Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - REALNETWORKS INC | d8k.htm |
| EX-99.2 - INFORMATION REGARDING NON-GAAP FINANCIAL MEASURES - REALNETWORKS INC | dex992.htm |
Exhibit 99.1
RealNetworks, Inc. and Subsidiaries
Supplemental Financial Information
(Unaudited)
| 2010 | 2009 | |||||||||||||||||||||||
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Net Revenue by Line of Business: |
||||||||||||||||||||||||
| Core Products (A) |
$ | 51,742 | $ | 51,203 | $ | 64,154 | $ | 58,173 | $ | 56,346 | $ | 54,692 | ||||||||||||
| Emerging Products (B) |
8,997 | 11,428 | 13,014 | 13,835 | 9,153 | 9,205 | ||||||||||||||||||
| Games (C) |
28,145 | 30,236 | 30,736 | 29,491 | 29,774 | 32,823 | ||||||||||||||||||
| Total net revenue excluding music |
88,884 | 92,867 | 107,904 | 101,499 | 95,273 | 96,720 | ||||||||||||||||||
| Music (D) |
— | 35,733 | 37,598 | 38,765 | 40,452 | 44,053 | ||||||||||||||||||
| Total net revenue including music |
$ | 88,884 | $ | 128,600 | $ | 145,502 | $ | 140,264 | $ | 135,725 | $ | 140,773 | ||||||||||||
| Core Products Revenue by Product: |
||||||||||||||||||||||||
| SaaS (E) |
$ | 32,388 | $ | 33,614 | $ | 39,399 | $ | 38,704 | $ | 35,517 | $ | 34,497 | ||||||||||||
| Systems Integration/Professional Services (F) |
998 | 367 | 5,040 | 818 | 3,228 | 1,088 | ||||||||||||||||||
| Technology Licensing (G) |
7,736 | 7,910 | 9,830 | 7,906 | 7,463 | 7,994 | ||||||||||||||||||
| Consumer subscriptions (H) |
10,620 | 9,312 | 9,885 | 10,745 | 10,138 | 11,113 | ||||||||||||||||||
| Total Core Products net revenue |
$ | 51,742 | $ | 51,203 | $ | 64,154 | $ | 58,173 | $ | 56,346 | $ | 54,692 | ||||||||||||
| (A) | The Core Products segment primarily includes revenue from SaaS services, system integration and professional services to carriers and mobile handset companies, sales of licenses of our software products such as Helix, consumer subscriptions such as RadioPass and SuperPass. |
| (B) | The Emerging Products segment primarily includes revenue from RealPlayer, such as revenue from 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. |
| (D) | On March 31, 2010, we completed the restructuring of Rhapsody, which resulted in our ownership decreasing to approximately 47.5% of the outstanding equity in Rhapsody, and our loss of operating control over Rhapsody. Beginning with the quarter ended June 30, 2010, Rhapsody’s revenue or other operating results are no longer consolidated within our finanical statements and we are not recording any operating or other financial results for our Music segment. We now report our share of Rhapsody’s income or losses as “Equity in net loss of Rhapsody and other equity method investments” in Other Income. |
| (E) | Software as a Service (SaaS) revenue includes revenue from music on demand, video on demand, ringtones, ringback tones and intercarrier messaging services provided to network service providers, largely mobile phone networks. |
| (F) | Systems Integration revenue includes professional services, other than those associated with software sales, provided to mobile carriers and handset manufacturers. |
| (G) | Technology Licensing includes revenue from sales of software and other intellectual property licenses such as Helix servers and Helix software licenses for handsets. |
