SEATTLE, Feb. 4, 2015 /PRNewswire/ -- RealNetworks, Inc. (Nasdaq: RNWK), a leader in personal digital entertainment, today announced results for the fourth quarter and full year ended December 31, 2014.
For the fourth quarter of 2014, revenue was $35.5 million, compared to $34.2 million in the previous quarter and $50.6 million in the fourth quarter of 2013. For the full year 2014, revenue was $156.2 million, compared to $206.2 million in 2013.
"During 2014, we continued to make progress in our strategic transition to new mobile-centric, cloud-based products and services," said Rob Glaser, Chairman and CEO of RealNetworks. "RealPlayer Cloud now has over 10 million users worldwide, up from 500,000 a year ago. We are continuing to build on our early momentum with RealPlayer Cloud by investing to broaden and deepen the product. We are also working to bring in additional marketing and distribution partners to drive even more consumer adoption.
"We're also encouraged by the worldwide launch of our new Slingo Adventure and Emily's New Beginning games, as well as the continued subscriber and revenue growth at the Rhapsody music service in which we play a significant role and have a large stake."
GAAP net loss for the fourth quarter of 2014 was $(20.8) million or $(0.58) per diluted share, compared to GAAP net income of $2.5 million or $0.07 per diluted share in the fourth quarter of 2013. GAAP results for the fourth quarter of 2013 income included a pre-tax net gain of $21.4 million from the sale of our investment in LoEn. For the full year 2014, GAAP net loss was $(71.8) million or $(2.00) per diluted share, compared to $(59.0) million or $(1.66) per diluted share in 2013.
Adjusted EBITDA for the fourth quarter of 2014 was a loss of $(15.2) million compared to $(6.6) million for the fourth quarter of 2013. For the full year 2014, adjusted EBITDA was a loss of $(56.6) million, compared to a loss of $(23.7) million for 2013. A reconciliation of GAAP operating income (loss) to adjusted EBITDA is provided in the financial tables that accompany this release.
As of December 31, 2014, the company had $161.7 million in unrestricted cash, cash equivalents and short-term investments, compared to $178.0 million as of September 30, 2014.
Business Outlook
For the first quarter of 2015, RealNetworks expects total revenue in the range of $30.0 million to $33.0 million and adjusted EBITDA for the quarter to be a loss in the range of $(18.0) million to $(21.0) million.
Webcast and Conference Call Information
The company will host a conference call today to review results and discuss the company's performance at 5 p.m. ET/2 p.m. PT by calling 888-790-3440 or +1-517-308-9350 (Passcode: Fourth Quarter Earnings). A live webcast of the call will be available at http://investor.realnetworks.com/ and an on-demand webcast will be available approximately one hour following the conclusion of the conference call. A telephonic replay will be available until 11:59 p.m. PT, February 26, 2015 by calling 866-426-7248 or +1-203-369-0887 (Passcode: 020415).
RNWK-F
About RealNetworks
RealNetworks creates innovative applications and services that make it easy to connect with and enjoy digital media. RealNetworks invented the streaming media category in 1995 and continues to connect consumers with their digital media both directly and through partners, aiming to support every network, device, media type and social network. RealNetworks' corporate information is located at www.realnetworks.com/about-us.
RealNetworks, RealPlayer and Slingo are trademarks or registered trademarks of RealNetworks, Inc. or its subsidiaries. All other companies or products listed herein are trademarks or registered trademarks of their respective owners.
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 adjusted EBITDA 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 operating income (loss) to adjusted EBITDA and to adjusted EBITDA by reportable segment.
