Wed, 08/01/2018

RealNetworks Announces Second Quarter 2018 Results

SEATTLE, Aug. 1, 2018 /PRNewswire/ --

 

Revenue of $15.7 million compared to $21.6 million in the prior year period and $19.7 million in the prior quarter

Reduced operating expenses by $0.6 million, or 3%, year-over-year and by $1.5 million, or 8%, sequentially

Gross margin from continuing operations of 71%, same as the prior year period

Continued progress on growth initiatives that will contribute to revenue in 2018

Launched SAFR, a state-of-the-art facial recognition platform, July 2018

 

RealNetworks, Inc. (Nasdaq: RNWK), a leader in digital media software and services, today announced results for the second quarter ended June 30, 2018.

 

Management Commentary

"It was a disappointing quarter financially and a strong quarter strategically," said Rob Glaser, Chairman and CEO of RealNetworks. "Revenue and Adjusted EBITDA fell short of our expectations, as a result of a few specific factors that don't lessen our confidence in our growth initiatives. We are particularly pleased with the mid-July launch of SAFR, our world class facial recognition platform. Initial market feedback has been very encouraging."

 

Second Quarter 2018 Financial Highlights from Continuing Operations

• Revenue was $15.7 million compared to $19.7 million in the prior quarter and $21.6 million in the prior year period.

• Operating expenses decreased $1.5 million, or 8%, from the prior quarter and decreased $0.6 million, or 3%, from the prior year period.

• Net loss was $(6.9) million, or $(0.18) per share, compared to net loss of $(5.2) million, or $(0.14) per share, in the prior quarter and a net loss of $(3.8) million, or $(0.10) per share, in the prior year period.

• Adjusted EBITDA was a loss of $(5.7) million compared to a loss of $(3.0) million in the prior quarter and a loss of $(1.3) million in the prior year period. A reconciliation of GAAP net income (loss) to adjusted EBITDA, a non-GAAP measure, is provided in the financial tables that accompany this release.

• At June 30, 2018, the Company had $42.1 million in unrestricted cash, cash equivalents and short-term investments, compared to $54.3 million at March 31, 2018. This change included $4.2 million associated with our acquisition of Blue Giraffe, a Netherlands-based game development studio.

 

Business Outlook

For the third quarter of 2018, RealNetworks expects to achieve the following results:

• Total revenue is expected to be in the range of $17 million to $19 million. 

• Adjusted EBITDA loss is expected to be in the range of $(2.5) million to $(4.5) million.

 

New Revenue Recognition Accounting Standard

As of January 1, 2018, we adopted Accounting Standards Codification 606 (Topic 606), Revenue from Contracts with Customers, which affects the accounting for our revenue. We adopted Topic 606 using the modified retrospective transition method, under which the prior periods presented have not been recast to reflect adoption of the new standard.

For additional details on the impact of the standard, see our Annual Report on Form 10-K for the year ended December 31, 2017, and our 2018 Quarterly Reports on Form 10-Q.

 

Conference Call and Webcast Information

The company will host a conference call today to review results and discuss the company's performance shortly after 4:30 p.m. ET/1:30 p.m. PT. You may join the conference call by calling 1-877-451-6152 (United States) or 1-201-389-0879 (International). A telephonic replay of the call will also be available shortly after the completion of the call, until 11:59 pm ET on Wednesday, August 22, 2018, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (International) and entering the replay pin number: 13681039.

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

 

For More Information

Investor Relations for RealNetworks

Laura Bainbridge, Addo IR

310-829-5400

IR@realnetworks.com

RNWK-F

 

 

About RealNetworks

RealNetworks creates innovative technology products and services that make it easy to connect with and enjoy digital media. RealNetworks invented the streaming media category 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. Find RealNetworks’ corporate information at www.realnetworks.com.

RealNetworks® and the company’s respective logos are trademarks, registered trademarks, or service marks of RealNetworks, Inc. Other products and company names mentioned are the 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 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.

