EX-99.1 2 exhibit991erq2-19.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
REALNETWORKS ANNOUNCES SECOND QUARTER 2019 FINANCIAL RESULTS

SEATTLE — August 1, 2019 -

RealNetworks, Inc. (Nasdaq: RNWK), a leader in digital media software and services, today announced its financial results for the second quarter ended June 30, 2019.

•
Second quarter revenue of $44.2 million
•
Strong early success with SAFRTM
•
Successful worldwide roll-out of 2nd free-to-play game, Delicious World
•
Remain committed to proactive expense management

Management Commentary

“In the second quarter, we achieved solid results overall with two particularly strong areas: our SAFR Facial Recognition platform and our free-to-play casual mobile games,” said Rob Glaser, Chairman and CEO of RealNetworks. “SAFR bookings were up significantly quarter-over-quarter. SAFR also continued to shine technically, retaining its position in the NIST ratings as the fastest and smallest of the most accurate Facial Recognition Systems.”

Mr. Glaser added, “We also demonstrated solid traction in free-to-play casual mobile games. Our second free-to-play title, Delicious World, launched at the end of the second quarter and is off to a terrific start.”

Second Quarter 2019 Financial Highlights
•
Revenue was $44.2 million (inclusive of $28.6 million from Napster) compared to $39.5 million (inclusive of $24.3 million from Napster) in the prior quarter and $15.7 million in the prior year period. The second quarter of 2019 reflects the first full quarter consolidation of Napster’s financial statements.
•
Gross profit margin was 38%, up from 37% in the prior quarter and down from 71% in the prior year period. Napster’s gross profit margin for the second quarter of 2019 was 19%, while RealNetworks’ gross profit margin without Napster was 73%.
•
Operating expenses increased $0.9 million, or 3%, from the prior quarter and increased $8.4 million, or 47%, from the prior year period. Napster’s operating expenses were $6.6 million for the second quarter of 2019. Included in the second quarter of 2019 total operating expenses were $0.4 million of transaction costs related to the acquisition of Napster and $0.3 million of expenses recorded for the change in fair value of the contingent consideration liability related to the acquisition of Napster.
•
Net loss attributable to RealNetworks was $(9.2) million, or $(0.24) per share, compared to net income of $1.5 million, or $0.04 per share, in the prior quarter and a net loss of $(6.9) million, or $(0.18) per share, in the prior year period. Net income attributable to RealNetworks in the first quarter of 2019 included a gain of $12.3 million related to the acquisition of Napster.
•
Adjusted EBITDA was a loss of $(6.3) million compared to a loss of $(7.9) million in the prior quarter and a loss of $(5.8) million in the prior year period. A reconciliation of GAAP net income (loss) including noncontrolling interests to adjusted EBITDA, a non-GAAP measure, is provided in the financial tables that accompany this release.
•
At June 30, 2019, the Company had $26.3 million in unrestricted cash and cash equivalents compared to $36.9 million at March 31, 2019.

Business Outlook





For the third quarter of 2019, RealNetworks expects to achieve the following results including noncontrolling interests:

•
Total revenue is expected to be in the range of $43.0 million to $46.0 million.
•
Adjusted EBITDA loss is expected to be in the range of $(2.5) million to $(5.5) million.

Conference Call and Webcast Information
The Company will host a conference call today to review results and discuss its performance shortly after 4:30 p.m. ET / 1:30 p.m. PT. Participants may join the conference call by dialing 1-877-451-6152 (United States) or 1-201-389-0879 (International). A telephonic replay of the call will also be available shortly after the completion of the call, until 11:59 pm ET on Thursday, August 22, 2019, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (International) and entering the replay pin number: 13692194.

A live webcast will be available on RealNetworks’ Investor Relations site under the Events & Presentations section at http://investor.realnetworks.com and will be archived online upon completion of the conference call.

