EX-99.3 4 exhibit993erq4-17recast.htm EXHIBIT 99.3 Q4-17 RECAST Exhibit


Exhibit 99.3
RealNetworks, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited) (Recast)
 
 
2017
 
 
Q4
 
Q3
 
Q2
 
Q1
 
 
 (in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 Net revenue
 
$
18,865

 
$
18,557

 
$
21,605

 
$
19,691

 Cost of revenue
 
4,965

 
5,343

 
6,287

 
6,569

           Gross profit
 
13,900

 
13,214

 
15,318

 
13,122

 
 
 
 
 
 
 
 
 
 Operating expenses:
 
 
 
 
 
 
 
 
       Research and development
 
7,625

 
7,152

 
7,584

 
7,349

       Sales and marketing
 
5,419

 
4,883

 
5,496

 
7,155

       General and administrative
 
5,358

 
5,081

 
5,254

 
5,303

       Restructuring and other charges
 
255

 
557

 
150

 
1,564

 
 
 
 
 
 
 
 
 
           Total operating expenses
 
18,657

 
17,673

 
18,484

 
21,371

 
 
 
 
 
 
 
 
 
 Operating income (loss)
 
(4,757
)
 
(4,459
)
 
(3,166
)
 
(8,249
)
 
 
 
 
 
 
 
 
 
 Other income (expenses):
 
 
 
 
 
 
 
 
       Interest income, net
 
83

 
116

 
109

 
128

       Gain (loss) on investments, net
 
4,500

 

 

 

       Equity in net loss of Rhapsody
 
(2,894
)
 

 
(349
)
 
(748
)
       Other income (expense), net
 
(217
)
 
(50
)
 
(13
)
 
(226
)
 
 
 
 
 
 
 
 
 
           Total other income (expense), net
 
1,472

 
66

 
(253
)
 
(846
)
 
 
 
 
 
 
 
 
 
 Income (loss) from continuing operations before income taxes
 
(3,285
)
 
(4,393
)
 
(3,419
)
 
(9,095
)
 Income tax expense (benefit)
 
(3,732
)
 
139

 
360

 
455

 
 
 
 
 
 
 
 
 
Net income (loss) from continuing operations
 
447

 
(4,532
)
 
(3,779
)
 
(9,550
)
Net income (loss) from discontinued operations, net of tax
 
392

 
198

 
393

 
126

 Net income (loss)
 
$
839

 
$
(4,334
)
 
$
(3,386
)
 
$
(9,424
)
 
 
 
 
 
 
 
 
 
Net income (loss) per share - Basic:
 
 
 
 
 
 
 
 
Continuing operations
 
$
0.01

 
$
(0.12
)
 
$
(0.10
)
 
$
(0.26
)
Discontinued operations
 
0.01

 

 
0.01

 
0.01

Net income (loss) per share - Basic
 
$
0.02

 
$
(0.12
)
 
$
(0.09
)
 
$
(0.25
)
Net income (loss) per share - Diluted:
 
 
 
 
 
 
 
 
Continuing operations
 
$
0.01

 
$
(0.12
)
 
$
(0.10
)
 
$
(0.26
)
Discontinued operations
 
0.01

 

 
0.01

 
0.01

Net income (loss) per share - Diluted
 
$
0.02

 
$
(0.12
)
 
$
(0.09
)
 
$
(0.25
)
 
 
 
 
 
 
 
 
 
 Shares used to compute basic net income (loss) per share
 
37,315

 
37,200

 
37,103

 
37,030

 Shares used to compute diluted net income (loss) per share
 
37,383

 
37,200

 
37,103

 
37,030








RealNetworks, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited) (Recast)
 
 
2016
 
 
Q4
 
Q3
 
Q2
 
Q1
 
 
 (in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 Net revenue
 
$
20,395

 
$
21,189

 
$
20,073

 
$
19,822

 Cost of revenue
 
6,591

 
7,235

 
6,651

 
7,071

           Gross profit
 
13,804

 
13,954

 
13,422

 
12,751

 
 
 
 
 
 
 
 
 
 Operating expenses:
 
 
 
 
 
 
 
