EX-99.1 2 d430450dex991.htm PRESS RELEASE Press Release

EXHIBIT 99.1

REALNETWORKS ANNOUNCES THIRD QUARTER 2012 RESULTS

SEATTLE – October 30, 2012 – RealNetworks, Inc. (Nasdaq: RNWK) today announced results for the third quarter ended Sept. 30, 2012.

Quarterly Summary:

 

   

Revenue of $59.1 million

 

   

Net loss of $(22.2) million or $(0.63) per share

 

   

Adjusted EBITDA of $(6.0) million

 

   

Cash and short term investments of $273.7 million as of Sept. 30, 2012

“We are working hard to put RealNetworks on a path to growth and profitability,” said Rob Glaser, Chairman and interim CEO of RealNetworks. “We have made progress and have a strategy that we are in the process of implementing.”

Third Quarter Results

For the third quarter of 2012, revenue was $59.1 million, a sequential decrease of 10% from the second quarter of 2012, and a decrease of 30% compared with the third quarter of 2011. Revenue trends in each of RealNetworks’ businesses in the third quarter of 2012 compared with the year-earlier quarter were: a 6% decrease in Emerging Products revenue to $10.1 million, a 33% decrease in Core Products revenue to $34.1 million, and a 35% decrease in Games revenue to $14.9 million.

Net loss for the third quarter of 2012 was $(22.2) million, or $(0.63) per share, compared with a net loss of $(5.2) million, or $(0.15) per share, in the third quarter of 2011. Net loss for the most-recent quarter included restructuring charges of $11.0 million primarily for employee severance costs, costs associated with the transfer of some SaaS contracts to Livewire Mobile, Inc., and a loss on excess office facilities; and $2.2 million in gains on the sale of a portion of the company’s investment in LoEn Entertainment, Inc. RealNetworks’ share of Rhapsody losses increased to $(1.6) million in the third quarter of 2012 from $(1.4) million in the third quarter of 2011.

Adjusted EBITDA loss for the third quarter was $(6.0) million, compared with adjusted EBITDA of $4.1 million for the third quarter of 2011. A reconciliation of GAAP operating income and loss to adjusted EBITDA is provided in the financial tables that accompany this release.

As of Sept. 30, 2012, RealNetworks had $273.7 million in unrestricted cash, cash equivalents and short-term investments, of which approximately $40.8 million is held in foreign jurisdictions, compared with cash of $185.1 million at Dec. 31, 2011. The increase in the cash balance reflects the proceeds from the sale of patent assets to Intel in the second quarter of 2012 and other asset sales in the second and third quarters of 2012, partially offset by cash used in operations and restructuring expenses over the first three quarters of the year. In addition, RealNetworks had $46.9 million in restricted cash and available-for-sale securities as of Sept. 30, 2012.

 

1


Segment Operating Results

 

     2012     2012     2011  
     Q3     Q2     Q3  
     (in thousands)  

Revenue

      

Core Products

   $ 34,078      $ 38,250      $ 50,705   

Emerging Products

     10,134        9,913        10,764   

Games

     14,876        17,363        22,945   

Corporate

     —          —          —     
  

 

 

   

 

 

   

 

 

 

Total

   $ 59,088      $ 65,526      $ 84,414   
  

 

 

   

 

 

   

 

 

 

Operating Income (loss)

      

Core Products

   $ 1,180      $ 4,140      $ 8,815   

Emerging Products

     (152     1,021        (2,033

Games

     (1,708     (1,302     1,589   

Corporate

     (22,495     100,309        (11,854
  

 

 

   

 

 

   

 

 

 

Total

   $ (23,175   $ 104,168      $ (3,483
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

      

Core Products

   $ 3,736      $ 6,628      $ 11,617   

Emerging Products

     158        1,266        (1,711

Games

     (894     (619     2,275   

Corporate

     (9,042     (13,784     (8,094
  

 

 

   

 

 

   

 

 

 

Total

   $ (6,042   $ (6,509   $ 4,087   
  

 

 

   

 

 

   

 

 

 

Business Outlook

For the fourth quarter of 2012, RealNetworks expects revenue of $60.0 million to $63.0 million. The company expects revenue from Core Products to increase, revenue from Emerging Products to be flat and revenue from Games to decline sequentially. Year-over-year, revenue is expected to decline in all segments. RealNetworks expects to report a fourth-quarter adjusted EBITDA loss of $(4.0) million to $(7.0) million.

