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EXHIBIT 99.1

REALNETWORKS ANNOUNCES SECOND QUARTER RESULTS

Reports Record Revenue of $136.2 million

SEATTLE — July 31, 2007 — RealNetworks^®, Inc. (Nasdaq: RNWK), the leading creator of digital media services and software, today announced results for the second quarter ended June 30, 2007.

Quarterly Highlights:

•

Record revenue of $136.2 million

•

Net income of $1.3 million or $0.01 per diluted share

•

Adjusted net income of $8.9 million or $0.05 per diluted share

“We are pleased to again deliver record revenue and solid financial performance this quarter,” said Rob Glaser, chairman and CEO of RealNetworks. “We also released a new version of our flagship RealPlayer product to widespread acclaim. The new RealPlayer makes it easy for consumers to download and record video from thousands of Web sites.”

For the second quarter of 2007, revenue grew 52% to $136.2 million compared to $89.4 million for the second quarter of 2006. For the second quarter of 2007, revenue in the Consumer Products and Services segment was as follows: Music revenue was $36.8 million, a 22% increase over the second quarter of 2006; Games revenue was $24.9 million, a 17% increase over the second quarter of 2006; and Media Software and Services revenue was $25.4 million, a 3% decrease from the second quarter of 2006. In the Technology Products and Solutions segment, revenue was $49.1 million, a 310% increase over the second quarter of 2006, due to the acquisition of WiderThan. Foreign currency exchange rate fluctuations positively impacted 2007 second quarter revenue by approximately $1.2 million compared to the second quarter of 2006.

Net income for the second quarter of 2007 was $1.3 million or $0.01 per diluted share, compared to $38.9 million or $0.22 per diluted share in the second quarter of 2006. The second quarter of 2006 results included payments related to Real’s antitrust settlement and commercial agreements with Microsoft. The final payment was received under these agreements during the first quarter of 2007. Further information regarding these payments can be found in Real’s SEC filings. Adjusted net income, described below in Real’s description of non-GAAP measures, was $8.9 million or $0.05 per diluted share for the second quarter of 2007, compared to $5.1 million or $0.03 per diluted share in the second quarter of 2006. Adjusted EBITDA for the second quarter of 2007 was $12.7 million compared to $2.2 million in the second quarter of 2006. A reconciliation of GAAP net income to adjusted net income and adjusted EBITDA is provided in the financial tables that accompany this release.

Gross margin was 64% in the second quarter of 2007 compared to 70% in the second quarter of 2006. Operating expenses for the second quarter of 2007 were $92.1 million, compared to $13.1 million in the second quarter of 2006. Operating expenses in the second quarter of 2006 included benefits related to payments under Real’s antitrust settlement and commercial agreements with Microsoft. Adjusted operating expenses in the second quarter of 2007 were $82.7 million compared to $64.4 million in the second quarter of 2006. A reconciliation of GAAP operating expenses to adjusted operating expenses is provided in the financial tables that accompany this release. For the second quarter of 2007, Real’s effective tax rate was 62%, due in part to foreign tax impacts of acquisitions made during the quarter.

As of June 30, 2007, Real had approximately $614 million in unrestricted cash, cash equivalents and short-term investments which include the proceeds from $100 million of convertible debt.

Under Real’s current stock repurchase program, approximately 3.5 million shares were repurchased for $29.4 million during the second quarter of 2007. As of June 30, 2007, approximately $70.6 million remained available under the existing stock repurchase program.

Acquisition of Exomi

In June 2007, Real acquired Exomi, a provider of mobile software and services for a total upfront cash payment of approximately $11 million, and a commitment to make additional contingent cash payments of up to an aggregate of approximately $5 million if certain financial performance targets are met over the next three-year period. Headquartered in Helsinki, Finland, Exomi provides the messaging and WAP (Wireless Application Protocol) gateways that are necessary for mobile carriers to deliver mobile entertainment services such as Music on Demand, Video on Demand, Ringback Tones, Games and other services to the mobile handset.

This acquisition is part of Real’s strategy to extend its global leadership in digital entertainment services to mobile operators, and follows Real’s recent acquisitions of mobile entertainment providers Sony NetServices in May 2007 and WiderThan in late 2006.

Business Outlook

The following forward-looking statements reflect RealNetworks’ expectations as of July 31, 2007. The Company currently does not intend to update these forward-looking statements until its next quarterly results announcement.

