously
provided goals and outlook.
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
1-877-451-6152 (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 p.m. ET on Thursday, August 11,
2022, by dialing 1-844-512-2921 (United States) or 1-412-317-6671
(international) and entering the replay pin number: 13731696.
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.
Additional Information and Where to Find It
RealNetworks, its directors and certain executive officers are
participants in the solicitation of proxies from stockholders in
connection with the pending merger of RealNetworks (the
"Transaction"). RealNetworks plans to file a proxy statement (the
"Transaction Proxy Statement") with the Securities and Exchange
Commission (the "SEC") in connection with the solicitation of
proxies to approve the Transaction. Additional information
regarding such participants, including their direct or indirect
interests, by security holdings or otherwise, will be included in
the Transaction Proxy Statement and other relevant documents to be
filed with the SEC in connection with the Transaction. Information
relating to the foregoing can also be found in RealNetworks's
definitive proxy statement for its 2021 Annual Meeting of
Stockholders (the "2021 Proxy Statement"), which was filed with the
SEC on October 29, 2021. To the
extent that holdings of RealNetworks's securities have changed
since the amounts printed in the 2021 Proxy Statement, such changes
have been or will be reflected on Statements of Change in Ownership
on Form 4 filed with the SEC. Promptly after filing the definitive
Transaction Proxy Statement with the SEC, RealNetworks will mail
the definitive Transaction Proxy Statement to each stockholder
entitled to vote at the special meeting to consider the
Transaction. STOCKHOLDERS ARE URGED TO READ THE TRANSACTION PROXY
STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY
OTHER RELEVANT DOCUMENTS THAT REALNETWORKS WILL FILE WITH THE SEC
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Stockholders may obtain, free of charge, the
preliminary and definitive versions of the Transaction Proxy
Statement, any amendments or supplements thereto, and any other
relevant documents filed by RealNetworks with the SEC in connection
with the Transaction at the SEC's website (http://www.sec.gov).
Copies of RealNetworks's definitive Transaction Proxy Statement,
any amendments or supplements thereto, and any other relevant
documents filed by RealNetworks with the SEC in connection with the
Transaction will also be available, free of charge, from
RealNetworks's website at www.realnetworks.com.
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, the
anticipated closing of the merger, expectations following the
closing of the merger, 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: the possibility that the conditions to the
closing of the merger are not satisfied, including the risk that
required stockholder approval for the merger is not obtained;
potential litigation relating to the merger; uncertainties as to
the timing of the consummation of the merger; the ability of each
party to consummate the merger; risks relating to the substantial
costs and diversion of personnel's attention and resources due to
the merger; 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 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 June
30,
|
|
Six Months Ended
June 30,
|
|
|
|
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
|
|
$
11,856
|
|
$
14,561
|
|
$
25,132
|
|
$
30,449
|
|
Cost of
revenue
|
|
|
2,705
|
|
3,572
|
|
5,441
|
|
7,251
|
|
Gross profit
|
|
|
9,151
|
|
10,989
|
|
19,691
|
|
23,198
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
5,332
|
|
6,330
|
|
