RealNetworks Announces Second Quarter 2020 Financial Results
SEATTLE, Aug. 5, 2020 /PRNewswire/ -- RealNetworks, Inc. (Nasdaq: RNWK), a leader in digital media software and services, today announced its financial results for the second quarter ended June 30, 2020.
- Consolidated revenue of $40.4 million; core revenue without Napster of $17.1 million, up 9% year-over-year
- Games revenue up 23% year-over-year and 12% quarter-over-quarter driven by success of free-to-play strategy
- Introduced two innovative new AI-powered consumer PC software products: RealPlayer® 20/20 and StarSearch™ by Real®
- SAFR was awarded two Phase II Small Business Innovation Research (SBIR) contracts with the United States Air Force worth $1.9 million
- The RealNetworks Foundation committed $1 million in 2020 grants to help address racial injustice and the COVID-19 Pandemic
- Appointed Mike Ensing President and Chief Operating Officer, succeeding Max Pellegrini
Management Commentary
"In Q2 Real delivered solid results. We were very pleased with our strong operational execution in the first full quarter of living and working during the global pandemic," said Rob Glaser, Founder, Chairman, and Chief Executive Officer of RealNetworks. "We generated a 9% year-over-year increase in our core revenue when not including Napster. In addition, we narrowed our adjusted EBITDA loss, our fourth consecutive quarter of year-over-year improvement in this metric. We are putting an appropriate amount of fuel into our growth businesses while also closely managing our overall expenses."
Mr. Glaser continued, "We were excited to introduce two new consumer products in commemoration of the 25th anniversary of the streaming industry. RealPlayer® 20/20 and StarSearch™ by Real® utilize the power of AI and our SAFR computer vision platform to make streaming in today's world even better. In addition, we are continuing to enhance our world-class SAFR platform and service focused primarily on the traditional security and safety markets along with innovations focused on new needs at the intersection of public health and public safety. In particular, we were honored to be awarded two SBIR contracts by the U.S. Air Force. These contracts both enable us to continue to enhance the SAFR platform and also support the important missions of our U.S. armed forces while enhancing their safety."
Second Quarter 2020 Financial Highlights
- Revenue was $40.4 million compared to $43.1 million in the prior quarter and $44.2 million in the prior year period. RealNetworks' core revenue without Napster was $17.1 million, up 2% from $16.8 million in the prior quarter and up 9% from $15.7 million in the prior year period.
- Games revenue was $7.5 million, up 12% compared to $6.6 million in the prior quarter and up 23% compared to $6.0 million in the prior year period.
- Gross profit margin was 43%, down from 44% in the prior quarter and up from 38% in the prior year period. RealNetworks' core gross profit margin without Napster was 75%, down from 76% in the prior quarter and up from 73% in the prior year period.
- Operating expenses decreased $1.8 million, or 7%, from the prior quarter and decreased $4.1 million, or 15%, from the prior year period.
- Net loss attributable to RealNetworks was $(5.1) million, or $(0.13) per diluted share, compared to a net loss of $(4.6) million, or $(0.12) per diluted share, in the prior quarter and a net loss of $(9.2) million, or $(0.24) per diluted share, in the prior year period.
- Adjusted EBITDA was a loss of $(2.2) million compared to a loss of $(3.3) million in the prior quarter and a loss of $(6.3) million in the prior year period.
- At June 30, 2020, the Company had $19.7 million in unrestricted cash and cash equivalents compared to $19.0 million at March 31, 2020.
Corporate Developments
- On June 1, 2020, the Company received a second letter from Nasdaq Staff indicating that the Company had regained compliance with Nasdaq Listing Rule 5450(a)(1). Nasdaq Staff further indicated that the matter is now closed.
- On July 9, 2020, The RealNetworks Foundation, a philanthropic arm of RealNetworks, Inc., allocated an additional $1 million in grants for 2020 to help address the immediate needs stemming from racial injustice and COVID-19, two historic challenges that have disproportionally impacted communities of color. The RealNetworks Foundation has directed $500,000 to each cause, applying the funds to both local and national recipients. More information on the RealNetworks Foundation can be found at https://www.realnetworks.com/realnetworks-foundation.
