RealNetworks Reports First Quarter Results

Seventh Consecutive Quarter of Profitable Pro Forma Operating Results



RealPlayer GoldPass Subscriber Base Now More Than 200,000, Content Offerings

Now Include Exclusive Sports Programming With NBA and MLB



RealNetworks Maintains Industry Leadership Position, RealPlayer User Base Now

Over 200 Million Unique Registered Users Worldwide



MusicNet, New Platform for Online Music Subscription Services, Launched With

RealNetworks, AOL Time Warner, Bertelsmann and EMI as Joint Venture Partners



Apr 17, 2001, 01:00 ET from RealNetworks, Inc.

    SEATTLE, April 17 /PRNewswire/ -- RealNetworks(R), Inc. (Nasdaq: RNWK),
 the global leader in Internet media delivery, today announced results for the
 quarter ended March 31, 2001.  This was the Company's seventh consecutive
 quarter of profitable pro forma operating results and twelfth consecutive
 quarter of pro forma positive cash flow from operations.  Net revenues for the
 quarter were $50.4 million, compared to $53.5 million in the first quarter of
 2000.  The Company reported pro forma net earnings for the quarter of
 $3.5 million, or $0.02 per diluted share, compared to pro forma net earnings
 of $8.8 million, or $0.05 per diluted share, in the first quarter last year.
     Including non-cash goodwill and acquisition-related charges, net loss in
 the first quarter was $24.4 million, or $0.15 per share, compared to a net
 loss of $18.8 million, or $0.12 per share, for the first quarter a year ago.
     Rob Glaser, chairman and CEO, RealNetworks, Inc., said, "RealNetworks
 continued to demonstrate the long-term strength of our business model by
 expanding our universal media delivery platform, increasing the amount of
 compelling content available on the Internet and helping our partners and
 customers make money.  Moreover, I'm very encouraged by several major
 strategic initiatives we kicked off this quarter.  While these initiatives
 will take time to bear fruit, they position RealNetworks very well for the
 tremendous opportunities in front of us.  We are built to last, and this
 quarter's activities underscore that."
 
     GoldPass Counts More than 200,000 Subscribers, Signs Exclusive Sports
      Content Deals
     Last week, RealNetworks announced that RealPlayer(R) GoldPass(TM), the
 premium Internet subscription service launched by RealNetworks last August,
 now counts more than 200,000 paying subscribers.  In the first quarter,
 RealNetworks signed agreements with the NBA and Major League Baseball Advanced
 Media (MLBAM).  The MLBAM agreement makes RealNetworks the exclusive platform
 for a broad range of MLBAM's online services, including live audio webcasts of
 all MLB games and a customizable, on-demand video highlight service available
 exclusively to GoldPass subscribers.  In January, RealNetworks announced a
 multi-year relationship with the NBA to offer NBA.com TV, the league's 24-hour
 digital television network, and NBA.com Audio League Pass, a package of
 exclusive home and away audio feeds of every NBA game, to the RealPlayer
 GoldPass subscriber base -- the first time ever that premium cable television
 content will be available live, 24 hours a day, through an Internet content
 subscription service.
     Larry Jacobson, president and chief operating officer, RealNetworks, Inc.,
 said, "Through our pioneering agreements with the NBA and MLBAM, RealNetworks
 is leading the way to make the Internet a great, practical medium for
 distributing sports programming.  Premium sports content has driven consumer
 adoption of other new media distribution platforms like cable and satellite
 TV.  By offering such premium content to our installed base of over
 200 million unique registered users, we feel optimistic about our ability to
 build growing, profitable subscription services on the Internet."
 
     MusicNet Launched as Joint Venture with AOL Time Warner, Bertelsmann, EMI
     On April 2, 2001, RealNetworks announced the launch of MusicNet, a new
 joint venture formed with AOL Time Warner, Bertelsmann and EMI to create a
 breakthrough platform for online music subscription services.  MusicNet will
 combine an extensive collection of downloadable and streaming music with
 RealNetworks' industry-leading Internet media delivery technology.  Under the
 agreement, RealNetworks, EMI, Bertelsmann, and AOL Time Warner will each own a
 minority stake in MusicNet.  The latter three companies' music subsidiaries
 -- EMI Recorded Music, BMG Entertainment, and Warner Music Group -- will each
 separately license their music to MusicNet.  MusicNet will initially license
 its platform to RealNetworks and America Online, each of which plans to launch
 branded online music subscription services later this year.  MusicNet will
 also seek to license music from other record companies and will seek to
 license its platform to other distribution outlets, potentially including
 Napster, provided such outlets satisfy legal, copyright and security concerns.
     Mr. Glaser said, "By combining great technology, incredible content and
 the worldwide reach of the licensees, MusicNet will transform how consumers
 experience music and provide a new distribution channel for record companies
 and their artists.  RealNetworks was uniquely qualified to bring this exciting
 venture together due to our technology leadership position, our huge worldwide
 base of RealPlayer users, our strong relationships with the record companies
 and rights-holders, and our experience building a successful Internet
 subscription service."
 