The rationale for management's use of non-GAAP measures is included in the supplementary materials presented with the 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 RealNetworks' current expectations regarding future revenue and adjusted EBITDA, our future growth, profitability, strategic focus and initiatives. 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 RealNetworks' expectations as of today, and actual results may differ materially from the results predicted. Factors that could cause actual results to differ from the results predicted include: risks associated with the implementation of RealNetworks' growth plan, strategic initiatives, and restructuring efforts; its ability to successfully introduce and monetize new products and services; competitive risks, including the growth of competing technologies, products and services, and the emergence of new entrants and competition in the market; the potential outcomes and effects of claims and legal proceedings on RealNetworks' business, prospects, financial condition or results of operations; risks associated with key customer or strategic relationships, business acquisitions and the introduction of new products and services; changes in consumer and advertising spending in response to disruptions in the global financial markets; fluctuations in foreign currencies; and changes in RealNetworks' effective tax rate. More information about potential risk factors that could affect RealNetworks' 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 RealNetworks' financial statements and forward-looking financial guidance requires the company 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. The company assumes no obligation to update any forward-looking statements or information, which are in effect as of their respective dates.
RealNetworks, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) Quarters Ended Years Ended December 31, December 31, ------------ ------------ 2014 2013 2014 2013 ---- ---- ---- ---- (in thousands, except per share data) Net revenue $35,506 $50,595 $156,212 $206,196 Cost of revenue 17,881 20,076 76,381 79,091 Extinguishment of liability - - (10,580) - Gross profit 17,625 30,519 90,411 127,105 ------ ------ ------ ------- Operating expenses: Research and development 12,655 14,929 52,765 60,880 Sales and marketing 15,904 20,181 66,926 80,011 General and administrative 8,384 8,137 34,001 36,643 Restructuring and other charges 1,187 1,690 4,992 5,765 Lease exit and related charges 177 23 880 3,089 Loss on litigation settlements - - - 11,525 --- --- --- ------ Total operating expenses 38,307 44,960 159,564 197,913 ------ ------ ------- ------- Operating income (loss) (20,682) (14,441) (69,153) (70,808) ------- ------- ------- ------- Other income (expenses): Interest income, net 160 141 556 1,133 Gain (loss) on sale of available for sale securities, net - 21,389 2,371 21,389 Equity in net loss of Rhapsody investment (282) (59) (4,452) (6,268) Other income (expense), net (10) 613 143 467 --- --- --- --- Total other income (expense), net (132) 22,084 (1,382) 16,721 ---- ------ ------ ------ Income (loss) before income taxes (20,814) 7,643 (70,535) (54,087) Income tax expense (benefit) 24 5,113 1,280 4,903 --- ----- ----- ----- Net income (loss) $(20,838) $2,530 $(71,815) $(58,990) ======== ====== ======== ======== Basic net income (loss) per share $(0.58) $0.07 $(2.00) $(1.66) Diluted net income (loss) per share $(0.58) $0.07 $(2.00) $(1.66) Shares used to compute basic net income (loss) per share 36,052 35,738 35,947 35,553 Shares used to compute diluted net income (loss) per share 36,052 35,906 35,947 35,553
