FORM 10-Q |
ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
RealNetworks, Inc. | ||||
(Exact name of registrant as specified in its charter) | ||||
Washington | 91-1628146 | |||
(State of incorporation) | (I.R.S. Employer Identification Number) | |||
1501 First Avenue South, Suite 600 Seattle, Washington | 98134 | |||
(Address of principal executive offices) | (Zip Code) | |||
(206) 674-2700 | ||||
(Registrant’s telephone number, including area code) |
Large accelerated filer | ¨ | Accelerated filer | ý | ||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | ||
Emerging growth company | ¨ | ||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ |
Page | |
Item 1. | Financial Statements |
September 30, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 37,964 | $ | 51,196 | |||
Short-term investments | 1,172 | 8,779 | |||||
Trade accounts receivable, net of allowances of $577 and $937 | 13,090 | 12,689 | |||||
Deferred costs, current portion | 365 | 426 | |||||
Prepaid expenses and other current assets | 4,719 | 3,715 | |||||
Current assets of discontinued operations | — | 17,456 | |||||
Total current assets | 57,310 | 94,261 | |||||
Equipment, software, and leasehold improvements, at cost: | |||||||
Equipment and software | 40,016 | 46,417 | |||||
Leasehold improvements | 3,431 | 3,536 | |||||
Total equipment, software, and leasehold improvements, at cost | 43,447 | 49,953 | |||||
Less accumulated depreciation and amortization | 40,531 | 46,093 | |||||
Net equipment, software, and leasehold improvements | 2,916 | 3,860 | |||||
Restricted cash equivalents | 1,630 | 2,400 | |||||
Other assets | 5,723 | 5,588 | |||||
Deferred costs, non-current portion | 593 | 955 | |||||
Deferred tax assets, net | 1,019 | 1,047 | |||||
Other intangible assets, net | 120 | 325 | |||||
Goodwill | 17,060 | 13,060 | |||||
Total assets | $ | 86,371 | $ | 121,496 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 3,914 | $ | 3,785 | |||
Accrued and other current liabilities | 11,916 | 12,365 | |||||
Commitment to Napster | 2,750 | 2,750 | |||||
Deferred revenue, current portion | 1,969 | 3,097 | |||||
Current liabilities of discontinued operations | — | 17,107 | |||||
Total current liabilities | 20,549 | 39,104 | |||||
Deferred revenue, non-current portion | 312 | 443 | |||||
Deferred rent | 953 | 982 | |||||
Deferred tax liabilities, net | 170 | 19 | |||||
Other long-term liabilities | 1,082 | 1,775 | |||||
Total liabilities | 23,066 | 42,323 | |||||
Commitments and contingencies | |||||||
Shareholders’ equity: | |||||||
Preferred stock, $0.001 par value, no shares issued and outstanding: | |||||||
Series A: authorized 200 shares | — | — | |||||
Undesignated series: authorized 59,800 shares | — | — | |||||
Common stock, $0.001 par value authorized 250,000 shares; issued and outstanding 37,652 shares in 2018 and 37,341 shares in 2017 | 37 | 37 | |||||
Additional paid-in capital | 641,449 | 638,727 | |||||
Accumulated other comprehensive loss | (61,077 | ) | (59,547 | ) | |||
Retained deficit | (517,104 | ) | (500,044 | ) | |||
Total shareholders’ equity | 63,305 | 79,173 | |||||
Total liabilities and shareholders’ equity | $ | 86,371 | $ | 121,496 |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net revenue (A) | $ | 17,579 | $ | 18,557 | $ | 52,953 | $ | 59,853 | |||||||
Cost of revenue (B) | 4,239 | 5,343 | 14,000 | 18,199 | |||||||||||
Gross profit | 13,340 | 13,214 | 38,953 | 41,654 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 8,052 | 7,152 | 23,398 | 22,085 | |||||||||||
Sales and marketing | 4,998 | 4,883 | 15,878 | 17,534 | |||||||||||
General and administrative | 4,586 | 5,081 | 15,526 | 15,638 | |||||||||||
Restructuring and other charges | 632 | 557 | 1,320 | 2,271 | |||||||||||
Lease exit and related benefit | — | — | (454 | ) | — | ||||||||||
Total operating expenses | 18,268 | 17,673 | 55,668 | 57,528 | |||||||||||
Operating loss | (4,928 | ) | (4,459 | ) | (16,715 | ) | (15,874 | ) | |||||||
Other income (expenses): | |||||||||||||||
Interest income, net | 72 | 116 | 270 | 353 | |||||||||||
Equity in net loss of Napster investment | (737 | ) | — | (737 | ) | (1,097 | ) | ||||||||
Other income (expenses), net | (112 | ) | (50 | ) | (195 | ) | (289 | ) | |||||||
Total other income (expenses), net | (777 | ) | 66 | (662 | ) | (1,033 | ) | ||||||||
Loss from continuing operations before income taxes | (5,705 | ) | (4,393 | ) | (17,377 | ) | (16,907 | ) | |||||||
Income tax expense | 272 | 139 | 708 | 954 | |||||||||||
Net loss from continuing operations | (5,977 | ) | (4,532 | ) | $ | (18,085 | ) | $ | (17,861 | ) | |||||
Net income from discontinued operations, net of tax | — | 198 | — | 717 | |||||||||||
Net loss | $ | (5,977 | ) | $ | (4,334 | ) | $ | (18,085 | ) | $ | (17,144 | ) | |||
Net income (loss) per share - Basic: | |||||||||||||||
Continuing operations | $ | (0.16 | ) | $ | (0.12 | ) | $ | (0.48 | ) | $ | (0.48 | ) | |||
Discontinued operations | — | — | — | 0.02 | |||||||||||
Net loss per share - Basic | $ | (0.16 | ) | $ | (0.12 | ) | $ | (0.48 | ) | $ | (0.46 | ) | |||
Net income (loss) per share - Diluted | |||||||||||||||
Continuing operations | $ | (0.16 | ) | $ | (0.12 | ) | $ | (0.48 | ) | $ | (0.48 | ) | |||
Discontinued operations | — | — | — | 0.02 | |||||||||||
Net loss per share - Diluted | $ | (0.16 | ) | $ | (0.12 | ) | $ | (0.48 | ) | $ | (0.46 | ) | |||
Shares used to compute basic net income (loss) per share | 37,618 | 37,200 | 37,549 | 37,112 | |||||||||||
Shares used to compute diluted net income (loss) per share | 37,618 | 37,200 | 37,549 | 37,112 | |||||||||||
Comprehensive income (loss): | |||||||||||||||
Unrealized investment holding gains (losses), net of reclassification adjustments | $ | (3 | ) | $ | — | $ | — | $ | 10 | ||||||
Foreign currency translation adjustments, net of reclassification adjustments | (322 | ) | 562 | (1,530 | ) | 1,802 | |||||||||
Total other comprehensive income (loss) | (325 | ) | 562 | (1,530 | ) | 1,812 | |||||||||
Net loss | (5,977 | ) | (4,334 | ) | (18,085 | ) | (17,144 | ) | |||||||
Comprehensive loss | $ | (6,302 | ) | $ | (3,772 | ) | $ | (19,615 | ) | $ | (15,332 | ) | |||
(A) Components of net revenue: | |||||||||||||||
License and product revenue | $ | 5,827 | $ | 6,873 | $ | 17,770 | $ | 23,677 | |||||||
Service revenue | 11,752 | 11,684 | 35,183 | 36,176 |
$ | 17,579 | $ | 18,557 | $ | 52,953 | $ | 59,853 | ||||||||
(B) Components of cost of revenue: | |||||||||||||||
License and product revenue | $ | 1,523 | $ | 2,163 | $ | 4,743 | $ | 6,683 | |||||||
Service revenue | 2,716 | 3,180 | 9,257 | 11,516 | |||||||||||
$ | 4,239 | $ | 5,343 | $ | 14,000 | $ | 18,199 |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (18,085 | ) | $ | (17,144 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation and amortization | 1,738 | 2,402 | |||||
Stock-based compensation | 2,113 | 3,045 | |||||
Equity in net loss of Napster | 737 | 1,097 | |||||
Deferred income taxes, net | 5 | (55 | ) | ||||
Fair value of warrants granted in 2015 and 2017, net of subsequent mark to market adjustments in 2018 and 2017 | 78 | (367 | ) | ||||
Net change in certain operating assets and liabilities: | |||||||
Trade accounts receivable | 16,754 | (3,516 | ) | ||||
Prepaid expenses and other assets | (979 | ) | 1,072 | ||||
Accounts payable | (15,235 | ) | (447 | ) | |||
Accrued and other liabilities | (2,754 | ) | (3,630 | ) | |||
Net cash used in operating activities | (15,628 | ) | (17,543 | ) | |||
Cash flows from investing activities: | |||||||
Purchases of equipment, software, and leasehold improvements | (698 | ) | (541 | ) | |||
Purchases of short-term investments | — | (13,905 | ) | ||||
Proceeds from sales and maturities of short-term investments | 7,607 | 43,754 | |||||
Acquisition, net of cash acquired | (4,192 | ) | — | ||||
Advance to Napster | — | (1,500 | ) | ||||
Net cash provided by investing activities | 2,717 | 27,808 | |||||
Cash flows from financing activities: | |||||||
Proceeds from issuance of common stock (stock options and stock purchase plan) | 114 | 130 | |||||
Tax payments from shares withheld upon vesting of restricted stock | (243 | ) | (338 | ) | |||
Net cash used in financing activities | (129 | ) | (208 | ) | |||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (962 | ) | 1,519 | ||||
Net increase (decrease) in cash, cash equivalents and restricted cash | (14,002 | ) | 11,576 | ||||
Cash, cash equivalents and restricted cash, beginning of period | 53,596 | 36,421 | |||||
Cash, cash equivalents, and restricted cash end of period | $ | 39,594 | $ | 47,997 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash received from income tax refunds | $ | 169 | $ | 419 | |||
Cash paid for income taxes | $ | 862 | $ | 1,124 | |||
Non-cash investing activities: | |||||||
Increase (decrease) in accrued purchases of equipment, software, and leasehold improvements | $ | (92 | ) | $ | 42 |
Note 1 | Description of Business and Summary of Significant Accounting Policies |
Note 2 | Recent Accounting Pronouncements |
Note 3 | Revenue Recognition |
Quarter Ended September 30, 2018 | Nine months ended September 30, 2018 | |||||||||||||||||||||||
Consumer Media | Mobile Services | Games | Consumer Media | Mobile Services | Games | |||||||||||||||||||
Business Line | ||||||||||||||||||||||||
Software License | $ | 2,746 | $ | 520 | $ | — | $ | 7,891 | $ | 2,324 | $ | — | ||||||||||||
Subscription Services | 1,232 | 6,828 | 2,744 | 3,742 | 20,447 | 8,126 | ||||||||||||||||||
Product Sales | 281 | — | 2,280 | 920 | — | 6,635 | ||||||||||||||||||
Advertising and Other | 474 | — | 474 | 1,547 | — | 1,321 | ||||||||||||||||||
Total | $ | 4,733 | $ | 7,348 | $ | 5,498 | $ | 14,100 | $ | 22,771 | $ | 16,082 |
Quarter Ended September 30, 2018 | Nine months ended September 30, 2018 | |||||||||||||||||||||||
Consumer Media | Mobile Services | Games | Consumer Media | Mobile Services | Games | |||||||||||||||||||
Sales Channel | ||||||||||||||||||||||||
Business to Business | $ | 3,220 | $ | 7,209 | $ | 806 | $ | 9,438 | $ | 22,312 | $ | 2,393 | ||||||||||||
Direct to Consumer | 1,513 | 139 | 4,692 | 4,662 | 459 | 13,689 | ||||||||||||||||||
Total | $ | 4,733 | $ | 7,348 | $ | 5,498 | $ | 14,100 | $ | 22,771 | $ | 16,082 |
Note 4 | Stock-Based Compensation |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Total stock-based compensation expense | $ | 499 | $ | 748 | $ | 2,113 | $ | 3,045 |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Expected dividend yield | 0 | % | 0 | % | 0 | % | 0 | % | |||
Risk-free interest rate | 2.78 | % | 1.61 | % | 2.69 | % | 1.71 | % | |||
Expected life (years) | 3.8 | 3.7 | 3.9 | 4.2 | |||||||
Volatility | 35 | % | 34 | % | 35 | % | 35 | % |
Note 5 | Napster Joint Venture |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net revenue | $ | 34,814 | $ | 42,816 | $ | 111,343 | $ | 134,414 | |||||||
Gross profit | 10,029 | 7,245 | 28,690 | 19,927 | |||||||||||