About RealNetworks

Building on a legacy of digital media expertise and innovation, RealNetworks has created a new generation of products that employ best-in-class artificial intelligence and machine learning to enhance and secure our daily lives. SAFR (www.safr.com) is the world’s premier facial recognition platform for live video. Leading in real-world performance and accuracy as evidenced in testing by NIST, SAFR enables new applications for security, convenience, and analytics. Kontxt (www.kontxt.com) is the foremost platform for categorizing A2P messages to help mobile carriers build customer loyalty and drive new revenue through text message classification and antispam. For information about our other products, visit www.realnetworks.com.

About Non-GAAP Financial Measures
To supplement RealNetworks' consolidated financial information presented in accordance with GAAP in this press release, the company also discloses certain non-GAAP financial measures, including adjusted EBITDA and contribution margin by reportable segment, which management believes provide investors with useful information.
In the financial tables of our earnings press release, RealNetworks has included reconciliations of GAAP net income (loss) including noncontrolling interests to adjusted EBITDA and operating income (loss) by reportable segment to contribution margin by reportable segment.
The rationale for management's use of non-GAAP measures is included in the supplementary materials presented with the quarterly earnings materials. Please refer to Exhibit 99.2 (“Information Regarding Non-GAAP Financial Measures”) to the company's report on Form 8-K, which is being submitted today to the SEC.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties, including statements relating to our current expectations regarding future revenue and adjusted EBITDA, our future growth, profitability, and market position, our strategic focus and initiatives, agreements with partners, and the growth and future prospects relating to our Napster segment. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements. These statements reflect




our expectations as of today, and actual results may differ materially from the results predicted. Factors that could cause actual results for RealNetworks, on a consolidated basis, to differ from the results predicted include: our ability to realize operating efficiencies, growth and other benefits from the implementation of our growth initiatives; successful monetization of our products and services; competitive risks, including the emergence or growth of competing technologies, products and services; potential outcomes and effects of claims and legal proceedings; risks associated with key customer or strategic relationships and business acquisitions; disruptions in the global financial markets, including changes in consumer spending and impacts to credit availability; fluctuations in foreign currencies; and unique risk factors that relate to our Napster segment, such as risks stemming from its streaming music service and related music royalties. More information about potential risk factors that could affect our business and financial results is included in RealNetworks' annual report on Form 10-K for the most recent year ended December 31, its quarterly reports on Form 10-Q and in other reports and documents filed by RealNetworks from time to time with the Securities and Exchange Commission. The preparation of our financial statements and forward-looking financial guidance requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, and revenues and expenses during the reported period. Actual results may differ materially from these estimates under different assumptions or conditions. RealNetworks assumes no obligation to update any forward-looking statements or information, which are in effect as of their respective dates.

For More Information:
Investor Relations for RealNetworks
Kimberly Orlando, Addo Investor Relations
310-829-5400
IR@realnetworks.com
RNWK-F





RealNetworks, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
 
Quarter Ended
June 30,
 
Six Months Ended
June 30,
 
 

2019
 
2018
 
2019
 
2018
 
 (in thousands, except per share data)
 
 
 
 
 
 
 
 
 Net revenue
$
44,248

 
$
15,724

 
$
83,720

 
$
35,374

 Cost of revenue
27,282

 
4,625

 
52,152

 
9,761

           Gross profit
16,966

 
11,099

 
31,568

 
25,613

 
 
 
 
 
 
 
 
 Operating expenses:
 
 


 

 

       Research and development
8,876

 
7,652

 
17,709

 
15,346

       Sales and marketing
8,360

 
4,883

 
16,502

 
10,880

       General and administrative
8,392

 
5,339

 
16,756

 
10,940

       Restructuring and other charges
729

 
187

 
896

 
688

       Lease exit and related benefit
—

 
(129
)
 
—

 
(454
)
 
 
 
 
 
 
 
 
           Total operating expenses
26,357

 
17,932

 
51,863

 
37,400

 
 
 
 
 
 
 
 