     Industry Adoption of RealSystem iQ
     RealSystem(TM) iQ, the universal Internet media delivery platform launched
 by RealNetworks last December, continues to earn broad support among key
 technology companies and content delivery networks, including Adobe, Deutsche
 Telekom, Digital Island, iBEAM, and Macromedia.  RealSystem iQ received an
 eWEEK eXcellence Award in February as the winner in the category of
 Internet-based Multimedia.  Also in February, RealNetworks announced the
 immediate availability of RealSystem iQ Server and Proxy on Hewlett-Packard's
 HP-UX, IBM's AIX, and Sun's Solaris Operating Environment, providing unmatched
 flexibility in network and enterprise deployments and underscoring the
 platform-independent power of RealSystem iQ.  RealNetworks also recently
 expanded to 48 the number of media formats supported by RealPlayer.
 
     Strategic Agreements, Product Introductions Strengthen Consumer Reach
     RealNetworks' leadership role in making the best Internet media content
 available to consumers was further extended during the first quarter with key
 product introductions and strategic agreements with consumer device makers.
     In March, RealNetworks announced the introduction of RealArcade(TM), a
 powerful, new end-to-end platform that strongly positions RealNetworks in the
 fast-growing market for digitally distributed PC games.  The RealArcade
 developer service is currently available and the RealArcade consumer service
 is scheduled to launch in the second quarter.  More than 40 game developers
 and publishers have already announced support for RealArcade, including
 developers such as Valve Software, Monolith, Zombie Entertainment and Small
 Rockets, and top game publishers like Sierra Online, Midas Interactive and
 ARUSH Entertainment.
     RealNetworks also announced agreements in the first quarter to bring its
 streaming media technology to a range of next-generation consumer devices.  In
 March, Nokia unveiled Mobile RealPlayer, the wireless version of the world's
 most popular digital media player, for the Nokia 9210 Communicator.
 RealNetworks also announced agreements with Hewlett-Packard (HP) and Intel to
 integrate a Linux-based RealPlayer into consumer digital entertainment
 products.  HP will use the software platform as the foundation for an upcoming
 set of products and services expected to reach the market by the Christmas
 holiday season, and Intel is offering the Intel Dot.Station to service
 providers today.
     Also in the first quarter, the Company announced an agreement with Texas
 Instruments (TI), the world leader in programmable digital signal processors
 (DSPs) used in Internet appliances, such as portable Internet audio players,
 mobile handsets, and personal digital assistants.  Under the agreement, users
 of TI's DSP-based Internet appliances will be able to watch breaking news and
 sports highlights, listen to music and receive the latest entertainment and
 weather updates in RealAudio(R) and RealVideo(R).
 
     RealNetworks Expands Global Leadership in Internet Media Delivery
     Today there are more than 200 million unique registered users of
 RealPlayer, an increase of 73% from the 116 million unique registered users at
 the end of the first quarter of 2000.  RealNetworks has continued to expand
 its international reach, with more than 50% of RealPlayer users located
 outside the United States.
     Data from independent analysts confirms that RealPlayer has extended its
 leadership in user reach, usage frequency and loyalty.  Media Metrix, which
 now accounts for previously unreported use of RealPlayer through AOL 6.0,
 reported that in January 2001, RealPlayer was used by 25.0 million U.S.
 Internet home users, and 10.2 million work users, a one-year increase of 49%
 (8.2 million) among home users and 53% (3.6 million) among work users.  This
 far outstrips growth of other media players.  In addition, Nielsen//NetRatings
 reported that in March 2001, 32.4 million U.S. home users accessed content in
 Real formats, which is well more than double the usage of the nearest
 competitor.
     Pro forma financial results exclude goodwill and acquisition-related
 charges and reflect the results of MusicNet using the equity method
 of accounting as if the company's ownership was reduced to 40% on
 January 1, 2001, versus the actual date of April 2, 2001.
 