11,130
|
|
12,568
|
|
Sales and
marketing
|
|
|
4,502
|
|
5,259
|
|
9,084
|
|
10,396
|
|
General and
administrative
|
|
|
4,071
|
|
4,376
|
|
8,898
|
|
9,274
|
|
Fair value adjustments
to contingent consideration liability
|
|
|
—
|
|
—
|
|
—
|
|
(1,040)
|
|
Restructuring
and other charges
|
|
|
165
|
|
718
|
|
455
|
|
3,889
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
14,070
|
|
16,683
|
|
29,567
|
|
35,087
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
|
(4,919)
|
|
(5,694)
|
|
(9,876)
|
|
(11,889)
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expenses):
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(22)
|
|
(24)
|
|
(44)
|
|
(119)
|
|
Interest
income
|
|
|
7
|
|
7
|
|
14
|
|
20
|
|
Gain on
forgiveness of Paycheck Protection Program loan
|
|
|
—
|
|
2,897
|
|
—
|
|
2,897
|
|
Loss on equity
and other investments, net
|
|
|
(410)
|
|
(569)
|
|
(599)
|
|
(4,841)
|
|
Other income,
net
|
|
|
268
|
|
1,916
|
|
287
|
|
2,020
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expenses), net
|
|
|
(157)
|
|
4,227
|
|
(342)
|
|
(23)
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
|
(5,076)
|
|
(1,467)
|
|
(10,218)
|
|
(11,912)
|
|
Income tax
expense
|
|
|
60
|
|
18
|
|
143
|
|
127
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(5,136)
|
|
(1,485)
|
|
(10,361)
|
|
(12,039)
|
|
Net loss attributable
to noncontrolling interests
|
|
|
—
|
|
(138)
|
|
—
|
|
(244)
|
|
Net loss attributable
to RealNetworks
|
|
|
$
(5,136)
|
|
$
(1,347)
|
|
$ (10,361)
|
|
$ (11,795)
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share
attributable to RealNetworks- Basic
|
|
|
$
(0.11)
|
|
$
(0.03)
|
|
$
(0.22)
|
|
$
(0.28)
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share
attributable to RealNetworks- Diluted
|
|
|
$
(0.11)
|
|
$
(0.03)
|
|
$
(0.22)
|
|
$
(0.28)
|
|
|
|
|
|
|
|
|
|
|
|
Shares used to
compute basic net loss per share
|
|
|
47,316
|
|
44,284
|
|
47,296
|
|
41,409
|
|
Shares used to
compute diluted net loss per share
|
|
|
47,316
|
|
44,284
|
|
47,296
|
|
41,409
|
|
RealNetworks, Inc.
and Subsidiaries
Condensed
Consolidated Balance Sheets
(Unaudited)
|
|
|
June 30,
2022
|
|
December 31,
2021
|
|
(in
thousands)
|
|
ASSETS
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
14,352
|
|
$
27,109
|
|
Trade accounts
receivable, net
|
8,283
|
|
9,556
|
|
Deferred costs,
current portion
|
7
|
|
49
|
|
Investments
|
—
|
|
1,755
|
|
Prepaid expenses
and other current assets
|
4,229
|
|
3,166
|
|
Total current
assets
|
26,871
|
|
41,635
|
|
|
|
|
|
Equipment and
software
|
23,731
|
|
29,464
|
|
Leasehold
improvements
|
1,708
|
|
2,750
|
|
Total equipment,
software, and leasehold improvements
|
25,439
|
|
32,214
|
|
Less accumulated
depreciation and amortization
|
24,252
|
|
30,744
|
|
Net equipment,
software, and leasehold improvements
|
1,187
|
|
1,470
|
|
|
|
|
|
Operating lease
assets
|
3,656
|
|
3,992
|
|
Restricted cash
equivalents
|
1,630
|
|
1,630
|
|
Other
assets
|
2,940
|
|
2,878
|
|
Deferred tax
assets, net
|
652
|
|
727
|
|
Goodwill
|
16,503
|
|
16,976
|
|
|
|
|
|
Total
assets
|
$
53,439
|
|
$
69,308
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
1,591
|
|
$
2,578
|
|
Accrued and
other current liabilities
|
10,929
|
|
13,286
|
|
Deferred
revenue, current portion
|
2,378
|
|
2,614
|
|
Total current
liabilities
|
14,898
|
|
18,478
|
|
|
|
|
|
Deferred revenue,
non-current portion
|
26
|
|
183
|
|
Deferred tax
liabilities, net
|
1,065
|
|
1,132
|
|
Long-term lease
liabilities
|
2,033
|
|
2,300
|
|
Other long-term
liabilities
|
7
|
|
1,142
|
|
|
|
|
|
Total
liabilities
|
18,029
|
|
23,235
|
|
|
|
|
|
|
|
|
|
Total
equity
|
35,410
|
|
46,073
|
|
|
|
|
|
Total
liabilities and equity
|
$
53,439
|
|
$
69,308
|
|
RealNetworks, Inc.
