8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) April 28, 2004

RealNetworks, Inc.

(Exact name of registrant as specified in its charter)

WASHINGTON
(State or other jurisdiction
of incorporation) 0-23137
(Commission File
Number) 91-1628146
(I.R.S. Employer
Identification No.)

2601 Elliott Avenue, Suite 1000
Seattle, Washington 98121
(Address of principal executive offices) (Zip code)

(206) 674-2700
Registrant’s telephone number, including area code

Not Applicable
(Former name or former address if changed since last report)

TABLE OF CONTENTS

	Item 5. Other Events and Regulation FD Disclosure
	Item 7(c). Financial Statements and Exhibits
	Item 12. Results of Operations and Financial Condition
SIGNATURE
EXHIBIT INDEX
EXHIBIT 99.1
EXHIBIT 99.2

Item 5. Other Events and Regulation FD Disclosure

     On April 28, 2004, RealNetworks, Inc. (the “Company”) announced via press release certain executive changes. A copy of the Company’s press release is attached hereto as Exhibit 99.1.

Item 7(c). Financial Statements and Exhibits

     (c) Exhibits.

     Pursuant to the rules and regulations of the Securities and Exchange Commission, the attached exhibits are deemed to have been furnished to, but not filed with, the Securities and Exchange Commission:

Exhibit No.	Description
99.1	Press Release issued by RealNetworks, Inc. dated April 28, 2004.
99.2	Press Release issued by RealNetworks, Inc. dated April 28, 2004.

Item 12. Results of Operations and Financial Condition

     On April 28, 2004, the Company announced via press release the Company’s results for its first quarter ended March 31, 2004. A copy of the Company’s press release is attached hereto as Exhibit 99.2. The information in this Form 8-K and the attached exhibits are furnished to, but not filed with, the Securities and Exchange Commission.

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	REALNETWORKS, INC.
Dated: April 28, 2004	By: /s/ Robert Kimball Robert Kimball Vice President, Legal and Business Affairs, General Counsel and Corporate Secretary

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release issued by RealNetworks, Inc. dated April 28, 2004.
99.2	Press Release issued by RealNetworks, Inc. dated April 28, 2004.

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

RealNetworks Announces Executive Changes

Lawrence Jacobson Steps Down as President; Sid Ferrales Joins as Senior Vice
President, Human Resources; Dan Sheeran Tapped as Senior Vice President,
International; Edmond Mesrobian and Karim Meghji Join Executive Team

SEATTLE, April 28, 2004 — RealNetworks®, Inc. (Nasdaq: RNWK), the leading creator of digital media services and software, today announced several executive changes and promotions. Lawrence Jacobson has resigned as President, effective immediately, to pursue other opportunities and spend more time with his family. Mr. Jacobson has been with RealNetworks for three years, and most recently was responsible for overseeing international operations. He will continue to work for the company as a Strategic Advisor, reporting to Chairman and Chief Executive Officer Rob Glaser, for a transitional period. The Company has no plans to fill the position of President at this time.

“Larry has been a valued member of our leadership team, and will continue to be a personal friend and great friend to the company. We thank him for his many contributions, and wish him and his family all the best,” said Rob Glaser.

Jacobson stated, “Real has successfully leveraged its core technology to become a recognized leader of Internet consumer services and I’m proud to have contributed to this expansion effort. With solid financial momentum, a central position in the marketplace, and a deep management team, Real is at a time and place which allows me to step aside and not upset its cadence for growth. I have valued my time as a member of this world-class organization.”

Dan Sheeran has been tapped as Senior Vice President, International, to assume responsibility for running the company’s international operations. Formerly Senior Vice President of Marketing for RealNetworks, Sheeran brings a wealth of operational, business, sales and marketing experience to the position. Prior to joining the RealNetworks executive team in 2001, he was senior vice president of worldwide sales and marketing for nCUBE, a leading provider of digital media systems for the cable television and telecommunications industries. There he worked extensively in Asia and Europe overseeing direct sales, channel development and product marketing. Mr. Sheeran holds a Bachelor of Science in the School of Foreign Service from Georgetown University, and a Master of Business Administration from Northwestern University.

“Dan’s international experience, his deep expertise in our products and services, and his successful contributions to Real across all aspects of our business over the last three years uniquely qualify him to lead our international efforts moving forward,” said Rob Glaser. “With Dan at the helm, Real is prepared to lead the expansion of digital media products and services around the world as the digital media marketplace continues to develop rapidly.”