The foregoing forward-looking statements reflect RealNetworks’ expectations as of October 30, 2012. It is not RealNetworks’ general practice to update these forward-looking statements until its next quarterly results announcement.

 

2


Webcast and Conference Call Information

The company will host an audio Webcast conference call to review results and discuss the company’s operations for the third quarter at 5:00 p.m. ET on October 30. The Webcast will be available at: http://investor.realnetworks.com.

Webcast participants will need RealPlayer® to hear the webcast, which can be downloaded at www.real.com.

The on-demand Webcast will be available beginning approximately two hours following the conclusion of the live Webcast.

Conference Call Details

5 p.m. ET / 2 p.m. PT

Dial in:

888-790-3162 Domestic

415-228-4854 International

Passcode: Third Quarter Earnings

Leader: Rob Glaser

Telephonic replay will be available until 8 p.m. ET, Nov. 13, 2012.

Replay dial in:

866-425-0182 Domestic

203-369-0874 International

For More Information:

Marj Charlier, Investor Relations at RealNetworks, Inc.

206-892-6785 or mcharlier@realnetworks.com

Press Only:

Barbara Krause, Krause Taylor Associates for RealNetworks, Inc.

408-981-2429 or barbara@krause-taylor.com.

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 http://www.realnetworks.com.

About Non-GAAP Financial Measures:

To supplement RealNetworks’ condensed consolidated financial statements 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 reporting 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 reporting segment.

The rationale for management’s use of non-GAAP measures is included in the supplementary materials presented with the Third quarter 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.

 

3


Forward-Looking Statements: This press release contains forward-looking statements that involve risks and uncertainties, including statements relating to RealNetworks’ current expectations for total and segment revenue; adjusted EBITDA; the development of its business plans; and the implementation of a strategy for growth and profitability. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements. Actual results may differ materially from the results predicted. Factors that could cause actual results to differ from the results predicted include: RealNetworks’ ability to realize operating efficiencies, growth and other benefits from the implementation of its strategic initiatives; the emergence of new entrants and competition in the market for digital media products and services; other competitive risks, including the growth of competing technologies, products and services; 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 the reported amounts of 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, RealPlayer and GameHouse 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.

 

4


RealNetworks, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

 

     Quarters Ended
September 30,
    Nine Months Ended
September 30,
 
     2012     2011     2012     2011  
     (in thousands, except per share data)  

Net revenue

   $ 59,088      $ 84,414      $ 191,578      $ 255,467   

Cost of revenue

     25,244        31,816        78,633        94,548   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     33,844        52,598        112,945        160,919   
  

 

 

   

 

 

   

 

 

   

 

 

 

Sale of patents and other technology assets, net of costs (A)

     —          —          116,353        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Research and development

     15,321        16,496        49,167        54,200   

Sales and marketing

     21,972        28,625        68,462        85,958   

General and administrative

     8,759        10,522        35,103        27,018   

Restructuring and other charges

     10,724        438        13,872        7,850   

Loss (gain) on excess office facilities

     243        —          243        (174
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     57,019        56,081        166,847        174,852   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (23,175     (3,483     62,451        (13,933
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expenses):

        

Interest income, net

     164        672        1,033        1,362   

Gain (loss) on sale of equity and other investments, net

     2,210        —          5,288        —     

Equity in net loss of Rhapsody investment

     (1,613     (1,440     (4,095     (5,739

Other income (expense), net

     248        (228     1,674        (661
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income (expense), net

