Thu, 08/01/2019

    RealNetworks Announces Second Quarter 2019 Financial Results

    SEATTLE, Aug. 1, 2019 /PRNewswire/ -- RealNetworks, Inc. (Nasdaq: RNWK), a leader in digital media software and services, today announced its financial results for the second quarter ended June 30, 2019.

    • Second quarter revenue of $44.2 million
    • Strong early success with SAFRTM
    • Successful  worldwide roll-out of 2nd free-to-play game, Delicious World
    • Remain committed to proactive expense management

    Management Commentary

    "In the second quarter, we achieved solid results overall with two particularly strong areas: our SAFR Facial Recognition platform and our free-to-play casual mobile games," said Rob Glaser, Chairman and CEO of RealNetworks. "SAFR bookings were up significantly quarter-over-quarter. SAFR also continued to shine technically, retaining its position in the NIST ratings as the fastest and smallest of the most accurate Facial Recognition Systems."

    Mr. Glaser added, "We also demonstrated solid traction in free-to-play casual mobile games. Our second free-to-play title, Delicious World, launched at the end of the second quarter and is off to a terrific start."

    Second Quarter 2019 Financial Highlights

    • Revenue was $44.2 million (inclusive of $28.6 million from Napster) compared to $39.5 million (inclusive of $24.3 million from Napster) in the prior quarter and $15.7 million in the prior year period. The second quarter of 2019 reflects the first full quarter consolidation of Napster's financial statements.
    • Gross profit margin was 38%, up from 37% in the prior quarter and down from 71% in the prior year period. Napster's gross profit margin for the second quarter of 2019 was 19%, while RealNetworks' gross profit margin without Napster was 73%.
    • Operating expenses increased $0.9 million, or 3%, from the prior quarter and increased $8.4 million, or 47%, from the prior year period. Napster's operating expenses were $6.6 million for the second quarter of 2019. Included in the second quarter of 2019 total operating expenses were $0.4 million of transaction costs related to the acquisition of Napster and $0.3 million of expenses recorded for the change in fair value of the contingent consideration liability related to the acquisition of Napster.
    • Net loss attributable to RealNetworks was $(9.2) million, or $(0.24) per share, compared to net income of $1.5 million, or $0.04 per share, in the prior quarter and a net loss of $(6.9) million, or $(0.18) per share, in the prior year period. Net income attributable to RealNetworks in the first quarter of 2019 included a gain of $12.3 million related to the acquisition of Napster.
    • Adjusted EBITDA was a loss of $(6.3) million compared to a loss of $(7.9) million in the prior quarter and a loss of $(5.8) million in the prior year period. 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 June 30, 2019, the Company had $26.3 million in unrestricted cash and cash equivalents compared to $36.9 million at March 31, 2019.

    Business Outlook

    For the third quarter of 2019, RealNetworks expects to achieve the following results including noncontrolling interests:

    • Total revenue is expected to be in the range of $43.0 million to $46.0 million
    • Adjusted EBITDA loss is expected to be in the range of $(2.5) million to $(5.5) million.

    Conference Call and Webcast Information

    The Company will host a conference call today to review results and discuss its performance shortly after 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 Thursday, August 22, 2019, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (International) and entering the replay pin number: 13692194.

    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 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; 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

    IR@realnetworks.com

    RNWK-F

    RealNetworks, Inc. and Subsidiaries

    Condensed Consolidated Statements of Operations

    (Unaudited)

     
     

    Quarter Ended

    June 30,

     

    Six Months Ended

    June 30,

       
     

    2019

     

    2018

     

    2019

     

    2018

     

     (in thousands, except per share data)

                   

     Net revenue

    $

    44,248

       

    $

    15,724

       

    $

    83,720

       

    $

    35,374

     

     Cost of revenue

    27,282

       

    4,625

       

    52,152

       

    9,761

     

               Gross profit

    16,966

       

    11,099

       

    31,568

       

    25,613

     
                   

     Operating expenses:

                 

           Research and development

    8,876

       

    7,652

       

    17,709

       

    15,346

     

           Sales and marketing

    8,360

       

    4,883

       

    16,502

       

    10,880

     

           General and administrative

    8,392

       

    5,339

       

    16,756

       

    10,940

     

           Restructuring and other charges

    729

       

    187

       

    896

       

