Wed, 02/10/2021

RealNetworks Announces Fourth Quarter And Full Year 2020 Financial Results

RealNetworks, Inc. (Nasdaq: RNWK), a leader in AI-powered digital media software and services, today announced its financial results* for the fourth quarter and full year ended December 31, 2020.

  • 2020 revenue from continuing operations of $68.1 million, up 3% year-over-year due to aggregate growth of over 110% from two key growth initiatives (free-to-play mobile Games and SAFR), offset by declines in legacy businesses
  • 2020 net loss from continuing operations of $(5.1) million, an improvement of $10.1 million compared to
  • 2019; 2020 adjusted EBITDA loss of $(8.6) million, an improvement of $11.4 million compared to 2019
  • Continued traction with SAFR driven by successes in the U.S. Federal market and in Japan and Korea
  • Completed the sale of Napster to MelodyVR for total consideration of $26.6 million and buyer’s assumption of approximately $44.0 million in payment obligations
  • Ended the year with $23.9 million in unrestricted cash and cash equivalents, up from $8.5 million on December 31, 2019

Management Commentary

“2020 was a year of strong achievements for RealNetworks in spite of the challenges associated with the Global Pandemic that had a huge impact on businesses and people around the globe,” said Rob Glaser, Founder, Chairman, and Chief Executive Officer of RealNetworks. “Revenue from two of our key growth initiatives – free-to-play mobile Games and SAFR – grew over 110% from 2019. We are also pleased to have completed the sale of Napster to MelodyVR. We believe the sale of Napster simplifies Real and will help us deepen our focus on our growth initiatives and create long-term shareholder value.”

Full Year 2020 Financial Highlights from Continuing Operations

  • Revenue was $68.1 million, up 3% compared to $65.8 million in 2019.
  • Revenue from key growth initiatives, free-to-play mobile Games and SAFR, increased over 110% from 2019.
  • Games revenue was $28.6 million, up 12% compared to $25.5 million in 2019.
  • Gross profit margin was 76%, up from 74% in 2019.
  • Operating expenses decreased $19.0 million, or 25%, from 2019. Normalizing for certain one-time and non-cash items, operating expenses decreased $10.0 million, or 14%, from 2019.
  • Net loss attributable to RealNetworks was $(4.8) million, or $(0.13) per diluted share, compared to a net loss of $(15.1) million, or $(0.40) per diluted share in 2019. Included in net loss attributable to RealNetworks in 2020 was a gain of $8.6 million and in 2019 was a gain of $12.3 million related to the transaction involving the Company's interest in Napster.
  • Adjusted EBITDA was a loss of $(8.6) million compared to a loss of $(19.9) million in 2019. 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 December 31, 2020, the Company had $23.9 million in unrestricted cash and cash equivalents compared to $13.2 million at September 30, 2020 and $8.5 million at December 31, 2019.

Fourth Quarter 2020 Financial Highlights from Continuing Operations

  • Revenue was $17.6 million, up 6% compared to $16.6 million in the prior quarter and up 2% compared to $17.3 million in the prior year period.
  • Games revenue was $6.9 million, down 10% compared to $7.6 million in the prior quarter and up 5% compared to $6.6 million in the prior year period.
  • Gross profit margin was 77%, up from 75% in the prior quarter and up from 76% in the prior year period.
  • Operating expenses decreased $7.2 million, or 47%, from the prior quarter and decreased $9.3 million, or 53%, from the prior year period. Normalizing for certain one-time and non-cash items, operating expenses were relatively flat with the prior quarter and decreased $1.7 million, or 10%, from the prior year period.
  • Net income attributable to RealNetworks was $6.1 million, or $0.16 per diluted share, compared to a net loss of $(3.2) million, or $(0.08) per diluted share, in the prior quarter and a net loss of $(4.5) million, or $(0.12) per diluted share, in the prior year period. Included in net loss attributable to RealNetworks in the fourth quarter of 2020 was a gain of $8.4 million related to the transaction involving the Company's interest in Napster.
  • Adjusted EBITDA was a loss of $(0.9) million compared to a loss of $(1.9) million in the prior quarter and a loss of $(2.9) million in the prior year period.