and Subsidiaries
Condensed
Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
Six Months Ended
June 30,
|
|
2022
|
|
2021
|
|
(in
thousands)
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
Net loss
|
$
(10,361)
|
|
$
(12,039)
|
|
Adjustment to reconcile
net loss to net cash used in operating activities:
|
|
|
|
|
Depreciation and
amortization
|
394
|
|
397
|
|
Stock-based
compensation
|
1,062
|
|
1,271
|
|
Loss on equity and
other investments, net
|
599
|
|
4,841
|
|
Loss on impairment of
operating lease assets
|
—
|
|
2,461
|
|
Foreign currency
gain
|
(275)
|
|
(15)
|
|
Fair value adjustments
to contingent consideration liability
|
—
|
|
(1,040)
|
|
Gain on
deconsolidation of subsidiary
|
—
|
|
(1,961)
|
|
Gain on forgiveness of
Paycheck Protection Program loan
|
—
|
|
(2,897)
|
|
Net change in certain
operating assets and liabilities
|
(2,839)
|
|
(1,923)
|
|
Net cash used in
operating activities
|
(11,420)
|
|
(10,905)
|
|
Cash flows from
investing activities:
|
|
|
|
|
Purchases of equipment,
software, and leasehold improvements
|
(161)
|
|
(131)
|
|
Deconsolidation of
subsidiary, net
|
—
|
|
(836)
|
|
Other
|
(595)
|
|
—
|
|
Net cash used in
investing activities
|
(756)
|
|
(967)
|
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from issuance
of common stock (stock options)
|
—
|
|
534
|
|
Proceeds from equity
offering, net of costs
|
—
|
|
20,114
|
|
Tax payments from
shares withheld upon vesting of restricted stock
|
(22)
|
|
(117)
|
|
Payment of contingent
consideration liability
|
—
|
|
(2,500)
|
|
Net cash provided by
(used in) financing activities
|
(22)
|
|
18,031
|
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
|
(559)
|
|
(239)
|
|
Net decrease in cash,
cash equivalents and restricted cash
|
(12,757)
|
|
5,920
|
|
Cash, cash equivalents,
and restricted cash, beginning of period
|
28,739
|
|
25,570
|
|
Cash, cash equivalents,
and restricted cash, end of period
|
$
15,982
|
|
$
31,490
|
|
RealNetworks, Inc.
and Subsidiaries
Supplemental
Financial Information
(Unaudited)
|
|
|
|
2022
|
|
2021
|
|
|
Q2
|
|
Q1
|
|
Q4
|
|
Q3
|
|
Q2
|
|
Q1
|
|
|
(in
thousands)
|
|
Net Revenue by
Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Media
(A)
|
|
$
2,499
|
|
$
2,111
|
|
$
2,168
|
|
$
2,763
|
|
$
2,061
|
|
$
3,309
|
|
Mobile Services
(B)
|
|
4,457
|
|
5,640
|
|
5,680
|
|
5,772
|
|
6,356
|
|
$
5,980
|
|
Games (C)
|
|
4,900
|
|
5,525
|
|
5,554
|
|
5,797
|
|
6,144
|
|
$
6,599
|
|
Total net
revenue
|
|
$
11,856
|
|
$
13,276
|
|
$
13,402
|
|
$
14,332
|
|
$
14,561
|
|
$
15,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue by
Product
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
Media
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Software License
(D)
|
|
$
1,393
|
|
$ 987
|
|
$ 854
|
|
$
1,506
|
|
$ 841
|
|
$
1,875
|
|
- Subscription Services
(E)
|
|
710
|
|
742
|
|
768
|
|
779
|
|
793
|
|
$ 818
|
|
- Product Sales
(F)
|
|
144
|
|
163
|
|
268
|
|
270
|
|
330
|
|
$ 438
|
|
- Advertising &
Other (G)
|
|
252
|
|
219
|
|
278
|
|
208
|
|