    688

     

           Lease exit and related benefit

       

    (129)

       

       

    (454)

     
                   

               Total operating expenses

    26,357

       

    17,932

       

    51,863

       

    37,400

     
                   

     Operating loss

    (9,391)

       

    (6,833)

       

    (20,295)

       

    (11,787)

     
                   

     Other income (expenses):

                 

           Interest expense

    (43)

       

       

    (209)

       

     

           Interest income

    40

       

    111

       

    117

       

    198

     

           Gain (loss) on equity investment, net

       

       

    12,338

       

     

           Other income (expenses), net

    183

       

    (42)

       

    310

       

    (83)

     
                   

               Total other income (expenses), net

    180

       

    69

       

    12,556

       

    115

     
                   

     Income (loss) before income taxes

    (9,211)

       

    (6,764)

       

    (7,739)

       

    (11,672)

     

     Income tax expense

    244

       

    166

       

    502

       

    436

     
                   

    Net income (loss) including noncontrolling interests

    (9,455)

       

    (6,930)

       

    (8,241)

       

    (12,108)

     

    Net income (loss) attributable to noncontrolling interests

    (253)

       

       

    (572)

       

     

    Net income (loss) attributable to RealNetworks

    $

    (9,202)

       

    $

    (6,930)

       

    $

    (7,669)

       

    $

    (12,108)

     
                   

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

    $

    (0.24)

       

    $

    (0.18)

       

    $

    (0.20)

       

    $

    (0.32)

     

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

    $

    (0.24)

       

    $

    (0.18)

       

    $

    (0.20)

       

    $

    (0.32)

     
                   

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

    37,948

       

    37,577

       

    37,885

       

    37,514

     

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

    37,948

       

    37,577

       

    37,885

       

    37,514

     

    RealNetworks, Inc. and Subsidiaries

    Condensed Consolidated Balance Sheets

    (Unaudited)

     
     

    June 30,

    2019

     

    December 31,

    2018

     

     (in thousands)

    ASSETS

     Current assets:

         

     Cash and cash equivalents

    $

    26,339

       

    $

    35,561

     

     Short-term investments

       

    24

     

     Trade accounts receivable, net

    31,957

       

    11,751

     

     Deferred costs, current portion

    465

       

    331

     

     Prepaid expenses and other current assets

    20,382

       

    5,911

     

     Total current assets

    79,143

       

    53,578

     
           

     Equipment and software

    32,079

       

    37,458

     

     Leasehold improvements

    3,319

       

    3,292

     

     Total equipment, software, and leasehold improvements

    35,398

       

    40,750

     

     Less accumulated depreciation and amortization

    32,268

       

    37,996

     

     Net equipment, software, and leasehold improvements

    3,130

       

    2,754

     
           

     Operating lease assets

    13,672

       

     

     Restricted cash equivalents

    2,124

       

    1,630

     

     Other assets

    2,739

       

    3,997

     

     Deferred costs, non-current portion

    797

       

    528

     

     Deferred tax assets, net

    854

       

    851

     

     Other intangible assets, net

    21,616

       

    26

     

     Goodwill

    65,395

       

    16,955

     
           

     Total assets

    $

    189,470

       

    $

    80,319

     
           

     LIABILITIES AND SHAREHOLDERS' EQUITY

           

     Current liabilities:

         

     Accounts payable

    $

    5,224

       

    $

    3,910

     

     Accrued royalties, fulfillment and other current liabilities

    97,951

       

    11,312

     

     Commitment to Napster

       

    2,750

     

     Deferred revenue, current portion

    6,054

       

    2,125

     

     Notes payable

    7,878

       

     

     Total current liabilities

    117,107

       

    20,097

     
           

     Deferred revenue, non-current portion

    179

       

    268

     

     Deferred rent

       

    986

     

     Deferred tax liabilities, net

    1,262

       

    1,168

     

     Long-term lease liabilities

    10,384

       

     

     Other long-term liabilities

    11,070

       

    960

     
           

     Total liabilities

    140,002

       

    23,479

     
           

     Total shareholders' equity

    49,382

       

    56,840

     
           

    Noncontrolling interests

    86

       

     
           

     Total equity

    49,468

       

    56,840

     
           

     Total liabilities and equity

    $

    189,470

       

    $

    80,319

     