Corporate Developments

  • On December 30, 2020, the Company announced the completion of the sale of Napster to MelodyVR for a total transaction value of approximately $70.6 million valued at the closing date, comprising $15.0 million in cash, $11.6 million in MelodyVR stock, and assumption by MelodyVR of approximately $44.0 million in payment obligations, primarily to various music industry entities. The Company received $10.6 million in MelodyVR stock and $6.7 million in cash as debt repayment and liquidation preference plus $3.0 million of cash to be held in an 18-month indemnity escrow. The Company expects to provide $4.8 million of consideration (equity and/or cash) to a third party to fulfill the terms of a January 2019 agreement to acquire its stake in Napster.
  • Effective March 1, 2021, Christine Chambers will be appointed to the position of Senior Vice President, Chief Financial Officer and Treasurer. Ms. Chambers will be rejoining RealNetworks, having served the Company in various finance roles for nearly a decade, most recently as Vice President, Finance. Ms. Chambers will report to President and COO Mike Ensing. Ms. Chambers succeeds Judd Lee, who will be transitioning out of the Company in March.

Business Outlook

As has been the case over the past year, RealNetworks is not providing guidance for the first quarter ending March 31, 2021.

Conference Call and Webcast Information

RealNetworks will host a conference call today to review its results and discuss its performance at approximately 4:30 p.m. ET / 1:30 p.m. PT. Participants 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 Wednesday, March 3, 2021, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (International) and entering the replay pin number: 13714971.

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

About RealNetworks

Building on a rich history of digital media expertise and innovation, RealNetworks has created a new generation of products that employ best-in-class artificial intelligence and machine learning to enhance and secure our daily lives. Real's portfolio includes SAFR, the world's premier computer vision platform for live video, Kontxt, an industry leading NLP (Natural Language Processing) platform for text and multi-media analysis, and leveraging its digital media expertise, a mobile games business focused on the large free-to-play segment. For information about all of our products, visit www.realnetworks.com.

About Continuing and Discontinued Operations and Non-GAAP Financial Measures

*This release refers to "continuing" and "discontinued" operations due to the completion of the sale of Napster, RealNetworks' 84%-owned subsidiary, to MelodyVR Group PLC, which closed on December 30, 2020. Effective as of the August 25, 2020 announcement date, Napster has been treated as a discontinued operation for accounting and disclosure purposes; therefore, unless otherwise noted, results presented in this release relate to the continuing operations of RealNetworks, which exclude Napster.

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 our current expectations regarding our future growth, profitability, and market position, our financial condition and liquidity, our strategic focus and initiatives, product plans, agreements with partners, and expectations and contingencies relating to the sale of Napster. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements.  These statements reflect our expectations as of today, and actual results may differ materially from the results predicted. Factors that could cause actual results for RealNetworks, on a consolidated basis, to differ from the results predicted include: our ability to realize operating efficiencies, growth and other benefits from the implementation of our growth initiatives and restructuring efforts; cash usage and conservation, and the pursuit of additional funding sources; successful monetization of our products and services; competitive risks, including the emergence or growth of competing technologies, products and services; potential outcomes and effects of claims and legal proceedings; risks associated with key customer or strategic relationships and business acquisitions; challenges caused by the COVID-19 pandemic; disruptions in the global financial markets, including changes in consumer spending and impacts to credit availability; and fluctuations in foreign currencies. More information about potential risk factors that could affect our business and financial results is included in RealNetworks' latest annual report on Form 10-K for year ended December 31, 2019 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

December 31,

 

Year ended December 31,

   
 

2020

 

2019

 

2020

 

2019

               
 

 (in thousands, except per share data)

               

 Net revenue

$

17,601

   

$

17,311

   

$

68,062

   

$

65,802

 

 Cost of revenue

4,036

   

4,204

   

16,465

   

17,226

 

           Gross profit

13,565

   

13,107

   

51,597

   

48,576

 
               

 Operating expenses:

             

       Research and development

5,944

   

6,411

   

24,319

   

27,850

 

       Sales and marketing

5,073

   

5,515

   

21,042

   

23,016

 

       General and administrative

4,068

   

4,846

   

17,331

   

21,820

 

Fair value adjustments to contingent consideration liability

(8,400)

   

300

   

(8,600)

   

1,000

 

       Restructuring and other charges

1,432

   

367

   

2,529

   

1,954

 
               

           Total operating expenses

8,117

   

17,439

   

56,621

   

75,640

 
               

 Operating income (loss)

