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REALNETWORKS ANNOUNCES THIRD QUARTER 2022 FINANCIAL RESULTS
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PR Newswire
SEATTLE, Nov. 8, 2022
SEATTLE, Nov. 8, 2022 /PRNewswire/ -- RealNetworks, Inc. (Nasdaq: RNWK), an emerging leader in AI-based software and solutions, today announced its financial results for the third quarter ended September 30, 2022.
- Revenue was $11.7 million, net loss of $(6.7) million and Adjusted EBITDA loss of $(5.8) million
- SAFR Scan received its first large order and smaller orders are creating a sales opportunity pipeline
- Pending merger process continues and the company is managing its resources responsibly through the process
Management Commentary
"In the third quarter we continued to manage our business rigorously while Real's transition moves forward. Shareholders will be asked to vote on the Merger Agreement and approval of the merger at a shareholder meeting which we expect to take place December 14, 2022," said Rob Glaser, Founder, Chairman, and Chief Executive Officer of RealNetworks. "Our financial results showed stable revenue sequentially, while our bottom line was negatively impacted by costs associated with the potential go private transaction. We will continue to manage our resources responsibly through the transition."
Mr. Glaser continued: "SAFR Scan has been receiving encouraging feedback from initial clients, and during the quarter we closed our first large SAFR Scan customer as well as a pipeline of sales opportunities for this exciting new product."
Third Quarter 2022 Financial Results
- Revenue was $11.7 million, compared to $11.9 million in the prior quarter and $14.3 million in the prior year period.
- Net loss attributable to RealNetworks was ($6.7) million, or $(0.14) per diluted share, compared to a net loss of ($5.1) million, or $(0.11) per diluted share, in the prior quarter and a net loss of ($7.7) million, or ($0.16) per diluted share, in the prior year period.
- Adjusted EBITDA was a loss of $(5.8) million compared to Adjusted EBITDA loss of $(4.2) million in the prior quarter and Adjusted EBITDA loss of $(2.7) million in the prior year period.
Corporate Developments
During the quarter, it was announced that RealNetworks and Founder, Chairman and CEO Rob Glaser entered into a definitive merger agreement pursuant to which the company will merge with and into Greater Heights LLC, an affiliate of Mr. Glaser, and each outstanding share of common stock of the Company will be converted into the right to receive cash consideration of $0.73 per share. The Company's shareholders will be asked to vote upon the adoption of the Merger Agreement and approval of the merger at a shareholder meeting on December 14, 2022. The transaction is expected to close in the fourth quarter of 2022.
Given the pending merger, the Company will not be providing any forward-looking guidance, and is withdrawing any previously provided goals and outlook.
Conference Call and Webcast Information
RealNetworks will host a conference call today to review its results and discuss its performance at approximately 4:30 p.m. ET / 1:30 p.m. PT. Participants may join the conference call by dialing 1-877-550-1707 (United States) or 1-848-488-9020 (International). A telephonic replay of the call will also be available shortly after the completion of the call, until 11:59 pm ET on November 22, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (International) and entering the replay pin number: 11152769.
A live webcast will be available on RealNetworks's 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 rich history 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. Real's portfolio includes SAFR, the world's premier computer vision platform for live video; KONTXT, an industry leading NLP (Natural Language Processing) platform for text and multi-media analysis; and leveraging its digital media expertise, a mobile games business focused on the large free-to-play segment. For information about all of our products, visit www.realnetworks.com.
About Non-GAAP Financial Measures
To supplement RealNetworks's 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) from continuing operations 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.