- On August 4, 2020, the Company announced the appointment of Mike Ensing to the position of President and Chief Operating Officer, succeeding Max Pellegrini. Mr. Ensing previously served as interim CFO and as a strategic advisor to the Company from early January to early May of this year. Mr. Ensing will assume worldwide responsibility for the operations of Real's core businesses and will help guide strategic decision-making.
Business Outlook
Given the ongoing uncertainty surrounding the global economy and the future impact of COVID-19, RealNetworks is not providing guidance for the third quarter ending September 30, 2020.
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 1-855-327-6837 (United States) or 1-631-891-4304 (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 26, 2020, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (International) and entering the replay pin number: 10010362.
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 legacy 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. SAFR (www.safr.com) is the world's premier facial recognition platform for live video. Leading in real-world performance and accuracy as evidenced in testing by NIST, SAFR enables new applications for security, convenience, and analytics. For information about our other products, visit www.realnetworks.com.
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) including noncontrolling interests 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, use of loan proceeds, our ability to maintain compliance with Nasdaq listing standards, and the growth and future prospects relating to our Napster segment. 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; fluctuations in foreign currencies; and unique risk factors that relate to our Napster segment, such as risks stemming from its streaming music service and related music royalties. More information about potential risk factors that could affect our business and financial results is included in RealNetworks' annual report on Form 10-K for the most recent 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
[email protected]
RNWK-F
RealNetworks, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) | |||||||||||||||
Quarter Ended | Six Months Ended | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
(in thousands, except per share data) | |||||||||||||||
Net revenue | $ | 40,424 | $ | 44,248 | $ | 83,569 | $ | 83,720 | |||||||
Cost of revenue | 23,033 | 27,282 | 47,209 | 52,152 | |||||||||||
Gross profit | 17,391 | 16,966 | 36,360 | 31,568 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 7,802 | 8,876 | 16,420 | 17,709 | |||||||||||
Sales and marketing | 6,927 | 8,360 | 15,044 | 16,502 | |||||||||||
General and administrative | 6,680 | 8,392 | 13,793 | 16,756 | |||||||||||
Restructuring and other charges | 881 | 729 | 1,090 | 896 | |||||||||||
Total operating expenses | 22,290 | 26,357 | 46,347 | 51,863 | |||||||||||
Operating loss | (4,899) | (9,391) | (9,987) | (20,295) | |||||||||||
Other income (expenses): | |||||||||||||||
Interest expense | (278) | (43) | (540) | (209) | |||||||||||
Interest income | 23 | 40 | 28 | 117 | |||||||||||
Gain (loss) on equity investments, net | (53) | — | (53) | 12,338 | |||||||||||
Other income (expenses), net | (134) | 183 | 661 | 310 | |||||||||||
Total other income (expenses), net | (442) | 180 | 96 | 12,556 | |||||||||||
Income (loss) before income taxes | (5,341) | (9,211) | (9,891) | (7,739) | |||||||||||
Income tax expense | 213 | 244 | 352 | 502 | |||||||||||
Net income (loss) including noncontrolling interests | (5,554) | (9,455) | (10,243) | (8,241) | |||||||||||
Net income (loss) attributable to noncontrolling interests | (442) | (253) | (489) | (572) | |||||||||||