5,448

   

(4,332)

   

(5,024)

   

(27,064)

 
               

 Other income (expenses):

             

       Interest expense

(8)

   

   

(20)

   

 

       Interest income

7

   

9

   

38

   

98

 

       Gain on equity and other investments, net

201

   

   

111

   

12,338

 

       Other income (expenses), net

(227)

   

(95)

   

(164)

   

102

 
               

           Total other income (expenses), net

(27)

   

(86)

   

(35)

   

12,538

 
               

Income (loss) from continuing operations before income taxes

5,421

   

(4,418)

   

(5,059)

   

(14,526)

 

 Income tax expense (benefit)

(551)

   

187

   

55

   

702

 
               

Net income (loss) from continuing operations

5,972

   

(4,605)

   

(5,114)

   

(15,228)

 

Net income (loss) from discontinued operations, net of tax

2,260

   

(2,158)

   

(206)

   

(6,030)

 

Net income (loss)

8,232

   

(6,763)

   

(5,320)

   

(21,258)

 

Net loss attributable to noncontrolling interests of continuing operations

(88)

   

(57)

   

(284)

   

(163)

 

Net income (loss) attributable to noncontrolling interests of discontinued

operations

180

   

(342)

   

(184)

   

(1,094)

 

Net income (loss) attributable to RealNetworks

$

8,140

   

$

(6,364)

   

$

(4,852)

   

$

(20,001)

 
               

Net income (loss) from continuing operations attributable to RealNetworks

$

6,060

   

$

(4,548)

   

$

(4,830)

   

$

(15,065)

 

Net income (loss) from discontinued operations attributable to RealNetworks

2,080

   

(1,816)

   

(22)

   

(4,936)

 

Net income (loss) attributable to RealNetworks

$

8,140

   

$

(6,364)

   

$

(4,852)

   

$

(20,001)

 
               

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

             

       Continuing operations

$

0.16

   

$

(0.12)

   

$

(0.13)

   

$

(0.40)

 

       Discontinued operations

0.05

   

(0.05)

   

   

(0.13)

 

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

$

0.21

   

$

(0.17)

   

$

(0.13)

   

$

(0.53)

 
               

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

             

       Continuing operations

$

0.16

   

$

(0.12)

   

$

(0.13)

   

$

(0.40)

 

       Discontinued operations

0.05

   

(0.05)

   

   

(0.13)

 

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

$

0.21

   

$

(0.17)

   

$

(0.13)

   

$

(0.53)

 
               

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

38,345

   

38,142

   

38,272

   

37,944

 

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

38,489

   

38,142

   

38,272

   

37,944

 

 

RealNetworks, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

 
 

December 31,

2020

 

December 31,

2019

 

 (in thousands)

ASSETS

 Current assets:

     

 Cash and cash equivalents

$

23,940

   

$

8,472

 

 Trade accounts receivable, net

10,229

   

12,767

 

 Deferred costs, current portion

196

   

537

 

 Investments

9,965

   

 

 Prepaid expenses and other current assets

3,480

   

4,428

 

 Current assets of discontinued operations

   

28,376

 

 Total current assets

47,810

   

54,580

 
       

 Equipment and software

30,726

   

31,699

 

 Leasehold improvements

2,776

   

3,071

 

 Total equipment, software, and leasehold improvements

33,502

   

34,770

 

 Less accumulated depreciation and amortization

31,631

   

32,350

 

 Net equipment, software, and leasehold improvements

1,871

   

2,420

 
       

 Operating lease assets

7,937

   

10,198

 

 Restricted cash equivalents

1,630

   

4,880

 

 Other assets

4,150

   

1,808

 

 Deferred costs, non-current portion

74

   

388

 

 Deferred tax assets, net

909

   

761

 

 Goodwill

17,375

   

16,908

 

 Non-current assets of discontinued operations

   

67,811

 
       

 Total assets

$

81,756

   

$

159,754

 
       

 LIABILITIES AND SHAREHOLDERS' EQUITY

       

 Current liabilities:

     

 Accounts payable

$

2,750

   

$

4,042

 

 Accrued and other current liabilities

17,850

   

17,495

 

 Deferred revenue, current portion

2,122

   

2,003

 

 Current liabilities of discontinued operations

   

72,641

 

 Total current liabilities

22,722

   

96,181

 
       