 Operating loss
(9,391
)
 
(6,833
)
 
(20,295
)
 
(11,787
)
 
 
 
 
 
 
 
 
 Other income (expenses):
 
 
 
 
 
 
 
       Interest expense
(43
)
 
—

 
(209
)
 
—

       Interest income
40

 
111

 
117

 
198

       Gain (loss) on equity investment, net
—

 
—

 
12,338

 
—

       Other income (expenses), net
183

 
(42
)
 
310

 
(83
)
 
 
 
 
 
 
 
 
           Total other income (expenses), net
180

 
69

 
12,556

 
115

 
 
 
 
 
 
 
 
 Income (loss) before income taxes
(9,211
)
 
(6,764
)
 
(7,739
)
 
(11,672
)
 Income tax expense
244

 
166

 
502

 
436

 
 
 
 
 
 
 
 
Net income (loss) including noncontrolling interests
(9,455
)
 
(6,930
)
 
(8,241
)
 
(12,108
)
Net income (loss) attributable to noncontrolling interests
(253
)
 
—

 
(572
)
 
—

Net income (loss) attributable to RealNetworks
$
(9,202
)
 
$
(6,930
)
 
$
(7,669
)
 
$
(12,108
)
 
 
 
 
 
 
 
 
Net income (loss) per share attributable to RealNetworks- Basic:
$
(0.24
)
 
$
(0.18
)
 
$
(0.20
)
 
$
(0.32
)
Net income (loss) per share attributable to RealNetworks- Diluted:
$
(0.24
)
 
$
(0.18
)
 
$
(0.20
)
 
$
(0.32
)
 
 
 
 
 
 
 
 
 Shares used to compute basic net income (loss) per share
37,948

 
37,577

 
37,885

 
37,514

 Shares used to compute diluted net income (loss) per share
37,948

 
37,577

 
37,885

 
37,514






RealNetworks, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
 
June 30,
2019
 
December 31,
2018
 
 (in thousands)
ASSETS
 Current assets:
 
 
 
 Cash and cash equivalents
$
26,339

 
$
35,561

 Short-term investments
—

 
24

 Trade accounts receivable, net
31,957

 
11,751

 Deferred costs, current portion
465

 
331

 Prepaid expenses and other current assets
20,382

 
5,911

 Total current assets
79,143

 
53,578

 
 
 
 
 Equipment and software
32,079

 
37,458

 Leasehold improvements
3,319

 
3,292

 Total equipment, software, and leasehold improvements
35,398

 
40,750

 Less accumulated depreciation and amortization
32,268

 
37,996

 Net equipment, software, and leasehold improvements
3,130

 
2,754

 
 
 
 
 Operating lease assets
13,672

 
—

 Restricted cash equivalents
2,124

 
1,630

 Other assets
2,739

 
3,997

 Deferred costs, non-current portion
797

 
528

 Deferred tax assets, net
854

 
851

 Other intangible assets, net
21,616

 
26

 Goodwill
65,395

 
16,955

 
 
 
 
 Total assets
$
189,470

 
$
80,319

 


 
 
 LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 Current liabilities:
 
 
 
 Accounts payable
$
5,224

 
$
3,910

 Accrued royalties, fulfillment and other current liabilities
97,951

 
11,312

 Commitment to Napster
—

 
2,750

 Deferred revenue, current portion
6,054

 
2,125

 Notes payable
7,878

 
—

 Total current liabilities
117,107

 
20,097

 
 
 
 
 Deferred revenue, non-current portion
179

 
268

 Deferred rent
—

 
986

 Deferred tax liabilities, net
1,262

 
1,168

 Long-term lease liabilities
10,384

 
—

 Other long-term liabilities
11,070

 
960

 
 
 
 
 Total liabilities
140,002

 
23,479

 
 
 
 
 Total shareholders' equity
49,382

 
56,840

 
 
 
 
Noncontrolling interests
86

 
—

 
 
 
 
