GigaMedia Announces Second-Quarter 2015 Financial Results

Aug 05, 2015, 09:00 ET from GigaMedia Limited

TAIPEI, Aug. 5, 2015 /PRNewswire/ -- GigaMedia Limited (NASDAQ: GIGM) today announced its second-quarter 2015 unaudited financial results.

Message from Management

For the second quarter of 2015, the sales revenues were $2.7 million. The contribution made by the mobile games, the social casino games and the cloud computing business accounted for about 45.7%, 28.2% and 26.5% respectively.

The mobile gaming market is getting more competitive. Started from the second quarter of 2015, the Company began to scrutinize current performance of the mobile gaming business and try to integrate the resources of the operations in Taiwan and Hong Kong in order to streamline the business and then hopefully improve its margin by the end of this year.

In June 2015, the Company entered into partnership with World Mahjong Ltd. to organize the World Series of Mahjong 2015 and also became their exclusive online mahjong game provider; furthermore, will host the online qualifying tournaments of the World Series of Mahjong 2015 on "ClubOne" platform. "ClubOne", the Company's in-house developed social casino platform, is designed also to enable the land-based operators to consolidate resources for seizing more opportunities that navigate both online and offline markets. 

Besides, in the second quarter of 2015, the Company continued to dispose partial marketable securities and repaid the short-term borrowings for lowering its leverage ratio and meanwhile, increasing its cash position.

Management considers 2015 a turnaround year for the Company. In addition to current mobile gaming business to be streamlined and newly launched platform, management also pursues an acquisitive growth and expects it to bring in more business value to the Company and also support its future revenue growth.

Consolidated Financial Results

GigaMedia Limited is a diversified provider of online games and cloud computing services. GigaMedia's online games business FunTown develops and operates a suite of games in Taiwan and Hong Kong, with focus on browser/mobile games and social casino games. GigaMedia's cloud computing business GigaCloud was launched in early April 2013 and is focused on providing small and medium-sized enterprises in Greater China with critical communications services and IT solutions that increase flexibility, efficiency and competitiveness.

Unaudited consolidated results of GigaMedia are summarized in the table below.

For the Second Quarter

GIGAMEDIA 2Q15UNAUDITED CONSOLIDATED FINANCIAL RESULTS

(unaudited, all figures in US$ thousands, except per share amounts)

2Q15

1Q15

Change (%)

2Q15

2Q14

Change (%)

Revenues

2,728

3,162

-13.7%

2,728

2,471

10.4%

Gross Profit

217

738

-70.6%

217

819

-73.5%

Loss from Operations

-3,801

-3,416

-11.3%

-3,801

-2,945

-29.1%

Net Income (Loss) Attributable to GigaMedia

1,377

5,239

-73.7%

1,377

-2,677

151.4%

Net Income (Loss) Per Share Attributable to GigaMedia, Diluted

0.02

0.09

-77.8%

0.02

-0.05

140.0%

EBITDA (A) 

1,463

5,335

-72.6%

1,463

-2,448

159.8%

Cash and Marketable Securities-Current

68,305

75,575

-9.6%

68,305

63,009

8.4%

(A) EBITDA (earnings before interest, taxes, depreciation, and amortization) is provided as a supplement to results provided in accordance with U.S. generally accepted accounting principles ("GAAP"). (See, "Use of Non-GAAP Measures," for more details.)

Second-Quarter Financial Results

  • Consolidated revenues were $2.7 million, dropped by 13.7% quarter-on-quarter mainly due to the decrease of the new game releases, but increased by 10.4% quarter-over-quarter due to the growth of the cloud computing business.
  • Consolidated operating expenses were $4.0 million in 2Q15, down by 3.3% quarter-on-quarter due to an slight decrease on selling and marketing expenses, but increased by 6.7% from $3.8 million quarter-over-quarter, resulting from an increase of selling and marketing expenses for the new games.
  • Consolidated non-operating income was $5.1 million attributable to the capital gain on disposal of marketable securities-current.
  • Net income was $1.4 million, up by 151.4% quarter-over-quarter mainly attributable to the gain on sales of marketable securities.
  • Cash and marketable securities-current in 2Q15 accounted for $68.3 million, decreased by 9.6% from $75.6 million in 1Q15 resulting from a disposal of marketable securities-current and the repayment of short-term borrowings.
  • Investments were $6.7 million in 2Q2015, increased approximately $1.0 million quarter-on-quarter, resulting from an investment in SportsPlus Inc. ( www.sportsplus.me ), a new app for daily fantasy sports and newly launched in the second quarter this year. Investments were decreased from $25.5 million in 2Q2014 to $6.7 million in 2Q2015 mainly due to a disposal of securities investment in April 2015.