 Deferred revenue, non-current portion

45

   

96

 

 Deferred tax liabilities, net

1,129

   

1,076

 

 Long-term lease liabilities

6,837

   

8,234

 

 Long-term debt

2,895

   

3,900

 

 Other long-term liabilities

2,241

   

10,151

 

 Non-current liabilities of discontinued operations

   

1,843

 
       

 Total liabilities

35,869

   

121,481

 
       

 Total shareholders' equity

46,149

   

38,775

 
       

Noncontrolling interests

(262)

   

(502)

 
       

 Total equity

45,887

   

38,273

 
       

 Total liabilities and equity

$

81,756

   

$

159,754

 

 

RealNetworks, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 
 

Year ended December 31,

 

2020

 

2019

 

 (in thousands)

 

Cash flows from operating activities:

     

Net loss from continuing operations

$

(5,114)

   

$

(15,228)

 

Adjustment to reconcile net loss from continuing operations to net cash used in operating

activities:

     

Depreciation and amortization

944

   

1,195

 

Stock-based compensation

1,420

   

2,881

 

Gain on equity and other investments, net

(111)

   

(12,338)

 

Loss on impairment of operating lease asset

1,055

   

 

Deferred income taxes, net

(191)

   

(29)

 

Foreign currency (gain) loss

330

   

7

 

Fair value adjustments to contingent consideration liability

(8,600)

   

1,000

 

Net change in certain operating assets and liabilities

2,184

   

1,197

 

Net cash used in operating activities - continuing operations

(8,083)

   

(21,315)

 

Net cash used in operating activities - discontinued operations

(2,555)

   

(4,055)

 

Net cash used in operating activities

(10,638)

   

(25,370)

 

Cash flows from investing activities:

     

Purchases of equipment, software, and leasehold improvements

(408)

   

(949)

 

Proceeds from sales and maturities of short-term investments

   

24

 

Acquisitions, net of cash acquired

   

12,249

 

Net cash provided by (used in) investing activities - continuing operations

(408)

   

11,324

 

Net cash used in investing activities - discontinued operations

(2,160)

   

(243)

 

Net cash provided by (used in) investing activities

(2,568)

   

11,081

 

Cash flows from financing activities:

     

Proceeds from issuance of common stock

   

199

 

Proceeds from issuance of preferred stock

10,000

   

 

Tax payments from shares withheld upon vesting of restricted stock

(26)

   

(309)

 

Proceeds from notes payable and long-term debt

2,876

   

3,900

 

Repayments of notes payable and long-term debt

(3,922)

   

 

Payment of financing fees

   

(622)

 

Other financing activities

2,106

   

900

 

Net cash provided by financing activities - continuing operations

11,034

   

4,068

 

Net cash provided by (used in) financing activities - discontinued operations

4,945

   

(4,691)

 

Net cash provided by (used in) financing activities

15,979

   

(623)

 

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

618

   

(100)

 

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

3,391

   

(15,012)

 

Cash, cash equivalents, and restricted cash, beginning of year

22,179

   

37,191

 

Cash, cash equivalents, and restricted cash, end of year

25,570

   

22,179

 

Less: Cash, cash equivalent and restricted cash from discontinued operations

   

8,827

 

Cash and cash equivalents from continuing operations, end of year

$

25,570

   

$

13,352

 

 

RealNetworks, Inc. and Subsidiaries

Supplemental Financial Information

(Unaudited)

 
   

2020

 

2019

   

 YTD

 

 Q4

 

 Q3

 

 Q2

 

Q1

 

 YTD

 

 Q4

 

 Q3

 

 Q2

 

 Q1

   

 (in thousands)

Net Revenue by Segment

                                     

Consumer Media (A)

 

$

12,581

   

$

3,384

   

$

2,543

   

$

3,159

   

$

3,495

   

$

13,170

   

$

4,432

   

$

3,632

   

$

2,620

   

$

2,486

 

Mobile Services (B)

 

26,889

   

7,338

   

6,400

   

6,461

   

6,690

   

27,143

   

6,312

   

6,895

   

6,997

   

6,939

 

Games (C)

 

28,592

   

6,879

   

7,611

   

7,465

   

6,637

   

25,489

   

6,567

   

7,164

   

6,048

   

5,710

 

     Total net revenue

 

$

68,062

   

$

17,601

   

$

16,554

   