    RealNetworks, Inc. and Subsidiaries

    Condensed Consolidated Statements of Cash Flows

    (Unaudited)

     
     

    Six Months Ended

    June 30,

     

    2019

     

    2018

     

     (in thousands)

     

     Cash flows from operating activities:

         

     Net income (loss) including noncontrolling interests

    $

    (8,241)

       

    $

    (12,108)

     

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

         

    Depreciation and amortization

    2,959

       

    1,231

     

    Stock-based compensation

    1,917

       

    1,614

     

    Deferred income taxes, net

       

    (12)

     

    (Gain) loss on equity investment, net

    (12,338)

       

     

    Foreign currency (gain) loss

    (315)

       

     

    Fair value adjustments to contingent consideration liability

    300

       

     

    Mark to market adjustment of warrants

       

    50

     

    Net change in certain operating assets and liabilities

    (381)

       

    (3,505)

     

      Net cash used in operating activities

    (16,099)

       

    (12,730)

     

     Cash flows from investing activities:

         

    Purchases of equipment, software, and leasehold improvements

    (873)

       

    (580)

     

    Proceeds from sales and maturities of short-term investments

    24

       

    5,726

     

    Acquisition, net of cash acquired

    12,260

       

    (4,192)

     

     Net cash provided by investing activities

    11,411

       

    954

     

     Cash flows from financing activities:

         

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

    144

       

    114

     

    Tax payments from shares withheld upon vesting of restricted stock

    (287)

       

    (243)

     

    Proceeds from notes payable

    19,760

       

     

    Repayments of notes payable

    (24,018)

       

     

    Other financing activities

    450

       

     

     Net cash provided by (used in) financing activities

    (3,951)

       

    (129)

     

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

    (89)

       

    (731)

     

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

    (8,728)

       

    (12,636)

     

     Cash, cash equivalents and restricted cash, beginning of period

    37,191

       

    53,596

     

     Cash, cash equivalents and restricted cash, end of period

    $

    28,463

       

    $

    40,960

     

    RealNetworks, Inc. and Subsidiaries

    Supplemental Financial Information

    (Unaudited)

     
     

    2019

     

    2018

     

     Q2

     

    Q1

     

     Q4

     

     Q3

     

     Q2

     

     Q1

     

     (in thousands)

    Net Revenue by Segment

                         

    Consumer Media (A)

    $

    2,620

       

    $

    2,486

       

    $

    4,068

       

    $

    4,733

       

    $

    3,884

       

    $

    5,483

     

    Mobile Services (B)

    6,997

       

    6,939

       

    6,899

       

    7,348

       

    6,719

       

    8,704

     

    Games (C)

    6,048

       

    5,710

       

    5,590

       

    5,498

       

    5,121

       

    5,463

     

    Napster (D)

    28,583

       

    24,337

       

       

       

       

     

         Total net revenue

    $

    44,248

       

    $

    39,472

       

    $

    16,557

       

    $

    17,579

       

    $

    15,724

       

    $

    19,650

     
                           

    Net Revenue by Product

                         

    Consumer Media

                         

    - Software License (E)

    $

    944

       

    $

    735

       

    $

    2,049

       

    $

    2,746

       

    $

    1,808

       

    $

    3,337

     

    - Subscription Services (F)

    1,040

       

    1,088

       

    1,153

       

    1,232

       

    1,225

       

    1,285

     

    - Product Sales (G)

    206

       

    219

       

    257

       

    281

       

    299

       

    340

     

    - Advertising & Other (H)

    430

       

    444

       

    609

       

    474

       

    552

       

    521

     
                           

    Mobile Services

                         

    - Software License (I)

    957

       

    599

       

    514

       

    520

       

    469

       

    1,335

     

    - Subscription Services (J)

    6,040

       

    6,340

       

    6,385

       

    6,828

       

    6,250

       

    7,369

     
                           

    Games

                         

    - Subscription Services (K)

    3,073

       

    2,985

       

    3,014

       

    2,745

       

    2,689

       

    2,693

     

    - Product Sales (L)

    2,177

       

    1,988

       

    2,013

       

    2,279

       

    1,953

       

    2,402

     

    - Advertising & Other (M)

    798

       

    737

       

    563

       

    474

       

    479

       

    368

     
                           

    Napster

                         