Additional Information and Where to Find It
RealNetworks, its directors and certain executive officers are participants in the solicitation of proxies from shareholders in connection with the pending merger of RealNetworks (the "Transaction"). RealNetworks has filed a definitive proxy statement (the "Transaction Proxy Statement") with the Securities and Exchange Commission (the "SEC") in connection with the solicitation of proxies to approve the Transaction. Additional information regarding such participants, including their direct or indirect interests, by security holdings or otherwise, is included in the Transaction Proxy Statement and other relevant documents to be filed with the SEC in connection with the Transaction. To the extent that holdings of RealNetworks's securities have changed since the amounts printed in the Transaction Proxy Statement, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. Prior to the special meeting to consider the Transaction, RealNetworks will furnish a Transaction Proxy Statement to is shareholders, together with a proxy card. SHAREHOLDERS ARE URGED TO READ THE TRANSACTION PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT REALNETWORKS WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Shareholders may obtain, free of charge, the preliminary and definitive versions of the Transaction Proxy Statement, any amendments or supplements thereto, and any other relevant documents filed by RealNetworks with the SEC in connection with the Transaction at the SEC's website (http://www.sec.gov). Copies of RealNetworks's Transaction Proxy Statement, any amendments or supplements thereto, and any other relevant documents filed by RealNetworks with the SEC in connection with the Transaction will also be available, free of charge, from RealNetworks's website at www.realnetworks.com.
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties, including statements relating to our current expectations regarding our future growth, profitability, and market position, the anticipated closing of the merger, expectations following the closing of the merger, our financial condition and liquidity, our strategic focus and initiatives, product plans, and agreements with partners. 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: the possibility that the conditions to the closing of the merger are not satisfied, including the risk that required shareholder approval for the merger is not obtained; potential litigation relating to the merger; uncertainties as to the timing of the consummation of the merger; the ability of each party to consummate the merger; risks relating to the substantial costs and diversion of personnel's attention and resources due to the merger; our ability to realize operating efficiencies, growth and other benefits from the implementation of our growth initiatives and restructuring efforts; cash usage and conservation, and the pursuit of additional funding sources; successful monetization of our products and services; competitive risks, including the emergence or growth of competing technologies, products and services; issues with the use of AI; potential outcomes and effects of claims and legal proceedings; risks associated with key customer or strategic relationships and business acquisitions and dispositions; challenges caused by the COVID-19 pandemic; disruptions in the global financial markets, including changes in consumer spending and impacts to credit availability, and fluctuations in foreign currencies; volatility of our stock price; material asset impairment; continued declines in subscription revenue; difficulty recruiting and retaining key personnel; regulatory, tax, accounting, and cross-border risks; and risks related to our governance structure. More information about potential risk factors that could affect our business and financial results is included in RealNetworks's latest annual report on Form 10-K for year ended December 31, 2021, 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 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
Brian M. Prenoveau, CFA
MZ North America
561-489-5315
IR@realnetworks.com
RNWK-F
| RealNetworks, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) | |||||||||
| | |||||||||
| | | | Quarter Ended | | Nine Months Ended | ||||
| | | | | ||||||
| | | | 2022 | | 2021 | | 2022 | | 2021 |
| | | | | | | | | | |
| | | | (in thousands, except per share data) | ||||||
| | | | | | | | | | |
| Net revenue | | | $ 11,708 | | $ 14,332 | | $ 36,840 | | $ 44,781 |
| Cost of revenue | | | 2,787 | | 3,119 | | 8,228 | | 10,370 |
| Gross profit | | | 8,921 | | 11,213 | | 28,612 | | 34,411 |
| | | | | | | | | | |
| Operating expenses: | | | | | | | | | |
| Research and development | | | 4,870 | | 5,250 | | 16,000 | | 17,818 |
| Sales and marketing | | | 4,726 | | 7,177 | | 13,810 | | 17,573 |
| General and administrative | | | 6,020 | | 4,228 | | 14,918 | | 13,502 |
| Fair value adjustments to contingent consideration liability | | | — | | — | | — | | (1,040) |
| Restructuring and other charges | | | 118 | | 1,017 | | 573 | | 4,906 |
| | | | | | | | | | |
| Total operating expenses | | | 15,734 | | 17,672 | | 45,301 | | 52,759 |
| | | | | | | | | | |
| Operating loss | | | (6,813) | | (6,459) | | (16,689) | | (18,348) |
| | | | | | | | | | |
| Other income (expenses): | | | | | | | | | |
| Interest expense | | | (3) | | (27) | | (47) | | (146) |
| Interest income | | | 7 | | 7 | | 21 | | 27 |
| Gain on forgiveness of Paycheck Protection Program loan | | | — | | — | | — | | 2,897 |
| Loss on equity and other investments, net | | | (207) | | (1,229) | | (806) | | (6,070) Werbung Mehr Nachrichten zur RealNetworks Aktie kostenlos abonnieren
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