RealNetworks, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) December 31, December 31, 2014 2013 ---- ---- (in thousands) ASSETS Current assets: Cash and cash equivalents $103,253 $151,235 Short-term investments 58,453 74,920 Trade accounts receivable, net 15,257 24,613 Deferred costs, current portion 702 1,601 Deferred tax assets, current 652 306 Prepaid expenses and other current assets 8,980 9,124 ----- ----- Total current assets 187,297 261,799 ------- ------- Equipment, software, and leasehold improvements, at cost: Equipment and software 74,100 86,721 Leasehold improvements 3,590 3,482 ----- ----- Total equipment, software, and leasehold improvements 77,690 90,203 Less accumulated depreciation and amortization 61,442 67,031 ------ ------ Net equipment, software, and leasehold improvements 16,248 23,172 Restricted cash equivalents and investments 3,000 3,000 Equity method investment 10,000 12,473 Available for sale securities 2,676 7,181 Other assets 2,299 2,332 Deferred costs, non- current portion 316 946 Deferred tax assets, net, non-current portion 999 1,409 Other intangible assets, net 10,109 12,993 Goodwill 17,355 17,476 ------ ------ Total assets $250,299 $342,781 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $18,653 $19,987 Accrued and other current liabilities 25,286 41,893 Deferred tax liabilities, net, current portion 1,628 899 Deferred revenue, current portion 5,301 7,498 ----- ----- Total current liabilities 50,868 70,277 Deferred revenue, non-current portion 235 166 Deferred rent 1,215 1,318 Deferred tax liabilities, net, non- current portion 702 1,556 Other long- term liabilities 81 483 --- --- Total liabilities 53,101 73,800 ------ ------ Shareholders' equity 197,198 268,981 ------- ------- Total liabilities and shareholders' equity $250,299 $342,781 ======== ========
RealNetworks, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) Years ended December 31, ------------------------ 2014 2013 ---- ---- (in thousands) Cash flows from operating activities: Net income (loss) $(71,815) $(58,990) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 11,959 18,748 Stock-based compensation 5,204 7,468 Extinguishment of liability (10,580) - Equity in net loss of Rhapsody 4,452 6,268 Lease exit and related charges 668 1,421 Deferred income taxes, net (237) 676 Gain on sale of available for sale securities (2,371) (21,389) Realized translation gain (48) (571) Other - 51 Net change in certain operating assets and liabilities 2,524 (3,561) ----- ------ Net cash provided by (used in) operating activities (60,244) (49,879) ------- ------- Cash flows from investing activities: Purchases of equipment, software, and leasehold improvements (2,460) (7,727) Proceeds from sale of available for sale securities 2,754 29,153 Purchases of short-term investments (81,216) (131,690) Proceeds from sales and maturities of short-term investments 97,683 164,986 Decrease in restricted cash equivalents and investments - 10,000 Increase in restricted cash equivalents and investments - (3,000) Acquisitions of businesses, net of cash acquired (733) (22,480) Other (467) - ---- --- Net cash provided by (used in) investing activities 15,561 39,242 ------ ------ Cash flows from financing activities: Proceeds from issuance of common stock (stock options and stock purchase plan) 812 594 Tax payments from shares withheld upon vesting of restricted stock (407) (1,201) Payment of contingent consideration (1,042) (828) Net cash provided by (used in) financing activities (637) (1,435) ---- ------ Effect of exchange rate changes on cash and cash equivalents (2,662) 109 ------ --- Net increase (decrease) in cash and cash equivalents (47,982) (11,963) Cash and cash equivalents, beginning of period 151,235 163,198 ------- ------- Cash and cash equivalents, end of period $103,253 $151,235 ======== ========
RealNetworks, Inc. and Subsidiaries Supplemental Financial Information (Unaudited) 2014 2013 ---- ---- YTD Q4 Q3 Q2 Q1 YTD Q4 Q3 Q2 Q1 --- --- --- --- --- --- --- --- --- --- (in thousands) Net Revenue by Line of Business RealPlayer Group (A) $39,201 $8,865 $6,565 $8,556 $15,215 $75,206 $16,799 $17,641 $18,383 $22,383 Mobile Entertainment (B) 79,901 17,616 19,190 23,182 19,913 81,181 22,146 19,948 18,592 20,495 Games (C) 37,110 9,025 8,402 9,087 10,596 49,809 11,650 11,369 12,875 13,915 Total net revenue $156,212 $35,506 $34,157 $40,825 $45,724 $206,196 $50,595 $48,958 $49,850 $56,793 ======== ======= ======= ======= ======= ======== ======= ======= ======= ======= Net Revenue by Product