     About RealNetworks
     RealNetworks, Inc., based in Seattle, is the global leader in Internet
 media delivery.  It develops and markets software products and services
 designed to enable users of personal computers and other consumer electronic
 devices to send and receive audio, video and other multimedia services using
 the Web.  Consumers can access and experience audio/video programming and
 download RealNetworks' consumer software on the Internet at
 http://www.real.com . RealNetworks' systems and corporate information is
 located on the Internet at http://www.realnetworks.com .
     This press release contains forward-looking statements that involve risks
 and uncertainties, including those relating to RealNetworks' ability to (a)
 continue its leadership position in the streaming media market; (b) obtain new
 content and consumer acceptance for GoldPass; (c) successfully launch and
 obtain consumer acceptance for new initiatives such as MusicNet and
 RealArcade; (d) anticipated MusicNet launch dates for RealNetworks and AOL;
 and (e) planned uses of RealNetworks' technologies by RealNetworks' partners.
 Actual results may differ materially from the results predicted.  Factors that
 could cause actual results to differ from the results predicted include the
 risks associated with the development of new streaming media technologies and
 the sustained adoption and use of RealNetworks technology by customers as well
 as factors impacting our partners' businesses that may impact the timing of
 their adoption of our technologies or their launch of the MusicNet platform.
 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 year ended December 31, 2000, and from time to time in other
 reports filed by RealNetworks with the Securities and Exchange Commission.
     NOTE:  RealNetworks, RealSystem, RealAudio, RealVideo, RealPlayer,
 GoldPass, and RealArcade are trademarks or registered trademarks of
 RealNetworks, Inc.  All other companies or products listed herein are
 trademarks or registered trademarks of their respective owners.
 
                        RealNetworks, Inc. and Subsidiaries
             Condensed Consolidated Pro Forma Statements of Operations
 
 
                                                 Pro Forma Results (1)
                                                Quarter Ended March 31,
                                                 2001              2000
                                        (in thousands, except per share data)
 
     Net revenues:
         Software license fees                 $29,571            34,103
         Service revenues                       15,286            11,018
         Advertising                             5,522             8,407
             Total net revenues                 50,379            53,528
 
     Cost of revenues:
         Software license fees                   1,927             4,348
         Service revenues                        5,152             2,585
         Advertising                             1,849             1,591
             Total cost of revenues              8,928             8,524
 
           Gross profit                         41,451            45,004
 
     Operating expenses:
         Research and development               15,244            11,620
         Sales and marketing                    20,087            22,600
         General and administrative              5,128             6,933
         Goodwill and other acquisition
          costs                                     --                --
             Total operating expenses           40,459            41,153
 
           Operating income                        992             3,851
 
     Other income, net                           4,082             4,900
 
     Net income before income
       tax provision                             5,074             8,751
     Income tax provision                        1,574                --
 
     Net income                                 $3,500             8,751
 
     Basic net income per share                  $0.02              0.06
 
     Diluted net income per share                $0.02              0.05
 
     Shares used to compute basic
       net income per share                    158,719           151,589
 
     Shares used to compute diluted
       net income per share                    167,352           178,702
 
 
     Net Revenues by Geography:
 
     North America                             $34,990            38,555
     Europe                                      8,953             6,353
     Rest of world                               6,436             6,003
       Subtotal                                 50,379            50,911
     Microsoft license revenue                      --             2,617
       Total                                   $50,379            53,528
 
     Net Cash Provided by Operating
      Activities                                  $456            22,451
 
     (1) Pro forma results exclude acquisition related charges and reflect the
 results of MusicNet using the equity method of accounting as if the Company's
 ownership was reduced to 40% on January 1, 2001 versus the actual date of
 April 2, 2001.
 
