Wed, 05/02/2012

2012 Press Releases

RealNetworks Announces First Quarter 2012 Results

SEATTLE – May 2, 2012 – Digital media software and services company RealNetworks, Inc. (Nasdaq: RNWK) today announced results for the first quarter ended March 31, 2012.

Quarterly Summary:

  • Revenue of $67.0 million

  • Net loss of $(17.0) million or $(0.49) per share

  • Adjusted EBITDA of $(7.4) million

  • Cash and short term investments of $167.0 million as of March 31, 2012

  • Closed $120 million sale of patent assets to Intel on April 5, 2012

"In the first quarter, we made progress on our turn-around plan for RealNetworks," said Thomas Nielsen, President and CEO of RealNetworks. "While it will take a while for financial results to reflect the work we are doing, we are confident that we are on the right path in simplifying our company and developing a strategy for future growth."

First Quarter Results

For the first quarter of 2012, revenue was $67.0 million, a sequential decrease of 17% from the fourth quarter of 2011, and a decrease of 23% compared with the first quarter of 2011. Revenue trends in each of RealNetworks' businesses in the first quarter of 2012 compared with the year-earlier quarter were: a 9% decrease in Emerging Products revenue to $10.2 million, a 22% decrease in Core Products revenue to $37.7 million and a 32% decrease in Games revenue to $19.1 million.

Net loss for the first quarter of 2012 was $(17.0) million, or $(0.49) per share, compared with a net loss of $(12.3) million, or $(0.36) per share, in the first quarter of 2011. The loss for the most-recent quarter was affected primarily by the decline in revenue. The loss widened in spite of a decline in restructuring costs to $(1.6) million, compared with $(6.9) million in the first quarter of 2011; a decline in RealNetworks' share of Rhapsody losses to $(0.4) million in the first quarter of 2012 from $(3.3) million in the first quarter of 2011; and lower tax expense of $(0.2) million, compared with $(3.6) million in the year-ago quarter. The year-ago net loss reflected a $6.4 million insurance reimbursement for legal expenses.

Adjusted EBITDA for the first quarter was $(7.4) million, excluding costs related to the Intel transaction, compared with adjusted EBITDA of $7.5 million for the first quarter of 2011. A reconciliation of GAAP operating income (loss) to adjusted EBITDA is provided in the financial tables that accompany this release.

As of March 31, 2012, RealNetworks had $167.0 million in unrestricted cash, cash equivalents and short-term investments, of which approximately $42.6 million is held in foreign jurisdictions, compared with cash of $185.1 million at Dec. 31, 2011. The $167.0 million at March 31, 2012, does not include the $120.0 million cash proceeds from the sale of patent assets to Intel, which closed on April 5, 2012. In addition, RealNetworks had $55.8 million in restricted cash and available-for-sale securities as of March 31, 2012, an increase of $8.4 million from Dec. 31, 2011.

Segment Operating Results

RealNetworks Segment Operating Results Q1-12

Business Outlook

For the second quarter of 2012, RealNetworks expects revenue of $66 million to $69 million. The company expects revenue from Core Products to increase sequentially and decline year-over-year, and revenue from Emerging Products to be flat sequentially and decline year-over-year. The company expects revenue in Games to decline sequentially and year-over-year. RealNetworks expects to report a second-quarter adjusted EBITDA loss similar to that of the first quarter.

Anticipating significant restructuring activities in 2012, which we expect will include acquisitions and divestitures as well as changes in RealNetworks' operating segments, RealNetworks is not providing full-year guidance for 2012.

The foregoing forward-looking statements reflect RealNetworks' expectations as of May 2, 2012. It is not RealNetworks' general practice to update these forward-looking statements until its next quarterly results announcement.

Webcast and Conference Call Information

The company will host an audio Webcast conference call to review results and discuss the company's operations for the first quarter at 5:00 p.m. ET on May 2. The Webcast will be available at:

Webcast participants will need RealPlayer® to hear the webcast, which can be downloaded at

The on-demand Webcast will be available beginning approximately two hours following the conclusion of the live Webcast.

Conference Call Details
5:00 p.m. (Eastern) / 2:00 p.m. (Pacific)

Dial in: 
889-323-9869 Domestic
517-308-9139 International

First Quarter Earnings

Thomas Nielsen

Telephonic replay will be available until 8:00 p.m. (Eastern), May 16, 2012.

Replay dial in:
800-944-8789 Domestic
402-220-3521 International

For More Information

Marj Charlier
Investor Relations at RealNetworks, Inc.
(206) 892-6785

Press Only
Barbara Krause
Krause Taylor Associates for RealNetworks, Inc.
(408) 981-2429

About RealNetworks

RealNetworks creates innovative applications and services that make it easy to connect with and enjoy digital media. RealNetworks invented the streaming media category in 1995 and continues to connect consumers with their digital media both directly and through partners, aiming to support every network, device, media type and social network. RealNetworks corporate information is located at

About Non-GAAP Financial Measures

To supplement RealNetworks' condensed consolidated financial statements presented in accordance with GAAP in this press release, the company also discloses certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA by reporting segment, which management believes provide investors with useful information.

In the financial tables of our earnings press release, RealNetworks has included reconciliations of GAAP operating income (loss) to adjusted EBITDA and to adjusted EBITDA by reporting segment.

The rationale for management's use of non-GAAP measures is included in the supplementary materials presented with the first quarter 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 RealNetworks' current expectations for revenue, adjusted EBITDA, the development of its strategy for future growth and plans to undertake restructuring activities, including acquisitions and divestitures. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements. Actual results may differ materially from the results predicted. Factors that could cause actual results to differ from the results predicted include: fluctuations in foreign currencies; RealNetworks' ability to realize operating efficiencies, growth and other benefits from the implementation of its strategic initiatives; the emergence of new entrants and competition in the market for digital media products and services; other competitive risks, including the growth of competing technologies, products and services; the potential outcomes and effects of claims and legal proceedings on RealNetworks' business, prospects, financial condition or results of operations; risks associated with key customer or strategic relationships, business acquisitions and the introduction of new products and services; changes in consumer and advertising spending in response to disruptions in the global financial markets; and changes in RealNetworks' effective tax rate. More information about potential risk factors that could affect RealNetworks' 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 RealNetworks' financial statements and forward-looking financial guidance requires the company to make estimates and assumptions that affect the reported amount of assets and liabilities and the reported amounts of revenues and expenses during the reported period. Actual results may differ materially from these estimates under different assumptions or conditions. The company assumes no obligation to update any forward-looking statements or information, which are in effect as of their respective dates.

RealNetworks, RealPlayer and GameHouse are trademarks or registered trademarks of RealNetworks, Inc. or its subsidiaries.  All other companies or products listed herein are trademarks or registered trademarks of their respective owners.