RealNetworks has also announced that Savino “Sid” Ferrales has joined its executive team as Senior Vice President, Human Resources. Mr. Ferrales has served as the senior human resource executive at leading technology companies including Interland, Inc., Dell Corporation and Digital Equipment Corporation over the course of his 20 year career. Mr. Ferrales reports to Rob Glaser.

“Sid’s tremendous experience and success as a human resources and business executive in industry leading, growing technology companies, combined with his personal integrity and commitment to people, make him the ideal person to help RealNetworks develop and grow our most valuable asset, our outstanding team of people,” said Rob Glaser.

“I’m very impressed by the incredibly talented team at RealNetworks, and the Company’s commitment to its people. They are the experts in the field, and they have a remarkable passion and commitment to winning. I’m excited to work with them personally, and to help position RealNetworks for business expansion and success at the start of the Company’s second decade,” said Savino “Sid” Ferrales, Senior Vice President, Human Resources.

Immediately prior to joining RealNetworks, Mr. Ferrales served as Senior Vice President of Human Resources for Interland, Inc., a leading provider of business-class Web hosting and online services to small and medium businesses. Previously, Mr. Ferrales was VP of HR at Dell Corporation during the rapid global expansion phase in which Dell experienced triple digit growth. His experience also includes serving as VP of Worldwide HR at Digital Equipment (DEC) in support of 60,000 employees in 47 countries, and as a senior HR leader at Motorola for 10 years.

Today RealNetworks also announced the addition of two executives to its leadership team. Edmond Mesrobian has been appointed Vice President and Chief Technology Officer, and Karim Meghji has been promoted to Vice President, Video Services.

Dr. Mesrobian is responsible for leading RealNetworks’ efforts to define, build and operate the leading world-class media service application platform which powers not only RealNetworks’ own consumer media subscription services, but also those of its partners and customers in the digital media industry. In addition, as the Company’s CTO, Edmond is responsible for leading technology strategy and initiatives across the Company. Dr. Mesrobian joined RealNetworks in 2003. Prior to RealNetworks, Dr. Mesrobian served as VP Engineering and Chief Scientist for Disney Online (Buena Vista Internet Group), President and Chief Technology Officer for Checkout.com, and Chief Technology Officer or its equivalent for entertainment technology companies Amplified Holdings and ARTISTdirect. Dr. Mesrobian received three degrees in computer science from UCLA, and co-founded the UCLA Data Mining Lab. Dr. Mesrobian reports to Martin Plaehn, Executive Vice President, Products and Services.

“Edmond’s intellectual depth, stellar academic and research background, and rigor are world-class. With his successful experience in building scalable, distributed, Internet-based systems, and his visionary technology leadership, he is well situated as CTO to help drive our overall technology strategy forward and oversee our Internet operations,” said Rob Glaser.

Mr. Meghji joined RealNetworks in 1997 and has led important product and programming efforts at RealNetworks, including the development of several versions of RealPlayer and more recently the development of RealOne SuperPass. In his new role, Mr. Meghji is responsible for the RealNetworks’ consumer facing free and paid video services, such as the new Real Guide and RealOne SuperPass , as well as business operations for RealNetworks’ partner subscription services. Prior to joining RealNetworks, Mr. Meghji held roles of increasing responsibility at Symantec.

Mr. Meghi holds a BS in Computer Science from San Jose State University and reports to Richard Wolpert, Chief Strategy Officer.

“Karim’s contributions over the last seven years at RealNetworks have spanned several generations of the RealPlayer and the launch of our video services. RealNetworks seeks the best and brightest employees at all levels and it’s always a great development when one of our own steps up to our executive ranks. Karim’s great body of work and leadership at Real make him a most welcome member of the management team,” said Rob Glaser.