 

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, and market position, our strategic focus and initiatives, agreements with partners, and the growth and future prospects relating to our Rhapsody d/b/a Napster affiliate. 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: RealNetworks' ability to realize operating efficiencies, growth and other benefits from the implementation of its growth plan, strategic initiatives, and restructuring efforts; 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 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)

 

 

 

Quarter Ended
June 30,

 

Six Months Ended
June 30,

 

 

 

 

 

2018

 

2017

 

2018

 

2017

 

 

 (in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 Net revenue

 

$

15,724

 

 

$

21,605

 

 

$

35,374

 

 

$

41,296

 

 Cost of revenue

 

4,625

 

 

6,287

 

 

9,761

 

 

12,856

 

           Gross profit

 

11,099

 

 

15,318

 

 

25,613

 

 

28,440

 

 

 

 

 

 

 

 

 

 

 Operating expenses:

 

 

 

 

 

 

 

 

       Research and development

 

7,652

 

 

7,584

 

 

15,346

 

 

14,933

 

       Sales and marketing

 

4,883

 

 

5,496

 

 

10,880

 

 

12,651

 

       General and administrative

 

5,339

 

 

5,254

 

 

10,940

 

 

10,557

 

       Restructuring and other charges

 

187

 

 

150

 

 

688

 

 

1,714

 

       Lease exit and related benefit

 

(129

)

 

 

 

(454

)

 

 

 

 

 

 

 

 

 

 

 

           Total operating expenses

 

17,932

 

 

18,484

 

 

37,400

 

 

39,855

 

 

 

 

 

 

 

 

 

 

 Operating loss

 

(6,833

)

 

(3,166

)

 

(11,787

)

 

(11,415

)

 

 

 

 

 

 

 

 

 

 Other income (expenses):

 

 

 

 

 

 

 

 

       Interest income, net

 

111

 

 

109

 

 

198

 

 

237

 

       Equity in net loss of Napster

 

 

 

(349

)

 

 

 

(1,097

)

       Other income (expense), net

 

(42

)

 

(13

)

 

(83

)

 

(239

)

 

 

 

 

 

 

 

 

 

           Total other income (expense), net

 

69

 

 

(253

)

 

115

 

 

(1,099

)

 

 

 

 

 

 

 

 

 

 Loss from continuing operations before income taxes

 

(6,764

)

 

(3,419

)

 

(11,672

)

 

(12,514

)

 Income tax expense

 

166

 

 

360

 

 

436

 

 

815

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations

 

(6,930

)

 

(3,779

)

 

(12,108

)

 

(13,329

)

Net income from discontinued operations, net of tax

 

 

 

393

 

 

 

 

519

 

 Net loss

 

$

(6,930

)

 

$

(3,386

)

 

$

(12,108

)

 

$

(12,810

)

 

 

 

 

 

 

 

 

 

Net income (loss) per share - Basic:

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.18

)

 

$

(0.10

)

 

$

(0.32

)

 

$

(0.35

)

Discontinued operations

 

 

 

0.01

 

 

 

 

0.01

 

Net loss per share - Basic

 

$

(0.18

)

 

$

(0.09

)

 

$

(0.32

)

 

$

(0.34

)

Net income (loss) per share - Diluted:

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.18

)

 

$

(0.10

)

 

$

(0.32

)

 

$

(0.35

)

Discontinued operations

 

 

 

0.01

 

 

 

 

0.01

 

Net loss per share - Diluted

 

$

(0.18

)

 

$

(0.09

)

 

$

(0.32

)

 

$

(0.34

)

 

 

 

 

 

 

 

 

 

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

 

37,577

 

 

37,103

 

 

37,514

 

 

37,067

 

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

 

37,577

 

 

37,103

 

 

37,514

 

 

37,067

 

 

 

RealNetworks, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

 

June 30,
 2018

 

December 31,
 2017

 

 (in thousands)

ASSETS

 Current assets:

 

 

 

 Cash and cash equivalents

$

39,080

 

 

$

51,196

 

 Short-term investments

3,053

 

 

8,779

 

 Trade accounts receivable, net

13,127

 

 

12,689

 

 Deferred costs, current portion

375

 

 

426

 

 Prepaid expenses and other current assets

5,250

 

 

3,715

 

Current assets of discontinued operations

 

 

17,456

 

 Total current assets

60,885

 

 

94,261

 

 

 

 

 

 Equipment and software

41,793

 

 

46,417

 

 Leasehold improvements

3,511

 

 

3,536

 

 Total equipment, software, and leasehold improvements

45,304

 

 

49,953

 

 Less accumulated depreciation and amortization

42,083

 

 

46,093

 

 Net equipment, software, and leasehold improvements

3,221

 

 

3,860

 

 

 

 

 

 Restricted cash equivalents

1,880

 

 

2,400

 

 Other assets

5,844

 

 

5,588

 

 Deferred costs, non-current portion

679

 

 

955

 

 Deferred tax assets, net

1,036

 

 

1,047

 

 Other intangible assets, net

215

 