Operating income (loss) | 4,142 | 179 | 14,452 | (9,692 | ) | ||||||||||
Net income (loss) | 2,768 | (627 | ) | 9,350 | (13,960 | ) |
Note 6 | Fair Value Measurements |
Fair Value Measurements as of | Amortized Cost as of | ||||||||||||||||||
September 30, 2018 | September 30, 2018 | ||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Cash and cash equivalents: | |||||||||||||||||||
Cash | $ | 26,472 | $ | — | $ | — | $ | 26,472 | $ | 26,472 | |||||||||
Money market funds | 11,492 | — | — | 11,492 | 11,492 | ||||||||||||||
Total cash and cash equivalents | 37,964 | — | — | 37,964 | 37,964 | ||||||||||||||
Short-term investments: | |||||||||||||||||||
Corporate notes and bonds | — | 1,172 | — | 1,172 | 1,172 | ||||||||||||||
Total short-term investments | — | 1,172 | — | 1,172 | 1,172 | ||||||||||||||
Restricted cash equivalents | — | 1,630 | — | 1,630 | 1,630 | ||||||||||||||
Warrants issued by Napster (included in Other assets) | — | — | 911 | 911 | — | ||||||||||||||
Total | $ | 37,964 | $ | 2,802 | $ | 911 | $ | 41,677 | $ | 40,766 |
Fair Value Measurements as of | Amortized Cost as of | ||||||||||||||||||
December 31, 2017 | December 31, 2017 | ||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Cash and cash equivalents: | |||||||||||||||||||
Cash | $ | 31,065 | $ | — | $ | — | $ | 31,065 | $ | 31,065 | |||||||||
Money market funds | 20,131 | — | — | 20,131 | 20,131 | ||||||||||||||
Total cash and cash equivalents | 51,196 | — | — | 51,196 | 51,196 | ||||||||||||||
Short-term investments: | |||||||||||||||||||
Corporate notes and bonds | — | 8,779 | — | 8,779 | 8,779 | ||||||||||||||
Total short-term investments | — | 8,779 | — | 8,779 | 8,779 | ||||||||||||||
Restricted cash equivalents | — | 2,400 | — | 2,400 | 2,400 | ||||||||||||||
Warrants issued by Napster (included in Other assets) | — | — | 989 | 989 | — | ||||||||||||||
Total | $ | 51,196 | $ | 11,179 | $ | 989 | $ | 63,364 | $ | 62,375 |
Estimated Fair Value | |||
Within one year | $ | 1,172 | |
Between one year and five years | — | ||
Total short-term investments | $ | 1,172 |
Note 7 | Other Intangible Assets |
September 30, 2018 | December 31, 2017 | ||||||||||||||||||||||||
Gross Amount | Accumulated Amortization | Net | Gross Amount | Accumulated Amortization | Net | ||||||||||||||||||||
Amortizing intangible assets: | |||||||||||||||||||||||||
Customer relationships | $ | 31,149 | $ | 31,079 | $ | 70 | $ | 32,286 | $ | 31,997 | $ | 289 | |||||||||||||
Developed technology | 24,571 | 24,571 | — | 25,177 | 25,177 | — | |||||||||||||||||||
Patents, trademarks and tradenames | 3,788 | 3,788 | — | 3,932 | 3,896 | 36 | |||||||||||||||||||
Service contracts | 5,559 | 5,509 | 50 | 5,576 | 5,576 | — | |||||||||||||||||||
Total | $ | 65,067 | $ | 64,947 | $ | 120 | $ | 66,971 | $ | 66,646 | $ | 325 |
Note 8 | Goodwill |
Balance, December 31, 2017 | $ | 13,060 | |
Increases due to current year acquisitions | 4,367 | ||
Effects of foreign currency translation | (367 | ) | |
Balance, September 30, 2018 | $ | 17,060 |
September 30, 2018 | |||
Consumer Media | $ | 580 | |
Mobile Services | 2,086 | ||
Games | 14,394 | ||
Total goodwill | $ | 17,060 |
Note 9 | Accrued and Other Current Liabilities |
September 30, 2018 | December 31, 2017 | ||||||
Royalties and other fulfillment costs | $ | 3,315 | $ | 2,965 | |||
Employee compensation, commissions and benefits | 3,985 | 4,384 | |||||
Sales, VAT and other taxes payable | 1,463 | 1,782 | |||||
Other | 3,153 | 3,234 | |||||
Total accrued and other current liabilities | $ | 11,916 | $ | 12,365 |
Note 10 | Restructuring Charges |
Employee Separation Costs | |||
Costs incurred and charged to expense for the nine months ended September 30, 2018 | $ | 1,320 | |
Costs incurred and charged to expense for the nine months ended September 30, 2017 | $ | 2,271 |
Employee Separation Costs | |||
Accrued liability at December 31, 2017 | $ | 244 | |
Costs incurred and charged to expense for the nine months ended September 30, 2018 | 1,320 | ||
Cash payments | (976 | ) | |
Accrued liability at September 30, 2018 | $ | 588 |
Note 11 | Lease Exit and Related Charges |
Accrued loss at December 31, 2017 | $ | 2,058 | |
Additions and adjustments to the lease loss accrual, including estimated sublease income | (454 | ) | |
Less amounts paid, net of sublease amounts | (484 | ) | |
Accrued loss at September 30, 2018 | 1,120 | ||
Less current portion (included in Accrued and other current liabilities) | (119 | ) | |
Accrued loss, non-current portion (included in Other long term liabilities) | $ | 1,001 |
Note 12 | Shareholders’ Equity |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Investments | |||||||||||||||||
Accumulated other comprehensive income (loss), beginning of period | $ | 5 | $ | 4 | $ | 2 | $ | (6 | ) | ||||||||
Unrealized gains (loss), net of tax effects of ($1), $0, $0 and $5 | (3 | ) | — | — | 10 | ||||||||||||
Net current period other comprehensive income (loss) | (3 | ) | — | — | 10 | ||||||||||||
Accumulated other comprehensive income balance, end of period | $ | 2 | $ | 4 | $ | 2 | $ | 4 | |||||||||
Foreign currency translation | |||||||||||||||||
Accumulated other comprehensive loss, beginning of period | $ | (60,757 | ) | $ | (60,399 | ) | $ | (59,549 | ) | $ | (61,639 | ) | |||||
Translation adjustments | (322 | ) | 562 | (1,530 | ) | 1,802 | |||||||||||
Net current period other comprehensive income (loss) | (322 | ) | 562 | (1,530 | ) | 1,802 | |||||||||||
Accumulated other comprehensive loss balance, end of period | $ | (61,079 | ) | $ | (59,837 | ) | $ | (61,079 | ) | $ | (59,837 | ) | |||||
Total accumulated other comprehensive loss, end of period | $ | (61,077 | ) | $ | (59,833 | ) | $ | (61,077 | ) | $ | (59,833 | ) |
Note 13 | Income Taxes |
Note 14 | Loss Per Share |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net loss from continuing operations | $ | (5,977 | ) | $ | (4,532 | ) | $ | (18,085 | ) | $ | (17,861 | ) | |||
Weighted average common shares outstanding used to compute basic EPS | 37,618 | 37,200 | 37,549 | 37,112 | |||||||||||
Dilutive effect of stock based awards | — | — | — | — | |||||||||||
Weighted average common shares outstanding used to compute diluted EPS | 37,618 | 37,200 | 37,549 | 37,112 | |||||||||||
Basic EPS from continuing operations | $ | (0.16 | ) | $ | (0.12 | ) | $ | (0.48 | ) | $ | (0.48 | ) | |||
Diluted EPS from continuing operations | $ | (0.16 | ) | $ | (0.12 | ) | $ | (0.48 | ) | $ | (0.48 | ) |
Note 15 | Discontinued Operations |
Quarter Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net revenue | $ | — | $ | 11,445 | $ | — | $ | 33,837 | ||||||||
Cost of revenue | — | 11,191 | — | 32,918 | ||||||||||||
Gross profit | — | 254 | — | 919 | ||||||||||||
Income taxes | — | 56 | — | 202 | ||||||||||||
Income from discontinued operations, net of tax | $ | — | $ | 198 | $ | — | $ | 717 |
September 30, 2018 | December 31, 2017 | |||||||
Trade accounts receivable, net | $ | — | $ | 17,456 | ||||
Total current assets of discontinued operations | — | 17,456 | ||||||
Accounts payable | $ | — | $ | 15,836 | ||||
Accrued and other current liabilities | — | 1,271 | ||||||
Total current liabilities of discontinued operations | $ | — | $ | 17,107 |
Note 16 | Commitments and Contingencies |
Note 17 | Guarantees |
Note 18 | Segment Information |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenue | $ | 4,733 | $ | 4,197 | $ | 14,100 | $ | 16,817 | |||||||
Cost of revenue | 955 | 981 | 2,976 | 3,545 | |||||||||||
Gross profit | 3,778 | 3,216 | 11,124 | 13,272 | |||||||||||
Operating expenses | 3,448 | 3,217 | 10,805 | 10,957 | |||||||||||
Operating income (loss) | $ | 330 | $ | (1 | ) | $ | 319 | $ | 2,315 |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenue | $ | 7,348 | $ | 7,678 | $ | 22,771 | $ | 23,597 | |||||||
Cost of revenue | 2,052 | 2,134 | 6,502 | 7,750 | |||||||||||
Gross profit | 5,296 | 5,544 | 16,269 | 15,847 | |||||||||||
Operating expenses | 6,825 | 6,437 | 21,160 | 21,261 | |||||||||||
Operating loss | $ | (1,529 | ) | $ | (893 | ) | $ | (4,891 | ) | $ | (5,414 | ) |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenue | $ | 5,498 | $ | 6,682 | $ | 16,082 | $ | 19,439 | |||||||
Cost of revenue | 1,228 | 2,226 | 4,501 | 6,842 | |||||||||||
Gross profit | 4,270 | 4,456 | 11,581 | 12,597 | |||||||||||
Operating expenses | 5,447 | 5,071 | 15,459 | 15,108 | |||||||||||
Operating loss | $ | (1,177 | ) | $ | (615 | ) | $ | (3,878 | ) | $ | (2,511 | ) |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Cost of revenue | $ | 4 | $ | 2 | $ | 21 | $ | 62 | |||||||
Operating expenses | 2,548 | 2,948 | 8,244 | 10,202 | |||||||||||
Operating loss | $ | (2,552 | ) | $ | (2,950 | ) | $ | (8,265 | ) | $ | (10,264 | ) |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
United States | $ | 9,026 | $ | 10,098 | $ | 28,106 | $ | 30,727 | |||||||
Europe | 3,005 | 3,337 | 9,040 | 9,737 | |||||||||||
Rest of the World | 5,548 | 5,122 | 15,807 | 19,389 | |||||||||||
Total net revenue | $ | 17,579 | $ | 18,557 | $ | 52,953 | $ | 59,853 |
September 30, 2018 | December 31, 2017 | ||||||
United States | $ | 11,862 | $ | 12,236 | |||
Europe | 7,001 | 3,437 | |||||
Rest of the World | 1,233 | 1,572 | |||||
Total long-lived assets | $ | 20,096 | $ | 17,245 |
Note 19 | Related Party Transactions |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | the expected benefits and other consequences of our growth plans, strategic initiatives, and restructurings; |
• | our expected introduction, distribution and monetization, of new and enhanced products, services and technologies across our businesses; |
• | future revenues, operating expenses, income and other taxes, tax benefits, net income (loss) per diluted share available to common shareholders, acquisition costs and related amortization, and other measures of results of operations; |
• | the effects of our past acquisitions and expectations for future acquisitions and divestitures; |
• | plans, strategies and expected opportunities for future growth, increased profitability and innovation; |
• | the expected financial position, performance, growth and profitability of, and investment in, our businesses and the availability of resources; |
• | the effects of legislation, regulations, administrative proceedings, court rulings, settlement negotiations and other factors that may impact our businesses; |
• | the continuation and expected nature of certain customer relationships; |
• | impacts of competition and certain customer relationships on the future financial performance and growth of our businesses; |
• | our involvement in potential claims, legal proceedings and government investigations, and the potential outcomes and effects of such potential claims, legal proceedings and governmental investigations on our business, prospects, financial condition or results of operations; |