For the third quarter of 2007, Real expects revenue in the range of $141 million to $145 million, GAAP net loss per share of ($0.03) to ($0.01) and adjusted net income per diluted share of $0.02 to $0.04.

For the full year 2007, Real expects revenue in the range of $561 million to $573 million. Real expects 2007 GAAP net income per diluted share of $0.22 to $0.25 and adjusted net income per diluted share of $0.21 to $0.24. This guidance assumes an effective tax rate of approximately 40%.

See a complete reconciliation of estimated GAAP net income per diluted share to adjusted net income per diluted share, provided in the financial tables that accompany this press release.

Webcast and Conference Call Information

The Company will host a webcast and conference call today at 5:00pm (Eastern)/ 2:00pm (Pacific). The live webcast featuring slides and audio, will be available at http://investor.realnetworks.com. Listeners will require RealPlayer^® to listen to the conference call, which can be downloaded for free at www.real.com. The on-demand webcast will be available approximately two hours following the conclusion of the live webcast. Participants may access the conference call by dialing 800-857-5305 (773-681-5857 for international callers). The passcode is “Second Quarter Earnings,” and the leader is Rob Glaser. A telephonic replay will be available until 8:00pm (Eastern) on August 7, 2007 and may be accessed by dialing 800-469-5439 (203-369-3805 for international callers).

RNWK-F

For More Information Contact

Press: Bill Hankes, (206) 892-6614, bhankes@real.com

Financial: Caroline Hughes, (206) 892-6718, carolinehughes@real.com

ABOUT REALNETWORKS

RealNetworks, Inc. is a leading creator of digital media services and software including Rhapsody^®, RealPlayer^®, and casual PC and mobile games. 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. Consumers can access and experience audio/video programming and download RealNetworks’ consumer software at http://www.real.com. RealNetworks’ corporate information is located at http://www.realnetworks.com.

About Non-GAAP Financial Measures

To supplement RealNetworks’ consolidated financial statements presented in accordance with GAAP, we present investors with certain non-GAAP financial measures, including adjusted net income and adjusted net income per share, adjusted EBITDA, adjusted cost of revenue and adjusted operating expenses.

•

Adjusted net income consists of net income excluding the impact of the following: stock-based compensation expense; income and expenses including charitable contributions related to the Microsoft agreements; equity investment gains and losses from sale or impairments; acquisition costs, including amortization of intangible assets and expenses for employee stock options that were converted to cash rights; an estimate of the income taxes from the aforementioned items; and changes in deferred tax asset valuation allowances.

•

Adjusted net income per share is calculated by dividing adjusted net income by GAAP weighted average diluted shares outstanding.

•

Adjusted EBITDA consists of net income excluding the impact of the following: interest income, net; income taxes; depreciation; amortization; stock-based compensation; expenses for employee stock options that were converted to cash rights; equity investment gains and losses from sale or impairments; and income and expenses including charitable contributions related to the Microsoft agreements.

•

Adjusted cost of revenue consists of GAAP cost of revenue excluding stock-based compensation expenses, and acquisition costs including amortization of intangible assets and expenses for employee stock options that were converted to cash rights.

•

Adjusted operating expenses consist of GAAP operating expenses excluding stock-based compensation expenses, antitrust litigation expenses (benefits) and acquisition costs including amortization of intangible assets and expenses for employee stock options that were converted to cash rights.

RealNetworks believes that the presentation of adjusted net income and adjusted net income per share, adjusted EBITDA, adjusted cost of revenue and adjusted operating expenses provides important supplemental information to management and investors regarding financial and business trends relating to the company’s financial condition and results of operations. Management believes that the use of these non-GAAP financial measures provides consistency and comparability with our past financial reports, and also facilitates comparisons with other companies in our industry, many of which use similar non-GAAP financial measures to supplement their GAAP results. Management has historically used these non-GAAP measures when evaluating operating performance because we believe that the inclusion or exclusion of the items described above provides an additional measure of our operating results and facilitates comparisons of our core operating

performance against prior periods and our business model objectives. We have chosen to provide this information to investors in order to enable them to perform additional analyses of past, present and future operating performance, to enable them to compare us to other companies, and as a supplemental means to evaluate our ongoing operations. Externally, we believe that adjusted net income and adjusted EBITDA continue to be useful to investors in their assessment of our operating performance and the valuation of our company.

