EX-99.1 2 a29788exv99w1.htm EXHIBIT 99.1 exv99w1
 

Exhibit 99.1
( BW)(CA-DIVX)(DIVX) DivX, Inc. Reports First Quarter 2007 Financial
Results
     Business Editors/High-Tech Writers
     SAN DIEGO—(BUSINESS WIRE)—May 1, 2007—DivX, Inc. (NASDAQ:DIVX) today announced results for the quarter ended March 31, 2007.
     In the first quarter of 2007, consolidated revenue was $20.2 million, an increase of 43 percent from the first quarter of 2006. Net income in the first quarter of 2007 was $3.7 million, or $0.10 per diluted share, compared to net income of $3.3 million, or $0.11 per diluted share, in the first quarter of 2006. Stock-based compensation charges for the first quarter totaled $944,000 compared to $366,000 for the same quarter a year ago.
     Jordan Greenhall, CEO and co-founder of DivX, Inc., said, “DivX continued to build on a successful 2006 with a very strong first quarter. As more and more consumers and consumer electronics manufacturers embrace DivX to improve the media experience, we move consistently closer to our goal of creating a common media language. The media world is in the earliest stages of a digital revolution, and we believe DivX is well-positioned to play a significant role as the future of the industry takes shape.”
     John Tanner, chief financial officer of DivX, Inc., added, “Our success in the first quarter was driven by the continuing growth in technology licensing from CE devices around the world. Technology licensing revenue represented the highest quarterly revenue in the company’s history, leading to 95% gross margins and strong cash from operations. Our balance sheet improved again in the quarter with cash and equivalents of approximately $157 million, an increase of approximately $8 million from the previous quarter.”
     Guidance
     For the second quarter of 2007, revenue is anticipated to be in the range of $16.7 to $18.7 million, reflecting the company’s
historical seasonality.
     Quarterly Conference Call
     DivX, Inc. will discuss its quarterly results via teleconference at 1:30 p.m. PDT today, May 1, 2007. To access the call, please dial (800) 562-8369, or outside the U.S. (913) 312-1299, at least five minutes prior to the start time. A live webcast and replay will also be available at http://investors.divx.com. An audio replay of today’s conference call will be available from 4:30 p.m. PDT on May 1, 2007 until 9:00 p.m. PDT May 8, 2007 by dialing (719) 457-0820 or (888) 203-1112 with the replay pass code 460319.
     About DivX, Inc.
     DivX creates products and services designed to improve the experience of media. Our first product offering was a video compression-decompression software library, or codec, which has been actively sought out and downloaded over 200 million times since January 2003, including over 60 million times during the last twelve months. We have since built on the success of our codec with other consumer software, including the DivX Player application, which is

 

 

distributed from our website, www.divx.com. We also license our technologies to consumer hardware device manufacturers and certify their products to ensure the interoperable support of DivX-encoded content. In addition to technology licensing to consumer hardware device manufacturers, we currently generate revenue from software licensing, advertising and content distribution.
     Forward-Looking Statements
     Statements in this press release that are not strictly historical in nature constitute “forward-looking statements.” Such statements include, but are not limited to, statements regarding the future development of digital media, DivX’s role in the development of the media industry and expectations regarding revenue for the second quarter of 2007. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause DivX’s actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements. These factors include, but are not limited to, the risk that customer use of DivX technology may not grow as anticipated, the risk that anticipated market opportunities may not materialize at expected levels, or at all, the risk that the Company’s activities may not result in the growth of profitable revenue, risks and uncertainties related to the maintenance and strength of the DivX brand; the risk that revenue for the second quarter of 2007 may be lower than expected; DivX’s ability to penetrate existing and new markets; the effects of competition; DivX’s dependence on its licensees and partners; the effect of intellectual property rights claims; and other factors discussed in the “Risk Factors” section of DivX’s annual report on Form 10-K filed with the SEC on March 29, 2007. All forward-looking statements are qualified in their entirety by this cautionary statement. DivX is providing this information as of the date of this release and does not undertake any obligation to update any forward-looking statements contained in this release as a result of new information, future events or otherwise.