     1,009        (996     3,900        (5,038
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     (22,166     (4,479     66,351        (18,971

Income tax (expense) benefit

     (48     (703     (24,583     (5,365
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (22,214   $ (5,182   $ 41,768      $ (24,336
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic net income (loss) per share

   $ (0.63   $ (0.15   $ 1.20      $ (0.71

Diluted net income (loss) per share

   $ (0.63   $ (0.15   $ 1.19      $ (0.71

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

     34,998        34,199        34,747        34,081   

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

     34,998        34,199        35,000        34,081   

 

(A) On April 5, 2012, RealNetworks completed the sale of certain patents and other technology assets to Intel for a cash purchase of $120.0 million.

 

5


RealNetworks, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

 

     September 30,
2012
     December 31,
2011
 
     (in thousands)  
ASSETS      

Current assets:

     

Cash and cash equivalents

   $ 170,702       $ 106,333   

Short-term investments

     103,046         78,739   

Trade accounts receivable, net

     35,716         41,165   

Deferred costs, current portion

     1,910         1,424   

Prepaid expenses and other current assets

     19,901         21,902   
  

 

 

    

 

 

 

Total current assets

     331,275         249,563   
  

 

 

    

 

 

 

Equipment, software, and leasehold improvements, at cost:

     

Equipment and software

     100,053         104,352   

Leasehold improvements

     26,184         25,947   
  

 

 

    

 

 

 

Total equipment, software, and leasehold improvements

     126,237         130,299   

Less accumulated depreciation and amortization

     93,287         92,825   
  

 

 

    

 

 

 

Net equipment, software, and leasehold improvements

     32,950         37,474   

Restricted cash equivalents and investments

     10,064         10,168   

Equity method investments

     3,703         7,798   

Available for sale securities

     36,819         37,204   

Other assets

     3,197         2,954   

Deferred costs, non-current portion

     170         843   

Deferred tax assets, net, non-current portion

     4,566         18,419   

Other intangible assets, net

     4,085         7,169   

Goodwill

     6,375         6,198   
  

 

 

    

 

 

 

Total assets

   $ 433,204       $ 377,790   
  

 

 

    

 

 

 
LIABILITIES AND SHAREHOLDERS’ EQUITY      

Current liabilities:

     

Accounts payable

   $ 21,350       $ 17,151   

Accrued and other liabilities

     62,215         59,194   

Deferred revenue, current portion

     11,558         11,835   

Accrued loss on excess office facilities, current portion

     747         596   
  

 

 

    

 

 

 

Total current liabilities

     95,870         88,776   

Deferred revenue, non-current portion

     159         195   

Accrued loss on excess office facilities, non-current portion

     1,229         2,151   

Deferred rent

     2,712         2,944   

Deferred tax liabilities, net, non-current portion

     1,085         1,443   

Other long-term liabilities

     10,290         10,994   
  

 

 

    

 

 

 

Total liabilities

     111,345         106,503   
  

 

 

    

 

 

 

Shareholders’ equity

     321,859         271,287   
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 433,204       $ 377,790   
  

 

 

    

 

 

 

 

6


RealNetworks, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

     Nine Months Ended September 30,  
     2012     2011  
     (in thousands)  

Cash flows from operating activities:

    

Net income (loss)

   $ 41,768      $ (24,336

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

    

Depreciation and amortization

     12,478        12,519   

Stock-based compensation

     6,419        9,086   

Loss (gain) on disposal of equipment, software, and leasehold improvements

     1,965        81   

Equity in net loss of Rhapsody investment

     4,095        5,739   

Excess tax benefit from stock option exercises

     —          (57

Deferred income taxes, net

     22,399        (429

Gain on sale of patent and other technology assets, net of costs

     (116,353     —     

Gain on sale of equity and other investments, net

     (5,288     —     

Realized translation gain

     (1,968     —     

Other

     —          (19

Net change in certain operating assets and liabilities

     3,735        (9,960
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     (30,750     (7,376
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchases of equipment, software, and leasehold improvements