RealPlayer Group ---------------- - License (D) $16,042 $4,496 $3,255 $3,273 $5,018 $29,507 $7,128 $7,281 $6,766 $8,332 - Subscriptions (E) 10,717 2,691 2,680 2,569 2,777 15,850 3,118 3,615 4,193 4,924 - Media Properties (F) 12,442 1,678 630 2,714 7,420 29,849 6,553 6,745 7,424 9,127 Mobile Entertainment -------------------- - SaaS (G) 73,284 16,727 17,919 20,175 18,463 74,238 20,406 18,156 17,002 18,674 - Technology License & Other (H) 6,617 889 1,271 3,007 1,450 6,943 1,740 1,792 1,590 1,821 Games ----- - License (I) 14,090 3,854 2,988 3,399 3,849 16,270 3,511 3,421 4,089 5,249 - Subscriptions (J) 17,948 3,947 4,320 4,440 5,241 23,713 5,688 5,733 5,980 6,312 - Media Properties (K) 5,072 1,224 1,094 1,248 1,506 9,826 2,451 2,215 2,806 2,354 Total net revenue $156,212 $35,506 $34,157 $40,825 $45,724 $206,196 $50,595 $48,958 $49,850 $56,793 ======== ======= ======= ======= ======= ======== ======= ======= ======= ======= Net Revenue by Geography United States $61,660 $13,860 $12,280 $15,092 $20,428 $90,250 $19,724 $21,039 $21,463 $28,024 Rest of world 94,552 21,646 21,877 25,733 25,296 115,946 30,871 27,919 28,387 28,769 Total net revenue $156,212 $35,506 $34,157 $40,825 $45,724 $206,196 $50,595 $48,958 $49,850 $56,793 ======== ======= ======= ======= ======= ======== ======= ======= ======= ======= Net Revenue by Line of Business (A) The RealPlayer Group primarily includes revenue from RealPlayer and related products, such as the distribution of third-party software products, advertising on RealPlayer websites, and sales of RealPlayer Plus software licenses to consumers, sales of intellectual property licenses, and consumer subscriptions such as our RealPlayer Cloud service and SuperPass. (B) The Mobile Entertainment division primarily includes revenue from SaaS services, system integration, and professional services to mobile carriers, and sales of technology licenses of our software products such as Helix. (C) The Games division primarily includes revenue from sales of games licenses, online games subscription services, advertising on games sites and social network sites, microtransactions from online and social games, and sales of mobile games. Net Revenue by Product (D) Licensing revenue within the RealPlayer Group includes sales of RealPlayer Plus software licenses to consumers and sales of intellectual property licenses. (E) Subscriptions revenue within the RealPlayer Group includes revenue from subscriptions such as our RealPlayer Cloud service and SuperPass. (F) Media Properties revenue within the RealPlayer Group includes distribution of third-party software products and advertising on RealPlayer websites. (G) SaaS revenue within Mobile Entertainment includes revenue from music on demand, ringback tones, intercarrier messaging services provided to network services providers who are largely mobile phone networks, and our LISTEN product. (H) Licensing and other revenue within Mobile Entertainment includes revenue from Helix-related products and professional services provided to mobile carriers. (I) Licensing revenue within Games includes retail games-related revenue, microtransactions from online and social games and sales of mobile games. (J) Subscriptions revenue within Games includes revenue from online games subscriptions. (K) Media Properties revenue within Games includes distribution of third-party software products and advertising on games sites and social network sites.
RealNetworks, Inc. and Subsidiaries Segment Results of Operations (Unaudited) 2014 2013 2014 2013 ---- ---- ---- ---- Q4 Q3 Q4 YTD YTD --- --- --- --- --- (in thousands) RealPlayer Group ---------------- Net revenue $8,865 $6,565 $16,799 $39,201 $75,206 Cost of revenue 3,804 3,566 3,236 14,508 16,220 Gross profit 5,061 2,999 13,563 24,693 58,986 Gross margin 57% 46% 81% 63% 78% Operating expenses 13,074 12,392 15,828 55,742 60,484 Operating income (loss) $(8,013) $(9,393) $(2,265) $(31,049) $(1,498) Adjusted EBITDA $(7,320) $(8,770) $(1,474) $(28,474) $951 Mobile Entertainment -------------------- Net revenue $17,616 $19,190 $22,146 $79,901 $81,181 