Financial Position

GigaMedia maintained its solid financial position with cash and cash equivalents, marketable securities-current and restricted cash accounted for $69.3 million as of June 30, 2015, or approximately $1.25 per share.

Business Outlook

The following forward-looking statements reflect GigaMedia's expectations as of August 5, 2015. Given potential changes in economic conditions and consumer spending, the evolving nature of online games, and various other risk factors, including those discussed in the Company's 2014 Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission as referenced below, actual results may differ materially.

In the third quarter of 2015, the Company will continue to attend the gaming events in order to promote the co-developed new games and attract overseas publishers to license them in various countries. Meanwhile, for mobile gaming operation, the Company currently seeks for cooperation with overseas online platforms in order to better the monetization of the games.

With regard to social casino game platform, the Company continues the cooperation talk with overseas operators in order to license "ClubOne" not only in China but also in South East Asia by the end of 2015.

As for cloud computing business, the Company will continue to provide customized and integrated services to the corporate customers. Management also expects it to improve its margin while the sales revenues are increasing.

Use of Non-GAAP Measures

To supplement GigaMedia's consolidated financial statements presented in accordance with US GAAP, the company uses the following measure defined as non-GAAP by the SEC: EBITDA. Management believes that EBITDA (earnings before interest, taxes, depreciation, and amortization) is a useful supplemental measure of performance because it excludes certain non-cash items such as depreciation and amortization and that EBITDA is a measure of performance used by some investors, equity analysts and others to make informed investment decisions. EBITDA is not a recognized earnings measure under GAAP and does not have a standardized meaning. Non-GAAP measures such as EBITDA should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, other financial measures prepared in accordance with GAAP. A limitation of using EBITDA is that it does not include all items that impact the company's net income for the period. Reconciliations to the GAAP equivalents of the non-GAAP financial measures are provided on the attached unaudited financial statements.

About the Numbers in This Release

Quarterly results

All quarterly results referred to in the text, tables and attachments to this release are unaudited. The financial statements from which the financial results reported in this press release are derived have been prepared in accordance with U.S. GAAP, unless otherwise noted as "non-GAAP," and are presented in U.S. dollars.

Webcast Schedule

For Q&A regarding the second quarter 2015 performance upon the release, investors may send the questions via email to IR@gigamedia.com.tw by August 10th, and the responses will be replied in the webcast. Webcast will be available on the company's official website www.gigamedia.com on August 14th.

About GigaMedia

Headquartered in Taipei, Taiwan, GigaMedia Limited (Singapore registration number: 199905474H) is a diversified provider of online games and cloud computing services. GigaMedia's online games business develops and operates a suite of games in Taiwan and Hong Kong, with focus on browser/mobile games and social casino games. The company's cloud computing business is focused on providing SMEs in Greater China with critical communications services and IT solutions that increase flexibility, efficiency and competitiveness. More information on GigaMedia can be obtained from www.gigamedia.com.

The statements included above and elsewhere in this press release that are not historical in nature are "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding expected financial performance (as described without limitation in the "Business Outlook" section and in quotations from management in this press release) and GigaMedia's strategic and operational plans. These statements are based on management's current expectations and are subject to risks and uncertainties and changes in circumstances. There are important factors that could cause actual results to differ materially from those anticipated in the forward looking statements, including but not limited to, our ability to license, develop or acquire additional online games that are appealing to users, our ability to retain existing online game players and attract new players, and our ability to launch online games in a timely manner and pursuant to our anticipated schedule. Further information on risks or other factors that could cause results to differ is detailed in GigaMedia's Annual Report on Form 20-F filed in April 2013 and its other filings with the United States Securities and Exchange Commission.

For further information contact: Amanda Chang Investor Relations Department +886-2-2656-8080 amanda.chang@gigamedia.com.tw

(Tables to follow)

GIGAMEDIA LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended

6/30/2015

3/31/2015

6/30/2014

unaudited

unaudited

unaudited

USD

USD

USD

Operating revenues

Asian online game and service revenues

2,014,922

2,718,393

2,180,171

Other revenues

712,646

443,692

290,627

2,727,568

3,162,085

2,470,798

Operating costs

Cost of Asian online game and service revenues

1,777,811

1,966,164

1,291,889

Cost of other revenues

732,775

457,520

360,349

2,510,586

2,423,684

1,652,238

Gross profit

216,982

738,401

818,560

Operating expenses

Product development and engineering expenses 

164,085

181,708

227,509

Selling and marketing expenses 

2,262,207

2,687,116

1,677,455

General and administrative expenses 

1,265,399

1,285,835

1,858,949

Other

326,594

0

0

4,018,285

4,154,659

3,763,913

Loss from operations

(3,801,303)