Internally, adjusted net income and adjusted net income per share, adjusted EBITDA, adjusted cost of revenue, and adjusted operating expenses are significant measures used by management for purposes of:

•

supplementing the financial results and forecasts reported to our board of directors;

•

evaluating the operating performance of our company which includes direct and incrementally controllable revenue and costs of operations, but excludes items considered by management to be either non-cash or non-operating such as interest income and expense, stock-based compensation, tax expense, deferred tax valuation allowance changes, depreciation and amortization;

•

managing and comparing performance internally across our businesses and externally against our peers;

•

establishing internal operating budgets;

•

evaluating and valuing potential acquisition candidates.

Adjusted net income is used by RealNetworks as a broad measure of financial performance that encompasses our operating performance, cash, capital structure and investment management, and income tax planning effectiveness. Adjusted EBITDA is used by management as a way to isolate our operating performance and to compare it to that of other companies.

Adjusted net income and adjusted net income per share, adjusted EBITDA, adjusted cost of revenue, and adjusted operating expenses are not calculated in accordance with GAAP, and should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Non-GAAP financial measures have limitations in that they do not reflect all of the costs associated with the operations of our business as determined in accordance with GAAP. As a result, you should not consider these measures in isolation or as a substitute for analysis of RealNetworks’ results as reported under GAAP. We expect to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from our non-GAAP financial measures should not be construed as an inference that these costs are unusual or infrequent. Some of the limitations in relying on our non-GAAP financial measures are:

•

Adjusted net income, adjusted net income per share and adjusted EBITDA are measures which we have defined for internal and investor purposes and are not in accordance with GAAP. A further limitation associated with these measures is that they do not include all costs and income that impact our net income and net income per share. We compensate for these limitations by prominently disclosing GAAP net income, which we believe is the most directly comparable GAAP measure, and providing investors with reconciliations from GAAP net income to adjusted net income and adjusted EBITDA.

•

Adjusted cost of revenue is limited in that it does not include stock-based compensation expenses, and certain costs associated with our acquisitions. Adjusted operating expenses are limited in that they do not include stock-based compensation expenses, antitrust litigation expenses (benefit) and certain costs associated with our acquisitions. We compensate for these limitations by prominently disclosing the reported GAAP results and providing investors with a reconciliation from GAAP to the adjusted amount.

In the financial tables of our earnings press release, RealNetworks has included reconciliations of GAAP net income to adjusted net income and adjusted EBITDA, GAAP cost of revenue to adjusted cost of revenue and GAAP operating expenses to adjusted operating expenses for the relevant periods.

Forward-Looking Statements: This press release contains forward-looking statements that involve risks and uncertainties, including statements relating to Real’s future revenue, GAAP and adjusted net income (loss) per diluted share, amortization of intangible assets, stock based compensation expense and income tax rate. 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 generally and RealNetworks’ content services in particular because these are relatively new and unproven business models and markets; risks associated with acquisitions generally, and the acquisitions of WiderThan, Sony NetServices and Exomi in particular, including the risks of integration, unknown liabilities and operations in new markets and geographies; 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 emergence of new entrants and competition in the market for digital media subscription offerings and online music sales; the impact on our gross margins of 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; risks associated with the introduction of new products and services, including the new RealPlayer; risks inherent in strategic relationships, especially with competitors, and technology and service integration efforts; and risks relating to the ability of Real’s strategic partners to generate subscribers for Real’s digital content services. 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, 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. 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 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.

RealNetworks, Rhapsody 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.

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


	Quarter Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
	(in thousands, except per share data)

Net revenue	$	136,171		$	89,409		$	265,643		$	176,011

Cost of revenue		49,199			26,646			95,142			53,399


Gross profit		86,972			62,763			170,501			122,612


Operating expenses:
Research and development		25,005			18,684			48,484			36,783
Sales and marketing		50,081			37,961			99,781			74,044
General and administrative		17,063			14,317			34,417			27,543
Loss on excess office facilities (A)		—			—			—			738


Subtotal operating expenses		92,149			70,962			182,682			139,108

Antitrust litigation benefit, net (B)		—			(57,858	)		(60,747	)		(97,693	)