Cost of revenue 11,525 12,626 13,634 50,399 47,608 Gross profit 6,091 6,564 8,512 29,502 33,573 Gross margin 35% 34% 38% 37% 41% Operating expenses 7,199 7,086 8,863 33,325 35,839 Operating income (loss) $(1,108) $(522) $(351) $(3,823) $(2,266) Adjusted EBITDA $24 $447 $1,251 $940 $5,830 Games ----- Net revenue $9,025 $8,402 $11,650 $37,110 $49,809 Cost of revenue 2,655 2,573 2,962 11,074 13,359 Gross profit 6,370 5,829 8,688 26,036 36,450 Gross margin 71% 69% 75% 70% 73% Operating expenses 9,977 8,658 12,057 37,170 47,177 Operating income (loss) $(3,607) $(2,829) $(3,369) $(11,134) $(10,727) Adjusted EBITDA $(3,024) $(2,246) $(2,724) $(8,742) $(7,897) Corporate --------- Net revenue $ - $ - $ - $ - $ - Cost of revenue (103) 163 244 400 1,904 Extinguishment of liability - - - (10,580) - --- Gross profit 103 (163) (244) 10,180 (1,904) Gross margin N/A N/A N/A N/A N/A Operating expenses 8,057 7,856 8,212 33,327 54,413 Operating income (loss) $(7,954) $(8,019) $(8,456) $(23,147) $(56,317) Adjusted EBITDA $(4,879) $(3,788) $(3,668) $(20,279) $(22,630) Total ----- Net revenue $35,506 $34,157 $50,595 $156,212 $206,196 Cost of revenue 17,881 18,928 20,076 76,381 79,091 Extinguishment of liability - - - (10,580) - Gross profit 17,625 15,229 30,519 90,411 127,105 Gross margin 50% 45% 60% 58% 62% Operating expenses 38,307 35,992 44,960 159,564 197,913 ------ Operating income (loss) $(20,682) $(20,763) $(14,441) $(69,153) $(70,808) Adjusted EBITDA $(15,199) $(14,357) $(6,615) $(56,555) $(23,746)
RealNetworks, Inc. and Subsidiaries Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment (Unaudited) 2014 2013 2014 2013 Q4 Q3 Q4 YTD YTD --- --- --- --- --- (in thousands) RealPlayer Group ---------------- Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment: Operating income (loss) $(8,013) $(9,393) $(2,265) $(31,049) $(1,498) Acquisitions related intangible asset amortization 96 103 60 384 249 Depreciation and amortization 597 520 731 2,191 2,200 Adjusted EBITDA $(7,320) $(8,770) $(1,474) $(28,474) $951 Mobile Entertainment -------------------- Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment: Operating income (loss) $(1,108) $(522) $(351) $(3,823) $(2,266) Acquisitions related intangible asset amortization 271 287 781 1,793 3,287 Depreciation and amortization 861 682 821 2,970 4,809 Adjusted EBITDA $24 $447 $1,251 $940 $5,830 Games ----- Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment: Operating income (loss) $(3,607) $(2,829) $(3,369) $(11,134) $(10,727) Acquisitions related intangible asset amortization 314 314 314 1,256 879 Depreciation and amortization 269 269 331 1,136 1,951 Adjusted EBITDA $(3,024) $(2,246) $(2,724) $(8,742) $(7,897) Corporate --------- Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment: Operating income (loss) $(7,954) $(8,019) $(8,456) $(23,147) $(56,317) Other income (expense), net (10) 325 613 143 467 Depreciation and amortization 675 556 665 2,229 5,373 Lease exit and related charges 177 154 23 880 3,089 Loss (gain) on litigation settlements - - - - 11,525 Restructuring and other charges 1,187 2,048 1,690 4,992 5,765 Stock-based compensation 1,046 1,148 1,797 5,204 7,468 Extinguishment of liability - - - (10,580) - Adjusted EBITDA $(4,879) $(3,788) $(3,668) $(20,279) $(22,630) Total ----- Reconciliation of GAAP operating income (loss) to adjusted EBITDA: Operating income (loss) $(20,682) $(20,763) $(14,441) $(69,153) $(70,808) Other income (expense), net (10) 325 613 143 467 Acquisitions related intangible asset amortization 681 704 1,155 3,433 4,415 Depreciation and amortization 2,402 2,027 2,548 8,526 14,333 Lease exit and related charges 177 154 23 880 3,089 Loss (gain) on litigation settlements - - - - 11,525 Restructuring and other charges 1,187 2,048 1,690 4,992 5,765 Stock-based compensation 1,046 1,148 1,797 5,204 7,468 Extinguishment of liability - - - (10,580) - Adjusted EBITDA $(15,199) $(14,357) $(6,615) $(56,555) $(23,746)
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/realnetworks-announces-fourth-quarter-and-full-year-2014-results-300030931.html
SOURCE RealNetworks, Inc.