 

325

 

 Goodwill

17,120

 

 

13,060

 

 

 

 

 

 Total assets

$

90,880

 

 

$

121,496

 

 

 

 

 

 LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 Current liabilities:

 

 

 

 Accounts payable

$

2,744

 

 

$

3,785

 

 Accrued and other current liabilities

12,261

 

 

12,365

 

 Commitment to Napster

2,750

 

 

2,750

 

 Deferred revenue, current portion

2,155

 

 

3,097

 

Current liabilities of discontinued operations

 

 

17,107

 

 Total current liabilities

19,910

 

 

39,104

 

 

 

 

 

 Deferred revenue, non-current portion

353

 

 

443

 

 Deferred rent

1,023

 

 

982

 

 Deferred tax liabilities, net

170

 

 

19

 

 Other long-term liabilities

1,054

 

 

1,775

 

 

 

 

 

 Total liabilities

22,510

 

 

42,323

 

 

 

 

 

 

 

 

 

 Shareholders' equity

68,370

 

 

79,173

 

 

 

 

 

 Total liabilities and shareholders' equity

$

90,880

 

 

$

121,496

 

 

 

 

RealNetworks, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

Six Months Ended
June 30,

 

2018

 

2017

 

 (in thousands)

 

 Cash flows from operating activities:

 

 

 

 Net loss

$

(12,108

)

 

$

(12,810

)

 Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

1,231

 

 

1,757

 

Stock-based compensation

1,614

 

 

2,297

 

Equity in net loss of Napster

 

 

1,097

 

Deferred income taxes, net

(12

)

 

(40

)

Fair value of warrants granted in 2015 and 2017, net of subsequent mark to market adjustments in 2018 and 2017

50

 

 

(417

)

Net change in certain operating assets and liabilities

(3,505

)

 

(5,830

)

  Net cash used in operating activities

(12,730

)

 

(13,946

)

 Cash flows from investing activities:

 

 

 

Purchases of equipment, software, and leasehold improvements

(580

)

 

(417

)

Purchases of short-term investments

 

 

(13,905

)

Proceeds from sales and maturities of short-term investments

5,726

 

 

32,617

 

Acquisition, net of cash acquired

(4,192

)

 

 

Advance to Napster

 

 

(1,500

)

 Net cash provided by investing activities

954

 

 

16,795

 

 Cash flows from financing activities:

 

 

 

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

114

 

 

130

 

Tax payments from shares withheld upon vesting of restricted stock

(243

)

 

(192

)

 Net cash used in financing activities

(129

)

 

(62

)

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

(731

)

 

1,347

 

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

(12,636

)

 

4,134

 

 Cash, cash equivalents and restricted cash, beginning of period

53,596

 

 

36,421

 

 Cash, cash equivalents and restricted cash, end of period

$

40,960

 

 

$

40,555

 

 

 

 

 

 

 

RealNetworks, Inc. and Subsidiaries

Supplemental Financial Information

(Unaudited)

 

2018

 

2017

 

 Q2

 

Q1

 

 Q4

 

 Q3

 

 Q2

 

 Q1

 

 (in thousands)

Net Revenue by Line of Business

 

 

 

 

 

 

 

 

 

 

 

Consumer Media (A)

$

3,884

 

 

$

5,483

 

 

$

5,752

 

 

$

4,197

 

 

$

6,951

 

 

$

5,669

 

Mobile Services (B)

6,719

 

 

8,704

 

 

7,155

 

 

7,678

 

 

7,720

 

 

8,199

 

Games (C)

5,121

 

 

5,463

 

 

5,958

 

 

6,682

 

 

6,934

 

 

5,823

 

     Total net revenue

$

15,724

 

 

$

19,650

 

 

$

18,865

 

 

$

18,557

 

 

$

21,605

 

 

$

19,691

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Revenue by Product

 

 

 

 

 

 

 

 

 

 

 

Consumer Media

 

 

 

 

 

 

 

 

 

 

 

- Software License (D)

$

1,808

 

 

$

3,337

 

 

$

3,595

 

 

$

2,012

 

 

$

4,741

 

 

$

3,295

 

- Subscription Services (E)

1,225

 

 

1,285

 

 

1,362

 

 

1,434

 

 

1,531

 

 

1,564

 

- Product Sales (F)

299

 

 

340

 

 

350

 

 

322

 

 

261

 

 

377

 

- Advertising & Other (G)

552

 

 

521

 

 

445

 

 

429

 

 