Net income (loss) attributable to RealNetworks | $ | (5,112) | $ | (9,202) | $ | (9,754) | $ | (7,669) | |||||||
Net income (loss) per share attributable to RealNetworks- Basic: | $ | (0.13) | $ | (0.24) | $ | (0.26) | $ | (0.20) | |||||||
Net income (loss) per share attributable to RealNetworks- Diluted: | $ | (0.13) | $ | (0.24) | $ | (0.26) | $ | (0.20) | |||||||
Shares used to compute basic net income (loss) per share | 38,243 | 37,948 | 38,236 | 37,885 | |||||||||||
Shares used to compute diluted net income (loss) per share | 38,243 | 37,948 | 38,236 | 37,885 | |||||||||||
RealNetworks, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) | |||||||
June 30, | December 31, | ||||||
(in thousands) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 19,688 | $ | 16,805 | |||
Trade accounts receivable, net | 28,289 | 29,507 | |||||
Deferred costs, current portion | 743 | 823 | |||||
Prepaid expenses and other current assets | 5,688 | 7,445 | |||||
Total current assets | 54,408 | 54,580 | |||||
Equipment and software | 30,862 | 32,167 | |||||
Leasehold improvements | 2,916 | 3,311 | |||||
Total equipment, software, and leasehold improvements | 33,778 | 35,478 | |||||
Less accumulated depreciation and amortization | 31,297 | 32,657 | |||||
Net equipment, software, and leasehold improvements | 2,481 | 2,821 | |||||
Operating lease assets | 10,058 | 11,592 | |||||
Restricted cash equivalents | 5,374 | 5,374 | |||||
Other assets | 992 | 1,891 | |||||
Deferred costs, non-current portion | 1,004 | 1,021 | |||||
Deferred tax assets, net | 756 | 761 | |||||
Other intangible assets, net | 16,931 | 19,286 | |||||
Goodwill | 62,336 | 62,428 | |||||
Total assets | $ | 154,340 | $ | 159,754 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 4,125 | $ | 4,927 | |||
Accrued royalties, fulfillment and other current liabilities | 75,865 | 77,303 | |||||
Deferred revenue, current portion | 6,181 | 6,620 | |||||
Notes payable | 4,495 | 7,331 | |||||
Total current liabilities | 90,666 | 96,181 | |||||
Deferred revenue, non-current portion | 396 | 96 | |||||
Deferred tax liabilities, net | 1,122 | 1,172 | |||||
Long-term lease liabilities | 7,088 | 8,466 | |||||
Long-term debt | 8,495 | 3,900 | |||||
Other long-term liabilities | 8,232 | 11,666 | |||||
Total liabilities | 115,999 | 121,481 | |||||
Total shareholders' equity | 39,332 | 38,775 | |||||
Noncontrolling interests | (991) | (502) | |||||
Total equity | 38,341 | 38,273 | |||||
Total liabilities and equity | $ | 154,340 | $ | 159,754 | |||
RealNetworks, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||||
Six Months Ended | |||||||
2020 | 2019 | ||||||
(in thousands) | |||||||
Cash flows from operating activities: | |||||||
Net income (loss) including noncontrolling interests | $ | (10,243) | $ | (8,241) | |||
Adjustments to reconcile net income (loss) including noncontrolling interests to net cash used in operating activities: | |||||||
Depreciation and amortization | 2,832 | 2,959 | |||||
Stock-based compensation | 703 | 1,917 | |||||
(Gain) loss on equity investments, net | 53 | (12,338) | |||||
Foreign currency (gain) loss | (612) | (315) | |||||
Fair value adjustments to contingent consideration liability | (200) | 300 | |||||
Net change in certain operating assets and liabilities | (1,110) | (381) | |||||
Net cash used in operating activities | (8,577) | (16,099) | |||||
Cash flows from investing activities: | |||||||
Purchases of equipment, software, and leasehold improvements | (326) | (873) | |||||
Proceeds from sales and maturities of short-term investments | — | 24 | |||||
Acquisition, net of cash acquired | — | 12,260 | |||||