 Total equity
49,468

 
56,840

 
 
 
 
 Total liabilities and equity
$
189,470

 
$
80,319





RealNetworks, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
Six Months Ended
June 30,
 
2019
 
2018
 
 (in thousands)
 
 Cash flows from operating activities:
 
 
 
 Net income (loss) including noncontrolling interests
$
(8,241
)
 
$
(12,108
)
 Adjustments to reconcile net income (loss) including noncontrolling interests to net cash used in operating activities:
 
 
 
Depreciation and amortization
2,959

 
1,231

Stock-based compensation
1,917

 
1,614

Deferred income taxes, net
—

 
(12
)
(Gain) loss on equity investment, net
(12,338
)
 
—

Foreign currency (gain) loss
(315
)
 
—

Fair value adjustments to contingent consideration liability
300

 
—

Mark to market adjustment of warrants
—

 
50

Net change in certain operating assets and liabilities
(381
)
 
(3,505
)
  Net cash used in operating activities
(16,099
)
 
(12,730
)
 Cash flows from investing activities:


 
 
Purchases of equipment, software, and leasehold improvements
(873
)
 
(580
)
Proceeds from sales and maturities of short-term investments
24

 
5,726

Acquisition, net of cash acquired
12,260

 
(4,192
)
 Net cash provided by investing activities
11,411

 
954

 Cash flows from financing activities:
 
 
 
Proceeds from issuance of common stock (stock options and stock purchase plan)
144

 
114

Tax payments from shares withheld upon vesting of restricted stock
(287
)
 
(243
)
Proceeds from notes payable
19,760

 
—

Repayments of notes payable
(24,018
)
 
—

Other financing activities
450

 
—

 Net cash provided by (used in) financing activities
(3,951
)
 
(129
)
 Effect of exchange rate changes on cash, cash equivalents and restricted cash
(89
)
 
(731
)
 Net increase (decrease) in cash, cash equivalents and restricted cash
(8,728
)
 
(12,636
)
 Cash, cash equivalents and restricted cash, beginning of period
37,191

 
53,596

 Cash, cash equivalents and restricted cash, end of period
$
28,463

 
$
40,960










RealNetworks, Inc. and Subsidiaries
Supplemental Financial Information
(Unaudited)
 
2019
 
2018
 
 Q2
 
Q1
 
 Q4
 
 Q3
 
 Q2
 
 Q1
 
 (in thousands)
Net Revenue by Segment
 
 
 
 
 
 
 
 
 
 
 
Consumer Media (A)
$
2,620

 
$
2,486

 
$
4,068

 
$
4,733

 
$
3,884

 
$
5,483

Mobile Services (B)
6,997

 
6,939

 
6,899

 
7,348

 
6,719

 
8,704

Games (C)
6,048

 
5,710

 
5,590

 
5,498

 
5,121

 
5,463

Napster (D)
28,583

 
24,337

 
—

 
—

 
—

 
—

     Total net revenue
$
44,248

 
$
39,472

 
$
16,557

 
$
17,579

 
$
15,724

 
$
19,650

 
 
 
 
 
 
 
 
 
 
 
 
Net Revenue by Product
 
 
 
 
 
 
 
 
 
 
 
Consumer Media
 
 
 
 
 
 
 
 
 
 
 
- Software License (E)
$
944

 
$
735

 
$
2,049

 
$
2,746

 
$
1,808

 
$
3,337

- Subscription Services (F)
1,040

 
1,088

 
1,153

 
1,232

 
1,225

 
1,285

- Product Sales (G)
206

 
219

 
257

 
281

 
299

 
340

- Advertising & Other (H)
430

 
444

 
609

 
474

 
552

 
521

 
 
 
 
 
 
 
 
 
 
 
 
Mobile Services
 
 
 
 
 
 
 
 
 
 
 
- Software License (I)
957

 
599

 
514

 
520

 
469

 
1,335

- Subscription Services (J)
6,040

 
6,340

 
6,385

 
6,828

 
6,250

 
7,369

 
 