$

17,085

   

$

16,822

   

$

65,802

   

$

17,311

   

$

17,691

   

$

15,665

   

$

15,135

 
                                         

Net Revenue by Product

                                       

Consumer Media

                                       

- Software License (D)

 

$

5,957

   

$

1,593

   

$

642

   

$

1,702

   

$

2,020

   

$

6,522

   

$

2,856

   

$

1,987

   

$

944

   

$

735

 

- Subscription Services (E)

 

3,586

   

867

   

892

   

898

   

929

   

4,148

   

992

   

1,028

   

1,040

   

1,088

 

- Product Sales (F)

 

1,301

   

625

   

193

   

261

   

222

   

825

   

193

   

207

   

206

   

219

 

- Advertising & Other (G)

 

1,737

   

299

   

816

   

298

   

324

   

1,675

   

391

   

410

   

430

   

444

 
                                         

Mobile Services

                                       

- Software License (H)

 

5,110

   

2,376

   

931

   

972

   

831

   

3,101

   

657

   

888

   

957

   

599

 

- Subscription Services (I)

 

21,779

   

4,962

   

5,469

   

5,489

   

5,859

   

24,042

   

5,655

   

6,007

   

6,040

   

6,340

 
                                         

Games

                                       

- Subscription Services (J)

 

10,794

   

2,589

   

2,705

   

2,730

   

2,770

   

12,121

   

3,007

   

3,056

   

3,073

   

2,985

 

- Product Sales (K)

 

13,879

   

3,315

   

3,874

   

3,712

   

2,978

   

9,823

   

2,580

   

3,078

   

2,177

   

1,988

 

- Advertising & Other (L)

 

3,919

   

975

   

1,032

   

1,023

   

889

   

3,545

   

980

   

1,030

   

798

   

737

 
                                         
                                         

     Total net revenue

 

$

68,062

   

$

17,601

   

$

16,554

   

$

17,085

   

$

16,822

   

$

65,802

   

$

17,311

   

$

17,691

   

$

15,665

   

$

15,135

 
                                         

Net Revenue by Geography

                                       

United States

 

$

43,704

   

$

10,893

   

$

11,855

   

$

10,742

   

$

10,214

   

$

39,724

   

$

10,153

   

$

10,588

   

$

9,480

   

$

9,503

 

Rest of world

 

24,358

   

6,708

   

4,699

   

6,343

   

6,608

   

26,078

   

7,158

   

7,103

   

6,185

   

5,632

 

     Total net revenue

 

$

68,062

   

$

17,601

   

$

16,554

   

$

17,085

   

$

16,822

   

$

65,802

   

$

17,311

   

$

17,691

   

$

15,665

   

$

15,135

 
                                         

Net Revenue by Segment

                                   

(A) The Consumer Media segment primarily includes revenue from the licensing of our portfolio of video codec technologies. Also included is RealPlayer and related products, such as the distribution of third-party software products, advertising on RealPlayer websites, sales of RealPlayer Plus software to consumers, and consumer subscriptions such as RealPlayer Plus and SuperPass.

(B) The Mobile Services segment primarily includes revenue from SaaS services and sales of professional services provided to mobile carriers.

(C) The Games segment primarily includes revenue from player purchases of in-game virtual goods within our free-to-play games, mobile and PC games, online games subscription services, and advertising on games sites and social network sites.

Net Revenue by Product

                                       

(D) Software licensing revenue within Consumer Media includes revenues from licenses of our video codec technologies.

(E) Subscriptions revenue within Consumer Media includes revenue from subscriptions such as our RealPlayer Plus and SuperPass offerings.

(F) Product sales within Consumer Media includes sales of RealPlayer Plus software to consumers.

(G) Advertising & other revenue within Consumer Media includes distribution of third-party software products and advertising on RealPlayer websites.

(H) Software license revenue within Mobile Services includes revenue from our integrated RealTimes platform and our facial recognition platform, SAFR.

(I) 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.

(J) Subscription services revenue within Games includes revenue from online games subscriptions.