Total operating expenses		92,149			13,104			121,935			41,415


Operating (loss) income		(5,177	)		49,659			48,566			81,197


Other income (expenses):
Interest and other, net		8,065			9,381			17,167			17,360
Gain on sale of equity investments		132			2,286			132			2,286
Equity in net loss of investments		—			—			(132	)		—
Other income		485			73			952			190


Other income, net		8,682			11,740			18,119			19,836


Income before income taxes		3,505			61,399			66,685			101,033
Income taxes		(2,178	)		(22,521	)		(25,397	)		(37,272	)


Net income	$	1,327		$	38,878		$	41,288		$	63,761


Basic net income per share	$	0.01		$	0.24		$	0.26		$	0.40
Diluted net income per share	$	0.01		$	0.22		$	0.24		$	0.36

Shares used to compute basic net income per share		153,880			159,938			157,929			160,410
Shares used to compute diluted net income per share		169,033			177,337			173,822			177,127

(A) The loss on unoccupied excess office facilities represents an increase in the estimate of loss from building operating costs that are not expected to be recovered.

(B) Consists of amounts received under the Settlement and Commercial agreements with Microsoft, net of certain legal fees, personnel costs, public relations and other professional service fees incurred related to antitrust complaints against Microsoft, including proceedings in the European Union.

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


	June 30,		December 31,
	2007		2006
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	219,548	$	525,232
Short-term investments		394,215		153,688
Trade accounts receivable, net		79,354		65,751
Deferred costs, current portion		5,089		1,643
Deferred tax assets, net, current portion		927		891
Prepaid expenses and other current assets		21,720		21,990


Total current assets		720,853		769,195


Equipment, software, and leasehold improvements, at cost:
Equipment and software		94,038		83,587
Leasehold improvements		30,343		29,665

Total equipment, software, and leasehold improvements		124,381		113,252
Less accumulated depreciation and amortization		72,829		65,509


Net equipment, software, and leasehold improvements		51,552		47,743

Restricted cash equivalents		15,500		17,300
Equity investments		12,511		22,649
Other assets		5,412		5,148
Deferred tax assets, net, non-current portion		30,687		27,150
Other intangible assets, net		104,760		105,109
Goodwill		325,009		309,122


Total assets	$	1,266,284	$	1,303,416


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	50,231	$	52,097
Accrued and other liabilities		108,013		104,328
Deferred revenue, current portion		37,233		24,137
Accrued loss on excess office facilities, current portion		4,132		4,508


Total current liabilities		199,609		185,070

Deferred revenue, non-current portion		2,757		3,440
Accrued loss on excess office facilities, non-current portion		8,574		9,993
Deferred rent		4,446		4,331
Deferred tax liabilities, net, non-current portion		24,580		27,076
Convertible debt		100,000		100,000
Other long-term liabilities		6,912		3,740


Total liabilities		346,878		333,650


Total shareholders’ equity		919,406		969,766


Total liabilities and shareholders’ equity	$	1,266,284	$	1,303,416

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


	Six Months Ended June 30,
	2007			2006
	(in thousands)
Cash flows from operating activities:
Net income	$	41,288		$	63,761
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization		20,905			8,219
Stock-based compensation		11,307			7,311
Loss on disposal of equipment, software, and leasehold improvements		163			76
Equity in net loss of investments		132			—
Gain on sale of equity investments		(132	)		(2,286	)
Excess tax benefit from stock option exercises		(596	)		—
Accrued loss on excess office facilities		(1,795	)		(1,742	)
Unrealized gain on securities		(2,102	)		—
Deferred income taxes		(6,069	)		35,246
Purchases of securities		(270,000	)		—
Other		51			48
Net change in certain assets and liabilities, net of acquisitions		552			(50,651	)


Net cash (used in) provided by operating activities		(206,296	)		59,982


Cash flows from investing activities:
Purchases of equipment, software, and leasehold improvements		(11,525	)		(5,381	)
Purchases of short-term investments		(38,768	)		(102,853	)
Proceeds from sales and maturities of short-term investments		70,343			86,422
Purchases of intangible assets		(2,060	)		—
Proceeds from sale of equity investments		1,615			2,286
Purchase of equity investments		—			(450	)
Decrease in restricted cash equivalents		1,800			—
Cash used in acquisitions, net of cash acquired		(25,351	)		(7,086	)


Net cash used in investing activities		(3,946	)		(27,062	)