418

 

 

433

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile Services

 

 

 

 

 

 

 

 

 

 

 

- Software License (H)

469

 

 

1,335

 

 

388

 

 

688

 

 

642

 

 

619

 

- Subscription Services (I)

6,250

 

 

7,369

 

 

6,767

 

 

6,990

 

 

7,078

 

 

7,580

 

 

 

 

 

 

 

 

 

 

 

 

 

Games

 

 

 

 

 

 

 

 

 

 

 

- Subscription Services (J)

2,689

 

 

2,693

 

 

2,707

 

 

2,708

 

 

2,781

 

 

2,828

 

- Product Sales (K)

1,953

 

 

2,402

 

 

3,086

 

 

3,851

 

 

4,007

 

 

2,862

 

- Advertising & Other (L)

479

 

 

368

 

 

165

 

 

123

 

 

146

 

 

133

 

 

 

 

 

 

 

 

 

 

 

 

 

     Total net revenue

$

15,724

 

 

$

19,650

 

 

$

18,865

 

 

$

18,557

 

 

$

21,605

 

 

$

19,691

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Revenue by Geography

 

 

 

 

 

 

 

 

 

 

 

United States

$

7,646

 

 

$

11,434

 

 

$

10,120

 

 

$

10,084

 

 

$

10,889

 

 

$

9,740

 

Rest of world

8,078

 

 

8,216

 

 

8,745

 

 

8,473

 

 

10,716

 

 

9,951

 

     Total net revenue

$

15,724

 

 

$

19,650

 

 

$

18,865

 

 

$

18,557

 

 

$

21,605

 

 

$

19,691

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Revenue by Line of Business

 

 

 

 

 

 

 

 

 

 

 

(A) The Consumer Media division 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 division primarily includes revenue from SaaS services and sales of professional services provided to mobile carriers.

(C) The Games division primarily includes revenue from sales of 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 integrated RealTimes platform.

(I) Subscription services revenue within Mobile Services includes revenue from ringback tones and our intercarrier messaging services, as well as from 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 retail and wholesale games-related revenue and 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)

 

 

 

 

2018

 

2017

 

2018

 

2017

 

Q2

 

Q1

 

Q2

 

YTD

 

YTD

 

 (in thousands)

Consumer Media

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

$

3,884

 

 

$

5,483

 

 

$

6,951

 

 

$

9,367

 

 

$

12,620

 

Cost of revenue

1,028

 

 

993

 

 

1,159

 

 

2,021

 

 

2,564

 

   Gross profit

2,856

 

 

4,490

 

 

5,792

 

 

7,346

 

 

10,056

 

 

 

 

 

 

 

 

 

 

 

   Gross margin

74

%

 

82

%

 

83

%

 

78

%

 

80

%

 

 

 

 

 

 

 

 

 

 

Operating expenses

3,439

 

 

3,918

 

 

3,730

 

 

7,357

 

 

7,740

 

Operating income (loss), a GAAP measure

$

(583

)

 

$

572

 

 

$

2,062

 

 

$

(11

)

 

$

2,316

 

Depreciation and amortization

51

 

 

46

 

 

159

 

 

97

 

 

326

 

 

 

 

 

 

 

 

 

 

 

  Contribution margin, a non-GAAP measure

$

(532

)

 

$

618

 

 

$

2,221

 

 

$

86

 

 

$

2,642

 

 

 

 

 

 

 

 

 

 

 

Mobile Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

$

6,719

 

 

$

8,704

 

 

$

7,720

 

 

$

15,423

 

 

$

15,919

 

Cost of revenue

2,134

 

 

2,316

 

 

2,426

 

 

4,450

 

 

5,616

 

   Gross profit

4,585

 

 

6,388

 

 

5,294

 

 

10,973

 

 

10,303

 

 

 

 

 

 

 

 

 

 

 

   Gross margin

68

%

 

73

%

 

69

%

 

71

%

 

65

%

 

 

 

 

 

 

 

 

 

 

Operating expenses

6,969

 

 

7,366

 

 

6,705

 

 

14,335

 

 

14,824

 

Operating income (loss), a GAAP measure

$

(2,384

)

 

$

(978

)

 

$

(1,411

)

 

$

(3,362

)

 

$

(4,521

)

Acquisitions related intangible asset amortization

91

 

 

92

 

 

201

 

 

183

 

 

397

 

Depreciation and amortization

155

 

 

180

 

 

175

 

 

335

 

 

378

 

 

 

 

 

 

 