(K) Product sales revenue within Games includes revenue from player purchases of in-game virtual goods, retail and wholesale games-related revenue, 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)

 
   

2020

 

2019

 

2020

 

2019

   

Q4

 

Q3

 

Q4

 

YTD

 

YTD

   

 (in thousands)

Consumer Media

                   
                     

Net revenue

 

$

3,384

   

$

2,543

   

$

4,432

   

$

12,581

   

$

13,170

 

Cost of revenue

 

550

   

593

   

690

   

2,273

   

3,031

 

Gross profit

 

2,834

   

1,950

   

3,742

   

10,308

   

10,139

 
                     

Gross margin

 

84

%

 

77

%

 

84

%

 

82

%

 

77

%

                     

Operating expenses

 

2,135

   

2,092

   

2,498

   

8,889

   

11,186

 

Operating income (loss), a GAAP measure

 

$

699

   

$

(142)

   

$

1,244

   

$

1,419

   

$

(1,047)

 

Depreciation and amortization

 

17

   

17

   

34

   

62

   

178

 
                     

Contribution margin, a non-GAAP measure

 

$

716

   

$

(125)

   

$

1,278

   

$

1,481

   

$

(869)

 
                     

Mobile Services

                   
                     

Net revenue

 

$

7,338

   

$

6,400

   

$

6,312

   

$

26,889

   

$

27,143

 

Cost of revenue

 

1,736

   

1,511

   

1,866

   

6,725

   

7,500

 

Gross profit

 

5,602

   

4,889

   

4,446

   

20,164

   

19,643

 
                     

Gross margin

 

76

%

 

76

%

 

70

%

 

75

%

 

72

%

                     

Operating expenses

 

5,940

   

5,577

   

7,198

   

24,787

   

29,340

 

Operating income (loss), a GAAP measure

 

$

(338)

   

$

(688)

   

$

(2,752)

   

$

(4,623)

   

$

(9,697)

 

Depreciation and amortization

 

130

   

88

   

100

   

418

   

518

 
                     

Contribution margin, a non-GAAP measure

 

$

(208)

   

$

(600)

   

$

(2,652)

   

$

(4,205)

   

$

(9,179)

 
                     

Games

                   
                     

Net revenue

 

$

6,879

   

$

7,611

   

$

6,567

   

$

28,592

   

$

25,489

 

Cost of revenue

 

1,744

   

1,955

   

1,716

   

7,451

   

6,975

 

Gross profit

 

5,135

   

5,656

   

4,851

   

21,141

   

18,514

 
                     

Gross margin

 

75

%

 

74

%

 

74

%

 

74

%

 

73

%

                     

Operating expenses

 

4,885

   

5,152

   

4,744

   

19,936

   

20,220

 

Operating income (loss), a GAAP measure

 

$

250

   

$

504

   

$

107

   

$

1,205

   

$

(1,706)

 

Acquisitions related intangible asset amortization

 

   

   

   

   

27

 

Depreciation and amortization

 

72

   

71

   

85

   

347

   

341

 
                     

Contribution margin, a non-GAAP measure

 

$

322

   

$

575

   

$

192

   

$

1,552

   

$

(1,338)

 
                     

Corporate

                   
                     

Cost of revenue

 

$

6

   

$

3

   

$

(68)

   

$

16

   

$

(280)

 

Gross profit

 

(6)

   

(3)

   

68

   

(16)

   

280

 
                     

Gross margin

 

N/A

   

N/A

   

N/A

   

N/A

   

N/A

 
                     

Operating expenses

 

(4,843)

   

2,521

   

2,999

   

3,009

   

14,894

 

Operating income (loss), a GAAP measure

 

$

4,837

   

$

(2,524)

   

$

(2,931)

   

$

(3,025)

   

$

(14,614)

 

Other expense, net

 

(227)

   

(104)

   

(95)

   

(164)

   

102

 

Foreign currency loss

 

305

   

143

   

157

   

330

   

7

 

Depreciation and amortization

 

28

   

28

   

33

   

117

   

131

 

Fair value adjustments to contingent consideration liability

 

(8,400)

   

   

300

   

(8,600)

   

1,000

 

Restructuring and other charges

 

1,432

   

307

   

367

   

2,529

   

1,954

 

Stock-based compensation

 

327

   

390

   

461

   

1,420

   

2,881

 
                     

Contribution margin, a non-GAAP measure

 

$

(1,698)

   

$

(1,760)

   

$

(1,708)

   

$

(7,393)

   

$

(8,539)

 

 

RealNetworks, Inc. and Subsidiaries

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

(Unaudited)

 
   

2020

 

2019