 
                        RealNetworks, Inc. and Subsidiaries
                  Condensed Consolidated Statements of Operations
 
 
                                                Quarter Ended March 31,
                                                2001               2000
                                        (in thousands, except per share data)
     Net revenues:
         Software license fees                 $29,571            34,103
         Service revenues                       15,286            11,018
         Advertising                             5,522             8,407
             Total net revenues                 50,379            53,528
 
     Cost of revenues:
         Software license fees                   1,927             4,348
         Service revenues                        5,152             2,585
         Advertising                             1,849             1,591
             Total cost of revenues              8,928             8,524
 
           Gross profit                         41,451            45,004
 
     Operating expenses:
         Research and development               16,621            11,620
         Sales and marketing                    20,246            22,600
         General and administrative              5,453             6,933
         Goodwill and other acquisition
          costs                                 27,466            27,572
             Total operating expenses           69,786            68,725
 
           Operating loss                      (28,335)          (23,721)
 
     Other income, net                           5,196             4,900
 
     Net loss before income
       tax provision                           (23,139)          (18,821)
     Income tax provision                        1,234                --
 
     Net loss                                 $(24,373)          (18,821)
 
     Basic and diluted net loss per share       $(0.15)            (0.12)
 
     Shares used to compute basic and
      diluted
       net loss per share                      158,719           151,589
 
 
                        RealNetworks, Inc. and Subsidiaries
                       Condensed Consolidated Balance Sheets
 
                                                 March 31,        December 31,
                                                   2001               2000
                                                (unaudited)
                                                       (in thousands)
                                      ASSETS
 
     Current assets:
          Cash, cash equivalents and
           short-term investments                 $350,476           364,710
          Trade accounts receivable, net
           of allowances for doubtful
            accounts and sales returns               7,210             8,647
          Prepaid expenses and other
           current assets                            4,272             3,989
          Deferred tax assets                        9,201            10,777
            Total current assets                   371,159           388,123
 
     Equipment and leasehold
      improvements, at cost:
          Equipment and software                    30,783            28,979
          Leasehold improvements                    32,667            25,670
            Total equipment and leasehold
             improvements                           63,450            54,649
          Less accumulated depreciation
           and amortization                         15,241            12,376
            Net equipment and leasehold
             improvements                           48,209            42,273
     Goodwill, net                                  95,672           104,861
     Restricted cash equivalents                    17,300            18,800
     Other assets                                   19,539            20,986
     Deferred tax assets                             3,758             3,365
 
            Total assets                          $555,637           578,408
 
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
 
     Current liabilities:
          Accounts payable                          $7,476             7,727
          Accrued and other liabilities             32,473            36,552
          Deferred revenue, excluding
           non-current portion                      31,605            38,522
            Total current liabilities               71,554            82,801
 
     Deferred revenue, excluding current
      portion                                       13,098            12,747
     Deferred rent                                   2,237             2,048
 
     Total shareholders' equity                    468,748           480,812
 
      Total liabilities and
        shareholders' equity                      $555,637           578,408
 
 

SOURCE RealNetworks, Inc.
    SEATTLE, April 17 /PRNewswire/ -- RealNetworks(R), Inc. (Nasdaq: RNWK),
 the global leader in Internet media delivery, today announced results for the
 quarter ended March 31, 2001.  This was the Company's seventh consecutive
 quarter of profitable pro forma operating results and twelfth consecutive
 quarter of pro forma positive cash flow from operations.  Net revenues for the
 quarter were $50.4 million, compared to $53.5 million in the first quarter of
 2000.  The Company reported pro forma net earnings for the quarter of
 $3.5 million, or $0.02 per diluted share, compared to pro forma net earnings
 of $8.8 million, or $0.05 per diluted share, in the first quarter last year.
     Including non-cash goodwill and acquisition-related charges, net loss in
 the first quarter was $24.4 million, or $0.15 per share, compared to a net
 loss of $18.8 million, or $0.12 per share, for the first quarter a year ago.
     Rob Glaser, chairman and CEO, RealNetworks, Inc., said, "RealNetworks
 continued to demonstrate the long-term strength of our business model by
 expanding our universal media delivery platform, increasing the amount of
 compelling content available on the Internet and helping our partners and
 customers make money.  Moreover, I'm very encouraged by several major
 strategic initiatives we kicked off this quarter.  While these initiatives
 will take time to bear fruit, they position RealNetworks very well for the
 tremendous opportunities in front of us.  We are built to last, and this
 quarter's activities underscore that."
 