Net cash (used in) provided by investing activities | (326) | 11,411 | |||||
Cash flows from financing activities: | |||||||
Proceeds from issuance of common stock (stock options and stock purchase plan) | — | 144 | |||||
Proceeds from issuance of preferred stock | 10,000 | — | |||||
Tax payments from shares withheld upon vesting of restricted stock | (5) | (287) | |||||
Proceeds from notes payable and long-term debt | 18,776 | 19,760 | |||||
Repayments of notes payable and long-term debt | (16,889) | (24,018) | |||||
Other financing activities | — | 450 | |||||
Net cash provided by (used in) financing activities | 11,882 | (3,951) | |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (96) | (89) | |||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 2,883 | (8,728) | |||||
Cash, cash equivalents and restricted cash, beginning of period | 22,179 | 37,191 | |||||
Cash, cash equivalents and restricted cash, end of period | $ | 25,062 | $ | 28,463 | |||
RealNetworks, Inc. and Subsidiaries Supplemental Financial Information (Unaudited) | |||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||
Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Net Revenue by Segment | |||||||||||||||||||||||
Consumer Media (A) | $ | 3,159 | $ | 3,495 | $ | 4,432 | $ | 3,632 | $ | 2,620 | $ | 2,486 | |||||||||||
Mobile Services (B) | 6,461 | 6,690 | 6,312 | 6,895 | 6,997 | 6,939 | |||||||||||||||||
Games (C) | 7,465 | 6,637 | 6,567 | 7,164 | 6,048 | 5,710 | |||||||||||||||||
Napster (D) | 23,339 | 26,323 | 26,089 | 27,302 | 28,583 | 24,337 | |||||||||||||||||
Total net revenue | $ | 40,424 | $ | 43,145 | $ | 43,400 | $ | 44,993 | $ | 44,248 | $ | 39,472 | |||||||||||
Net Revenue by Product | |||||||||||||||||||||||
Consumer Media | |||||||||||||||||||||||
- Software License (E) | $ | 1,702 | $ | 2,020 | $ | 2,856 | $ | 1,987 | $ | 944 | $ | 735 | |||||||||||
- Subscription Services (F) | 898 | 929 | 992 | 1,028 | 1,040 | 1,088 | |||||||||||||||||
- Product Sales (G) | 261 | 222 | 193 | 207 | 206 | 219 | |||||||||||||||||
- Advertising & Other (H) | 298 | 324 | 391 | 410 | 430 | 444 | |||||||||||||||||
Mobile Services | |||||||||||||||||||||||
- Software License (I) | 972 | 831 | 657 | 888 | 957 | 599 | |||||||||||||||||
- Subscription Services (J) | 5,489 | 5,859 | 5,655 | 6,007 | 6,040 | 6,340 | |||||||||||||||||
Games | |||||||||||||||||||||||
- Subscription Services (K) | 2,730 | 2,770 | 3,007 | 3,056 | 3,073 | 2,985 | |||||||||||||||||
- Product Sales (L) | 3,712 | 2,978 | 2,580 | 3,078 | 2,177 | 1,988 | |||||||||||||||||
- Advertising & Other (M) | 1,023 | 889 | 980 | 1,030 | 798 | 737 | |||||||||||||||||
Napster | |||||||||||||||||||||||
- Subscription Services (N) | 23,339 | 26,323 | 26,089 | 27,302 | 28,583 | 24,337 | |||||||||||||||||
Total net revenue | $ | 40,424 | $ | 43,145 | $ | 43,400 | $ | 44,993 | $ | 44,248 | $ | 39,472 | |||||||||||
Net Revenue by Geography | |||||||||||||||||||||||
United States | $ | 20,785 | $ | 22,420 | $ | 21,053 | $ | 22,015 | $ | 21,322 | $ | 18,970 | |||||||||||
Rest of world | 19,639 | 20,725 | 22,347 | 22,978 | 22,926 | 20,502 | |||||||||||||||||
Total net revenue | $ | 40,424 | $ | 43,145 | $ | 43,400 | $ | 44,993 | $ | 44,248 | $ | 39,472 | |||||||||||
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. | |||||||||||||||||||||||
(D) The Napster segment primarily includes revenue from subscription music offerings from on-demand streaming services and conditional downloads. Napster revenues are included in our consolidated results from the January 18, 2019 acquisition date forward. | |||||||||||||||||||||||
Net Revenue by Product | |||||||||||||||||||||||