 
 
 
 
 
 
 
 
 
 
Games
 
 
 
 
 
 
 
 
 
 
 
- Subscription Services (K)
3,073

 
2,985

 
3,014

 
2,745

 
2,689

 
2,693

- Product Sales (L)
2,177

 
1,988

 
2,013

 
2,279

 
1,953

 
2,402

- Advertising & Other (M)
798

 
737

 
563

 
474

 
479

 
368

 
 
 
 
 
 
 
 
 
 
 
 
Napster
 
 
 
 
 
 
 
 
 
 
 
- Subscription Services (N)
28,583

 
24,337

 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
     Total net revenue
$
44,248

 
$
39,472

 
$
16,557

 
$
17,579

 
$
15,724

 
$
19,650

 
 
 
 
 
 
 
 
 
 
 
 
Net Revenue by Geography
 
 
 
 
 
 
 
 
 
 
 
United States
$
21,322

 
$
18,970

 
$
7,697

 
$
9,026

 
$
7,646

 
$
11,434

Rest of world
22,926

 
20,502

 
8,860

 
8,553

 
8,078

 
8,216

     Total net revenue
$
44,248

 
$
39,472

 
$
16,557

 
$
17,579

 
$
15,724

 
$
19,650

 
 
 
 
 
 
 
 
 
 
 
 
Net Revenue by Segment
 
 
 
 
 
 
 
 
 
 
 
(A) The Consumer Media segment primarily includes revenue from the licensing of our portfolio of video codec technologies. Also included is RealPlayer and related products, such as the distribution of third-party software products, advertising on RealPlayer websites, sales of RealPlayer Plus software to consumers, and consumer subscriptions such as RealPlayer Plus and SuperPass.
(B) The Mobile Services segment primarily includes revenue from SaaS services and sales of professional services provided to mobile carriers.
(C) The Games segment primarily includes revenue from sales of mobile and PC games, online games subscription services, player purchases of in-game virtual goods, and advertising on games sites and social network sites.
(D) The Napster segment primarily includes revenue from subscription music offerings from on-demand streaming services and conditional downloads. Napster revenues are included in our consolidated results from the January 18, 2019 acquisition date forward.
Net Revenue by Product
 
 
 
 
 
 
 
 
 
 
 
(E) Software licensing revenue within Consumer Media includes revenues from licenses of our video codec technologies.
(F) Subscriptions revenue within Consumer Media includes revenue from subscriptions such as our RealPlayer Plus and SuperPass offerings.
(G) Product sales within Consumer Media includes sales of RealPlayer Plus software to consumers.
(H) Advertising & other revenue within Consumer Media includes distribution of third-party software products and advertising on RealPlayer websites.
(I) Software license revenue within Mobile Services includes revenue from our integrated RealTimes platform.
(J) Subscription services revenue within Mobile Services includes revenue from ringback tones and our messaging platform services, as well as from related professional services provided to mobile carriers.
(K) Subscription services revenue within Games includes revenue from online games subscriptions.
(L) Product sales revenue within Games includes revenue from retail and wholesale games-related revenue, sales of mobile games, and player purchases of in-game virtual goods.
(M) Advertising & other revenue within Games includes advertising on games sites and social network sites.
(N) Subscription services revenue within Napster includes music tracks by way of on-demand streaming and conditional downloads offered directly to end consumers and distribution partners.