Cash flows from financing activities:
Net proceeds from sales of common stock under employee stock purchase plan and exercise of stock options		12,277			34,522
Excess tax benefit from stock option exercises		596			—
Repurchase of common stock		(107,905	)		(96,972	)


Net cash used in financing activities		(95,032	)		(62,450	)


Effect of exchange rate changes on cash		(410	)		739


Net decrease in cash and cash equivalents		(305,684	)		(28,791	)

Cash and cash equivalents, beginning of period		525,232			651,971


Cash and cash equivalents, end of period	$	219,548		$	623,180

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


	2007						2006
	Q2			Q1			Q4			Q3			Q2			Q1
	(in thousands)
Net Revenue by Line of Business:
Consumer products and services (A)	$	87,115		$	85,040		$	88,022		$	82,497		$	77,442		$	74,811
Technology products and solutions (B)		49,056			44,432			37,552			11,179			11,967			11,791


Total net revenue	$	136,171		$	129,472		$	125,574		$	93,676		$	89,409		$	86,602


Consumer Products and Services:
Subscriptions (C)	$	51,091		$	51,490		$	50,835		$	50,878		$	47,452		$	47,832
Media properties (D)		17,748			15,932			18,815			13,883			11,546			9,484
E-commerce and other (E)		18,276			17,618			18,372			17,736			18,444			17,495


Total consumer products and services revenue	$	87,115		$	85,040		$	88,022		$	82,497		$	77,442		$	74,811


Consumer Products and Services:
Music (F)	$	36,801		$	34,127		$	33,623		$	30,375		$	30,118		$	28,918
Media software and services (G)		25,419			27,011			30,513			29,586			26,127			27,277
Games (H)		24,895			23,902			23,886			22,536			21,197			18,616


Total consumer products and services revenue	$	87,115		$	85,040		$	88,022		$	82,497		$	77,442		$	74,811


Net Revenue by Geography:
United States	$	88,035		$	84,554		$	81,758		$	69,433		$	66,542		$	65,700
Rest of world		48,136			44,918			43,816			24,243			22,867			20,902


Total net revenue	$	136,171		$	129,472		$	125,574		$	93,676		$	89,409		$	86,602


Gross Margin by Line of Business:
Consumer products and services		67	%		67	%		70	%		68	%		68	%		67	%
Technology products and solutions		59	%		59	%		58	%		81	%		81	%		83	%
Total gross margin		64	%		65	%		66	%		70	%		70	%		69	%

Subscribers (presented as greater than) *
Total Subscribers (I)		26,150			24,550			22,700			2,450			2,400			2,400
Technology Products and Solutions Application Services Subscribers (J)		23,600			21,900			20,200
Total Music Subscribers (K)		2,700			2,675			2,550			1,650			1,625			1,575

*Beginning the quarter ended December 31, 2006, total subscribers reflect the inclusion of subscribers related to wireless carrier application subscription services. Total Music Subscribers includes subscribers from our Technology Products and Solutions Application Subscription Services, such as music-on-demand, as well as our Consumer Music Services, such as Rhapsody and Premium Radio. Although music-on-demand subscribers are included in the Technology Products and Solutions Application Services subscribers and total music subscribers, these subscribers are only counted once as part of our Total Subscribers.

(A) Revenue is derived from consumer digital media subscription services, RealPlayer 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 carrier application services such as ringback tones and music-on-demand, 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 advertising and through the distribution of third party products.

(E) Revenue is derived from RealPlayer Plus and related products, sales of third party software products, and content such as games and music.

(F) Revenue is derived from Rhapsody and RadioPass subscription services and sales of music content, advertising generated from our music and music related websites and the distribution of third party products.

(G) Revenue is derived from SuperPass subscriptions, RealPlayer Plus and related products, stand-alone subscription services, sales and distribution of third-party software products and advertising related to our non-game and non-music related web properties.

(H) Revenue is derived from GamePass subscription service, sales of games, advertising generated from our games and game-related websites and the distribution of third-party products.

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

(I) Total subscribers include Technology Products and Solutions application services and consumer subscription services including: Ringback Tones, Music-on-Demand, Video-on-Demand, Rhapsody, Rhapsody-to-Go, RadioPass, SuperPass, GamePass, and stand-alone subscriptions.

(J) Technology Products and Solutions application service subscribers include: Ringback Tones, Music-on-Demand and Video-on-Demand.