(E) Software licensing revenue within Consumer Media includes revenues from licenses of our video codec technologies. | |||||||||||||||||||||||
(F) Subscriptions revenue within Consumer Media includes revenue from subscriptions such as our RealPlayer Plus and SuperPass offerings. | |||||||||||||||||||||||
(G) Product sales within Consumer Media includes sales of RealPlayer Plus software to consumers. | |||||||||||||||||||||||
(H) Advertising & other revenue within Consumer Media includes distribution of third-party software products and advertising on RealPlayer websites. | |||||||||||||||||||||||
(I) Software license revenue within Mobile Services includes revenue from our integrated RealTimes platform and our facial recognition platform, SAFR. | |||||||||||||||||||||||
(J) 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. | |||||||||||||||||||||||
(K) Subscription services revenue within Games includes revenue from online games subscriptions. | |||||||||||||||||||||||
(L) 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. | |||||||||||||||||||||||
(M) Advertising & other revenue within Games includes advertising on games sites and social network sites. | |||||||||||||||||||||||
(N) Subscription services revenue within Napster includes music tracks by way of on-demand streaming and conditional downloads offered directly to end consumers and distribution partners. | |||||||||||||||||||||||
RealNetworks, Inc. and Subsidiaries Segment Results of Operations and Reconciliation to non-GAAP Contribution Margin (Unaudited) | |||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||
Q2 | Q1 | Q2 | YTD | YTD | |||||||||||||||
(in thousands) | |||||||||||||||||||
Consumer Media | |||||||||||||||||||
Net revenue | $ | 3,159 | $ | 3,495 | $ | 2,620 | $ | 6,654 | $ | 5,106 | |||||||||
Cost of revenue | 519 | 611 | 803 | 1,130 | 1,636 | ||||||||||||||
Gross profit | 2,640 | 2,884 | 1,817 | 5,524 | 3,470 | ||||||||||||||
Gross margin | 84 | % | 83 | % | 69 | % | 83 | % | 68 | % | |||||||||
Operating expenses | 2,204 | 2,458 | 2,877 | 4,662 | 5,996 | ||||||||||||||
Operating income (loss), a GAAP measure | $ | 436 | $ | 426 | $ | (1,060) | $ | 862 | $ | (2,526) | |||||||||
Depreciation and amortization | 15 | 13 | 56 | 28 | 110 | ||||||||||||||
Contribution margin, a non-GAAP measure | $ | 451 | $ | 439 | $ | (1,004) | $ | 890 | $ | (2,416) | |||||||||
Mobile Services | |||||||||||||||||||
Net revenue | $ | 6,461 | $ | 6,690 | $ | 6,997 | $ | 13,151 | $ | 13,936 | |||||||||
Cost of revenue | 1,782 | 1,696 | 1,865 | 3,478 | 3,913 | ||||||||||||||
Gross profit | 4,679 | 4,994 | 5,132 | 9,673 | 10,023 | ||||||||||||||
Gross margin | 72 | % | 75 | % | 73 | % | 74 | % | 72 | % | |||||||||
Operating expenses | 5,682 | 7,588 | 7,438 | 13,270 | 14,999 | ||||||||||||||
Operating income (loss), a GAAP measure | $ | (1,003) | $ | (2,594) | $ | (2,306) | $ | (3,597) | $ | (4,976) | |||||||||
Depreciation and amortization | 102 | 98 | 106 | 200 | 337 | ||||||||||||||
Contribution margin, a non-GAAP measure | $ | (901) | $ | (2,496) | $ | (2,200) | $ | (3,397) | $ | (4,639) | |||||||||
Games | |||||||||||||||||||
Net revenue | $ | 7,465 | $ | 6,637 | $ | 6,048 | $ | 14,102 | $ | 11,758 | |||||||||
Cost of revenue | 1,958 | 1,794 | 1,655 | 3,752 | 3,325 | ||||||||||||||
Gross profit | 5,507 | 4,843 | 4,393 | 10,350 | 8,433 | ||||||||||||||
Gross margin | 74 | % | 73 | % | 73 | % | 73 | % | 72 | % | |||||||||
Operating expenses | 4,976 | 4,923 | 5,288 | 9,899 | 10,325 | ||||||||||||||
Operating income (loss), a GAAP measure | $ | 531 | $ | (80) | $ | (895) | $ | 451 | $ | (1,892) | |||||||||
Acquisitions related intangible asset amortization | — | — | — | — | 23 | ||||||||||||||