• | the effects of U.S. and foreign income and other taxes on our business, prospects, financial condition or results of operations; and |
• | the effect of economic and market conditions on our business, prospects, financial condition or results of operations. |
Quarter Ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||
2018 | 2017 | $ Change | % Change | 2018 | 2017 | $ Change | % Change | ||||||||||||||||||||||
Total revenue | $ | 17,579 | $ | 18,557 | $ | (978 | ) | (5 | )% | $ | 52,953 | $ | 59,853 | $ | (6,900 | ) | (12 | )% | |||||||||||
Cost of revenue | 4,239 | 5,343 | (1,104 | ) | (21 | )% | 14,000 | 18,199 | (4,199 | ) | (23 | )% | |||||||||||||||||
Gross profit | 13,340 | 13,214 | 126 | 1 | % | 38,953 | 41,654 | (2,701 | ) | (6 | )% | ||||||||||||||||||
Gross margin | 76 | % | 71 | % | 74 | % | 70 | % | |||||||||||||||||||||
Operating expenses | 18,268 | 17,673 | 595 | 3 | % | 55,668 | 57,528 | (1,860 | ) | (3 | )% | ||||||||||||||||||
Operating loss | $ | (4,928 | ) | $ | (4,459 | ) | $ | (469 | ) | (11 | )% | $ | (16,715 | ) | $ | (15,874 | ) | $ | (841 | ) | (5 | )% |
Quarter Ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||
2018 | 2017 | $ Change | % Change | 2018 | 2017 | $ Change | % Change | ||||||||||||||||||||||
Revenue | $ | 4,733 | $ | 4,197 | $ | 536 | 13 | % | $ | 14,100 | $ | 16,817 | $ | (2,717 | ) | (16 | )% | ||||||||||||
Cost of revenue | 955 | 981 | (26 | ) | (3 | )% | 2,976 | 3,545 | (569 | ) | (16 | )% | |||||||||||||||||
Gross profit | 3,778 | 3,216 | 562 | 17 | % | 11,124 | 13,272 | (2,148 | ) | (16 | )% | ||||||||||||||||||
Gross margin | 80 | % | 77 | % | 79 | % | 79 | % | |||||||||||||||||||||
Operating expenses | 3,448 | 3,217 | 231 | 7 | % | 10,805 | 10,957 | (152 | ) | (1 | )% | ||||||||||||||||||
Operating income (loss) | $ | 330 | $ | (1 | ) | $ | 331 | NM | $ | 319 | $ | 2,315 | $ | (1,996 | ) | (86 | )% |
Quarter Ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||
2018 | 2017 | $ Change | % Change | 2018 | 2017 | $ Change | % Change | ||||||||||||||||||||||
Revenue | $ | 7,348 | $ | 7,678 | $ | (330 | ) | (4 | )% | $ | 22,771 | $ | 23,597 | $ | (826 | ) | (4 | )% | |||||||||||
Cost of revenue | 2,052 | 2,134 | (82 | ) | (4 | )% | 6,502 | 7,750 | (1,248 | ) | (16 | )% | |||||||||||||||||
Gross profit | 5,296 | 5,544 | (248 | ) | (4 | )% | 16,269 | 15,847 | 422 | 3 | % | ||||||||||||||||||
Gross margin | 72 | % | 72 | % | 71 | % | 67 | % | |||||||||||||||||||||
Operating expenses | 6,825 | 6,437 | 388 | 6 | % | 21,160 | 21,261 | (101 | ) | — | % | ||||||||||||||||||
Operating loss | $ | (1,529 | ) | $ | (893 | ) | $ | (636 | ) | (71 | )% | $ | (4,891 | ) | $ | (5,414 | ) | $ | 523 | 10 | % |
Quarter Ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||
2018 | 2017 | $ Change | % Change | 2018 | 2017 | $ Change | % Change | ||||||||||||||||||||||
Revenue | $ | 5,498 | $ | 6,682 | $ | (1,184 | ) | (18 | )% | $ | 16,082 | $ | 19,439 | $ | (3,357 | ) | (17 | )% | |||||||||||
Cost of revenue | 1,228 | 2,226 | (998 | ) | (45 | )% | 4,501 | 6,842 | (2,341 | ) | (34 | )% | |||||||||||||||||
Gross profit | 4,270 | 4,456 | (186 | ) | (4 | )% | 11,581 | 12,597 | (1,016 | ) | (8 | )% | |||||||||||||||||
Gross margin | 78 | % | 67 | % | 72 | % | 65 | % | |||||||||||||||||||||
Operating expenses | 5,447 | 5,071 | 376 | 7 | % | 15,459 | 15,108 | 351 | 2 | % | |||||||||||||||||||
Operating loss | $ | (1,177 | ) | $ | (615 | ) | $ | (562 | ) | (91 | )% | $ | (3,878 | ) | $ | (2,511 | ) | $ | (1,367 | ) | (54 | )% |
Quarter Ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||
2018 | 2017 | $ Change | % Change | 2018 | 2017 | $ Change | % Change | ||||||||||||||||||||||
Cost of revenue | $ | 4 | $ | 2 | $ | 2 | (100 | )% | $ | 21 | $ | 62 | $ | (41 | ) | 66 | % | ||||||||||||
Operating expenses | 2,548 | 2,948 | (400 | ) | (14 | )% | 8,244 | 10,202 | (1,958 | ) | (19 | )% | |||||||||||||||||
Operating loss | $ | (2,552 | ) | $ | (2,950 | ) | $ | 398 | 13 | % | $ | (8,265 | ) | $ | (10,264 | ) | $ | 1,999 | 19 | % |
Quarter Ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||
2018 | 2017 | $ Change | % Change | 2018 | 2017 | $ Change | % Change | ||||||||||||||||||||||
Research and development | $ | 8,052 | $ | 7,152 | $ | 900 | 13 | % | $ | 23,398 | $ | 22,085 | $ | 1,313 | 6 | % | |||||||||||||
Sales and marketing | 4,998 | 4,883 | 115 | 2 | % | 15,878 | 17,534 | (1,656 | ) | (9 | )% | ||||||||||||||||||
General and administrative | 4,586 | 5,081 | (495 | ) | (10 | )% | 15,526 | 15,638 | (112 | ) | (1 | )% | |||||||||||||||||
Restructuring and other charges | 632 | 557 | 75 | 13 | % | 1,320 | 2,271 | (951 | ) | (42 | )% | ||||||||||||||||||
Lease exit and related charges | — | — | — | NM | (454 | ) | — | (454 | ) | NM | |||||||||||||||||||
Total consolidated operating expenses | $ | 18,268 | $ | 17,673 | $ | 595 | 3 | % | $ | 55,668 | $ | 57,528 | $ | (1,860 | ) | (3 | )% |
Quarter Ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
2018 | 2017 | $ Change | 2018 | 2017 | $ Change | ||||||||||||||||||
Interest income, net | $ | 72 | $ | 116 | $ | (44 | ) | $ | 270 | $ | 353 | $ | (83 | ) | |||||||||
Equity in net loss of Napster | (737 | ) | — | (737 | ) | (737 | ) | (1,097 | ) | 360 | |||||||||||||
Other income (expense), net | (112 | ) | (50 | ) | (62 | ) | (195 | ) | (289 | ) | 94 | ||||||||||||
Total other income (expense), net | $ | (777 | ) | $ | 66 | $ | (843 | ) | $ | (662 | ) | $ | (1,033 | ) | $ | 371 |
September 30, 2018 | December 31, 2017 | ||||||
Working capital | $ | 36,761 | $ | 55,157 | |||
Cash, cash equivalents, and short-term investments | 39,136 | 59,975 | |||||
Restricted cash equivalents and investments | 1,630 | 2,400 |
Nine months ended September 30, | |||||||
2018 | 2017 | ||||||
Cash used in operating activities | $ | (15,628 | ) | $ | (17,543 | ) | |
Cash provided by investing activities | 2,717 | 27,808 | |||||
Cash used in financing activities | (129 | ) | (208 | ) |
• | Revenue recognition; |
• | Estimating losses on excess office facilities; |
• | Valuation of equity method investments; |
• | Valuation of definite-lived assets and goodwill; and |
• | Accounting for income taxes. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
• | reduced prices or margins, |
• | loss of current and potential customers, or partners and potential partners who distribute our products and services or who provide content that we distribute to our customers, |
• | changes to our products, services, technologies, licenses or business practices or strategies, |
• | lengthened sales cycles, |
• | inability to meet demands for more rapid sales or development cycles, |
• | industry-wide changes in content distribution to customers or in trends in consumer consumption of digital media products and services, |
• | pressure to prematurely release products or product enhancements, or |
• | degradation in our stature or reputation in the market. |
• | periodic local or geographic economic downturns and unstable political conditions; |
• | price and currency exchange controls; |
• | fluctuation in the relative values of currencies; |
• | difficulty in repatriating money, whether as a result of tax laws or otherwise; |
• | compliance with current and changing tax laws, and the coordination of compliance with U.S. tax laws and the laws of any of the jurisdictions in which we do business; |
• | difficulties protecting intellectual property; |
• | compliance with labor laws and other laws governing employees; |
• | local labor disputes; |
• | changes in trading policies, regulatory requirements, tariffs and other barriers, or the termination or renegotiation of existing trade agreements; |
• | impact of changes in immigration or other policies impacting our ability to attract, hire, and retain key talent; and |
• | difficulties in managing a global enterprise, including staffing, collecting accounts receivable, and managing suppliers, distributors and representatives. |
• | difficulties and expenses in assimilating the operations, products, technology, information systems, and/or personnel of the acquired company; |
• | retaining key management or employees of the acquired company; |
• | entrance into unfamiliar markets, industry segments, or types of businesses; |
• | operating, managing and integrating acquired businesses in remote locations or in countries in which we have little or no prior experience; |
• | diversion of management time and other resources from existing operations; |
• | impairment of relationships with employees, affiliates, advertisers or content providers of our business or acquired business; and |
• | assumption of known and unknown liabilities of the acquired company, including intellectual property claims. |
• | elect or defeat the election of our directors; |
• | amend or prevent amendment of our articles of incorporation or bylaws; |
• | effect or prevent a merger, sale of assets or other corporate transaction; and |
• | control the outcome of any other matter submitted to the shareholders for vote. |
• | adopt a plan of merger; |
• | authorize the sale, lease, exchange or mortgage of assets representing more than 50% of the book value of our assets prior to the transaction or on which our long-term business strategy is substantially dependent; |
• | authorize our voluntary dissolution; or |
• | take any action that has the effect of any of the above. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Default Upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
REALNETWORKS, INC. | |||
By: | /s/ Cary Baker | ||
Cary Baker | |||
Title: | Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) |
Exhibit Number | Description |
31.1 | |
31.2 | |
32.1 | |
32.2 | |
101.INS | XBRL Instance Document |
101.SCH | XBRL Taxonomy Extension Schema Document |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
1. | I have reviewed this report on Form 10-Q of RealNetworks, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | November 8, 2018 | ||
/s/ Robert Glaser | |||
Robert Glaser | |||
Title: | Chairman and Chief Executive Officer | ||
(Principal Executive Officer) |
1. | I have reviewed this report on Form 10-Q of RealNetworks, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | November 8, 2018 | ||
/s/ Cary Baker | |||
Cary Baker | |||
Title: | Senior Vice President, Chief Financial Officer and Treasurer | ||
(Principal Financial and Accounting Officer) |
Date: | November 8, 2018 | ||
By: | /s/ Robert Glaser | ||
Name: | Robert Glaser | ||
Title: | Chairman and Chief Executive Officer | ||
(Principal Executive Officer) |
Date: | November 8, 2018 | ||
By: | /s/ Cary Baker | ||
Name: | Cary Baker | ||
Title: | Senior Vice President, Chief Financial Officer and Treasurer | ||
(Principal Financial and Accounting Officer) |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Oct. 31, 2018 |
|
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | RNWK | |
Entity Registrant Name | REALNETWORKS INC | |