     GoldPass Counts More than 200,000 Subscribers, Signs Exclusive Sports
      Content Deals
     Last week, RealNetworks announced that RealPlayer(R) GoldPass(TM), the
 premium Internet subscription service launched by RealNetworks last August,
 now counts more than 200,000 paying subscribers.  In the first quarter,
 RealNetworks signed agreements with the NBA and Major League Baseball Advanced
 Media (MLBAM).  The MLBAM agreement makes RealNetworks the exclusive platform
 for a broad range of MLBAM's online services, including live audio webcasts of
 all MLB games and a customizable, on-demand video highlight service available
 exclusively to GoldPass subscribers.  In January, RealNetworks announced a
 multi-year relationship with the NBA to offer NBA.com TV, the league's 24-hour
 digital television network, and NBA.com Audio League Pass, a package of
 exclusive home and away audio feeds of every NBA game, to the RealPlayer
 GoldPass subscriber base -- the first time ever that premium cable television
 content will be available live, 24 hours a day, through an Internet content
 subscription service.
     Larry Jacobson, president and chief operating officer, RealNetworks, Inc.,
 said, "Through our pioneering agreements with the NBA and MLBAM, RealNetworks
 is leading the way to make the Internet a great, practical medium for
 distributing sports programming.  Premium sports content has driven consumer
 adoption of other new media distribution platforms like cable and satellite
 TV.  By offering such premium content to our installed base of over
 200 million unique registered users, we feel optimistic about our ability to
 build growing, profitable subscription services on the Internet."
 
     MusicNet Launched as Joint Venture with AOL Time Warner, Bertelsmann, EMI
     On April 2, 2001, RealNetworks announced the launch of MusicNet, a new
 joint venture formed with AOL Time Warner, Bertelsmann and EMI to create a
 breakthrough platform for online music subscription services.  MusicNet will
 combine an extensive collection of downloadable and streaming music with
 RealNetworks' industry-leading Internet media delivery technology.  Under the
 agreement, RealNetworks, EMI, Bertelsmann, and AOL Time Warner will each own a
 minority stake in MusicNet.  The latter three companies' music subsidiaries
 -- EMI Recorded Music, BMG Entertainment, and Warner Music Group -- will each
 separately license their music to MusicNet.  MusicNet will initially license
 its platform to RealNetworks and America Online, each of which plans to launch
 branded online music subscription services later this year.  MusicNet will
 also seek to license music from other record companies and will seek to
 license its platform to other distribution outlets, potentially including
 Napster, provided such outlets satisfy legal, copyright and security concerns.
     Mr. Glaser said, "By combining great technology, incredible content and
 the worldwide reach of the licensees, MusicNet will transform how consumers
 experience music and provide a new distribution channel for record companies
 and their artists.  RealNetworks was uniquely qualified to bring this exciting
 venture together due to our technology leadership position, our huge worldwide
 base of RealPlayer users, our strong relationships with the record companies
 and rights-holders, and our experience building a successful Internet
 subscription service."
 
     Industry Adoption of RealSystem iQ
     RealSystem(TM) iQ, the universal Internet media delivery platform launched
 by RealNetworks last December, continues to earn broad support among key
 technology companies and content delivery networks, including Adobe, Deutsche
 Telekom, Digital Island, iBEAM, and Macromedia.  RealSystem iQ received an
 eWEEK eXcellence Award in February as the winner in the category of
 Internet-based Multimedia.  Also in February, RealNetworks announced the
 immediate availability of RealSystem iQ Server and Proxy on Hewlett-Packard's
 HP-UX, IBM's AIX, and Sun's Solaris Operating Environment, providing unmatched
 flexibility in network and enterprise deployments and underscoring the
 platform-independent power of RealSystem iQ.  RealNetworks also recently
 expanded to 48 the number of media formats supported by RealPlayer.
 
     Strategic Agreements, Product Introductions Strengthen Consumer Reach
     RealNetworks' leadership role in making the best Internet media content
 available to consumers was further extended during the first quarter with key
 product introductions and strategic agreements with consumer device makers.
     In March, RealNetworks announced the introduction of RealArcade(TM), a
 powerful, new end-to-end platform that strongly positions RealNetworks in the
 fast-growing market for digitally distributed PC games.  The RealArcade
 developer service is currently available and the RealArcade consumer service
 is scheduled to launch in the second quarter.  More than 40 game developers
 and publishers have already announced support for RealArcade, including
 developers such as Valve Software, Monolith, Zombie Entertainment and Small
 Rockets, and top game publishers like Sierra Online, Midas Interactive and
 ARUSH Entertainment.
     RealNetworks also announced agreements in the first quarter to bring its
 streaming media technology to a range of next-generation consumer devices.  In
 March, Nokia unveiled Mobile RealPlayer, the wireless version of the world's
 most popular digital media player, for the Nokia 9210 Communicator.
 RealNetworks also announced agreements with Hewlett-Packard (HP) and Intel to
 integrate a Linux-based RealPlayer into consumer digital entertainment
 products.  HP will use the software platform as the foundation for an upcoming
 set of products and services expected to reach the market by the Christmas
 holiday season, and Intel is offering the Intel Dot.Station to service
 providers today.
     Also in the first quarter, the Company announced an agreement with Texas
 Instruments (TI), the world leader in programmable digital signal processors
 (DSPs) used in Internet appliances, such as portable Internet audio players,
 mobile handsets, and personal digital assistants.  Under the agreement, users
 of TI's DSP-based Internet appliances will be able to watch breaking news and
 sports highlights, listen to music and receive the latest entertainment and
 weather updates in RealAudio(R) and RealVideo(R).
 