     (6,478     (6,013

Proceeds from sale of patents and other technology assets, net of costs

     116,353        —     

Proceeds from sale of equity and other investments

     7,244        —     

Purchases of short-term investments

     (76,191     (77,078

Proceeds from sales and maturities of short-term investments

     51,885        95,104   

Decrease (increase) in restricted cash equivalents and investments, net

     103        (141

Payment of acquisition costs, net of cash acquired

     —          (2,888
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     92,916        8,984   
  

 

 

   

 

 

 

Cash flows from financing activities:

    

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

     3,240        1,940   

Tax payments from shares withheld upon vesting of restricted stock

     (964     —     

Excess tax benefit from stock option exercises

     —          57   

Payment of common stock cash dividend

     —          (136,793
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     2,276        (134,796
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (73     (19
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     64,369        (133,207

Cash and cash equivalents, beginning of period

     106,333        236,018   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 170,702      $ 102,811   
  

 

 

   

 

 

 

 

7


RealNetworks, Inc. and Subsidiaries

Supplemental Financial Information

(Unaudited)

 

     2012      2011  
     Q3      Q2      Q1      Q4      Q3      Q2      Q1  
            (in thousands)  

Net Revenue by Line of Business:

                    

Core Products (A)

   $ 34,078       $ 38,250       $ 37,697       $ 46,693       $ 50,705       $ 45,735       $ 48,107   

Emerging Products (B)

     10,134         9,913         10,159         11,974         10,764         12,717         11,135   

Games (C)

     14,876         17,363         19,108         21,552         22,945         25,300         28,059   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total net revenue

   $ 59,088       $ 65,526       $ 66,964       $ 80,219       $ 84,414       $ 83,752       $ 87,301   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Core Products Revenue by Product:

                    

SaaS (D)

   $ 20,697       $ 23,286       $ 23,463       $ 28,255       $ 30,381       $ 30,216       $ 30,526   

Systems Integration / Professional Services (E)

     247         965         426         771         3,844         388         1,840   

Technology Licensing (F)

     6,079         7,189         6,207         9,246         6,250         6,508         6,425   

Consumer Subscriptions (G)

     7,055         6,810         7,601         8,421         10,230         8,623         9,316   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Core Products net revenue

   $ 34,078       $ 38,250       $ 37,697       $ 46,693       $ 50,705       $ 45,735       $ 48,107   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Revenue by Geography:

                    

United States

   $ 29,101       $ 28,614       $ 31,814       $ 37,298       $ 38,969       $ 41,984       $ 44,469   

Rest of world

     29,987         36,912         35,150         42,921         45,445         41,768         42,832   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total net revenue

   $ 59,088       $ 65,526       $ 66,964       $ 80,219       $ 84,414       $ 83,752       $ 87,301   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Product Metrics (subscribers and ICM presented as greater than):

                    

Addressable subscribers of mobile operators under contract (H)

     700,000         725,000         725,000         725,000         700,000         775,000         775,000   

SaaS subscribers (I)

     26,500         30,600         30,500         30,050         34,000         34,550         35,900   

Monthly SaaS ARPU (in cents) (J)

   $ 0.17       $ 0.16       $ 0.15       $ 0.19       $ 0.17       $ 0.18       $ 0.18   

ICM delivered in billions (K)

     173         162         166         165         162         157         151   

Consumer subscribers (L)

     350         350         400         425         500         475         500   

Net Revenue by Line of Business:

(A) The Core Products segment primarily includes revenue from SaaS services, system integration and professional services to carriers and mobile handset companies, sales of technology licenses of our software products such as Helix for handsets, consumer subscriptions such as SuperPass and our international radio subscription services.
(B) The Emerging Products segment primarily includes revenue from RealPlayer and related products, such as the distribution of third party software products, advertising on RealPlayer websites and sales of RealPlayerPlus software licenses to consumers.
(C) The Games segment primarily includes revenue from sales of games licenses, online games subscription services, advertising on game sites and social network sites, games syndication services, microtransactions from online and social games and sales of mobile games.