For More Information, Press Only:
Greg Chiemingo, RealNetworks, 206-892-6234, gchiemingo@real.com

About RealNetworks

RealNetworks, Inc. is the leading creator of digital media services and software including the award-winning Rhapsody Internet jukebox service and RealPlayer 10, the first product to integrate finding, organizing, buying, playing and managing digital audio and video in a single product. Consumers can access and experience audio/video programming and download RealNetworks’ consumer software at http://www.real.com. Broadcasters, network operators, media companies and enterprises use RealNetworks’ products and services to create and deliver digital media to PCs, mobile phones and consumer electronics devices. RealNetworks’ systems and corporate information is located at http://www.realnetworks.com

RealNetworks, RealPlayer, RealOne, SuperPass, Real Guide and the Real logo are trademarks or registered trademarks of RealNetworks, Inc. Other companies or products listed herein are trademarks or registered trademarks of their respective owners.

FORWARD LOOKING STATEMENTS

This press release contains forward-looking statements that involve risks and uncertainties, including RealNetworks’ financial momentum, market position, the expansion of RealNetworks’ digital media products and services, and the rapid development and expansion of digital media markets. 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 digital media technologies and services, the availability of content under reasonable terms, the sustained adoption and use of RealNetworks products and services by customers and RealNetworks’ ability to hire and retain key personnel necessary to expand worldwide. 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, 2003, its quarterly reports on Form 10-Q, and from time to time in other reports filed by RealNetworks with the Securities and Exchange Commission.

EX-99.2

Exhibit 99.2

RealNetworks Revenue Grows 29% in First Quarter of 2004

Continuing Revenue Growth Fueled by Consumer Services

SEATTLE, WA – April 28th, 2004 – RealNetworks®, Inc. (Nasdaq: RNWK) today announced results for the quarter ended March 31st, 2004. For the first quarter of 2004, revenue was $60.4 million, up 29% from the first quarter of 2003 and up 12% from the fourth quarter of 2003. First quarter results include approximately $2 million of revenue associated with the acquisition of GameHouse, Inc. in January 2004. The GAAP net loss for the first quarter was ($10.4) million or ($0.06) per share compared to a net loss of ($5.3) million or ($0.03) per share in the fourth quarter of 2003 and net loss of ($2.8) million or ($0.02) per share in the first quarter of 2003. Included in the GAAP net loss for the first quarter of 2004 was a $4.9 million expense for costs related to removal of the PGA TOUR content from subscription services and $2.3 million expense related to the Company’s antitrust litigation. Excluding these litigation and content expenses, the net loss was ($3.2) million or ($0.02) per share. This compares to a net loss of ($3.8) million or ($0.02) per share, excluding antitrust litigation expense of $1.6 million, in the fourth quarter of 2003.

     “Our business accelerated in the first quarter,” said Rob Glaser, CEO of RealNetworks. “Driving this acceleration was our growth in consumer services, particularly music and games. We now have more than 450,000 subscribers to our digital music services, which we believe makes us #1 in music subscriptions. Combining our growth on the consumer side with the positive results we saw in our business segment this quarter, we believe we are well on our way to achieving quarterly profitability by the end of 2004, excluding antitrust litigation expenses.”

Financial Discussion

     First quarter revenue from consumer products and services was $46.5 million, which represents a 41% increase from the first quarter of 2003 and a 13% increase from the fourth quarter of 2003. Revenue from music grew 55% to $12.3 million from $7.9 million in the fourth quarter of 2003 as more than 100,000 new music subscribers were added and the RealPlayer Music Store was introduced. Similarly, games revenue grew 72% to $6.8 million from $3.9 million in the fourth quarter of 2003. This increase reflects both the acquisition of GameHouse as well as continued growth in the RealArcade business. Revenue from business products and

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services was $13.9 million, representing an increase of 8% from the fourth quarter of 2003 and a decrease of 1% from the first quarter of 2003.

     Total subscribers finished the quarter in excess of 1.3 million. As previously announced, RealNetworks ended its contract with Major League Baseball Advanced Media early in the first quarter, resulting in the removal of 142,000 MLB subscribers. Thus, in the first quarter RealNetworks in effect replaced all of the MLB subscribers with subscribers to other services, most of which are higher revenue and higher margin than the discontinued baseball subscribers. This is reflected in the fact that subscriber revenue grew 5% sequentially from $30.1 million to $31.6 million in the first quarter of 2004.

     Due to a previously discussed change in strategic focus in RealNetworks’ sports business, the Company agreed with the PGA TOUR to restructure their relationship resulting in a discontinuation of their content in RealNetworks’ subscription services. The restructuring resulted in a write-off of the guaranteed fees associated with the PGA TOUR content for the remaining 1 3/4 years of the contract. RealNetworks is now focused on ensuring that Real technology powers the website subscription services of the leading sports brands such as the PGA TOUR.