    - Subscription Services (N)

    28,583

       

    24,337

       

       

       

       

     
                           

         Total net revenue

    $

    44,248

       

    $

    39,472

       

    $

    16,557

       

    $

    17,579

       

    $

    15,724

       

    $

    19,650

     
                           

    Net Revenue by Geography

                         

    United States

    $

    21,322

       

    $

    18,970

       

    $

    7,697

       

    $

    9,026

       

    $

    7,646

       

    $

    11,434

     

    Rest of world

    22,926

       

    20,502

       

    8,860

       

    8,553

       

    8,078

       

    8,216

     

         Total net revenue

    $

    44,248

       

    $

    39,472

       

    $

    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.

    (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

     

    Q2

     

    Q1

     

    Q2

     

    YTD

     

    YTD

     

     (in thousands)

    Consumer Media

                     
                       

    Net revenue

    $

    2,620

       

    $

    2,486

       

    $

    3,884

       

    $

    5,106

       

    $

    9,367

     

    Cost of revenue

    803

       

    833

       

    1,028

       

    1,636

       

    2,021

     

    Gross profit

    1,817

       

    1,653

       

    2,856

       

    3,470

       

    7,346

     
                       

    Gross margin

    69

    %

     

    66

    %

     

    74

    %

     

    68

    %

     

    78

    %

                       

    Operating expenses

    2,877

       

    3,119

       

    3,439

       

    5,996

       

    7,357

     

    Operating income (loss), a GAAP measure

    $

    (1,060)

       

    $

    (1,466)

       

    $

    (583)

       

    $

    (2,526)

       

    $

    (11)

     

    Depreciation and amortization

    56

       

    54

       

    51

       

    110

       

    97

     
                       

    Contribution margin, a non-GAAP measure

    $

    (1,004)

       

    $

    (1,412)

       

    $

    (532)

       

    $

    (2,416)

       

    $

    86

     
                       

    Mobile Services

                     
                       

    Net revenue

    $

    6,997

       

    $

    6,939

       

    $

    6,719

       

    $

    13,936

       

    $

    15,423

     

    Cost of revenue

    1,865

       

    2,048

       

    2,134

       

    3,913

       

    4,450

     

    Gross profit

    5,132

       

    4,891

       

    4,585

       

    10,023

       

    10,973

     
                       

    Gross margin

    73

    %

     

    70

    %

     

    68

    %

     

    72

    %

     

    71

    %

                       

    Operating expenses

    7,438

       

    7,561

       

    6,969

       

    14,999

       

    14,335

     

    Operating income (loss), a GAAP measure

    $

    (2,306)

       

    $

    (2,670)

       

    $

    (2,384)

       

    $

    (4,976)

       

    $

    (3,362)

     

    Acquisitions related intangible asset amortization

       

       

    91

       

       

    183

     

    Depreciation and amortization

    106

       

    231

       

    155

       

    337

       

    335

     
                       

    Contribution margin, a non-GAAP measure

    $

    (2,200)

       

    $

    (2,439)

       

    $

    (2,138)

       

    $

    (4,639)

       

    $

    (2,844)

     
                       

    Games

                     
                       

    Net revenue

    $

    6,048

       

    $

    5,710

       

    $

    5,121

       

    $

    11,758

       

    $

    10,584

     

    Cost of revenue

    1,655

       

    1,670

       

    1,456

       

    3,325

       

    3,273

     

    Gross profit

    4,393

       

    4,040

       

    3,665

       

    8,433

       

    7,311

     
                       

    Gross margin

    73

    %

     

    71

    %

     

    72

    %

     

    72

    %

     

    69

    %

                       

    Operating expenses

    5,288

       

    5,037

       

    5,095

       

    10,325

       

    10,012

     

    Operating income (loss), a GAAP measure

    $

    (895)

       

    $

    (997)

       

    $

    (1,430)

       

    $

    (1,892)

       

    $

    (2,701)

     

    Acquisitions related intangible asset amortization

       

    23

       

    20

       

    23

       

    20

     

    Depreciation and amortization

    84

       

    83

       

    146

       

    167

       

    311

     
                       

    Contribution margin, a non-GAAP measure

    $

    (811)

       

    $

    (891)

       

    $

    (1,264)

       

    $

    (1,702)

       

    $

    (2,370)