(K) Music subscribers represent an aggregate of all of our music services and include both Technology Products and Solutions application services subscribers and consumer subscription services. Music subscribers include: Rhapsody, Rhapsody-to-Go, premium radio, and Music-on-Demand. Revenue from Technology Products and Solutions application services, including Music-on-Demand, are included in our Technology Products and Solutions revenue.

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

Reconciliation of GAAP net income to adjusted net income is as follows:


	Quarters Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			March 31,
	2007			2007			2006			2006			2006			2006
	(in thousands, except per share data)
Net income in accordance with GAAP	$	1,327		$	39,961		$	39,302		$	42,153		$	38,878		$	24,883
Stock-based compensation		5,622			5,685			5,819			5,021			3,673			3,638
Loss (gain) on equity investments		(132	)		—			3,116			—			(2,286	)		—
Conversion of WiderThan stock options to a cash equivalent		614			845			641			—			—			—
Acquisitions related intangible asset amortization*		5,311			5,312			3,530			569			445			727
Expenses (benefit) related to antitrust litigation:
Income		—			(61,000	)		(61,000	)		(62,000	)		(58,000	)		(40,000	)
Expenses		202			471			1,026			1,000			997			971
Charitable contributions		—			1,921			2,009			1,889			1,805			1,225
Tax impact of above pro forma items*		(3,858	)		20,051			18,428			20,370			19,569			12,446
Change in income tax valuation allowance		(143	)		(2,805	)		(2,662	)		—			—			—

Adjusted net income	$	8,943		$	10,441		$	10,209		$	9,002		$	5,081		$	3,890


GAAP basic net income per share	$	0.01		$	0.25		$	0.24		$	0.26		$	0.24		$	0.15
GAAP diluted net income per share	$	0.01		$	0.22		$	0.22		$	0.24		$	0.22		$	0.14

Adjusted basic net income per share*	$	0.06		$	0.06		$	0.06		$	0.06		$	0.03		$	0.02
Adjusted diluted net income per share*	$	0.05		$	0.06		$	0.06		$	0.05		$	0.03		$	0.02

Shares used to compute basic net income per share		153,880			161,350			162,130			160,578			159,938			160,887
Shares used to compute diluted net income per share		169,033			178,053			180,919			178,913			177,337			176,923

* 2006 results have been restated to include acquisition related intangible asset amortization and related tax impact to conform to the pro forma presentation for 2007.

Reconciliation of GAAP net income to adjusted EBITDA is as follows:


	Quarters Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			March 31,
	2007			2007			2006			2006			2006			2006
	(in thousands)
Net income in accordance with GAAP	$	1,327		$	39,961		$	39,302		$	42,153		$	38,878		$	24,883
Interest income, net		(8,065	)		(9,102	)		(9,644	)		(10,618	)		(9,381	)		(7,979	)
Stock-based compensation		5,622			5,685			5,819			5,021			3,673			3,638
Loss (gain) on equity investments		(132	)		—			3,116			—			(2,286	)		—
Conversion of WiderThan stock options to a cash equivalent		614			845			641			—			—			—
Depreciation and amortization		5,661			4,621			4,970			3,692			3,522			3,525
Acquisitions related intangible asset amortization		5,311			5,312			3,530			569			445			727
Expenses (benefit) related to antitrust litigation:
Income		—			(61,000	)		(61,000	)		(62,000	)		(58,000	)		(40,000	)
Expenses		202			471			1,026			1,000			997			971
Charitable contributions		—			1,921			2,009			1,889			1,805			1,225
Income taxes		2,178			23,219			19,357			25,908			22,521			14,751


Adjusted EBITDA	$	12,718		$	11,933		$	9,126		$	7,614		$	2,174		$	1,741

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


	Quarter Ended June 30, 2007
						Acquisitions			WiderThan
						Related			Options
						Intangible			Converted			Antitrust
	As		Stock-Based			Asset			to a Cash			Litigation
	Reported		Compensation			Amortization			Equivalent			Related			Adjusted
	(in thousands)
Expenses in accordance with GAAP

Cost of revenue	$	49,199	$	(154	)	$	(1,988	)	$	(117	)	$	—		$	46,940

Operating expenses:
Research and development	$	25,005	$	(1,641	)	$	—		$	(128	)	$	—		$	23,236
Sales and marketing		50,081		(2,203	)		(3,323	)		(299	)		—			44,256
General and administrative		17,063		(1,624	)		—			(70	)		(202	)		15,167