     Gross margin, including the charge for the discontinued use of the PGA TOUR content, was 56% for the first quarter. Absent the PGA related expense, gross margin improved to 64% compared to 62% in the fourth quarter of 2003 due to higher margin in our consumer business as well as increased revenue in our higher margin business products and services segment.

     GAAP operating expenses were $43.9 million for the quarter, a slight increase as a percentage of revenue compared to the fourth quarter of 2003. First quarter operating expenses included increased marketing activity for Rhapsody, two months of expenses associated with the GameHouse acquisition, and the effects of increased patent litigation defense costs net of insurance reimbursements. As of March 31st, 2004, RealNetworks had approximately $364 million in cash, cash equivalents and short-term investments and $100 million of convertible debt.

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Continued Growth of Consumer Services

     In the first quarter of 2004, RealNetworks introduced RealPlayer® 10 and new RealVideo® 10 and RealAudio® 10. RealPlayer 10 is the first media player to feature universal playback enabling consumers to listen/view content in any mainstream format. Also, during the quarter, Google teamed with RealNetworks to improve consumers’ experience of the web. Every consumer downloading RealPlayer 10 is offered the opportunity to install the Google Toolbar which offers valuable time saving services such as eliminating unwanted pop-ups, completing forms with one click and highlighting search terms on a web page. In addition, RealNetworks launched the RealPlayer Music Store, which more than half a million tracks of what we believe to be the highest quality audio files at 192Kbps RealAudio with AAC available in any Internet music store.

     RealNetworks’ games business grew as RealNetworks completed the purchase of GameHouse, Inc. during the first quarter of 2004. RealArcade® introduced 27 game titles this quarter including 5 GameHouse Studios titles. Additionally, GameHouse’s Super Collapse® II is now available for the Nintendo Game Boy Advance and, through Jamdat, select GameHouse games are now accessible to subscribers to the major US mobile networks.

Business Products and Services

     During the quarter, the Helix™ mobile platform continued to gain momentum. More than 26 mobile carriers in Europe and the Middle East announced they have adopted RealNetworks Helix mobile platform. RealNetworks also increased the penetration of the RealPlayer on mobile handsets; Sony Ericsson announced that new multimedia capable phones will ship with the RealPlayer, and QUALCOMM, whose chips power the vast majority of handsets in the CDMA market, announced it licensed the RealPlayer for inclusion on its chip sets. RealPlayer on mobile devices provides the platform for RealNetworks and mobile carriers to offer consumer services powered by the Helix mobile platform.

Forward Looking Guidance

     RealNetworks believes the Company will continue to show improved financial results in the second quarter of 2004. Net revenue for the second quarter is expected to be between $63 million and $65 million, representing between 27% and 31%, growth over the second quarter of 2003. GAAP quarterly loss, which includes an estimated $3 million expense relating to antitrust

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litigation, is expected to be between ($0.03) and $(0.04) per share. The quarterly net loss excluding antitrust litigation expenses is expected to be between ($0.01) and ($0.02) per share. The Company expects to reach quarterly profitability, excluding expenses relating to antitrust litigation, by the end of 2004. This guidance excludes any changes related to the Company’s ownership interest in MusicNet.

About RealNetworks, Inc.
RealNetworks, Inc. is the leading creator of digital media services and software including the award-winning Rhapsody Internet jukebox service and RealPlayer 10. Consumers can access and experience audio/video programming and download RealNetworks’ consumer software at http://www.real.com. Broadcasters, network operators, media companies and enterprises use RealNetworks’ products and services to create and deliver digital media to PCs, mobile phones and consumer electronics devices. RealNetworks’ systems and corporate information is located at http://www.realnetworks.com.