 
       Research and development
 
6,738

 
6,699

 
7,167

 
9,319

       Sales and marketing
 
7,451

 
7,183

 
7,749

 
9,225

       General and administrative
 
6,035

 
7,086

 
6,217

 
8,077

       Restructuring and other charges
 
192

 
499

 
413

 
385

       Lease exit and related charges
 
48

 
1,233

 
127

 
831

 
 
 
 
 
 
 
 
 
           Total operating expenses
 
20,464

 
22,700

 
21,673

 
27,837

 
 
 
 
 
 
 
 
 
 Operating income (loss)
 
(6,660
)
 
(8,746
)
 
(8,251
)
 
(15,086
)
 
 
 
 
 
 
 
 
 
 Other income (expenses):
 
 
 
 
 
 
 
 
       Interest income, net
 
133

 
119

 
80

 
117

       Gain (loss) on investments, net
 
2,495

 
6,021

 
(46
)
 
3

       Equity in net loss of Rhapsody
 
(5,904
)
 
(233
)
 
(396
)
 

       Other income (expense), net
 
(128
)
 
(243
)
 
15

 
(287
)
 
 
 
 
 
 
 
 
 
           Total other income (expense), net
 
(3,404
)
 
5,664

 
(347
)
 
(167
)
 
 
 
 
 
 
 
 
 
 Income (loss) from continuing operations before income taxes
 
(10,064
)
 
(3,082
)
 
(8,598
)
 
(15,253
)
 Income tax expense (benefit)
 
139

 
252

 
228

 
157

 
 
 
 
 
 
 
 
 
Net income (loss) from continuing operations
 
(10,203
)
 
(3,334
)
 
(8,826
)
 
(15,410
)
Net income (loss) from discontinued operations, net of tax
 
227

 
278

 
479

 
239

 Net income (loss)
 
$
(9,976
)
 
$
(3,056
)
 
$
(8,347
)
 
$
(15,171
)
 
 
 
 
 
 
 
 
 
Net income (loss) per share - Basic:
 
 
 
 
 
 
 
 
Continuing operations
 
$
(0.28
)
 
$
(0.09
)
 
$
(0.24
)
 
$
(0.42
)
Discontinued operations
 
0.01

 
0.01

 
0.01

 

Net income (loss) per share - Basic
 
$
(0.27
)
 
$
(0.08
)
 
$
(0.23
)
 
$
(0.42
)
Net income (loss) per share - Diluted:
 
 
 
 
 
 
 
 
Continuing operations
 
$
(0.28
)
 
$
(0.09
)
 
$
(0.24
)
 
$
(0.42
)
Discontinued operations
 
0.01

 
0.01

 
0.01

 

Net income (loss) per share - Diluted
 
$
(0.27
)
 
$
(0.08
)
 
$
(0.23
)
 
$
(0.42
)
 
 
 
 
 
 
 
 
 
 Shares used to compute basic net income (loss) per share
 
37,042

 
36,805

 
36,755

 
36,520

 Shares used to compute diluted net income (loss) per share
 
37,042

 
36,805

 
36,755

 
36,520







RealNetworks, Inc. and Subsidiaries
Segment Results of Operations and Reconciliation to non-GAAP Contribution Margin
(Unaudited)
 
 
2017
 
2016
 
 
 Q1
 
 Q2
 
 Q3
 
 Q4
 
 YTD
 
 Q1
 
 Q2
 
 Q3
 
 Q4
 
 YTD
 
 
 (in thousands)
 
 (in thousands)
Consumer Media
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue
 
$
5,669

 
$
6,951

 
$
4,197

 
$
5,752

 
$
22,569

 
$
5,726

 
$
6,400

 
$
6,482

 
$
6,443

 
$
25,051

Cost of revenue
 
1,405

 
1,159

 
981

 
915

 
4,460

 
2,417

 
1,561

 
1,507

 
1,589

 
7,074

   Gross profit
 
4,264

 
5,792

 
3,216

 
4,837

 
18,109

 
3,309

 
4,839

 
4,975

 
4,854

 
17,977

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Gross margin
 
75
%
 
83
%
 
77
%
 
84
%
 
80
%
 
58
%
 
76
%
 
77
%
 
75
%
 
72
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
 
4,010

 
3,730

 
3,217

 
3,573

 
14,530

 
5,376

 
4,293

 
4,271

 
4,459

 
18,399

Operating income (loss), a GAAP measure
 
$
254


$
2,062


$
(1
)