Depreciation and amortization | 66 | 138 | 84 | 204 | 167 | ||||||||||||||
Contribution margin, a non-GAAP measure | $ | 597 | $ | 58 | $ | (811) | $ | 655 | $ | (1,702) | |||||||||
Napster | |||||||||||||||||||
Net revenue | $ | 23,339 | $ | 26,323 | $ | 28,583 | $ | 49,662 | $ | 52,920 | |||||||||
Cost of revenue | 18,770 | 20,072 | 23,026 | 38,842 | 43,422 | ||||||||||||||
Gross profit | 4,569 | 6,251 | 5,557 | 10,820 | 9,498 | ||||||||||||||
Gross margin | 20 | % | 24 | % | 19 | % | 22 | % | 18 | % | |||||||||
Operating expenses | 6,609 | 6,461 | 6,638 | 13,070 | 12,170 | ||||||||||||||
Operating income (loss), a GAAP measure | $ | (2,040) | $ | (210) | $ | (1,081) | $ | (2,250) | $ | (2,672) | |||||||||
Acquisitions related intangible asset amortization | 1,124 | 1,125 | 1,129 | 2,249 | 2,072 | ||||||||||||||
Depreciation and amortization | 59 | 32 | 69 | 91 | 184 | ||||||||||||||
Restructuring and other charges | 177 | 122 | — | 299 | — | ||||||||||||||
Contribution margin, a non-GAAP measure | $ | (680) | $ | 1,069 | $ | 117 | $ | 389 | $ | (416) | |||||||||
Corporate | |||||||||||||||||||
Cost of revenue | $ | 4 | $ | 3 | $ | (67) | $ | 7 | $ | (144) | |||||||||
Gross profit | (4) | (3) | 67 | (7) | 144 | ||||||||||||||
Gross margin | N/A | N/A | N/A | N/A | N/A | ||||||||||||||
Operating expenses | 2,819 | 2,627 | 4,116 | 5,446 | 8,373 | ||||||||||||||
Operating income (loss), a GAAP measure | $ | (2,823) | $ | (2,630) | $ | (4,049) | $ | (5,453) | $ | (8,229) | |||||||||
Other income (expense), net | (134) | 795 | 183 | 661 | 310 | ||||||||||||||
Foreign currency (gain) loss | 155 | (767) | (164) | (612) | (315) | ||||||||||||||
Depreciation and amortization | 30 | 30 | 33 | 60 | 66 | ||||||||||||||
Fair value adjustments to contingent consideration liability | 100 | (300) | 300 | (200) | 300 | ||||||||||||||
Restructuring and other charges | 704 | 87 | 729 | 791 | 896 | ||||||||||||||
Stock-based compensation | 323 | 380 | 533 | 703 | 1,917 | ||||||||||||||
Contribution margin, a non-GAAP measure | $ | (1,645) | $ | (2,405) | $ | (2,435) | $ | (4,050) | $ | (5,055) | |||||||||
RealNetworks, Inc. and Subsidiaries Reconciliation of Net income (loss) including noncontrolling interests to adjusted EBITDA, a non-GAAP measure (Unaudited) | |||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||
Q2 | Q1 | Q2 | YTD | YTD | |||||||||||||||
(in thousands) | |||||||||||||||||||
Reconciliation of GAAP Net income (loss) including noncontrolling interests to adjusted EBITDA: | |||||||||||||||||||
Net income (loss) including noncontrolling interests | $ | (5,554) | $ | (4,689) | $ | (9,455) | $ | (10,243) | $ | (8,241) | |||||||||
Income tax expense (benefit) | 213 | 139 | 244 | 352 | 502 | ||||||||||||||
Interest expense | 278 | 262 | 43 | 540 | 209 | ||||||||||||||
Interest income | (23) | (5) | (40) | (28) | (117) | ||||||||||||||
(Gain) loss on equity investments, net | 53 | — | — | 53 | (12,338) | ||||||||||||||
Foreign currency (gain) loss | 155 | (767) | (164) | (612) | (315) | ||||||||||||||
Acquisitions related intangible asset amortization | 1,124 | 1,125 | 1,129 | 2,249 | 2,095 | ||||||||||||||
Depreciation and amortization | 272 | 311 | 348 | 583 | 864 | ||||||||||||||
Fair value adjustments to contingent consideration liability | 100 | (300) | 300 | (200) | 300 | ||||||||||||||
Restructuring and other charges | 881 | 209 | 729 | 1,090 | 896 | ||||||||||||||
Stock-based compensation | 323 | 380 | 533 | 703 | 1,917 | ||||||||||||||
Adjusted EBITDA, a non-GAAP measure | $ | (2,178) | $ | (3,335) | $ | (6,333) | $ | (5,513) | $ | (14,228) | |||||||||
SOURCE RealNetworks, Inc.
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