REALNETWORKS ANNOUNCES FIRST QUARTER 2013 RESULTS SEATTLE – May 1, 2013 – RealNetworks, Inc. (Nasdaq: RNWK) today announced results for the first quarter ended March 31, 2013. "We continue to execute our turnaround plans to put RealNetworks on a path to growth and sustainable profitability," said Rob Glaser, Chairman and interim CEO of RealNetworks. First Quarter Results For the first quarter of 2013, revenue was $56.8 million, a sequential decrease of 16% from the fourth quarter of 2012, and a decrease of 15% compared with the first quarter of 2012. Revenue trends in each of RealNetworks' businesses in the first quarter of 2013 compared with the year-earlier quarter were: a 1% increase in RealPlayer Group revenue to $22.4 million, a 20% decrease in Mobile Entertainment revenue to $20.5 million and a 27% decrease in Games revenue to $13.9 million. Net loss for the first quarter of 2013 was $(11.7) million, or $(0.33) per share, compared with net loss of $(17.0) million, or $(0.49) per share, in the first quarter of 2012. Adjusted EBITDA loss for the first quarter of 2013 was $(3.0) million, compared with an adjusted EBITDA loss of $(7.4) million for the first quarter of 2012. A reconciliation of GAAP operating income (loss) to adjusted EBITDA is provided in the financial tables that accompany this release. As of March 31, 2013, RealNetworks had $260.6 million in unrestricted cash, cash equivalents and short-term investments compared with $271.4 million as of Dec. 31, 2012, of which approximately $39.4 million was held in foreign jurisdictions. In addition, RealNetworks had $48.6 million in restricted cash and available-for-sale securities as of March 31, 2013, compared with $44.3 million as of Dec. 31, 2012. Segment Reorganization Beginning with the first quarter of 2013, RealNetworks reorganized its financial reporting to reflect changes in how we manage the businesses and changed the way we allocate certain operating expenses within the company to increase efficiency and accountability for financial and operational performance within each business. RealNetworks' 2013 financial results now reflect the new corporate organization with the following reportable segments: (1) the RealPlayer Group, which includes RealPlayer, SuperPass and mobile IP sales; (2) Mobile Entertainment, which includes SaaS services of ringback tones, music on demand, and intercarrier messaging; professional services and systems integration; and Helix software; and (3) Games. Additionally, more of RealNetworks' corporate costs – such as some of the costs of finance, HR, legal and facilities – are now assigned to each business unit, although certain costs are being retained at the corporate level. On April 22, 2013, RealNetworks filed a report on Form 8-K with a description of the new segments and historical results that reflect those new segments. Segment Operating Results Business Outlook For the second quarter of 2013, RealNetworks expects total revenue of $49 million to $52 million, with all segments declining sequentially and year over year. We expect adjusted EBITDA for the quarter to be a loss of $(7) million to $(10) million. In the second quarter, we expect to finalize and announce plans to reduce our facilities costs by several millions of dollars per year. Our outlook for the second quarter does not include any cost reductions or one-time charges that could result from this change. The foregoing forward-looking statements reflect RealNetworks' expectations as of May 1, 2013. It is not RealNetworks' general practice to update these forward-looking statements until its next quarterly results announcement. Webcast and Conference Call Information Passcode: First Quarter Earnings Telephonic replay will be available until 8 p.m. ET, May 15, 2013. Investors Only: Press Only: About RealNetworks: Forward-Looking Statements: This press release contains forward-looking statements that involve risks and uncertainties, including statements relating to RealNetworks' current expectations for future revenue, adjusted EBITDA, plans to undertake, as well as results and benefits from its business restructuring activities, including anticipated changes in headquarters, and strategic initiatives. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements. Actual results may differ materially from the results predicted. Factors that could cause actual results to differ from the results predicted include: fluctuations in foreign currencies; RealNetworks' ability to realize operating efficiencies, growth and other benefits from the implementation of its strategic initiatives; the emergence of new entrants and competition in the market for digital media products and services; other competitive risks, including the growth of competing technologies, products and services; the potential outcomes and effects of claims and legal proceedings on RealNetworks' business, prospects, financial condition or results of operations; risks associated with key customer or strategic relationships, business acquisitions and the introduction of new products and services; changes in consumer and advertising spending in response to disruptions in the global financial markets; and changes in RealNetworks' effective tax rate. 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 most recent year ended December 31, 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 RealNetworks' financial statements and forward-looking financial guidance requires the company to make estimates and assumptions that affect the reported amount of assets and liabilities and the reported amounts of revenues and expenses during the reported period. Actual results may differ materially from these estimates under different assumptions or conditions. The company assumes no obligation to update any forward-looking statements or information, which are in effect as of their respective dates.
Quarterly Summary:
The company will host an audio Webcast conference call to review results and discuss the company's operations for the first quarter at5:00 p.m. ET on May 1. The Webcast will be available at: http://investor.realnetworks.com
The on-demand Webcast will be available beginning approximately two hours following the conclusion of the live Webcast.
Conference Call Details
5 p.m. ET / 2 p.m. PT
Dial in:
888-790-3162 Domestic
415-228-4854 International
Leader: Rob Glaser
Replay dial in:
888-566-0589 Domestic
402-998-0696 International
For More Information:
Marj Charlier, 206-892-6718, or mcharlier@realnetworks.com
Tim Wan, 206-892-6604, or twan@realnetworks.com
Michael Eggerling, RealNetworks, 206-892-6308 or meggerling@realnetworks.com
RealNetworks creates innovative applications and services that make it easy to connect with and enjoy digital media. RealNetworks invented the streaming media category in 1995 and continues to connect consumers with their digital media both directly and through partners, aiming to support every network, device, media type and social network. RealNetworks' corporate information is located at http://www.realnetworks.com/about-us
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 adjusted EBITDA 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 operating income (loss) to adjusted EBITDA and to adjusted EBITDA by reportable segment.
The rationale for management's use of non-GAAP measures is included in the supplementary materials presented with the first quarter 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.
RealNetworks, RealPlayer and GameHouse are trademarks or registered trademarks of RealNetworks, Inc. or its subsidiaries. All other companies or products listed herein are trademarks or registered trademarks of their respective owners.
Wed, 05/01/2013