| (H) | Consumer subscriptions includes revenue from SuperPass and RadioPass subscription services. |
RealNetworks, Inc. and Subsidiaries
Segment Results of Operations
(Unaudited)
| 2010 | 2009 | |||||||||||||||||||||||
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Core Products |
||||||||||||||||||||||||
| Net revenue |
$ | 51,742 | $ | 51,203 | $ | 64,154 | $ | 58,173 | $ | 56,346 | $ | 54,692 | ||||||||||||
| Cost of revenue |
18,085 | 17,739 | 23,767 | 20,250 | 19,914 | 17,843 | ||||||||||||||||||
| Gross profit |
33,657 | 33,464 | 40,387 | 37,923 | 36,432 | 36,849 | ||||||||||||||||||
| Gross margin |
65 | % | 65 | % | 63 | % | 65 | % | 65 | % | 67 | % | ||||||||||||
| Operating expenses: |
22,508 | 24,086 | 20,130 | 23,059 | 72,688 | 22,625 | ||||||||||||||||||
| Operating income (loss) |
$ | 11,149 | $ | 9,378 | $ | 20,257 | $ | 14,864 | $ | (36,256 | ) | $ | 14,224 | |||||||||||
| Adjusted EBITDA |
$ | 14,675 | $ | 12,799 | $ | 24,332 | $ | 18,956 | $ | 18,306 | $ | 18,341 | ||||||||||||
| Emerging Products |
||||||||||||||||||||||||
| Net revenue |
$ | 8,997 | $ | 11,428 | $ | 13,014 | $ | 13,835 | $ | 9,153 | $ | 9,205 | ||||||||||||
| Cost of revenue |
3,404 | 1,464 | 1,664 | 1,703 | 1,657 | 1,860 | ||||||||||||||||||
| Gross profit |
5,593 | 9,964 | 11,350 | 12,132 | 7,496 | 7,345 | ||||||||||||||||||
| Gross margin |
62 | % | 87 | % | 87 | % | 88 | % | 82 | % | 80 | % | ||||||||||||
| Operating expenses: |
7,602 | 7,033 | 8,867 | 6,145 | 52,770 | 5,429 | ||||||||||||||||||
| Operating income (loss) |
$ | (2,009 | ) | $ | 2,931 | $ | 2,483 | $ | 5,987 | $ | (45,274 | ) | $ | 1,916 | ||||||||||
| Adjusted EBITDA |
$ | (1,732 | ) | $ | 3,009 | $ | 2,579 | $ | 6,097 | $ | 1,809 | $ | 2,218 | |||||||||||
| Games |
||||||||||||||||||||||||
| Net revenue |
$ | 28,145 | $ | 30,236 | $ | 30,736 | $ | 29,491 | $ | 29,774 | $ | 32,823 | ||||||||||||
| Cost of revenue |
7,228 | 7,703 | 8,254 | 7,598 | 8,662 | 8,348 | ||||||||||||||||||
| Gross profit |
20,917 | 22,533 | 22,482 | 21,893 | 21,112 | 24,475 | ||||||||||||||||||
| Gross margin |
74 | % | 75 | % | 73 | % | 74 | % | 71 | % | 75 | % | ||||||||||||
| Operating expenses: |
20,832 | 22,771 | 23,392 | 21,604 | 61,884 | 21,028 | ||||||||||||||||||
| Operating income (loss) |
$ | 85 | $ | (238 | ) | $ | (910 | ) | $ | 289 | $ | (40,772 | ) | $ | 3,447 | |||||||||
| Adjusted EBITDA |
$ | 1,948 | $ | 1,685 | $ | 1,063 | $ | 1,187 | $ | 1,282 | $ | 4,240 | ||||||||||||
| Music |
||||||||||||||||||||||||
| Net revenue |
$ | — | $ | 35,733 | $ | 37,598 | $ | 38,765 | $ | 40,452 | $ | 44,053 | ||||||||||||
| Cost of revenue |
— | 21,864 | 22,614 | 23,655 | 24,868 | 27,185 | ||||||||||||||||||
| Gross profit |
— | 13,869 | 14,984 | 15,110 | 15,584 | 16,868 | ||||||||||||||||||
| Gross margin |
N/A | 39 | % | 40 | % | 39 | % | 39 | % | 38 | % | |||||||||||||
| Operating expenses: |
— | 13,911 | 25,484 | 20,776 | 58,911 | 23,914 | ||||||||||||||||||
| Operating income (loss) |
$ | — | $ | (42 | ) | $ | (10,500 | ) | $ | (5,666 | ) | $ | (43,327 | ) | $ | (7,046 | ) | |||||||
| Adjusted EBITDA |
$ | — | $ | 4,214 | $ | 4,388 | $ | 4,896 | $ | 3,850 | $ | 4,460 | ||||||||||||
| Corporate |
||||||||||||||||||||||||
| Net revenue |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
| Cost of revenue |
432 | 389 | 522 | 480 | 513 | 785 | ||||||||||||||||||