Core Products Revenue by Product:

(D) Software as a Service (SaaS) revenue includes revenue from music on demand (MOD), video on demand (VOD), ringtones, ringback tones (RBT) and intercarrier messaging services provided to network service providers, who are largely mobile phone networks.
(E) Systems Integrations / Professional Services revenue includes professional services, other than those associated with software sales, provided to mobile carriers and handset manufacturers.
(F) Technology Licensing includes revenue from sales of software and other intellectual property licenses such as Helix server licenses and Helix software licenses for handsets.
(G) Consumer Subscriptions includes revenue from SuperPass as well as our international radio subscription services.

Product Metrics:

(H) Total subscribers reported at the end of the quarter of mobile carriers that offer one or more of our SaaS services, other than intercarrier messaging services, to their customers.
(I) SaaS subscribers include RBT, MOD and VOD services, measured at the end of the quarter.
(J) Monthly SaaS ARPU (Average Revenue Per User) is calculated by dividing (a) the total quarterly revenue from SaaS subscription services, including RBT, MOD, VOD, by (b) the number of SaaS subscribers at the end of the quarter, and dividing the resulting quotient by three.
(K) ICM (Intercarrier message) represents the total number of messages delivered across our messaging platform during the quarter.
(L) Consumer subscribers primarily includes our SuperPass and GamePass products.

 

8


RealNetworks, Inc. and Subsidiaries

Segment Results of Operations

(Unaudited)

 

     2012     2011     2012     2011  
     Q3     Q2     Q3     YTD     YTD  
     (in thousands)  

Core Products

          

Net revenue

   $ 34,078      $ 38,250      $ 50,705      $ 110,025      $ 144,547   

Cost of revenue

     17,323        17,681        22,492        52,832        62,829   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     16,755        20,569        28,213        57,193        81,718   

Gross margin

     49     54     56     52     57

Operating expenses

     15,575        16,429        19,398        50,072        57,958   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

   $ 1,180      $ 4,140      $ 8,815      $ 7,121      $ 23,760   

Adjusted EBITDA

   $ 3,736      $ 6,628      $ 11,617      $ 14,764      $ 31,777   

Emerging Products

          

Net revenue

   $ 10,134      $ 9,913      $ 10,764      $ 30,206      $ 34,616   

Cost of revenue

     2,041        1,800        3,913        5,946        8,431   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     8,093        8,113        6,851        24,260        26,185   

Gross margin

     80     82     64     80     76

Operating expenses

     8,245        7,092        8,884        22,883        28,144   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

   $ (152   $ 1,021      $ (2,033   $ 1,377      $ (1,959

Adjusted EBITDA

   $ 158      $ 1,266      $ (1,711   $ 2,178      $ (1,192

Games

          

Net revenue

   $ 14,876      $ 17,363      $ 22,945      $ 51,347      $ 76,304   

Cost of revenue

     4,936        5,572        7,197        17,169        23,771   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     9,940        11,791        15,748        34,178        52,533   

Gross margin

     67     68     69     67     69

Operating expenses

     11,648        13,093        14,159        38,171        46,184   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

   $ (1,708   $ (1,302   $ 1,589      $ (3,993   $ 6,349   

Adjusted EBITDA

   $ (894   $ (619   $ 2,275      $ (1,837   $ 8,363   

Corporate

          

Net revenue

   $ —        $ —        $ —        $ —        $ —     

Cost of revenue

     944        909        (1,786     2,686        (483
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     (944     (909     1,786        (2,686     483   