Entity Central Index Key | 0001046327 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 37,655,047 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Allowance for Doubtful Accounts Receivable, Current | $ 577 | $ 937 |
Preferred stock, par value (USD per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 0 | |
Preferred stock, shares outstanding | 0 | |
Common stock, par value (USD per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 250,000,000 | 250,000,000 |
Common stock, issued | 37,652,000 | 37,341,000 |
Common stock, outstanding | 37,652,000 | 37,341,000 |
Preferred stock, Series A | ||
Preferred stock, authorized | 200,000 | 200,000 |
Preferred stock, Undesignated series | ||
Preferred stock, authorized | 59,800,000 | 59,800,000 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
||||||
Revenue | [1] | $ 17,579 | $ 18,557 | $ 52,953 | $ 59,853 | ||||
Cost of revenue | [2] | 4,239 | 5,343 | 14,000 | 18,199 | ||||
Gross profit | 13,340 | 13,214 | 38,953 | 41,654 | |||||
Operating expenses: | |||||||||
Research and development | 8,052 | 7,152 | 23,398 | 22,085 | |||||
Sales and marketing | 4,998 | 4,883 | 15,878 | 17,534 | |||||
General and administrative | 4,586 | 5,081 | 15,526 | 15,638 | |||||
Restructuring and other charges | 632 | 557 | 1,320 | 2,271 | |||||
Lease exit and related benefit | 0 | 0 | (454) | 0 | |||||
Total operating expenses | 18,268 | 17,673 | 55,668 | 57,528 | |||||
Operating loss | (4,928) | (4,459) | (16,715) | (15,874) | |||||
Other income (expenses): | |||||||||
Interest income, net | 72 | 116 | 270 | 353 | |||||
Equity in net loss of Napster investment | (737) | 0 | (737) | (1,097) | |||||
Other income (expenses), net | (112) | (50) | (195) | (289) | |||||
Total other income (expenses), net | (777) | 66 | (662) | (1,033) | |||||
Loss from continuing operations before income taxes | (5,705) | (4,393) | (17,377) | (16,907) | |||||
Income tax expense | 272 | 139 | 708 | 954 | |||||
Net loss from continuing operations | (5,977) | (4,532) | (18,085) | (17,861) | |||||
Income (Loss) from Discontinued Operations, Net of Tax, Attributable to Parent | 0 | 198 | 0 | 717 | |||||
Net loss | $ (5,977) | $ (4,334) | $ (18,085) | $ (17,144) | |||||
Income (Loss) from Continuing Operations, Per Basic Share | $ (0.16) | $ (0.12) | $ (0.48) | $ (0.48) | |||||
Discontinued Operation, Income (Loss) from Discontinued Operation, Net of Tax, Per Basic Share | 0.00 | 0.00 | 0.00 | 0.02 | |||||
Basic net income (loss) per share (USD per share) | (0.16) | (0.12) | (0.48) | (0.46) | |||||
Income (Loss) from Continuing Operations, Per Diluted Share | (0.16) | (0.12) | (0.48) | (0.48) | |||||
Discontinued Operation, Income (Loss) from Discontinued Operation, Net of Tax, Per Diluted Share | 0.00 | 0.00 | 0.00 | 0.02 | |||||
Diluted net income (loss) per share (USD per share) | $ (0.16) | $ (0.12) | $ (0.48) | $ (0.46) | |||||
Shares used to compute basic net income (loss) per share | 37,618 | 37,200 | 37,549 | 37,112 | |||||
Shares used to compute diluted net income (loss) per share | 37,618 | 37,200 | 37,549 | 37,112 | |||||
Comprehensive income (loss): | |||||||||
Unrealized investment holding gains (losses), net of reclassification adjustments | $ 0 | $ 0 | $ 10 | ||||||
Foreign currency translation adjustments, net of reclassification adjustments | 562 | (1,530) | 1,802 | ||||||
Total other comprehensive income (loss) | $ (325) | 562 | (1,530) | 1,812 | |||||
Net loss | (5,977) | (4,334) | (18,085) | (17,144) | |||||
Comprehensive loss | (6,302) | (3,772) | (19,615) | (15,332) | |||||
License and product revenue | |||||||||
Revenue | 5,827 | 6,873 | 17,770 | 23,677 | |||||
Cost of revenue | 1,523 | 2,163 | 4,743 | 6,683 | |||||
Service revenue | |||||||||
Revenue | 11,752 | 11,684 | 35,183 | 36,176 | |||||
Cost of revenue | $ 2,716 | $ 3,180 | $ 9,257 | $ 11,516 | |||||
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
||||||
Components of net revenue: | |||||||||
Revenue | [1] | $ 17,579 | $ 18,557 | $ 52,953 | $ 59,853 | ||||
Components of cost of revenue: | |||||||||
Cost of revenue | [2] | 4,239 | 5,343 | 14,000 | 18,199 | ||||
License and product revenue | |||||||||
Components of net revenue: | |||||||||
Revenue | 5,827 | 6,873 | 17,770 | 23,677 | |||||
Components of cost of revenue: | |||||||||
Cost of revenue | 1,523 | 2,163 | 4,743 | 6,683 | |||||
Service revenue | |||||||||
Components of net revenue: | |||||||||
Revenue | 11,752 | 11,684 | 35,183 | 36,176 | |||||
Components of cost of revenue: | |||||||||
Cost of revenue | $ 2,716 | $ 3,180 | $ 9,257 | $ 11,516 | |||||
|
Description of Business and Summary of Significant Accounting Policies |
9 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||
Accounting Policies [Abstract] | |||||||
Description of Business and Summary of Significant Accounting Policies |
Description of Business. RealNetworks, Inc. and subsidiaries is a global provider of network-delivered digital media applications and services that make it easy to manage, play and share digital media. The Company also develops and markets software products and services that enable the creation, distribution and consumption of digital media, including audio and video. Inherent in our business are various risks and uncertainties, including a limited history of certain of our product and service offerings. RealNetworks' success will depend on the acceptance of our technology, products and services and the ability to generate related revenue. In this Quarterly Report on Form 10-Q (10-Q or Report), RealNetworks, Inc. and Subsidiaries is referred to as “RealNetworks”, the “Company”, “we”, “us”, or “our”. Basis of Presentation. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal, recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations for the periods presented. Operating results for the quarter and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for any subsequent period or for the year ending December 31, 2018. Certain information and disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2017 (the 10-K). Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Recent Accounting Pronouncements |
9 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||
Accounting Changes and Error Corrections [Abstract] | |||||||
Recent Accounting Pronouncements |
Recently adopted accounting pronouncements In May 2014, and subsequently updated and amended in 2015 and 2016, the Financial Accounting Standards Board (FASB) issued new revenue recognition guidance (Topic 606), which replaced most existing revenue recognition guidance in U.S. GAAP. The guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. We adopted Topic 606 as of January 1, 2018 using the modified retrospective transition method. Refer to Note 3 Revenue Recognition for further details. In November 2016, the FASB issued guidance on the classification and presentation of changes in restricted cash on the statement of cash flows. We adopted this guidance on January 1, 2018, and retroactively applied the changes to the Statement of Cash Flows for all periods presented. As a result, we no longer classify changes in restricted cash within the investing section of our Statement of Cash flows, and instead include restricted cash with unrestricted cash as a combined total. The impact of the adoption did not have a material impact on the Condensed Consolidated Financial Statements. Recently issued accounting pronouncements not yet adopted In February 2016, the FASB issued new guidance related to the accounting for leases. A major change in the new guidance is that lessees will be required to present right-of-use assets and lease liabilities on the balance sheet. Enhanced disclosures will also be required to give financial statement users the ability to assess the amount, timing and uncertainty of cash flows arising from leases. In July 2018 the FASB issued an alternative method that permits application of the new guidance at the beginning of the year of adoption. This is in addition to the method of applying the new guidance retrospectively to each prior reporting period presented. The new guidance will be effective for us on January 1, 2019, including interim periods within 2019. We continue to evaluate the effect that the guidance will have on our consolidated financial statements and related disclosures. We expect that the guidance will result in a material change to our Consolidated Balance Sheet as a result of capitalizing our operating leases. In January 2017, the FASB issued new guidance simplifying the test for goodwill impairment. The new guidance eliminates Step 2 from the goodwill impairment test, instead requiring an entity to recognize a goodwill impairment charge for the amount by which the reporting unit's carrying amount exceeds the reporting unit's fair value. This guidance is effective for interim and annual goodwill impairment tests beginning on December 15, 2019, with early adoption permitted. We will be evaluating the impact of the guidance, but do not currently expect the adoption to have a material impact on our consolidated financial statements and related disclosures. In June 2018, the FASB issued new guidance related to the measurement and classification for share-based awards to non-employees. The new guidance essentially aligns the measurement and classification for these awards with that for share-based awards to employees. The new guidance will be effective for us on January 1, 2019, including interim periods within 2019, with early adoption permitted. We will be evaluating the impact of the guidance, but do not currently expect the adoption to have a material impact on our consolidated financial statements and related disclosures. |
Revenue Recognition Revenue Recognition |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition |
Adoption of New Revenue Standard On January 1, 2018 we adopted the new revenue recognition standard by applying the modified retrospective approach to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under the new revenue recognition standard, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior periods. We recorded a net decrease to opening retained deficit of $1.0 million as of January 1, 2018 due to the cumulative impact of adopting the new revenue recognition standard, with the impact primarily related to licensing of our RealPlayer product and full recognition of non-recurring engineering fees which were previously deferred and amortized over the life of the contract. The net impact to revenues as a result of adopting the new standard was a decrease of $0.4 million for the three months ended September 30, 2018 and an increase of $2.0 million for the nine months ended September 30, 2018. Performance Obligations We generate all of our revenue through contracts with customers. Revenue is either recognized over time as the service is provided, or at a point in time when the product is transferred to the customer, depending on the contract type. Our performance obligations typically have an original duration of one year or less. Our software licensing revenue stream generates revenue through the on-premises licensing of our codec technologies and integrated RealTimes platform. We recognize revenue upfront at the point in time when the software is made available to the customer. In cases where a sale or usage-based royalty is promised in exchange for a license of our codec technologies, revenue is recognized as the subsequent usage occurs for the contractual amount owed by the customer for that usage, as is allowed under the licensing of intellectual property section of Topic 606. Software licensing in our Mobile Services segment is invoiced on a monthly basis either based on usage of the respective product, or on a fixed fee basis. Our Consumer Media licensing is invoiced either quarterly or annually based on the usage of the respective product, or on a fixed fee basis. For each of these, the timing of payment generally does not vary significantly from the timing of invoice, however, certain of our long-term Consumer Media licensing contracts have extended payment schedules which may exceed one year. Our subscription services revenue stream allows customers to use hosted software over the respective contract period without taking possession of the technology. The stream is primarily comprised of our intercarrier messaging service, ringback tones, PC-based and mobile games subscriptions and our RealPlayer and SuperPass services. Revenues related to subscription service products are recognized ratably over the contract period, or as we have the right to invoice as a practical expedient when that amount corresponds directly with the value to the customer of our performance completed to date. Consumer subscription products are paid in advance, typically on a monthly or quarterly basis. Subscription services offered to businesses are invoiced on a monthly basis, generally based upon the amount of usage for the previous month, and the timing of payment generally does not vary significantly from the timing of invoice. Our product sales revenue stream includes purchases of mobile and wholesale games, as well as our RealPlayer product. Retail purchases are recognized and paid for at the point in time the product is made available to the end user. For games which are sold through third-party application storefronts, we evaluate the transaction for gross or net revenue recognition. As we typically are the primary obligor in our third-party transactions, we recognize revenues gross of any app store fees. We then receive monthly payments from the respective app store for all purchases within the respective month. Other revenues consist primarily of advertising and the distribution of third-party products, which are recognized and paid on a cost per impression or cost per download basis. Disaggregation of Revenue The following table presents our disaggregated revenue by source and segment (in thousands):
The following table presents our disaggregated revenue by sales channel (in thousands):
Contract Balances The timing of revenue recognition may differ from the timing of invoicing to our customers. We record accounts receivable when the right to consideration becomes unconditional, except for the passage of time. For certain contracts, payment schedules may exceed one year; for those contracts we recognize a long-term receivable. As of September 30, 2018, our balance of long-term accounts receivable was $0.3 million, and is included in other long-term assets on our condensed consolidated balance sheets. During the quarter and nine months ended September 30, 2018, we recorded no impairments to our contract assets. We record deferred revenue when cash payments are received or due in advance of our completion of the underlying performance obligation. As of September 30, 2018 we had a deferred revenue balance of $2.3 million, a decrease of $1.3 million from December 31, 2017. The decrease is due primarily to our transition to Topic 606, with $0.8 million recorded to retained earnings on January 1, 2018. The decrease is further due to $0.2 million of revenues recognized which were included in the deferred balance at December 31, 2017. Significant Estimates For certain of our contracts, we recognize revenues using the sales- and usage-based exception as defined in the licensing guidance of Topic 606. For these contracts, we typically receive reporting of actual usage a quarter in arrears, and as such, we are required to estimate the current quarter's usage. To make these estimates, we utilize historical reporting information, as well as industry trends and interim reporting to quantify total quarterly usage. As actual usage information is received, we record a true-up in the following quarter to reflect any variance from our estimate. Our true-up on our second quarter estimates recorded in the third quarter of 2018 was not material to our condensed consolidated financial statements. Practical Expedients For those contracts for which we recognize revenue at the amount to which we have the right to invoice for service performed, we do not disclose the value of any unsatisfied performance obligations. We also do not disclose the remaining unsatisfied performance obligations which have an original duration of one year or less. Additionally, we immediately expense sales commissions when incurred as the amortization period would have been less than one year. These costs are recorded within sales and marketing expense. |
Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation |
Total stock-based compensation expense recognized in our unaudited condensed consolidated statements of operations and comprehensive income (loss) includes amounts related to stock options, restricted stock, and employee stock purchase plans and was as follows (in thousands):
The fair value of options granted determined using the Black-Scholes model used the following weighted-average assumptions:
The total stock-based compensation amounts for 2018 and 2017 disclosed above are recorded in their respective line items within operating expenses in the unaudited condensed consolidated statements of operations and comprehensive income (loss). Included in the expense for the nine months ended September 30, 2018 and 2017 was stock compensation expense recorded in the first quarter of 2018 and 2017 related to our 2017 and 2016 incentive bonuses paid in fully vested restricted stock units, which were authorized and granted in the first quarter of 2018 and 2017, respectively. As of September 30, 2018, $3.3 million of total unrecognized compensation cost, net of estimated forfeitures, related to stock awards. The unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 3.8 years. |
Rhapsody Joint Venture |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rhapsody Joint Venture |
As of September 30, 2018 we owned approximately 42% of the issued and outstanding stock of Rhapsody International Inc., doing business as Napster, and account for our investment using the equity method of accounting. Rhapsody America LLC was initially formed in 2007 as a joint venture between RealNetworks and MTV Networks, a division of Viacom International Inc. (MTVN), to own and operate a business-to-consumer digital audio music service originally branded as Rhapsody. The service was re-branded in 2016 as Napster. In this Note, we refer to the business as Napster, although the legal entity in which we hold our investment is Rhapsody International, Inc. Following certain restructuring transactions effective March 31, 2010, we began accounting for our investment using the equity method of accounting. As part of the 2010 restructuring transactions, RealNetworks contributed $18.0 million in cash, the Rhapsody brand and certain other assets, including content licenses, in exchange for shares of convertible preferred stock of Rhapsody, carrying a $10.0 million preference upon certain liquidation events. We recorded our share of losses of Napster of $0.7 million for the quarter and nine months ended September 30, 2018; and $0.0 million and $1.1 million for the quarter and nine months ended September 30, 2017. Because of the $10.0 million liquidation preference on the preferred stock we hold in Napster, under the equity method of accounting we did not record any share of Napster losses that would reduce our carrying value of Napster, which is impacted by Napster equity transactions, below $10.0 million, until Napster's book value was reduced below $10.0 million. This occurred in the first quarter of 2015. As of September 30, 2018, the carrying value of our Napster equity investment was zero, as we did not have any further commitment to provide future support to Napster, with the exception of the guaranty discussed below. Unless we commit to provide future financial support to Napster, we do not record any further share of Napster losses that would reduce our carrying value of Napster below zero; in accordance with GAAP, we currently track those suspended losses outside of our financial statements. In December 2016, RealNetworks entered into an agreement to loan up to $5.0 million to Napster for general operating purposes, as did Napster's other 42% owner. Each entity fully funded its loan, providing $3.5 million each in December 2016 and the remaining $1.5 million each in January 2017. These loans are subordinate to senior creditors, and bear an interest rate of 10% per annum, which is added to the outstanding principal balance. At the time of signing the agreement we recognized previously suspended Napster losses, and, consequently, we did not record a receivable related to this loan. As discussed in Note 4 to our 2017 Form 10-K, during November 2017, Napster entered into an amendment to its revolving credit facility. In conjunction with the amendment, both RealNetworks and Napster's other 42% owner entered into an arrangement to guarantee up to $2.75 million each of Napster's outstanding indebtedness on the credit facility. As a result of this guaranty, in December 2017 we recognized previously suspended Napster losses up to the full $2.75 million guaranty in our consolidated statement of operations. As of the date of this filing, RealNetworks has not been required to pay any amounts under the guaranty, and the amount is reflected on our condensed consolidated balance sheets as Commitment to Napster. Summarized financial information for Napster, which represents 100% of its financial information, is as follows (in thousands):
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements |
Items Measured at Fair Value on a Recurring Basis The following table presents information about our financial assets that have been measured at fair value on a recurring basis as of September 30, 2018 and December 31, 2017, and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands).