RealNetworks, Inc. and Subsidiaries
Segment Results of Operations and Reconciliation to non-GAAP Contribution Margin
(Unaudited)

 
2019
 
2018
 
2019
 
2018
 
Q2
 
Q1
 
Q2
 
YTD
 
YTD
 
 (in thousands)
Consumer Media
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue
$
2,620

 
$
2,486

 
$
3,884

 
$
5,106

 
$
9,367

Cost of revenue
803

 
833

 
1,028

 
1,636

 
2,021

Gross profit
1,817

 
1,653

 
2,856

 
3,470

 
7,346

 
 
 
 
 
 
 
 
 
 
Gross margin
69
%
 
66
%
 
74
%
 
68
%
 
78
%
 
 
 
 
 
 
 
 
 
 
Operating expenses
2,877

 
3,119

 
3,439

 
5,996

 
7,357

Operating income (loss), a GAAP measure
$
(1,060
)
 
$
(1,466
)
 
$
(583
)
 
$
(2,526
)
 
$
(11
)
Depreciation and amortization
56

 
54

 
51

 
110

 
97

 
 
 
 
 
 
 
 
 
 
Contribution margin, a non-GAAP measure
$
(1,004
)
 
$
(1,412
)
 
$
(532
)
 
$
(2,416
)
 
$
86

 
 
 
 
 
 
 
 
 
 
Mobile Services
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue
$
6,997

 
$
6,939

 
$
6,719

 
$
13,936

 
$
15,423

Cost of revenue
1,865

 
2,048

 
2,134

 
3,913

 
4,450

Gross profit
5,132

 
4,891

 
4,585

 
10,023

 
10,973

 
 
 
 
 
 
 
 
 
 
Gross margin
73
%
 
70
%
 
68
%
 
72
%
 
71
%
 
 
 
 
 
 
 
 
 
 
Operating expenses
7,438

 
7,561

 
6,969

 
14,999

 
14,335

Operating income (loss), a GAAP measure
$
(2,306
)
 
$
(2,670
)
 
$
(2,384
)
 
$
(4,976
)
 
$
(3,362
)
Acquisitions related intangible asset amortization
—

 
—

 
91

 
—

 
183

Depreciation and amortization
106

 
231

 
155

 
337

 
335

 
 
 
 
 
 
 
 
 
 
Contribution margin, a non-GAAP measure
$
(2,200
)
 
$
(2,439
)
 
$
(2,138
)
 
$
(4,639
)
 
$
(2,844
)
 
 
 
 
 
 
 
 
 
 
Games
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue
$
6,048

 
$
5,710

 
$
5,121

 
$
11,758

 
$
10,584

Cost of revenue
1,655

 
1,670

 
1,456

 
3,325

 
3,273

Gross profit
4,393

 
4,040

 
3,665

 
8,433

 
7,311

 
 
 
 
 
 
 
 
 
 
Gross margin
73
%
 
71
%
 
72
%
 
72
%
 
69
%
 
 
 
 
 
 
 
 
 
 
Operating expenses
5,288

 
5,037

 
5,095

 
10,325

 
10,012

Operating income (loss), a GAAP measure
$
(895
)
 
$
(997
)
 
$
(1,430
)
 
$
(1,892
)
 
$
(2,701
)
Acquisitions related intangible asset amortization
—

 
23

 
20

 
23

 
20

Depreciation and amortization
84

 
83

 
146

 
167

 
311

 
 
 
 
 
 
 
 
 
 
Contribution margin, a non-GAAP measure
$
(811
)
 
$
(891
)
 
$
(1,264
)
 
$
(1,702
)
 
$
(2,370
)
 
 
 
 
 
 
 
 
 
 
Napster
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue
$
28,583

 
$
24,337

 
$
—

 
$
52,920

 
$
—

Cost of revenue
23,026

 
20,396

 
—

 
43,422

 
—

Gross profit
5,557

 
3,941

 
 
 
9,498

 
—

 
 
 
 
 
 
 
 
 
 
Gross margin
19
%
 
16
%
 
—
%
 
18
%
 
—
%
 
 
 
 
 
 
 
 
 
 
Operating expenses
6,638

 
5,532

 
—

 
12,170

 
—

Operating income (loss), a GAAP measure
$
(1,081
)
 
$
(1,591
)
 
$
—

 
$
(2,672
)
 