 

 

DivX, Inc.
Consolidated Condensed Statement of Income
(in thousands, except per share data)
                 
    Three months ended March 31,  
    2006     2007  
    (unaudited)  
Net revenues:
                
Technology licensing
   $ 11,068     $ 16,702  
Media and other distribution and services
     3,031       3,516  
 
            
Total net revenues
     14,099       20,218  
 
                
Cost of revenue:
                
Cost of technology licensing
     731       848  
Cost of media and other distribution and services (1)
     221       261  
 
            
Total cost of revenue
     952       1,109  
 
            
Gross margin
     13,147       19,109  
 
                
Operating expenses:
                
Selling, general and administrative (1)
     5,929       10,796  
Product development (1)
     3,225       4,156  
 
            
Total operating expenses
     9,154       14,952  
 
            
 
                
Income from operations
     3,993       4,157  
 
                
Interest income
     290       1,909  
 
                
Interest expense and other
     (23 )     (6 )
 
            
 
                
Income before income taxes
     4,260       6,060  
 
                
Income tax provision
     981       2,400  
 
            
 
                
Net income
   $ 3,279     $ 3,660  
 
            
 
                
Basic net income per share
   $ 0.14     $ 0.11  
 
            
 
                
Diluted net income per share
   $ 0.11     $ 0.10  
 
            
 
                
Shares used to compute basic net income per share
     8,196       33,151  
 
            
 
                
Shares used to compute diluted net income per share
     10,482       35,413  
 
            
 
                
 
 
                
(1) Includes stock-based compensation as follows:
 
                
Cost of revenues
   $ 1     $ 1  
Selling, general and administrative
     275       513  
Product development
     90       430  
 
            
Total stock-based compensation
   $ 366     $ 944  
 
            

 

 

DivX, Inc.
Consolidated Condensed Balance Sheets
(in thousands)
                 
    December 31,     March 31,  
    2006     2007  
    (unaudited)  
Assets
                
Current assets:
                
Cash and cash equivalents
   $ 86,310     $ 47,291  
Restricted cash
     270       —  
Short-term investments
     62,331       109,581  
Accounts receivable, net of allowance of $1,424 and $2,001, respectively
     6,939       6,054  
Prepaid expenses
     1,419       1,028  
Deferred tax assets, current
     937       937  
Other current assets
     615       850  
 
            
 
                
Total current assets
     158,821       165,741  
 
                
Property and equipment, net
     3,488       3,950  
Deferred tax assets, long term
     1,363       1,319  
Other assets
     714       890  
 
            
 
                
Total assets
   $ 164,386     $ 171,900  
 
            
 
                
Liabilities and stockholders’ equity
                
Current liabilities:
                
Accounts payable
   $ 2,189     $ 2,095  
Accrued liabilities
     1,038       1,494  
Accrued compensation and benefits
     2,279       3,220  
Accrued patent royalties
     742       839  
Income taxes payable
     486       4,304  
Deferred revenue, current
     4,654       3,265  
Current portion of capital lease obligations
     36       36  
Notes payable, current portion
     378       259  
 
            
 
                
Total current liabilities
     11,802       15,512  
 
                
Capital lease, net of current portion
     73       64  
Notes payable, net of current portion
     15       —  
Deferred revenue, long term
     768       832  
Deferred rent
     461       441  
Liability for unvested portion of early stock option exercises
     356       298  
 
            
 
                
Total liabilities
     13,475       17,147  
 
                
Stockholders’ equity
     150,911       154,753  
 
            
 
                
Total liabilities and stockholders’ equity
   $ 164,386     $ 171,900  
 
            

 

 

DivX, Inc.
Consolidated Condensed Statement of Cash Flows
(in thousands)
                 
    Three months ended  
    March 31,  
    2006     2007  
    (unaudited)  
Net cash provided by operating activities
   $ 7,233     $ 7,239  
 
                
Net cash used in investing activities
     (707 )     (47,183 )
 
                
Net cash (used in) provided by financing activities
     (50 )     925  
 
            
 
                
Net increase (decrease) in cash and cash equivalents
     6,476       (39,019 )
 
                
Cash and cash equivalents at beginning of period
     25,035       86,310  
 
            
 
                
Cash and cash equivalents at end of periods
   $ 31,511     $ 47,291  
 
            
     CONTACT:   DivX, Inc.
Tom Huntington, 858-882-0672 (Media)
thuntington@divxcorp.com
or
The Blueshirt Group
Todd Friedman or Stacie Bosinoff, 415-217-7722(Investors)
todd@blueshirtgroup.com
stacie@blueshirtgroup.com