Gross margin

     N/A        N/A        N/A        N/A        N/A   

Gain on sale of patents and other technology assets, net of costs

     —          117,933        —          116,353        —     

Operating expenses

     21,551        16,715        13,640        55,721        42,566   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

   $ (22,495   $ 100,309      $ (11,854   $ 57,946      $ (42,083

Adjusted EBITDA

   $ (9,042   $ (13,784   $ (8,094   $ (35,073   $ (25,097

Total

          

Net revenue

   $ 59,088      $ 65,526      $ 84,414      $ 191,578      $ 255,467   

Cost of revenue

     25,244        25,962        31,816        78,633        94,548   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     33,844        39,564        52,598        112,945        160,919   

Gross margin

     57     60     62     59     63

Gain on sale of patents and other technology assets, net of costs

     —          117,933        —          116,353        —     

Operating expenses

     57,019        53,329        56,081        166,847        174,852   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

   $ (23,175   $ 104,168      $ (3,483   $ 62,451      $ (13,933

Adjusted EBITDA

   $ (6,042   $ (6,509   $ 4,087      $ (19,968   $ 13,851   

 

9


RealNetworks, Inc. and Subsidiaries

Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment

(Unaudited)

 

     2012     2011     2012     2011  
     Q3     Q2     Q3     YTD     YTD  
     (in thousands)  
Core Products           

Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment:

          

Operating income (loss)

   $ 1,180      $ 4,140      $ 8,815      $ 7,121      $ 23,760   

Acquisitions related intangible asset amortization

     796        786        833        2,384        2,017   

Depreciation and amortization

     1,760        1,702        1,969        5,259        6,000   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 3,736      $ 6,628      $ 11,617      $ 14,764      $ 31,777   
Emerging Products           

Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment:

          

Operating income (loss)

   $ (152   $ 1,021      $ (2,033   $ 1,377      $ (1,959

Acquisitions related intangible asset amortization

     62        79        79        220        132   

Depreciation and amortization

     248        166        243        581        635   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 158      $ 1,266      $ (1,711   $ 2,178      $ (1,192
Games           

Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment:

          

Operating income (loss)

   $ (1,708   $ (1,302   $ 1,589      $ (3,993   $ 6,349   

Acquisitions related intangible asset amortization

     171        207        257        587        767   

Depreciation and amortization

     643        476        429        1,569        1,247   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ (894   $ (619   $ 2,275      $ (1,837   $ 8,363   
Corporate           

Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment:

          

Operating income (loss)

   $ (22,495   $ 100,309      $ (11,854   $ 57,946      $ (42,083

Other income (expense), net

     248        (49     (228     1,674        (661

Depreciation and amortization

     636        628        593        1,878        1,721   

Restructuring and other charges

     10,724        1,539        438        13,872        7,850   

Stock-based compensation

     1,602        1,722        2,957        5,667        8,250   

Gain on sale of patents and other technology assets, net of costs

     —          (117,933     —          (116,353     —     

Loss (Gain) on excess office facilities

     243        —          —          243        (174
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ (9,042   $ (13,784   $ (8,094   $ (35,073   $ (25,097
Total           

Reconciliation of GAAP operating income (loss) to adjusted EBITDA:

          

Operating income (loss)

   $ (23,175   $ 104,168      $ (3,483   $ 62,451      $ (13,933

Other income (expense), net

     248        (49     (228     1,674        (661

Acquisitions related intangible asset amortization

     1,029        1,072        1,169        3,191        2,916   

Depreciation and amortization

     3,287        2,972        3,234        9,287        9,603   

Loss (Gain) on excess office facilities

     243        —          —          243        (174

Restructuring and other charges

     10,724        1,539        438        13,872        7,850   

Stock-based compensation

     1,602        1,722        2,957        5,667        8,250   

Gain on sale of patents and other technology assets, net of costs

     —          (117,933     —          (116,353     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ (6,042   $ (6,509   $ 4,087      $ (19,968   $ 13,851   

 

10