$
1,264


$
3,579


$
(2,067
)

$
546


$
704


$
395


$
(422
)
Depreciation and amortization
 
167

 
159

 
42

 
42

 
410

 
1,303

 
375

 
295

 
239

 
2,212

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Contribution margin, a non-GAAP measure
 
$
421

 
$
2,221

 
$
41

 
$
1,306

 
$
3,989

 
$
(764
)
 
$
921

 
$
999

 
$
634

 
$
1,790

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mobile Services
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue
 
$
8,199

 
$
7,720

 
$
7,678

 
$
7,155

 
$
30,752

 
$
8,057

 
$
7,636

 
$
7,821

 
$
7,775

 
$
31,289

Cost of revenue
 
3,190

 
2,426

 
2,134

 
2,271

 
10,021

 
2,816

 
3,357

 
3,521

 
2,912

 
12,606

   Gross profit
 
5,009

 
5,294

 
5,544

 
4,884

 
20,731

 
5,241

 
4,279

 
4,300

 
4,863

 
18,683

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Gross margin
 
61
%
 
69
%
 
72
%
 
68
%
 
67
%
 
65
%
 
56
%
 
55
%
 
63
%
 
60
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
 
8,119

 
6,705

 
6,437

 
6,709

 
27,970

 
9,794

 
8,784

 
8,075

 
7,786

 
34,439

Operating income (loss), a GAAP measure
 
$
(3,110
)

$
(1,411
)

$
(893
)

$
(1,825
)

$
(7,239
)

$
(4,553
)

$
(4,505
)

$
(3,775
)

$
(2,923
)

$
(15,756
)
Acquisitions related intangible asset amortization
 
196

 
201

 
88

 
89

 
574

 
308

 
209

 
208

 
198

 
923

Depreciation and amortization
 
203

 
175

 
180

 
174

 
732

 
422

 
608

 
403

 
290

 
1,723

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Contribution margin, a non-GAAP measure
 
$
(2,711
)
 
$
(1,035
)
 
$
(625
)
 
$
(1,562
)
 
$
(5,933
)
 
$
(3,823
)
 
$
(3,688
)
 
$
(3,164
)
 
$
(2,435
)
 
$
(13,110
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Games
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue
 
$
5,823

 
$
6,934

 
$
6,682

 
$
5,958

 
$
25,397

 
$
6,039

 
$
6,037

 
$
6,886

 
$
6,177

 
$
25,139

Cost of revenue
 
1,937

 
2,679

 
2,226

 
1,868

 
8,710

 
1,845

 
1,817

 
2,203

 
2,054

 
7,919

   Gross profit
 
3,886

 
4,255

 
4,456

 
4,090

 
16,687

 
4,194

 
4,220

 
4,683

 
4,123

 
17,220

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Gross margin
 
67
%
 
61
%
 
67
%
 
69
%
 
66
%
 
69
%
 
70
%
 
68
%
 
67
%
 
68
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
 
4,947

 
5,090

 
5,071

 
5,293

 
20,401

 
5,295

 
4,725

 
4,649

 
4,975

 
19,644

Operating income (loss), a GAAP measure
 
$
(1,061
)
 
$
(835
)
 
$
(615
)
 
$
(1,203
)
 
$
(3,714
)
 
$
(1,101
)
 
$
(505
)
 
$
34

 
$
(852
)
 
$
(2,424
)
Acquisitions related intangible asset amortization
 
27

 
25

 
27

 
18

 
97

 
25

 
34

 
29

 
27

 
115

Depreciation and amortization
 
141

 
157

 
169

 
163

 
630

 
179

 
154

 
104

 
146

 
583

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Contribution margin, a non-GAAP measure
 
$
(893
)
 
$
(653
)
 
$
(419
)
 
$
(1,022
)
 
$
(2,987
)
 
$
(897
)
 
$
(317
)
 
$
167

 
$
(679
)
 
$
(1,726
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of revenue
 
37

 
23

 
2

 
(89
)
 
(27
)
 
(7
)
 
(84
)
 
4

 
36

 
(51
)
   Gross profit
 
(37
)
 
(23
)
 
(2
)
 