| Gross profit |
(432 | ) | (389 | ) | (522 | ) | (480 | ) | (513 | ) | (785 | ) | ||||||||||||
| Gross margin |
N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||
| Operating expenses: |
30,487 | 26,302 | 32,358 | 19,271 | 26,729 | 30,296 | ||||||||||||||||||
| Operating income (loss) |
$ | (30,919 | ) | $ | (26,691 | ) | $ | (32,880 | ) | $ | (19,751 | ) | $ | (27,242 | ) | $ | (31,081 | ) | ||||||
| Adjusted EBITDA |
$ | (14,287 | ) | $ | (15,982 | ) | $ | (23,837 | ) | $ | (13,855 | ) | $ | (20,832 | ) | $ | (22,991 | ) | ||||||
| Total |
||||||||||||||||||||||||
| Net revenue |
$ | 88,884 | $ | 128,600 | $ | 145,502 | $ | 140,264 | $ | 135,725 | $ | 140,773 | ||||||||||||
| Cost of revenue |
29,149 | 49,159 | 56,821 | 53,686 | 55,614 | 56,021 | ||||||||||||||||||
| Gross profit |
59,735 | 79,441 | 88,681 | 86,578 | 80,111 | 84,752 | ||||||||||||||||||
| Gross margin |
67 | % | 62 | % | 61 | % | 62 | % | 59 | % | 60 | % | ||||||||||||
| Operating expenses: |
81,429 | 94,103 | 110,231 | 90,855 | 272,982 | 103,292 | ||||||||||||||||||
| Operating income (loss) |
$ | (21,694 | ) | $ | (14,662 | ) | $ | (21,550 | ) | $ | (4,277 | ) | $ | (192,871 | ) | $ | (18,540 | ) | ||||||
| Adjusted EBITDA |
$ | 604 | $ | 5,725 | $ | 8,525 | $ | 17,281 | $ | 4,415 | $ | 6,268 | ||||||||||||
RealNetworks, Inc. and Subsidiaries
Reconciliation of segment operating income (loss) to adjusted EBITDA by reporting segment
(Unaudited)
| 2010 | 2009 | |||||||||||||||||||||||
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Core Products | ||||||||||||||||||||||||
| Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment: |
|
|||||||||||||||||||||||
| Operating income (loss) |
$ | 11,149 | $ | 9,378 | $ | 20,257 | $ | 14,864 | $ | (36,256 | ) | $ | 14,224 | |||||||||||
| Acquisitions related intangible asset amortization |
1,106 | 1,121 | 1,424 | 1,436 | 1,270 | 1,345 | ||||||||||||||||||
| Depreciation and amortization |
2,420 | 2,300 | 2,651 | 2,656 | 2,761 | 2,772 | ||||||||||||||||||
| Impairment of goodwill |
— | — | — | — | 50,531 | — | ||||||||||||||||||
| Adjusted EBITDA |
$ | 14,675 | $ | 12,799 | $ | 24,332 | $ | 18,956 | $ | 18,306 | $ | 18,341 | ||||||||||||
| Emerging Products | ||||||||||||||||||||||||
| Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment: |
|
|||||||||||||||||||||||
| Operating income (loss) |
$ | (2,009 | ) | $ | 2,931 | $ | 2,483 | $ | 5,987 | $ | (45,274 | ) | $ | 1,916 | ||||||||||
| Acquisitions related intangible asset amortization |
— | — | — | — | — | — | ||||||||||||||||||
| Depreciation and amortization |
277 | 78 | 96 | 110 | 307 | 302 | ||||||||||||||||||
| Impairment of goodwill |
— | — | — | — | 46,776 | — | ||||||||||||||||||
| Adjusted EBITDA |
$ | (1,732 | ) | $ | 3,009 | $ | 2,579 | $ | 6,097 | $ | 1,809 | $ | 2,218 | |||||||||||
| Games | ||||||||||||||||||||||||
| Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment: |
|
|||||||||||||||||||||||
| Operating income (loss) |
$ | 85 | $ | (238 | ) | $ | (910 | ) | $ | 289 | $ | (40,772 | ) | $ | 3,447 | |||||||||
| Acquisitions related intangible asset amortization |
61 | 60 | 95 | 69 | 100 | 144 | ||||||||||||||||||
| Depreciation and amortization |
1,802 | 1,863 | 1,878 | 829 | 707 | 649 | ||||||||||||||||||
| Impairment of goodwill |