     RealNetworks Expands Global Leadership in Internet Media Delivery
     Today there are more than 200 million unique registered users of
 RealPlayer, an increase of 73% from the 116 million unique registered users at
 the end of the first quarter of 2000.  RealNetworks has continued to expand
 its international reach, with more than 50% of RealPlayer users located
 outside the United States.
     Data from independent analysts confirms that RealPlayer has extended its
 leadership in user reach, usage frequency and loyalty.  Media Metrix, which
 now accounts for previously unreported use of RealPlayer through AOL 6.0,
 reported that in January 2001, RealPlayer was used by 25.0 million U.S.
 Internet home users, and 10.2 million work users, a one-year increase of 49%
 (8.2 million) among home users and 53% (3.6 million) among work users.  This
 far outstrips growth of other media players.  In addition, Nielsen//NetRatings
 reported that in March 2001, 32.4 million U.S. home users accessed content in
 Real formats, which is well more than double the usage of the nearest
 competitor.
     Pro forma financial results exclude goodwill and acquisition-related
 charges and reflect the results of MusicNet using the equity method
 of accounting as if the company's ownership was reduced to 40% on
 January 1, 2001, versus the actual date of April 2, 2001.
 
     About RealNetworks
     RealNetworks, Inc., based in Seattle, is the global leader in Internet
 media delivery.  It develops and markets software products and services
 designed to enable users of personal computers and other consumer electronic
 devices to send and receive audio, video and other multimedia services using
 the Web.  Consumers can access and experience audio/video programming and
 download RealNetworks' consumer software on the Internet at
 http://www.real.com . RealNetworks' systems and corporate information is
 located on the Internet at http://www.realnetworks.com .
     This press release contains forward-looking statements that involve risks
 and uncertainties, including those relating to RealNetworks' ability to (a)
 continue its leadership position in the streaming media market; (b) obtain new
 content and consumer acceptance for GoldPass; (c) successfully launch and
 obtain consumer acceptance for new initiatives such as MusicNet and
 RealArcade; (d) anticipated MusicNet launch dates for RealNetworks and AOL;
 and (e) planned uses of RealNetworks' technologies by RealNetworks' partners.
 Actual results may differ materially from the results predicted.  Factors that
 could cause actual results to differ from the results predicted include the
 risks associated with the development of new streaming media technologies and
 the sustained adoption and use of RealNetworks technology by customers as well
 as factors impacting our partners' businesses that may impact the timing of
 their adoption of our technologies or their launch of the MusicNet platform.
 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 year ended December 31, 2000, and from time to time in other
 reports filed by RealNetworks with the Securities and Exchange Commission.
     NOTE:  RealNetworks, RealSystem, RealAudio, RealVideo, RealPlayer,
 GoldPass, and RealArcade are trademarks or registered trademarks of
 RealNetworks, Inc.  All other companies or products listed herein are
 trademarks or registered trademarks of their respective owners.
 
                        RealNetworks, Inc. and Subsidiaries
             Condensed Consolidated Pro Forma Statements of Operations
 
 
                                                 Pro Forma Results (1)
                                                Quarter Ended March 31,
                                                 2001              2000
                                        (in thousands, except per share data)
 
     Net revenues:
         Software license fees                 $29,571            34,103
         Service revenues                       15,286            11,018
         Advertising                             5,522             8,407
             Total net revenues                 50,379            53,528
 
     Cost of revenues:
         Software license fees                   1,927             4,348
         Service revenues                        5,152             2,585
         Advertising                             1,849             1,591
             Total cost of revenues              8,928             8,524
 