###

Press Inquiries – Erika Shaffer, RealNetworks, (206) 892-6191, eshaffer@real.com
Financial Inquiries — Roy Goodman, RealNetworks, (206) 892-6841, rgoodman@real.com

This press release contains forward-looking statements that involve risks and uncertainties, including statements relating to: (a) the acceleration of our business and any future effect thereon; (b) our ability to continue to grow and sustain successful consumer subscription and paid content businesses; (c) the inclusion of our product and technology in mobile handsets and handset technology offered by Sony Ericsson and QUALCOMM; (d) revenue and net loss projections for the second quarter of 2004; and (e) projections of quarterly profitability by the end of 2004. Actual results may differ materially from the results predicted. Factors that could cause actual results to differ from the results predicted include: development and consumer acceptance of legal online music distribution services; risks associated with the sustained adoption and use of RealNetworks’ services by customers, including the uncertainty of whether consumers will continue to pay for subscription content over the Internet, which is a relatively new and unproven business model; the potential that we will be unable to continue to enter into commercially attractive agreements with third parties for the provision of compelling content for our subscription service offerings; the risk that the costs of our antitrust litigation will be greater than we anticipate; the emergence of new entrants and competition in the market for digital media subscription offerings; the impact on our gross margins from content costs and from the mix of subscribers to subscription offerings with higher content costs than others; competitive risks, including competing technologies, products and services, and the competitive activities of our larger competitors, some of which have strong ties to streaming media users through other products; potential adverse responses by GameHouse distributors to the announcement of the acquisition; risks relating to the timely development, production, marketing and acceptance of the products, services and technologies contemplated by the GameHouse acquisition; potential funding decisions by companies in which we have a significant equity position; and RealNetworks’ independent decisions, from time to time, based on all factors it deems relevant, whether to repurchase shares under its stock buyback program. 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, 2003, and its quarterly reports on Form 10-Q and from time to time in other reports filed by RealNetworks with the Securities and Exchange Commission.

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RealNetworks, RealAudio, RealVideo, Helix, Rhapsody, RealArcade, GameHouse and RealPlayer are trademarks or registered trademarks of RealNetworks, Inc. All other companies or products listed herein are trademarks or registered trademarks of their respective owners.

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RealNetworks, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)

	Quarters Ended
	March 31,			December 31,			March 31,
	2004			2003			2003
	(in thousands, except per share data)
Net revenue	$	60,390			54,056			46,866
Cost of revenue		21,761			20,780			13,784
Loss on content agreement		4,938			—			—
Gross profit		33,691			33,276			33,082
Operating expenses:
Research and development		12,251			11,922			10,907
Sales and marketing		22,203			20,638			18,303
General and administrative		6,821			4,186			5,497
Antitrust litigation		2,321			1,574			—
Stock-based compensation		266			260			301
Total operating expenses		43,862			38,580			35,008
Operating loss		(10,171	)		(5,304	)		(1,926	)
Other income (expense), net:
Interest income		860			878			1,265
Equity in net loss of MusicNet		(1,115	)		(1,104	)		(1,731	)
Impairment of equity investments (A)		—			—			(424	)
Other, net		90			219			56
Other expense, net		(165	)		(7	)		(834	)
Loss before income taxes		(10,336	)		(5,311	)		(2,760	)
Income tax expense		(102	)		(16	)		(78	)
Net loss	$	(10,438	)		(5,327	)		(2,838	)
Basic and diluted net loss per share	$	(0.06	)		(0.03	)		(0.02	)
Shares used to compute basic and diluted net loss per share		166,961			163,755			157,431

(A) Relates to other-than-temporary declines in the value of certain equity investments. These charges were recorded to reflect these investments at their estimated fair value.

RealNetworks, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)

	March 31,		December 31,
	2004		2003
	(in thousands)
ASSETS
Current assets:
Cash, cash equivalents and short-term investments	$	363,804		373,593
Trade accounts receivable, net of allowances for doubtful accounts and sales returns		11,965		10,618
Prepaid expenses and other current assets		9,792		8,879
Total current assets		385,561		393,090
Equipment and leasehold improvements, at cost:
Equipment and software		39,811		37,110
Leasehold improvements		25,871		26,085
Total equipment and leasehold improvements		65,682		63,195
Less accumulated depreciation and amortization		35,100		33,258
Net equipment and leasehold improvements		30,582		29,937
Restricted cash equivalents		20,151		19,953
Investments		34,694		34,577
Goodwill, net		119,371		97,477
Other intangible assets, net		7,535		1,065
Other		4,453		4,840
Total assets	$	602,347		580,939
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	9,551		6,865
Accrued and other liabilities		43,090		39,400
Deferred revenue, excluding non-current portion		32,884		31,186
Accrued loss on excess office facilities and content agreement, excluding non-current portion		7,014		4,960
Total current liabilities		92,539		82,411
Deferred revenue, excluding current portion		2,621		4,561
Accrued loss on excess office facilities and content agreement, excluding current portion		24,014		24,099
Deferred rent		3,383		3,382
Convertible debt		100,000		100,000
Total shareholders’ equity		379,790		366,486
Total liabilities and shareholders’ equity	$	602,347		580,939