     
                       

    Napster

                     
                       

    Net revenue

    $

    28,583

       

    $

    24,337

       

    $

       

    $

    52,920

       

    $

     

    Cost of revenue

    23,026

       

    20,396

       

       

    43,422

       

     

    Gross profit

    5,557

       

    3,941

           

    9,498

       

     
                       

    Gross margin

    19

    %

     

    16

    %

     

    %

     

    18

    %

     

    %

                       

    Operating expenses

    6,638

       

    5,532

       

       

    12,170

       

     

    Operating income (loss), a GAAP measure

    $

    (1,081)

       

    $

    (1,591)

       

    $

       

    $

    (2,672)

       

    $

     

    Acquisitions related intangible asset amortization

    1,129

       

    943

       

       

    2,072

       

     

    Depreciation and amortization

    69

       

    115

       

       

    184

       

     
                       

    Contribution margin, a non-GAAP measure

    $

    117

       

    $

    (533)

       

    $

       

    $

    (416)

       

    $

     
                       

    Corporate

                     
                       

    Cost of revenue

    $

    (67)

       

    $

    (77)

       

    $

    7

       

    $

    (144)

       

    $

    17

     

    Gross profit

    67

       

    77

       

    (7)

       

    144

       

    (17)

     
                       

    Gross margin

    N/A

     

    N/A

     

    N/A

     

    N/A

     

    N/A

                       

    Operating expenses

    4,116

       

    4,257

       

    2,429

       

    8,373

       

    5,696

     

    Operating income (loss), a GAAP measure

    $

    (4,049)

       

    $

    (4,180)

       

    $

    (2,436)

       

    $

    (8,229)

       

    $

    (5,713)

     

    Other income (expense), net

    183

       

    127

       

    (42)

       

    310

       

    (83)

     

    Foreign currency (gain) loss

    (164)

       

    (151)

       

    (2)

       

    (315)

       

    20

     

    Depreciation and amortization

    33

       

    33

       

    148

       

    66

       

    285

     

    Fair value adjustments to contingent consideration liability

    300

       

       

       

    300

       

     

    Restructuring and other charges

    729

       

    167

       

    187

       

    896

       

    688

     

    Stock-based compensation

    533

       

    1,384

       

    457

       

    1,917

       

    1,614

     

    Lease exit and related benefit

       

       

    (129)

       

       

    (454)

     
                       

    Contribution margin, a non-GAAP measure (1)

    $

    (2,435)

       

    $

    (2,620)

       

    $

    (1,817)

       

    $

    (5,055)

       

    $

    (3,643)

     
     

    (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

     

    Q2

     

     Q1

     

     Q2

     

     YTD

     

     YTD

     

    (in thousands)

                       

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

               
                       

    Net income (loss) including noncontrolling interests

    $

    (9,455)

       

    $

    1,214

       

    $

    (6,930)

       

    $

    (8,241)

       

    $

    (12,108)

     

    Income tax expense (benefit)

    244

       

    258

       

    166

       

    502

       

    436

     

    Interest expense

    43

       

    166

       

       

    209

       

     

    Interest income

    (40)

       

    (77)

       

    (111)

       

    (117)

       

    (198)

     

    (Gain) loss on equity investment, net

       

    (12,338)

       

       

    (12,338)

       

     

    Foreign currency (gain) loss

    (164)

       

    (151)

       

    (2)

       

    (315)

       

    20

     

    Acquisitions related intangible asset amortization

    1,129

       

    966

       

    111

       

    2,095

       

    203

     

    Depreciation and amortization

    348

       

    516

       

    500

       

    864

       

    1,028

     

    Fair value adjustments to contingent consideration liability

    300

       

       

       

    300

       

     

    Restructuring and other charges

    729

       

    167

       

    187

       

    896

       

    688

     

    Stock-based compensation

    533

       

    1,384

       

    457

       

    1,917

       

    1,614

     

    Lease exit and related benefit

       

       

    (129)

       

       

    (454)

     

       Adjusted EBITDA, a non-GAAP measure (1)

    $

    (6,333)

       

    $

    (7,895)

       

    $

    (5,751)

       

    $

    (14,228)

       

    $

    (8,771)

     
     

    (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.

    SOURCE RealNetworks, Inc.

    Related Links

    http://www.realnetworks.com