Restricted cash equivalents as of September 30, 2018 and December 31, 2017 relates to cash pledged as collateral against letters of credit in connection with lease agreements. Realized gains or losses on sales of short-term investment securities for the quarters and nine months ended September 30, 2018 and 2017 were not significant. Gross unrealized gains and gross unrealized losses on short-term investment securities as of September 30, 2018 and December 31, 2017 were also not significant. Investments with remaining contractual maturities of five years or less are classified as short-term because the investments are marketable and highly liquid, and we have the ability to utilize them for current operations. Contractual maturities of short-term investments as of September 30, 2018 (in thousands):
In February 2015, Napster issued warrants to purchase Napster common shares to both RealNetworks and Napster's other 42% owner. The warrants were issued as compensation for past services provided by RealNetworks and the other 42% owner, and both warrants covered the same number of underlying shares, with a 10 year contractual term. The exercise price of the warrants was equal to the fair value of the underlying shares on the issuance date, and we used the Black-Scholes option-pricing model to calculate the fair value of the warrant, using an expected term of 5 years and expected volatility of 55%. On the date of issuance, we recognized and recorded the $1.2 million fair value of the warrant issued to RealNetworks within Other assets in the unaudited condensed consolidated balance sheets, and as an expense reduction within General and administrative expense in the unaudited condensed consolidated statements of operations. The warrants are free-standing derivatives and as such their fair value is determined each quarter using updated inputs in the Black-Scholes option-pricing model. At December 31, 2017 due to the management change and strategic shift undertaken by Napster, we determined that a change to the expected term was necessary. As a result, we extended the expected term by 3.25 years, resulting in a total expected term for the warrant of 8.25 years. During the nine months ended September 30, 2018, the decrease in the fair value of the warrants was insignificant. In February 2017, Napster issued additional warrants to purchase Napster common shares to both RealNetworks and Napster's other 42% owner. Consistent with the warrants issued in 2015, the 2017 warrants were issued as compensation for past services provided by RealNetworks and the other 42% owner, and both warrants covered the same number of underlying shares, with a 10 year contractual term. The exercise price of the warrants exceeded the fair value of the underlying shares on the issuance date, and we used the Black-Scholes option-pricing model to calculate the fair value of the warrant, using an expected term of 5 years and expected volatility of 55%, resulting in a recognized fair value of $0.5 million in Other assets in the unaudited condensed consolidated balance sheets, and as an expense reduction within general and administrative expense in the unaudited condensed consolidated statements of operations. At December 31, 2017, due to the management change and strategic shift undertaken by Napster, we determined that a change to the expected term was necessary. As a result, we extended the expected term by 1 year, resulting in a total expected term for the warrant of 6 years. During the nine months ended September 30, 2018, the decrease in the fair value of the warrants was insignificant. Items Measured at Fair Value on a Non-recurring Basis Certain of our assets and liabilities are measured at estimated fair value on a non-recurring basis, using Level 3 inputs. These instruments are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). During the nine months ended September 30, 2018 and 2017, we did not record any impairments on those assets required to be measured at fair value on a non-recurring basis. See Note 11, Lease Exit and Related Charges, for a discussion of the losses related to reductions in the use of RealNetworks' office space, which were recorded at the estimated fair value of remaining lease obligations, less expected sub-lease income. |
Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Intangible Assets |
Other intangible assets (in thousands):
In conjunction with our acquisition of a Netherlands-based game development studio in the second quarter of 2018, we recorded $0.1 million in intangibles. Refer to Note 8 Goodwill for further details about the acquisition. No impairments of other intangible assets were recognized in either of the nine months ended September 30, 2018 or 2017. |
Goodwill |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill |
Changes in goodwill (in thousands):
On April 16, 2018, in order to acquire a full workforce, we purchased 100% of the shares of a small, privately-held Netherlands-based game development studio for net cash consideration of $4.2 million. All tangible and intangible assets and liabilities recognized are reported within the Games segment. As a result of our preliminary purchase price allocation, we recorded $0.1 million of identifiable intangible assets relating to an existing customer contract. We also recorded goodwill of $4.4 million, representing the intangible assets that do not qualify for separate recognition for accounting purposes, primarily related to the assembled workforce and expected synergies in development of our Original Stories titles. The goodwill is not deductible for income tax purposes. We did not recognize significant revenue or loss before income taxes from this acquired business from the date of acquisition through September 30, 2018. Goodwill by segment (in thousands):
No impairment of goodwill was recognized in either of the nine months ended September 30, 2018 or in 2017. |
Accrued and Other Current Liabilities |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued and Other Current Liabilities |
Accrued and other current liabilities (in thousands):
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Restructuring Charges |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Charges |
Restructuring and other charges in 2018 and 2017 consist of costs associated with the ongoing reorganization of our business operations and our ongoing expense re-alignment efforts. The expense amounts in both years relate primarily to severance costs due to workforce reductions. Restructuring charges are as follows (in thousands):
Changes to the accrued restructuring liability (which is included in Accrued and other current liabilities) for 2018 (in thousands) are as follows:
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Lease Exit and Related Charges |
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Disclosure Changes To Accrued Loss On Excess Office Facilities [Abstract] | |||||||||||||||||||||||||||||||||||||||
Lease Exit and Related Charges |
As a result of the reduction in use of RealNetworks' office space, lease exit and related charges have been recognized representing rent and contractual operating expenses over the remaining life of the leases, including estimates of sublease income expected to be received. In the first quarter of 2018, we renegotiated the lease for our Seattle headquarters, reducing our total leased space by 15%. Consequently, we recorded a reduction to our lease loss accrual to reflect our reduced future obligations. This reduction has also been recorded as a benefit of $0.3 million in our condensed consolidated statement of operations for the nine months ended September 30, 2018. We continue to regularly evaluate the market for office space. If the market for such space changes further in future periods, we may have to revise our estimates which may result in future adjustments to expense for excess office facilities. Changes to accrued lease exit and related charges (which is included in Accrued and other current liabilities) for 2018 (in thousands) are as follows:
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Shareholders’ Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders’ Equity |
Accumulated Other Comprehensive Income (Loss) Changes in components of accumulated other comprehensive income (loss) (in thousands):
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Income Taxes |
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Sep. 30, 2018 | |||||||
Income Tax Disclosure [Abstract] | |||||||
Income Taxes |
As of September 30, 2018, there have been no material changes to RealNetworks’ uncertain tax positions disclosures as provided in Note 14 of the 2017 10-K. We do not anticipate that the total amount of unrecognized tax benefits will significantly change within the next twelve months. We file numerous consolidated and separate income tax returns in the U.S. including federal, state and local, as well as foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal income tax examinations for tax years before 2013 or state, local, or foreign income tax examinations for years before 1993. We are currently under audit by various states and foreign jurisdictions for certain tax years subsequent to 1993. |
Earnings (Loss) Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings (Loss) Per Share |
Basic net loss per share (EPS) is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net loss by the weighted average number of common and dilutive potential common shares outstanding during the period. Basic and diluted EPS (in thousands, except per share amounts):
During the quarter and nine months ended September 30, 2018, 6.7 million and 6.3 million shares of common stock, respectively, of potentially issuable shares from stock awards were excluded from the calculation of diluted EPS because of their antidilutive effect. During the quarter and nine months ended September 30, 2017, 5.3 million and 5.2 million shares of common stock, respectively, of potentially issuable shares from stock awards were excluded from the calculation of diluted EPS because of their antidilutive effect. |
Discontinued Operations Discontinued Operations |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations |
On December 31, 2017, our contract with our low-margin music on demand customer LOEN expired. The activity for this contract represented our only revenue source relating to music on demand services, and we did not renew the sole contract for this service, resulting in the abandonment of the related business. As the exit of the music on demand business represented a strategic shift, and the amounts were financially significant to our consolidated results, at December 31, 2017 we determined this business should be reported as a discontinued operation, and treated it as such beginning in our fourth quarter of 2017. The following table summarizes the results of operations, which were recorded in our Mobile Services segment, relating to the discontinued operation (in thousands):
The following table summarizes the remaining carrying amounts of major classes of assets and liabilities of the discontinued operation (in thousands). These assets and liabilities relate to final settlements of prior year activity between various parties. These balances were fully settled prior to the end of the second quarter of 2018.
The cash flows related to the discontinued operation have not been segregated, and are included in the Consolidated Statements of Cash Flows. For all periods presented, depreciation and amortization, capital expenditures and significant operating non-cash items from the discontinued operation were not material. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||
Commitments and Contingencies |
From time to time we are and may be subject to legal proceedings, governmental investigations and claims in the ordinary course of business, including employment claims, contract-related claims, and claims of alleged infringement of third-party patents, trademarks and other intellectual property rights. Although we believe that resolving such claims, individually or in aggregate, will not have a material adverse impact on our business or financial condition, these matters are subject to inherent uncertainties. Such claims, even if not meritorious, could force us to expend significant financial and managerial resources. In addition, given the broad distribution of some of our consumer products, any individual claim related to those products could give rise to liabilities that may be material to us. In the event of a determination adverse to us, we may incur substantial monetary liability, and/or be required to change our business practices. Either of these could have a material adverse effect on our consolidated financial statements. |
Guarantees |
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Guarantees [Abstract] | |||||||
Guarantees |
In the ordinary course of business, RealNetworks is subject to potential obligations for standard warranty and indemnification provisions that are contained within many of our customer license and service agreements. Our warranty provisions are consistent with those prevalent in our industry, and we do not have a history of incurring losses on warranties; therefore, we do not maintain accruals for warranty-related obligations. With regard to indemnification provisions, nearly all of our carrier contracts obligate us to indemnify our carrier customers for certain liabilities that may be incurred by them. We have received in the past, and may receive in the future, claims for indemnification from some of our carrier customers. In relation to certain patents and other technology assets we sold to Intel in the second quarter of 2012, we have specific obligations to indemnify Intel for breaches of the representations and warranties that we made and covenants that we agreed to in the asset purchase agreement for certain potential future intellectual property infringement claims brought by third parties against Intel. The amount of any potential liabilities related to our indemnification obligations to Intel will not be determined until a claim has been made, but we are obligated to indemnify Intel up to the amount of the gross purchase price that we received in the sale. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information |
We manage our business and report revenue and operating income (loss) in three segments: (1) Consumer Media, which includes licensing of our codec technology and our PC-based RealPlayer products, including RealPlayer Plus and related products; (2) Mobile Services, which includes our subscription services and our integrated RealTimes platform which is sold to mobile carriers; and (3) Games, which includes all our games-related businesses, including sales of mobile games, sales of games licenses, games subscription services, advertising on games sites and within our games, and microtransactions from online games. We allocate to our reportable segments certain corporate expenses which are directly attributable to supporting our businesses, including but not limited to a portion of finance, legal, human resources and headquarters facilities. Remaining expenses, which are not directly attributable to supporting the business, are reported as corporate items. Also reported in our corporate segment are restructuring charges, lease exit and related charges, as well as stock-based compensation expense. RealNetworks reports three reportable segments based on factors such as how we manage our operations and how our Chief Operating Decision Maker (CODM) reviews results. The CODM reviews financial information presented on both a consolidated basis and on a business segment basis. The accounting policies used to derive segment results are the same as those described in Note 1, Description of Business and Summary of Significant Accounting Policies, in the 10-K. Segment results for the quarters and nine months ended September 30, 2018 and 2017 (in thousands): Consumer Media
Mobile Services
Games
Corporate
Our customers consist primarily of consumers and corporations located in the U.S., Europe, and various foreign countries (Rest of the World). Revenue by geographic region (in thousands):
Long-lived assets (which consist of primarily of goodwill, but also includes equipment, software, leasehold improvements, and other intangible assets) by geographic region (in thousands) are as follows:
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Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||
Related Party Transactions |
See Note 5, Napster Joint Venture, and Note 6, Fair Value Measurements, for details on transactions involving Napster. |
Description of Business and Summary of Significant Accounting Policies (Policies) |
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Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business. RealNetworks, Inc. and subsidiaries is a global provider of network-delivered digital media applications and services that make it easy to manage, play and share digital media. The Company also develops and markets software products and services that enable the creation, distribution and consumption of digital media, including audio and video. Inherent in our business are various risks and uncertainties, including a limited history of certain of our product and service offerings. RealNetworks' success will depend on the acceptance of our technology, products and services and the ability to generate related revenue. In this Quarterly Report on Form 10-Q (10-Q or Report), RealNetworks, Inc. and Subsidiaries is referred to as “RealNetworks”, the “Company”, “we”, “us”, or “our”. |
Basis of Presentation | Basis of Presentation. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal, recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations for the periods presented. Operating results for the quarter and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for any subsequent period or for the year ending December 31, 2018. Certain information and disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2017 (the 10-K). |
Use of Estimates | Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Segments | We manage our business and report revenue and operating income (loss) in three segments: (1) Consumer Media, which includes licensing of our codec technology and our PC-based RealPlayer products, including RealPlayer Plus and related products; (2) Mobile Services, which includes our subscription services and our integrated RealTimes platform which is sold to mobile carriers; and (3) Games, which includes all our games-related businesses, including sales of mobile games, sales of games licenses, games subscription services, advertising on games sites and within our games, and microtransactions from online games. We allocate to our reportable segments certain corporate expenses which are directly attributable to supporting our businesses, including but not limited to a portion of finance, legal, human resources and headquarters facilities. Remaining expenses, which are not directly attributable to supporting the business, are reported as corporate items. Also reported in our corporate segment are restructuring charges, lease exit and related charges, as well as stock-based compensation expense. RealNetworks reports three reportable segments based on factors such as how we manage our operations and how our Chief Operating Decision Maker (CODM) reviews results. The CODM reviews financial information presented on both a consolidated basis and on a business segment basis. The accounting policies used to derive segment results are the same as those described in Note 1, Description of Business and Summary of Significant Accounting Policies, in the 10-K. |
Revenue Recognition Revenue Recognition (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | Disaggregation of Revenue The following table presents our disaggregated revenue by source and segment (in thousands):
The following table presents our disaggregated revenue by sales channel (in thousands):
Games
Mobile Services
Corporate
Consumer Media
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Stock-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation Expense | Total stock-based compensation expense recognized in our unaudited condensed consolidated statements of operations and comprehensive income (loss) includes amounts related to stock options, restricted stock, and employee stock purchase plans and was as follows (in thousands):
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Weighted-Average Assumptions Used to Determine Fair Value of Options Granted | The fair value of options granted determined using the Black-Scholes model used the following weighted-average assumptions:
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Rhapsody Joint Venture (Tables) |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summarized Financial Operating Information for Rhapsody | Summarized financial information for Napster, which represents 100% of its financial information, is as follows (in thousands):
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Fair Value Measurements (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets Measured at Fair Value on a Recurring Basis | The following table presents information about our financial assets that have been measured at fair value on a recurring basis as of September 30, 2018 and December 31, 2017, and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands).