 

 

 

 

Contribution margin, a non-GAAP measure

$

(2,138

)

 

$

(706

)

 

$

(1,035

)

 

$

(2,844

)

 

$

(3,746

)

 

 

 

 

 

 

 

 

 

 

Games

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

$

5,121

 

 

$

5,463

 

 

$

6,934

 

 

$

10,584

 

 

$

12,757

 

Cost of revenue

1,456

 

 

1,817

 

 

2,679

 

 

3,273

 

 

4,616

 

   Gross profit

3,665

 

 

3,646

 

 

4,255

 

 

7,311

 

 

8,141

 

 

 

 

 

 

 

 

 

 

 

   Gross margin

72

%

 

67

%

 

61

%

 

69

%

 

64

%

 

 

 

 

 

 

 

 

 

 

Operating expenses

5,095

 

 

4,917

 

 

5,090

 

 

10,012

 

 

10,037

 

Operating income (loss), a GAAP measure

$

(1,430

)

 

$

(1,271

)

 

$

(835

)

 

$

(2,701

)

 

$

(1,896

)

Acquisitions related intangible asset amortization

20

 

 

 

 

25

 

 

20

 

 

52

 

Depreciation and amortization

146

 

 

165

 

 

157

 

 

311

 

 

298

 

 

 

 

 

 

 

 

 

 

 

   Contribution margin, a non-GAAP measure

$

(1,264

)

 

$

(1,106

)

 

$

(653

)

 

$

(2,370

)

 

$

(1,546

)

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

$

7

 

 

$

10

 

 

$

23

 

 

$

17

 

 

$

60

 

   Gross profit

(7

)

 

(10

)

 

(23

)

 

(17

)

 

(60

)

 

 

 

 

 

 

 

 

 

 

   Gross margin

N/A

 

N/A

 

N/A

 

N/A

 

N/A

 

 

 

 

 

 

 

 

 

 

Operating expenses

2,429

 

 

3,267

 

 

2,959

 

 

5,696

 

 

7,254

 

Operating income (loss), a GAAP measure

$

(2,436

)

 

$

(3,277

)

 

$

(2,982

)

 

$

(5,713

)

 

$

(7,314

)

Other income (expense), net

(42

)

 

(41

)

 

(13

)

 

(83

)

 

(239

)

Depreciation and amortization

148

 

 

137

 

 

119

 

 

285

 

 

306

 

Restructuring and other charges

187

 

 

501

 

 

150

 

 

688

 

 

1,714

 

Stock-based compensation

457

 

 

1,157

 

 

863

 

 

1,614

 

 

2,297

 

Lease exit and related benefit

(129

)

 

(325

)

 

 

 

(454

)

 

 

 

 

 

 

 

 

 

 

 

 

   Contribution margin, a non-GAAP measure

$

(1,815

)

 

$

(1,848

)

 

$

(1,863

)

 

$

(3,663

)

 

$

(3,236

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RealNetworks, Inc. and Subsidiaries

Reconciliation of Net income (loss) from continuing operations to adjusted EBITDA, a non-GAAP measure

(Unaudited)

 

 

2018

 

2017

 

2018

 

2017

 

 

 Q2

 

 Q1

 

 Q2

 

 YTD

 

 YTD

 

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP Net income (loss) from continuing operations to adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations

 

$

(6,930

)

 

$

(5,178

)

 

$

(3,779

)

 

$

(12,108

)

 

$

(13,329

)

Income tax expense (benefit)

 

166

 

 

270

 

 

360

 

 

436

 

 

815

 

Interest income, net

 

(111

)

 

(87

)

 

(109

)

 

(198

)

 

(237

)

Equity in net loss of Napster

 

 

 

 

 

349

 

 

 

 

1,097

 

Acquisitions related intangible asset amortization

 

111

 

 

92

 

 

226

 

 

203

 

 

449

 

Depreciation and amortization

 

500

 

 

528

 

 

610

 

 

1,028

 

 

1,308

 

Restructuring and other charges

 

187

 

 

501

 

 

150

 

 

688

 

 

1,714

 

Stock-based compensation

 

457

 

 

1,157

 

 

863

 

 

1,614

 

 

2,297

 

Lease exit and related benefit

 

(129

)

 

(325

)

 

 

 

(454

)

 

 

   Adjusted EBITDA, a non-GAAP measure

 

$

(5,749

)

 

$

(3,042

)

 

$

(1,330

)

 

$

(8,791

)

 

$

(5,886

)