89

 
27

 
7

 
84

 
(4
)
 
(36
)
 
51

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Gross margin
 
 N/A

 
 N/A

 
 N/A

 
 N/A

 
 N/A

 
 N/A

 
 N/A

 
 N/A

 
 N/A

 
 N/A

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
 
4,295

 
2,959

 
2,948

 
3,082

 
13,284

 
7,372

 
3,871

 
5,705

 
3,244

 
20,192

Operating income (loss), a GAAP measure
 
$
(4,332
)
 
$
(2,982
)
 
$
(2,950
)
 
$
(2,993
)
 
$
(13,257
)
 
$
(7,365
)
 
$
(3,787
)
 
$
(5,709
)
 
$
(3,280
)
 
$
(20,141
)
Other income (expense), net
 
(226
)
 
(13
)
 
(50
)
 
(217
)
 
(506
)
 
(287
)
 
15

 
(243
)
 
(128
)
 
(643
)
Depreciation and amortization
 
187

 
119

 
139

 
48

 
493

 
361

 
246

 
634

 
260

 
1,501

Restructuring and other charges
 
1,564

 
150

 
557

 
255

 
2,526

 
385

 
413

 
499

 
192

 
1,489

Stock-based compensation
 
1,434

 
863

 
748

 
630

 
3,675

 
3,171

 
608

 
778

 
867

 
5,424

Lease exit and related charges
 

 

 

 

 

 
831

 
127

 
1,233

 
48

 
2,239

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Contribution margin, a non-GAAP measure
 
$
(1,373
)
 
$
(1,863
)
 
$
(1,556
)
 
$
(2,277
)
 
$
(7,069
)
 
$
(2,904
)
 
$
(2,378
)
 
$
(2,808
)
 
$
(2,041
)
 
$
(10,131
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 








RealNetworks, Inc. and Subsidiaries
Reconciliation of Net income (loss) from continuing operations to adjusted EBITDA, a non-GAAP measure
(Unaudited)
 
 
 
2017
 
2016
 
 
 Q1
 
 Q2
 
 Q3
 
 Q4
 
 YTD
 
 Q1
 
 Q2
 
 Q3
 
 Q4
 
 YTD
 
 
 (in thousands)
 
 (in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of GAAP Net income (loss) from continuing operations to adjusted EBITDA:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) from continuing operations
 
$
(9,550
)
 
$
(3,779
)
 
$
(4,532
)
 
$
447

 
$
(17,414
)
 
$
(15,410
)
 
$
(8,826
)
 
$
(3,334
)
 
$
(10,203
)
 
$
(37,773
)
Income tax expense (benefit)
 
455

 
360

 
139

 
(3,732
)
 
(2,778
)
 
157

 
228

 
252

 
139

 
776

Interest income, net
 
(128
)
 
(109
)
 
(116
)
 
(83
)
 
(436
)
 
(117
)
 
(80
)
 
(119
)
 
(133
)
 
(449
)
(Gain) loss on investments, net
 

 

 

 
(4,500
)
 
(4,500
)
 
(3
)
 
46

 
(6,021
)
 
(2,495
)
 
(8,473
)
Equity in net loss of Rhapsody
 
748

 
349

 

 
2,894

 
3,991

 

 
396

 
233

 
5,904

 
6,533

Acquisitions related intangible asset amortization
 
223

 
226

 
115

 
107

 
671

 
333

 
243

 
237

 
225

 
1,038

Depreciation and amortization
 
698

 
610

 
530

 
427

 
2,265

 
2,265

 
1,383

 
1,436

 
935

 
6,019

Restructuring and other charges
 
1,564

 
150

 
557

 
255

 
2,526

 
385

 
413

 
499

 
192

 
1,489

Stock-based compensation
 
1,434

 
863

 
748

 
630

 
3,675

 
3,171

 
608

 
778

 
867

 
5,424

Lease exit and related charges, net of sublease income
 

 

 

 

 

 
831

 
127

 
1,233

 
48

 
2,239

 Adjusted EBITDA, a non-GAAP measure
 
$
(4,556
)

$
(1,330
)

$
(2,559
)

$
(3,555
)

$
(12,000
)

$
(8,388
)

$
(5,462
)

$
(4,806
)

$
(4,521
)

$
(23,177
)