— | — | — | — | 41,247 | — | ||||||||||||||||||
| Adjusted EBITDA |
$ | 1,948 | $ | 1,685 | $ | 1,063 | $ | 1,187 | $ | 1,282 | $ | 4,240 | ||||||||||||
| Music | ||||||||||||||||||||||||
| Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment: |
|
|||||||||||||||||||||||
| Operating income (loss) |
$ | — | $ | (42 | ) | $ | (10,500 | ) | $ | (5,666 | ) | $ | (43,327 | ) | $ | (7,046 | ) | |||||||
| Net income (loss) attributable to noncontrolling interest in Rhapsody |
— | 2,910 | 8,397 | 5,787 | 5,648 | 6,433 | ||||||||||||||||||
| Acquisitions related intangible asset amortization (A) |
— | 58 | 278 | 279 | 279 | 279 | ||||||||||||||||||
| Depreciation and amortization (A) |
— | 690 | 636 | 657 | 777 | 784 | ||||||||||||||||||
| Pro forma gain on sale of interest in Rhapsody America |
— | 598 | 5,577 | 3,839 | 3,444 | 4,010 | ||||||||||||||||||
| Impairment of goodwill |
— | — | — | — | 37,029 | — | ||||||||||||||||||
| Adjusted EBITDA |
$ | — | $ | 4,214 | $ | 4,388 | $ | 4,896 | $ | 3,850 | $ | 4,460 | ||||||||||||
| Corporate | ||||||||||||||||||||||||
| Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment: |
|
|||||||||||||||||||||||
| Operating income (loss) |
$ | (30,919 | ) | $ | (26,691 | ) | $ | (32,880 | ) | $ | (19,751 | ) | $ | (27,242 | ) | $ | (31,081 | ) | ||||||
| Other income (expense), net |
994 | 99 | (312 | ) | (888 | ) | (449 | ) | 855 | |||||||||||||||
| Depreciation and amortization |
993 | 1,074 | 1,094 | 1,180 | 1,263 | 1,219 | ||||||||||||||||||
| Restructuring and other charges |
4,792 | 5,615 | 2,346 | 877 | — | 794 | ||||||||||||||||||
| Stock-based compensation |
2,771 | 3,921 | 5,915 | 4,727 | 5,596 | 5,222 | ||||||||||||||||||
| Loss on excess office facilities |
7,082 | — | — | — | — | — | ||||||||||||||||||
| Impairment of goodwill |
— | — | — | — | — | — | ||||||||||||||||||
| Adjusted EBITDA |
$ | (14,287 | ) | $ | (15,982 | ) | $ | (23,837 | ) | $ | (13,855 | ) | $ | (20,832 | ) | $ | (22,991 | ) | ||||||
| Total | ||||||||||||||||||||||||
| Reconciliation of GAAP operating income (loss) to adjusted EBITDA: |
|
|||||||||||||||||||||||
| Operating income (loss) |
$ | (21,694 | ) | $ | (14,662 | ) | $ | (21,550 | ) | $ | (4,277 | ) | $ | (192,871 | ) | $ | (18,540 | ) | ||||||
| Net income (loss) attributable to noncontrolling interest in Rhapsody |
— | 2,910 | 8,397 | 5,787 | 5,648 | 6,433 | ||||||||||||||||||
| Other income (expense), net |
994 | 99 | (312 | ) | (888 | ) | (449 | ) | 855 | |||||||||||||||
| Acquisitions related intangible asset amortization (A) |
1,167 | 1,239 | 1,797 | 1,784 | 1,649 | 1,768 | ||||||||||||||||||
| Depreciation and amortization (A) |
5,492 | 6,005 | 6,355 | 5,432 | 5,815 | 5,726 | ||||||||||||||||||
| Impairment of goodwill |
— | — | — | — | 175,583 | — | ||||||||||||||||||
| Loss on excess office facilities |
7,082 | — | — | — | — | — | ||||||||||||||||||
| Pro forma gain on sale of interest in Rhapsody America |
— | 598 | 5,577 | 3,839 | 3,444 | 4,010 | ||||||||||||||||||
| Restructuring and other charges |
4,792 | 5,615 | 2,346 | 877 | — | 794 | ||||||||||||||||||
| Stock-based compensation |
2,771 | 3,921 | 5,915 | 4,727 | 5,596 | 5,222 | ||||||||||||||||||
| Adjusted EBITDA |
$ | 604 | $ | 5,725 | $ | 8,525 | $ | 17,281 | $ | 4,415 | $ | 6,268 | ||||||||||||
| (A) | Net of noncontrolling interest effect. |