$
—

Acquisitions related intangible asset amortization
1,129

 
943

 
—

 
2,072

 
—

Depreciation and amortization
69

 
115

 
—

 
184

 
—

 
 
 
 
 
 
 
 
 
 
Contribution margin, a non-GAAP measure
$
117

 
$
(533
)
 
$
—

 
$
(416
)
 
$
—

 
 
 
 
 
 
 
 
 
 
Corporate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of revenue
$
(67
)
 
$
(77
)
 
$
7

 
$
(144
)
 
$
17

Gross profit
67

 
77

 
(7
)
 
144

 
(17
)
 
 
 
 
 
 
 
 
 
 
Gross margin
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
 
 
 
 
 
 
 
 
 
Operating expenses
4,116

 
4,257

 
2,429

 
8,373

 
5,696

Operating income (loss), a GAAP measure
$
(4,049
)
 
$
(4,180
)
 
$
(2,436
)
 
$
(8,229
)
 
$
(5,713
)
Other income (expense), net
183

 
127

 
(42
)
 
310

 
(83
)
Foreign currency (gain) loss
(164
)
 
(151
)
 
(2
)
 
(315
)
 
20

Depreciation and amortization
33

 
33

 
148

 
66

 
285

Fair value adjustments to contingent consideration liability
300

 
—

 
—

 
300

 
—

Restructuring and other charges
729

 
167

 
187

 
896

 
688

Stock-based compensation
533

 
1,384

 
457

 
1,917

 
1,614

Lease exit and related benefit
—

 
—

 
(129
)
 
—

 
(454
)
 
 
 
 
 
 
 
 
 
 
Contribution margin, a non-GAAP measure (1)
$
(2,435
)
 
$
(2,620
)
 
$
(1,817
)
 
$
(5,055
)
 
$
(3,643
)
(1)2018 Corporate contribution margin was revised to exclude the impact of realized and unrealized foreign currency (gain) loss incurred in each respective period. Foreign currency (gain) loss is reported in Other income (expense), net, in our consolidated statement of operations.





RealNetworks, Inc. and Subsidiaries
Reconciliation of Net income (loss) including noncontrolling interests to adjusted EBITDA, a non-GAAP measure
(Unaudited)
 
2019
 
2018
 
2019
 
2018
 
Q2
 
 Q1
 
 Q2
 
 YTD
 
 YTD
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
Reconciliation of GAAP Net income (loss) including noncontrolling interests to adjusted EBITDA:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) including noncontrolling interests
$
(9,455
)
 
$
1,214

 
$
(6,930
)
 
$
(8,241
)
 
$
(12,108
)
Income tax expense (benefit)
244

 
258

 
166

 
502

 
436

Interest expense
43

 
166

 
—

 
209

 
—

Interest income
(40
)
 
(77
)
 
(111
)
 
(117
)
 
(198
)
(Gain) loss on equity investment, net

—

 
(12,338
)
 
—

 
(12,338
)
 
—

Foreign currency (gain) loss
(164
)
 
(151
)
 
(2
)
 
(315
)
 
20

Acquisitions related intangible asset amortization
1,129

 
966

 
111

 
2,095

 
203

Depreciation and amortization
348

 
516

 
500

 
864

 
1,028

Fair value adjustments to contingent consideration liability
300

 
—

 
—

 
300

 
—

Restructuring and other charges
729

 
167

 
187

 
896

 
688

Stock-based compensation
533

 
1,384

 
457

 
1,917

 
1,614

Lease exit and related benefit
—

 
—

 
(129
)
 
—

 
(454
)
   Adjusted EBITDA, a non-GAAP measure (1)
$
(6,333
)

$
(7,895
)
 
$
(5,751
)
 
$
(14,228
)
 
$
(8,771
)
(1)2018 adjusted EBITDA was revised to exclude the impact of realized and unrealized foreign currency (gain) loss incurred in each respective period. Foreign currency (gain) loss is reported in Other income (expense), net, in our consolidated statement of operations.