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Schedule of Contractual Maturity Date | Contractual maturities of short-term investments as of September 30, 2018 (in thousands):
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Other Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Intangible Assets | Other intangible assets (in thousands):
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Goodwill (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||
Changes in Goodwill | Changes in goodwill (in thousands):
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Goodwill Assigned by Segments | Goodwill by segment (in thousands):
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Accrued and Other Current Liabilities (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued and Other Liabilities | Accrued and other current liabilities (in thousands):
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Restructuring Charges (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Charges by Type of Cost | Restructuring charges are as follows (in thousands):
Changes to the accrued restructuring liability (which is included in Accrued and other current liabilities) for 2018 (in thousands) are as follows:
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Lease Exit and Related Charges (Tables) |
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Disclosure Changes To Accrued Loss On Excess Office Facilities [Abstract] | |||||||||||||||||||||||||||||||||
Changes to Accrued Loss on Excess Office Facilities | Changes to accrued lease exit and related charges (which is included in Accrued and other current liabilities) for 2018 (in thousands) are as follows:
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Shareholders’ Equity (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | Changes in components of accumulated other comprehensive income (loss) (in thousands):
|
Earnings (Loss) Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Calculation of Basic and Diluted Earnings Per Share | Basic and diluted EPS (in thousands, except per share amounts):
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Discontinued Operations Discontinued Operations (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal Groups, Including Discontinued Operations [Table Text Block] | The following table summarizes the results of operations, which were recorded in our Mobile Services segment, relating to the discontinued operation (in thousands):
The following table summarizes the remaining carrying amounts of major classes of assets and liabilities of the discontinued operation (in thousands). These assets and liabilities relate to final settlements of prior year activity between various parties. These balances were fully settled prior to the end of the second quarter of 2018.
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Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Results | Disaggregation of Revenue The following table presents our disaggregated revenue by source and segment (in thousands):
The following table presents our disaggregated revenue by sales channel (in thousands):
Games
Mobile Services
Corporate
Consumer Media
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Revenue by Geographic Region | Our customers consist primarily of consumers and corporations located in the U.S., Europe, and various foreign countries (Rest of the World). Revenue by geographic region (in thousands):
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Long-Lived Assets by Geographic Region | Long-lived assets (which consist of primarily of goodwill, but also includes equipment, software, leasehold improvements, and other intangible assets) by geographic region (in thousands) are as follows:
|
Revenue Recognition (Additional Information) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Jan. 01, 2018 |
Dec. 31, 2017 |
|||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||||
Retained deficit | $ (517,104) | $ (517,104) | $ (500,044) | |||||
Revenue | [1] | 17,579 | $ 18,557 | 52,953 | $ 59,853 | |||
Long-term accounts receivable | 300 | 300 | ||||||
Deferred revenue | 2,300 | 2,300 | ||||||
Decrease in deferred revenue | 1,300 | |||||||
Revenue recognized | 200 | |||||||
Accounting Standards Update 2014-09 | ||||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||||
Retained deficit | $ 1,000 | |||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | ||||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||||
Revenue | $ 400 | $ 2,000 | ||||||
Deferred revenue recorded to retained earnings | $ 800 | |||||||
|
Stock-Based Compensation (Recognized Stock-Based Compensation Expense) (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2017 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Total stock-based compensation expense | $ 499 | $ 748 | $ 3,045 |
Stock-Based Compensation (Weighted-Average Assumptions Used to Determine Fair Value of Options Granted) (Detail) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Risk-free interest rate | 2.78% | 1.61% | 2.69% | 1.71% |
Expected life | 3 years 9 months 18 days | 3 years 8 months 12 days | 3 years 10 months 25 days | 4 years 2 months 12 days |
Volatility | 35.00% | 34.00% | 35.00% | 35.00% |
Stock-Based Compensation (Additional Information) (Detail) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Total unrecognized compensation cost | $ 3.3 |
Total unrecognized compensation cost, expected recognition period (in years) | 3 years 9 months 17 days |
Rhapsody Joint Venture (Additional Information) (Detail) - USD ($) |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Mar. 31, 2010 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Nov. 30, 2017 |
Dec. 01, 2016 |
|
Schedule of Equity Method Investments [Line Items] | |||||||||
Losses recorded in the operations of Rhapsody | $ 737,000 | $ 0 | $ 737,000 | $ 1,097,000 | |||||
Advance to Rhapsody | $ 0 | 1,500,000 | |||||||
Rhapsody America LLC | |||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||
Percentage of ownership interest in Rhapsody | 42.00% | 42.00% | |||||||
Payments for restructuring | $ 18,000,000 | ||||||||
Liquidation preference amount | $ 10,000,000.0 | $ 10,000,000.0 | |||||||
Losses recorded in the operations of Rhapsody | 700,000 | $ 0 | $ (1,100,000) | ||||||
Carrying value | 0 | 0 | |||||||
Loan principal to related party | $ 5,000,000.0 | ||||||||
Advance to Rhapsody | $ 1,500,000 | $ 3,500,000 | |||||||
Related party loan rate | 10.00% | ||||||||
Line of Credit [Member] | |||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 2,750,000 | $ 2,750,000 | $ 2,750,000 |
Rhapsody Joint Venture (Summarized Financial Operating Information for Rhapsody) (Detail) - Rhapsody America LLC - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Schedule of Equity Method Investments [Line Items] | ||||
Net revenue | $ 34,814 | $ 42,816 | $ 111,343 | $ 134,414 |
Gross profit | 10,029 | 7,245 | 28,690 | 19,927 |
Operating income (loss) | 4,142 | 179 | 14,452 | (9,692) |
Net loss | $ 2,768 | $ (627) | $ 9,350 | $ (13,960) |
Fair Value Measurements (Financial Assets Measured at Fair Value on a Recurring Basis) (Detail) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | $ 41,677 | $ 63,364 |
Amortized Cost | 40,766 | 62,375 |
Cash and Cash Equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 37,964 | 51,196 |
Amortized Cost | 37,964 | 51,196 |
Cash and Cash Equivalents | Cash | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 26,472 | 31,065 |
Amortized Cost | 26,472 | 31,065 |
Cash and Cash Equivalents | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 11,492 | 20,131 |
Amortized Cost | 11,492 | 20,131 |
Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 1,172 | 8,779 |
Amortized Cost | 1,172 | 8,779 |
Short-term Investments | Corporate notes and bonds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 1,172 | 8,779 |
Amortized Cost | 1,172 | 8,779 |
Restricted cash equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 1,630 | 2,400 |
Amortized Cost | 1,630 | 2,400 |
Related Party Transaction | Warrants issued by Rhapsody | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 911 | 989 |
Amortized Cost | 0 | 0 |
Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 37,964 | 51,196 |
Level 1 | Cash and Cash Equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 37,964 | 51,196 |
Level 1 | Cash and Cash Equivalents | Cash | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 26,472 | 31,065 |
Level 1 | Cash and Cash Equivalents | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 11,492 | 20,131 |
Level 1 | Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 1 | Short-term Investments | Corporate notes and bonds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 1 | Restricted cash equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 1 | Related Party Transaction | Warrants issued by Rhapsody | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 2,802 | 11,179 |
Level 2 | Cash and Cash Equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 2 | Cash and Cash Equivalents | Cash | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 2 | Cash and Cash Equivalents | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 2 | Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 1,172 | 8,779 |
Level 2 | Short-term Investments | Corporate notes and bonds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 1,172 | 8,779 |
Level 2 | Restricted cash equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 1,630 | 2,400 |
Level 2 | Related Party Transaction | Warrants issued by Rhapsody | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 911 | 989 |
Level 3 | Cash and Cash Equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | Cash and Cash Equivalents | Cash | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | Cash and Cash Equivalents | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | Short-term Investments | Corporate notes and bonds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | Restricted cash equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | Related Party Transaction | Warrants issued by Rhapsody | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | $ 911 | $ 989 |
Fair Value Measurements (Short-term Investments) (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | $ 41,677 | $ 63,364 |
Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 1,172 | $ 8,779 |
Estimate of Fair Value Measurement | Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Within one year | 1,172 | |
Between one year and five years | 0 | |
Total short-term investments | $ 1,172 |
Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|---|
Feb. 28, 2017 |
Feb. 28, 2015 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||||
Financial assets fair value | $ 41,677 | $ 41,677 | $ 63,364 | ||||
Expected life | 3 years 9 months 18 days | 3 years 8 months 12 days | 3 years 10 months 25 days | 4 years 2 months 12 days | |||
Volatility | 35.00% | 34.00% | 35.00% | 35.00% | |||
Warrants issued by Rhapsody | Related Party Debt Obligation | |||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||||
Increase in expected term | 3 years 3 months | ||||||
Total expected term for warrant | 8 years 3 months | ||||||
Warrants issued by Rhapsody | Related Party Debt Obligation | Rhapsody America LLC | |||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||||