97
|
|
$ 178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mobile
Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Software License
(H)
|
|
879
|
|
1,531
|
|
1,616
|
|
1,459
|
|
1,931
|
|
$
1,391
|
|
- Subscription Services
(I)
|
|
3,578
|
|
4,109
|
|
4,064
|
|
4,313
|
|
4,425
|
|
$
4,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Games
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Subscription Services
(J)
|
|
2,116
|
|
2,219
|
|
2,286
|
|
2,361
|
|
2,431
|
|
$
2,528
|
|
- Product Sales
(K)
|
|
1,986
|
|
2,377
|
|
2,453
|
|
2,612
|
|
2,830
|
|
$
3,163
|
|
- Advertising &
Other (L)
|
|
798
|
|
929
|
|
815
|
|
824
|
|
883
|
|
$ 908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net
revenue
|
|
$
11,856
|
|
$
13,276
|
|
$
13,402
|
|
$
14,332
|
|
$
14,561
|
|
$
15,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue by
Geography
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United
States
|
|
$
8,237
|
|
$
8,187
|
|
$
8,126
|
|
$
9,227
|
|
$
9,209
|
|
$
9,932
|
|
Rest of
world
|
|
3,619
|
|
5,089
|
|
5,276
|
|
5,105
|
|
5,352
|
|
$
5,956
|
|
Total net
revenue
|
|
$
11,856
|
|
$
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
|
|
2022
|
|
2021
|
|
|
Q2
|
|
Q1
|
|
Q2
|
|
YTD
|
|
YTD
|
|
|
(in
thousands)
|
|
Consumer
Media
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
2,499
|
|
$
2,111
|
|
$
2,061
|
|
$
4,610
|
|
$
5,370
|
|
Cost of
revenue
|
|
432
|
|
388
|
|
497
|
|
820
|
|
975
|
|
Gross
profit
|
|
2,067
|
|
1,723
|
|
1,564
|
|
3,790
|
|
4,395
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
83 %
|
|
82 %
|
|
76 %
|
|
82 %
|
|
82 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
1,397
|
|
1,472
|
|
2,332
|
|
2,869
|
|
4,533
|
|
Operating income, a
GAAP measure
|
|
$ 670
|
|
$ 251
|
|
$ (768)
|
|
$ 921
|
|
$ (138)
|
|
Depreciation and
amortization
|
|
14
|
|
16
|
|
5
|
|
30
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution margin, a
non-GAAP measure
|
|
$ 684
|
|
$ 267
|
|
$ (763)
|
|
$ 951
|
|
$ (117)
|
|
|
|
|
|
|
|
|
|
|
|
|
Mobile
Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
4,457
|
|
$
5,640
|
|
$
6,356
|
|
$ 10,097
|
|
$ 12,336
|
|
Cost of
revenue
|
|
965
|
|
1,045
|
|
1,517
|
|
2,010
|
|
3,009
|
|
Gross
profit
|
|
3,492
|
|
4,595
|
|
4,839
|
|
8,087
|
|
9,327
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
78 %
|
|
81 %
|
|
76 %
|
|
80 %
|
|
76 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
6,510
|
|
6,666
|
|
6,332
|
|
13,176
|
|
12,477
|
|
Operating loss, a GAAP
measure
|
|
$
(3,018)
|
|
$
(2,071)
|
|
$
(1,493)
|
|
$
(5,089)
|
|
$
(3,150)
|
|
Depreciation and
amortization
|
|
104
|
|
84
|
|
79
|
|
188
|
|
163
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution margin, a
non-GAAP measure
|
|
$
(2,914)
|
|
$
(1,987)
|
|
$
(1,414)
|
|
$
(4,901)
|
|
$
(2,987)
|
|
|
|
|
|
|
|
|
|
|
|
|
Games
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
4,900
|
|
$
5,525
|
|
$
6,144
|
|
$ 10,425
|
|
$ 12,743
|
|
Cost of
revenue
|
|
1,300
|
|
1,295
|
|
1,552
|
|
2,595
|
|
3,257
|
|
Gross