           Gross profit                         41,451            45,004
 
     Operating expenses:
         Research and development               15,244            11,620
         Sales and marketing                    20,087            22,600
         General and administrative              5,128             6,933
         Goodwill and other acquisition
          costs                                     --                --
             Total operating expenses           40,459            41,153
 
           Operating income                        992             3,851
 
     Other income, net                           4,082             4,900
 
     Net income before income
       tax provision                             5,074             8,751
     Income tax provision                        1,574                --
 
     Net income                                 $3,500             8,751
 
     Basic net income per share                  $0.02              0.06
 
     Diluted net income per share                $0.02              0.05
 
     Shares used to compute basic
       net income per share                    158,719           151,589
 
     Shares used to compute diluted
       net income per share                    167,352           178,702
 
 
     Net Revenues by Geography:
 
     North America                             $34,990            38,555
     Europe                                      8,953             6,353
     Rest of world                               6,436             6,003
       Subtotal                                 50,379            50,911
     Microsoft license revenue                      --             2,617
       Total                                   $50,379            53,528
 
     Net Cash Provided by Operating
      Activities                                  $456            22,451
 
     (1) Pro forma results exclude acquisition related charges and reflect the
 results of MusicNet using the equity method of accounting as if the Company's
 ownership was reduced to 40% on January 1, 2001 versus the actual date of
 April 2, 2001.
 
 
                        RealNetworks, Inc. and Subsidiaries
                  Condensed Consolidated Statements of Operations
 
 
                                                Quarter Ended March 31,
                                                2001               2000
                                        (in thousands, except per share data)
     Net revenues:
         Software license fees                 $29,571            34,103
         Service revenues                       15,286            11,018
         Advertising                             5,522             8,407
             Total net revenues                 50,379            53,528
 
     Cost of revenues:
         Software license fees                   1,927             4,348
         Service revenues                        5,152             2,585
         Advertising                             1,849             1,591
             Total cost of revenues              8,928             8,524
 
           Gross profit                         41,451            45,004
 
     Operating expenses:
         Research and development               16,621            11,620
         Sales and marketing                    20,246            22,600
         General and administrative              5,453             6,933
         Goodwill and other acquisition
          costs                                 27,466            27,572
             Total operating expenses           69,786            68,725
 
           Operating loss                      (28,335)          (23,721)
 
     Other income, net                           5,196             4,900
 
     Net loss before income
       tax provision                           (23,139)          (18,821)
     Income tax provision                        1,234                --
 
     Net loss                                 $(24,373)          (18,821)
 
     Basic and diluted net loss per share       $(0.15)            (0.12)
 
     Shares used to compute basic and
      diluted
       net loss per share                      158,719           151,589
 
 
                        RealNetworks, Inc. and Subsidiaries
                       Condensed Consolidated Balance Sheets
 
                                                 March 31,        December 31,
                                                   2001               2000
                                                (unaudited)
                                                       (in thousands)
                                      ASSETS
 
     Current assets:
          Cash, cash equivalents and
           short-term investments                 $350,476           364,710
          Trade accounts receivable, net
           of allowances for doubtful
            accounts and sales returns               7,210             8,647
          Prepaid expenses and other
           current assets                            4,272             3,989
          Deferred tax assets                        9,201            10,777
            Total current assets                   371,159           388,123
 
     Equipment and leasehold
      improvements, at cost:
          Equipment and software                    30,783            28,979
          Leasehold improvements                    32,667            25,670
            Total equipment and leasehold
             improvements                           63,450            54,649
          Less accumulated depreciation
           and amortization                         15,241            12,376
            Net equipment and leasehold
             improvements                           48,209            42,273
     Goodwill, net                                  95,672           104,861
     Restricted cash equivalents                    17,300            18,800
     Other assets                                   19,539            20,986
     Deferred tax assets                             3,758             3,365
 
            Total assets                          $555,637           578,408
 
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
 
     Current liabilities:
          Accounts payable                          $7,476             7,727
          Accrued and other liabilities             32,473            36,552
          Deferred revenue, excluding
           non-current portion                      31,605            38,522
            Total current liabilities               71,554            82,801
 
     Deferred revenue, excluding current
      portion                                       13,098            12,747
     Deferred rent                                   2,237             2,048
 
     Total shareholders' equity                    468,748           480,812
 
      Total liabilities and
        shareholders' equity                      $555,637           578,408
 
 SOURCE  RealNetworks, Inc.