Financial assets fair value | $ 500 | $ 1,200 | |||||
Expected life | 5 years | 5 years | |||||
Volatility | 55.00% | 55.00% | |||||
Warrants Issued To Purchase Napster | Related Party Debt Obligation | |||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||||
Increase in expected term | 1 year | ||||||
Total expected term for warrant | 6 years |
Other Intangible Assets (Detail) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Apr. 16, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Finite-Lived Intangible Assets, Net [Abstract] | |||
Gross Amount | $ 65,067 | $ 66,971 | |
Accumulated Amortization | 64,947 | 66,646 | |
Net | 120 | 325 | |
Customer relationships | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Gross Amount | 31,149 | 32,286 | |
Accumulated Amortization | 31,079 | 31,997 | |
Net | 70 | 289 | |
Developed technology | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Gross Amount | 24,571 | 25,177 | |
Accumulated Amortization | 24,571 | 25,177 | |
Net | 0 | 0 | |
Patents, trademarks and tradenames | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Gross Amount | 3,788 | 3,932 | |
Accumulated Amortization | 3,788 | 3,896 | |
Net | 0 | 36 | |
Service contracts | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Gross Amount | 5,559 | 5,576 | |
Accumulated Amortization | 5,509 | 5,576 | |
Net | 50 | $ 0 | |
Netherlands-Based Game Development Studio | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Intangible assets acquired | $ 100 | $ 100 |
Goodwill (Changes in Goodwill) (Detail) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Goodwill [Roll Forward] | |
Beginning Balance | $ 13,060 |
Goodwill, Written off Related to Sale of Business Unit | 4,367 |
Effects of foreign currency translation | (367) |
Ending Balance | $ 17,060 |
Goodwill (Additional Information) (Details) - USD ($) $ in Thousands |
Apr. 16, 2018 |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Goodwill | $ 17,060 | $ 13,060 | |
Netherlands-Based Game Development Studio | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Percentage of shares acquired | 100.00% | ||
Net purchase price | $ 4,200 | ||
Intangible assets acquired | 100 | $ 100 | |
Goodwill | $ 4,400 |
Goodwill (Goodwill by Segments) (Detail) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Goodwill [Line Items] | ||
Goodwill | $ 17,060 | $ 13,060 |
Consumer Media | ||
Goodwill [Line Items] | ||
Goodwill | 580 | |
Mobile Services | ||
Goodwill [Line Items] | ||
Goodwill | 2,086 | |
Games | ||
Goodwill [Line Items] | ||
Goodwill | $ 14,394 |
Accrued and Other Current Liabilities (Detail) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Payables and Accruals [Abstract] | ||
Royalties and other fulfillment costs | $ 3,315 | $ 2,965 |
Employee compensation, commissions and benefits | 3,985 | 4,384 |
Sales, VAT and other taxes payable | 1,463 | 1,782 |
Other | 3,153 | 3,234 |
Total accrued and other liabilities | $ 11,916 | $ 12,365 |
Restructuring Charges (Details) - Employee Separation Costs - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Restructuring Cost and Reserve [Line Items] | ||
Costs incurred and charged to expense | $ 1,320 | $ 2,271 |
Restructuring Reserve [Roll Forward] | ||
Accrued liability beginning balance | 244 | |
Costs incurred and charged to expense | 1,320 | |
Cash payments | (976) | |
Accrued liability ending balance | $ 588 |
Lease Exit and Related Charges (Changes to Accrued Loss on Excess Office Facilities) (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Loans and Leases Receivable Disclosure [Line Items] | ||||
Reduction in lease space (as a percent) | 15.00% | 15.00% | ||
Lease exit and related charges (benefit) | $ 0 | $ 0 | $ 454 | $ 0 |
Accrued Loss on Excess Office Facilities [Roll Forward] | ||||
Accrued loss at December 31, 2017 | 2,058 | |||
Additions and adjustments to the lease loss accrual, including estimated sublease income | (454) | |||
Less amounts paid, net of sublease amounts | (484) | |||
Accrued loss at September 30, 2018 | 1,120 | 1,120 | ||
Less current portion (included in Accrued and other current liabilities) | (119) | (119) | ||
Accrued loss, non-current portion (included in Other long term liabilities) | $ 1,001 | 1,001 | ||
Seattle | ||||
Loans and Leases Receivable Disclosure [Line Items] | ||||
Lease exit and related charges (benefit) | $ 300 |
Shareholders’ Equity (Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||
Accumulated other comprehensive income (loss), beginning of period | $ 79,173 | ||||
Unrealized gains (loss), net of tax effects of ($1), $0, $0 and $5 | $ 0 | 0 | $ 10 | ||
Total other comprehensive income (loss) | $ (325) | 562 | (1,530) | 1,812 | |
Accumulated other comprehensive loss balance, end of period | 63,305 | 63,305 | |||
Total accumulated other comprehensive loss, end of period | (61,077) | (59,833) | (61,077) | (59,833) | $ (59,547) |
Investments | |||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||
Accumulated other comprehensive income (loss), beginning of period | 5 | 4 | 2 | (6) | |
Unrealized gains (loss), net of tax effects of ($1), $0, $0 and $5 | (3) | 0 | 0 | 10 | |
Total other comprehensive income (loss) | (3) | 0 | 0 | 10 | |
Accumulated other comprehensive loss balance, end of period | 2 | 4 | 2 | 4 | |
Accumulated Other Comprehensive Income (Loss), Tax [Abstract] | |||||
Unrealized gains (losses), tax effects | 1 | 0 | 1 | 5 | |
Foreign currency translation | |||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||
Accumulated other comprehensive income (loss), beginning of period | (60,757) | (60,399) | (59,549) | (61,639) | |
Translation adjustments | (322) | 562 | (1,530) | 1,802 | |
Total other comprehensive income (loss) | (322) | 562 | (1,530) | 1,802 | |
Accumulated other comprehensive loss balance, end of period | $ (61,079) | $ (59,837) | $ (61,079) | $ (59,837) |
Earnings (Loss) Per Share (Calculation of Basic and Diluted Earnings Per Share) (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Earnings Per Share [Abstract] | ||||
Net loss from continuing operations | $ (5,977) | $ (4,532) | $ (18,085) | $ (17,861) |
Net loss | (5,977) | (4,334) | (18,085) | (17,144) |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent | $ (6,302) | $ (3,772) | $ (19,615) | $ (15,332) |
Weighted average common shares outstanding used to compute basic EPS | 37,618 | 37,200 | 37,549 | 37,112 |
Dilutive effect of stock based awards | 0 | 0 | 0 | 0 |
Weighted average common shares outstanding used to compute diluted EPS | 37,618 | 37,200 | 37,549 | 37,112 |
Basic EPS from continuing operations (in dollars per share) | $ (0.16) | $ (0.12) | $ (0.48) | $ (0.48) |
Diluted EPS from continuing operations (in dollars per share) | $ (0.16) | $ (0.12) | $ (0.48) | $ (0.48) |
Earnings (Loss) Per Share (Additional Information) (Detail) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Earnings Per Share [Abstract] | ||||
Shares of common stock excluded from the calculation of diluted net income per share because of antidilutive effect | 6.7 | 5.3 | 6.3 | 5.2 |
Discontinued Operations (Results of Operations Relating to Discontinued Operations) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Income from discontinued operations, net of tax | $ 0 | $ 198 | $ 0 | $ 717 |
LOEN | Discontinued Operations | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Net revenue | 0 | 11,445 | 0 | 33,837 |
Cost of revenue | 0 | 11,191 | 0 | 32,918 |
Gross profit | 0 | 254 | 0 | 919 |
Income taxes | 0 | 56 | 0 | 202 |
Income from discontinued operations, net of tax | $ 0 | $ 198 | $ 0 | $ 717 |
Discontinued Operations (Carrying Amounts of Assets and Liabilities) (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Total current assets of discontinued operations | $ 0 | $ 17,456 |
Total current liabilities of discontinued operations | 0 | 17,107 |
LOEN | Discontinued Operations | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Trade accounts receivable, net | 0 | 17,456 |
Total current assets of discontinued operations | 0 | 17,456 |
Accounts payable | 0 | 15,836 |
Accrued and other current liabilities | 0 | 1,271 |
Total current liabilities of discontinued operations | $ 0 | $ 17,107 |
Segment Information (Additional Information) (Detail) |
9 Months Ended |
---|---|
Sep. 30, 2018
Segment
| |
Segment Reporting [Abstract] | |
Number of reporting segments | 3 |
Segment Information (Segment Results) (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
||||||
Segment Reporting Information [Line Items] | |||||||||
Revenue | [1] | $ 17,579 | $ 18,557 | $ 52,953 | $ 59,853 | ||||
Cost of revenue | [2] | 4,239 | 5,343 | 14,000 | 18,199 | ||||
Gross profit | 13,340 | 13,214 | 38,953 | 41,654 | |||||
Operating expenses | 18,268 | 17,673 | 55,668 | 57,528 | |||||
Operating income (loss) | (4,928) | (4,459) | (16,715) | (15,874) | |||||
Consumer Media | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenue | 4,733 | 14,100 | |||||||
Mobile Services | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenue | 7,348 | 22,771 | |||||||
Games | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenue | 5,498 | 16,082 | |||||||
Operating Segments | Consumer Media | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenue | 4,733 | 4,197 | 14,100 | 16,817 | |||||
Cost of revenue | 955 | 981 | 2,976 | 3,545 | |||||
Gross profit | 3,778 | 3,216 | 11,124 | 13,272 | |||||
Operating expenses | 3,448 | 3,217 | 10,805 | 10,957 | |||||
Operating income (loss) | 330 | (1) | 319 | 2,315 | |||||
Operating Segments | Mobile Services | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenue | 7,348 | 7,678 | 22,771 | 23,597 | |||||
Cost of revenue | 2,052 | 2,134 | 6,502 | 7,750 | |||||
Gross profit | 5,296 | 5,544 | 16,269 | 15,847 | |||||
Operating expenses | 6,825 | 6,437 | 21,160 | 21,261 | |||||
Operating income (loss) | (1,529) | (893) | (4,891) | (5,414) | |||||
Operating Segments | Games | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenue | 5,498 | 6,682 | 16,082 | 19,439 | |||||
Cost of revenue | 1,228 | 2,226 | 4,501 | 6,842 | |||||
Gross profit | 4,270 | 4,456 | 11,581 | 12,597 | |||||
Operating expenses | 5,447 | 5,071 | 15,459 | 15,108 | |||||
Operating income (loss) | (1,177) | (615) | (3,878) | (2,511) | |||||
Corporate | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Cost of revenue | 4 | 2 | 21 | 62 | |||||
Operating expenses | 2,548 | 2,948 | 8,244 | 10,202 | |||||
Operating income (loss) | $ (2,552) | $ (2,950) | $ (8,265) | $ (10,264) | |||||
|
Segment Information (Revenue by Geographic Region) (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Revenue | [1] | $ 17,579 | $ 18,557 | $ 52,953 | $ 59,853 | |
United States | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Revenue | 9,026 | 10,098 | 28,106 | 30,727 | ||
Europe | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Revenue | 3,005 | 3,337 | 9,040 | 9,737 | ||
Rest of the World | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Revenue | $ 5,548 | $ 5,122 | $ 15,807 | $ 19,389 | ||
|
Segment Information (Long-Lived Assets by Geographic Region) (Detail) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 20,096 | $ 17,245 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 11,862 | 12,236 |
Europe | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 7,001 | 3,437 |
Rest of the World | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 1,233 | $ 1,572 |
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