profit
|
|
3,600
|
|
4,230
|
|
4,592
|
|
7,830
|
|
9,486
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
73 %
|
|
77 %
|
|
75 %
|
|
75 %
|
|
74 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
3,826
|
|
3,999
|
|
4,849
|
|
7,825
|
|
9,947
|
|
Operating income
(loss), a GAAP measure
|
|
$ (226)
|
|
$ 231
|
|
$ (257)
|
|
$
5
|
|
$ (461)
|
|
Depreciation and
amortization
|
|
61
|
|
61
|
|
81
|
|
122
|
|
157
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution margin, a
non-GAAP measure
|
|
$ (165)
|
|
$ 292
|
|
$ (176)
|
|
$ 127
|
|
$ (304)
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
$
8
|
|
$
8
|
|
$
6
|
|
$
16
|
|
$
10
|
|
Gross
profit
|
|
(8)
|
|
(8)
|
|
(6)
|
|
(16)
|
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
2,337
|
|
3,360
|
|
3,170
|
|
5,697
|
|
8,130
|
|
Operating loss, a GAAP
measure
|
|
$
(2,345)
|
|
$
(3,368)
|
|
$
(3,176)
|
|
$
(5,713)
|
|
$
(8,140)
|
|
Other income (expense),
net
|
|
268
|
|
19
|
|
(45)
|
|
287
|
|
59
|
|
Foreign currency (gain)
loss
|
|
(272)
|
|
(3)
|
|
88
|
|
(275)
|
|
(15)
|
|
Depreciation and
amortization
|
|
25
|
|
29
|
|
28
|
|
54
|
|
56
|
|
Fair value adjustments
to contingent consideration liability
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,040)
|
|
Restructuring and other
charges
|
|
165
|
|
290
|
|
718
|
|
455
|
|
3,889
|
|
Stock-based
compensation
|
|
367
|
|
695
|
|
435
|
|
1,062
|
|
1,271
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution margin, a
non-GAAP measure
|
|
$
(1,792)
|
|
$
(2,338)
|
|
$
(1,952)
|
|
$
(4,130)
|
|
$
(3,920)
|
|
RealNetworks, Inc.
and Subsidiaries
Reconciliation of
Net loss to adjusted EBITDA, a non-GAAP measure
(Unaudited)
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
Q2
|
|
Q1
|
|
Q2
|
|
YTD
|
|
YTD
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
GAAP Net loss to adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ (5,136)
|
|
$ (5,225)
|
|
$ (1,485)
|
|
$
(10,361)
|
|
$
(12,039)
|
|
Income tax
expense
|
|
60
|
|
83
|
|
18
|
|
143
|
|
127
|
|
Interest
expense
|
|
22
|
|
22
|
|
24
|
|
44
|
|
119
|
|
Interest
income
|
|
(7)
|
|
(7)
|
|
(7)
|
|
(14)
|
|
(20)
|
|
Loss on equity and
other investments, net
|
|
410
|
|
189
|
|
569
|
|
599
|
|
4,841
|
|
Foreign currency (gain)
loss
|
|
(272)
|
|
(3)
|
|
88
|
|
(275)
|
|
(15)
|
|
Depreciation and
amortization
|
|
204
|
|
190
|
|
193
|
|
394
|
|
397
|
|
Fair value adjustments
to contingent consideration liability
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,040)
|
|
Gain on forgiveness of
Paycheck Protection Program loan
|
|
—
|
|
—
|
|
(2,897)
|
|
—
|
|
(2,897)
|
|
Gain on deconsolidation
of subsidiary
|
|
—
|
|
—
|
|
(1,961)
|
|
—
|
|
(1,961)
|
|
Restructuring and other
charges
|
|
165
|
|
290
|
|
718
|
|
455
|
|
3,889
|
|
Stock-based
compensation
|
|
367
|
|
695
|
|
435
|
|
1,062
|
|
1,271
|
|
Adjusted
EBITDA, a non-GAAP measure
|
|
$ (4,187)
|
|
$ (3,766)
|
|
$ (4,305)
|
|
$ (7,953)
|
|
$ (7,328)
|
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SOURCE RealNetworks, Inc.