Total adjusted operating expenses, net	$	92,149	$	(5,468	)	$	(3,323	)	$	(497	)	$	(202	)	$	82,659


	Quarter Ended June 30, 2006
							Acquisitions
							Related
							Intangible			Antitrust
	As			Stock-Based			Asset			Litigation
	Reported			Compensation			Amortization*			Related			Adjusted
	(in thousands)
Expenses in accordance with GAAP

Cost of revenue*	$	26,646		$	(41	)	$	(195	)	$	—		$	26,410

Operating expenses:
Research and development	$	18,684		$	(1,318	)	$	—		$	—		$	17,366
Sales and marketing*		37,961			(1,434	)		(250	)		—			36,277
General and administrative		14,317			(880	)		—			(2,660	)		10,777

Antitrust litigation benefit, net		(57,858	)		—			—			57,858			—


Total adjusted operating expenses, net*	$	13,104		$	(3,632	)	$	(250	)	$	55,198		$	64,420

* 2006 results have been restated to include acquisition related intangible asset amortization to conform to the pro forma presentation for 2007.


	Six Months Ended June 30, 2007
							Acquisitions			WiderThan
							Related			Options
							Intangible			Converted			Antitrust
	As			Stock-Based			Asset			to a Cash			Litigation
	Reported			Compensation			Amortization			Equivalent			Related			Adjusted
	(in thousands)
Expenses in accordance with GAAP

Cost of revenue	$	95,142		$	(313	)	$	(4,132	)	$	(244	)	$	—		$	90,453

Operating expenses:
Research and development	$	48,484		$	(3,413	)	$	—		$	(279	)	$	—		$	44,792
Sales and marketing		99,781			(4,590	)		(6,491	)		(648	)		—			88,052
General and administrative		34,417			(2,991	)		—			(288	)		(2,341	)		28,797
Antitrust litigation benefit, net		(60,747	)		—			—			—			60,747			—


Total adjusted operating expenses, net	$	121,935		$	(10,994	)	$	(6,491	)	$	(1,215	)	$	58,406		$	161,641


	Six Months Ended June 30, 2006
							Acquisitions
							Related
							Intangible			Antitrust
	As			Stock-Based			Asset			Litigation
	Reported			Compensation			Amortization*			Related			Adjusted
	(in thousands)
Expenses in accordance with GAAP

Cost of revenue*	$	53,399		$	(91	)	$	(576	)	$	—		$	52,732

Operating expenses:
Research and development	$	36,783		$	(2,687	)	$	—		$	—		$	34,096
Sales and marketing*		74,044			(2,793	)		(596	)		—			70,655
General and administrative		27,543			(1,740	)		—			(4,691	)		21,112
Loss on excess office facilities		738			—			—			—			738
Antitrust litigation benefit, net		(97,693	)		—			—			97,693			—


Total adjusted operating expenses, net*	$	41,415		$	(7,220	)	$	(596	)	$	93,002		$	126,601

* 2006 results have been restated to include acquisition related intangible asset amortization to conform to the pro forma presentation for 2007.

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

Forward-Looking Guidance

A reconciliation of GAAP net income per diluted share guidance for the quarter ending September 30, 2007 and the full year ending December 31, 2007 to adjusted net income per diluted share guidance is as follows:


	Quarter Ending September 30, 2007						Year Ending December 31, 2007
	Low			High			Low			High
Net income per diluted share in accordance with GAAP	$	(0.03	)	$	(0.01	)	$	0.22		$	0.25
Stock based compensation		0.04			0.04			0.16			0.15
Conversion of WiderThan stock options to a cash equivalent		0.00			0.00			0.02			0.02
Acquisitions related intangible asset amortization		0.04			0.04			0.13			0.13
Net benefit related to antitrust litigation		—			—			(0.34	)		(0.33	)
Tax impact of above pro forma items		(0.03	)		(0.03	)		0.04			0.04
Change in income tax valuation allowance		—			—			(0.02	)		(0.02	)


Total adjusted net income	$	0.02		$	0.04		$	0.21		$	0.24

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Exhibit No.		Description

99.1		Press Release issued by RealNetworks, Inc. dated July 31, 2007.


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


Exhibit Number		Description

99.1		Press Release issued by RealNetworks, Inc. dated July 31, 2007.


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