(3,416,258)

(2,945,353)

Non-operating income (expense)

Interest income

106,324

102,529

174,559

Gain on sales of marketable securities

4,703,500

9,473,063

162,051

Interest expense

(48,224)

(82,113)

(68,399)

Foreign exchange (loss) gain - net

(17,655)

(16,242)

115,438

Equity in net earnings (loss) on equity method investments

22,954

40,100

(244,775)

Changes in the fair value of an instrument recognized at fair value

879,472

(951,660)

0

Other

(508,926)

18,373

18,402

5,137,445

8,584,050

157,276

Income (loss) from continuing operations before income taxes

1,336,142

5,167,792

(2,788,077)

Income tax benefit 

170

13,351

60,849

Income (loss) from continuing operations

1,336,312

5,181,143

(2,727,228)

Net income (loss)

1,336,312

5,181,143

(2,727,228)

Less: Net loss attributable to noncontrolling interest

40,525

58,130

50,537

Net income (loss) attributable to shareholders of GigaMedia

1,376,837

5,239,273

(2,676,691)

(Loss) earnings per share attributable to GigaMedia

Basic:

Income (loss) from continuing operations

0.02

0.09

(0.05)

Loss from discontinued operations

0.00

0.00

0.00

0.02

0.09

(0.05)

Diluted:

Income (loss) from continuing operations

0.02

0.09

(0.05)

Loss from discontinued operations

0.00

0.00

0.00

0.02

0.09

(0.05)

Weighted average shares outstanding:

Basic

55,261,661

55,261,661

53,901,371

Diluted

55,262,036

55,261,926

53,901,371

 

 

GIGAMEDIA LIMITED

CONSOLIDATED BALANCE SHEETS

6/30/2015

3/31/2015

6/30/2014

unaudited

unaudited

unaudited

USD

USD

USD

Assets

Current assets

Cash and cash equivalents

68,299,828

53,856,429

40,660,576

Marketable securities - current

5,307

21,718,274

22,348,693

Accounts receivable - net

1,675,561

2,031,966

1,352,875

Prepaid expenses

1,019,249

671,116

648,190

Restricted cash

1,000,000

9,034,062

8,924,513

Other receivables

186,994

3,105,223

273,032

Other current assets

273,500

490,835

143,465

Total current assets

72,460,439

90,907,905

74,351,344

Marketable securities - noncurrent

4,744,000

4,744,000

9,214,270

Investments

6,740,252

5,724,346

25,476,917

Property, plant & equipment - net

1,675,312

1,719,799

1,695,953

Intangible assets - net

206,780

263,811

884,979

Prepaid licensing and royalty fees

5,026,779

5,144,947

4,843,848

Other assets

369,685

356,274

329,422

Total assets

91,223,247

108,861,082

116,796,733

Liabilities and equity

Short-term borrowings

4,536,617

19,808,307

19,755,567

Accounts payable

557,599

652,708

332,166

Accrued compensation

464,384

363,480

785,562

Accrued expenses

3,739,583

3,439,764

2,717,972

Unearned revenue            

1,673,170

1,947,176

2,289,599

Other current liabilities

1,800,582

1,985,012

3,810,015

Total current liabilities

12,771,935

28,196,447

29,690,881

Other liabilities

1,933,173

1,935,620

182,150

Total liabilities

14,705,108

30,132,067

29,873,031

GigaMedia's shareholders' equity

76,607,057

78,776,989

86,825,311

Noncontrolling interest

(88,918)

(47,974)

98,391

Total equity

76,518,139

78,729,015

86,923,702

Total liabilities and equity

91,223,247

108,861,082

116,796,733

 

 

GIGAMEDIA LIMITED

Reconciliations of Non-GAAP Results of Operations

Three months ended

6/30/2015

3/31/2015

6/30/2014

unaudited

unaudited

unaudited

USD

USD

USD

Reconciliation of Net Income (Loss) to EBITDA

Net income (loss) attributable to GigaMedia

1,376,837

5,239,273

(2,676,691)

Depreciation

80,296

74,212

75,599

Amortization 

64,129

55,316

319,683

Interest income

(106,302)

(102,529)

(174,362)

Interest expense

47,975

82,102

68,399

Income tax (benefit) expense

(170)

(13,351)

(60,849)

EBITDA

1,462,765

5,335,023

(2,448,221)

 

SOURCE GigaMedia Limited



RELATED LINKS

http://www.gigamedia.com