RealNetworks, Inc. and Subsidiaries
Supplemental Financial Information
(Unaudited)

	2004			2003
	Q1			Q4			Q3			Q2			Q1
	(in thousands)
Net Revenue by Line of Business:
Consumer products and services (A)	$	46,514			41,214			36,377			33,172			32,886
Business products and services (B)		13,876			12,842			15,432			16,474			13,980
Total net revenue	$	60,390			54,056			51,809			49,646			46,866
Consumer Products and Services:
Subscriptions (C)	$	31,562			30,075			27,909			25,470			23,639
E-commerce and other (D)		14,952			11,139			8,468			7,702			9,247
Total consumer products and services revenue	$	46,514			41,214			36,377			33,172			32,886
Consumer Products and Services:
Video, Consumer Software and Other (E)	$	27,494			29,347			28,572			28,830			29,645
Music (F)		12,265			7,937			4,655			1,670			831
Games (G)		6,755			3,930			3,150			2,672			2,410
Total consumer products and services revenue	$	46,514			41,214			36,377			33,172			32,886
Net Revenue by Geography:
North America	$	43,963			40,175			37,660			36,009			33,769
Rest of world		16,427			13,881			14,149			13,637			13,097
Total net revenue	$	60,390			54,056			51,809			49,646			46,866
Gross Margin by Line of Business: *
Consumer products and services		58	%		55	%		54	%		61	%		63	%
Business products and services		84	%		83	%		87	%		88	%		89	%
Total gross margin		64	%		62	%		64	%		70	%		71	%
Subscribers (presented as greater than)
Total **		1,300			1,300			1,150			1,000			1,000
Music		450			350			250			150			100

*	For the quarter ended March 31, 2004, total gross margin excludes loss on content agreement of $4.9 million. Including the loss on content agreement, total gross margin is 56%
**	Total subscribers as of March 31, 2004 reflects the removal of approximately 142,000 subscribers resulting from the non-renewal of the MLB contract

(A)	Revenue is derived from consumer digital media subscription services, Real Player Plus and related products, sales and distribution of third party software products, content such as games and music, and advertising
(B)	Revenue is derived from media delivery system software, support and maintenance services, broadcast hosting services and consulting services
(C)	Revenue is derived from consumer digital media subscription services including: SuperPass, RadioPass, Rhapsody, GamePass and stand-alone subscriptions
(D)	Revenue is derived from Real Player Plus and related products, sales and distribution of third party software products, content such as games and music, and advertising
(E)	Revenue is derived from RealOne SuperPass subscriptions, RealPlayer Plus and related products, stand-alone subscription services and sales and distribution of third party software products
(F)	Revenue is derived from RadioPass and Rhapsody subscription services and sales of music content
(G)	Revenue is derived from the GamePass subscription service, sales of games and advertising generated from our games and game related Web sites

RealNetworks, Inc. and Subsidiaries
Supplemental Financial Information
(Unaudited)

A reconciliation of GAAP net loss to loss before interest, taxes, depreciation, amortization and stock compensation (EBITDA) and EBITDA excluding antitrust litigation and loss on content agreement is as follows:

	Quarter Ended			Quarter Ended
	March 31,			December 31,
	2004			2003
	(in thousands)
Net loss in accordance with Generally Accepted Accounting Principles	$	(10,438	)		(5,327	)
Interest income		(860	)		(878	)
Taxes		102			16
Depreciation, amortization and stock compensation		3,648			3,107
EBITDA		(7,548	)		(3,082	)
Antitrust litigation		2,321			1,574
Loss on content agreement		4,938			—
EBITDA excluding antitrust litigation and loss on content agreement	$	(289	)		(1,508	)

This reconciliation has been provided as a performance measure, as the Company uses EBITDA and EBITDA excluding antitrust litigation expense on an ongoing basis to track and assess its financial performance. The Company has calculated EBITDA excluding loss on content agreement because it believes that the loss on content agreement is an item that does not reflect the ongoing financial operations of the Company’s business.