Wed, 08/08/2012

2012 Press Releases

RealNetworks Announces Second Quarter 2012 Results

SEATTLE – August 8, 2012 – RealNetworks, Inc. (Nasdaq: RNWK) today announced results for the second quarter ended June 30, 2012.

Quarterly Summary:

  • Revenue of $65.5 million

  • Net income of $81.0 million or $2.32 per diluted share

  • Adjusted EBITDA of $(6.5) million

  • Cash and short term investments of $282.9 million as of June 30, 2012

  • Results reflect $120.0 million sale of patent assets to Intel on April 5, 2012

"It's clear that there's a lot of work to do to get RealNetworks back on track," said Rob Glaser, Chairman and interim CEO of RealNetworks. "We are moving quickly to put a plan in place to do so."

Second Quarter Results

For the second quarter of 2012, revenue was $65.5 million, a sequential decrease of 2% from the first quarter of 2012, and a decrease of 22% compared with the second quarter of 2011. Revenue trends in each of RealNetworks' businesses in the second quarter of 2012 compared with the year-earlier quarter were: a 22% decline in Emerging Products revenue to $9.9 million, a 16% decrease in Core Products revenue to $38.3 million, and a 31% decrease in Games revenue to $17.4 million.

Net income for the second quarter of 2012 was $81.0 million, or $2.32 per diluted share, compared with a net loss of $(6.8) million, or $(0.20) per share, in the second quarter of 2011. Net income for the most recent quarter included the net gain on the sale of patent assets to Intel Corp. of approximately $117.9 million, and $3.1 million in gains on the sale of other assets, including a portion of the company's investment in LoEn Entertainment, Inc. RealNetworks' share of Rhapsody losses increased to $(2.1) million in the second quarter of 2012 from $(1.0) million in the second quarter of 2011. Tax expense of $(24.3) million in the second quarter of 2012, compared with $(1.0) million in the year-ago quarter, included taxes associated with the gain from the sale of patent assets.

Adjusted EBITDA loss for the second quarter was $(6.5) million, compared with adjusted EBITDA income of $2.2 million for the second quarter of 2011. A reconciliation of GAAP operating income and loss to adjusted EBITDA is provided in the financial tables that accompany this release.

As of June 30, 2012, RealNetworks had $282.9 million in unrestricted cash, cash equivalents and short-term investments, of which approximately $37.8 million is held in foreign jurisdictions, compared with cash of $185.1 million at Dec. 31, 2011. The increase in the cash balance reflects the proceeds from the sale of patent assets to Intel and other asset sales. In addition, RealNetworks had $42.5 million in restricted cash and available-for-sale securities as of June 30, 2012.

Segment Operating Results

RealNetworks Segment Operating Results Q2-12

Business Outlook

For the third quarter of 2012, RealNetworks expects revenue of $59 million to $62 million. The company expects revenue from Games, Core Products and Emerging Products to decline sequentially and year over year. RealNetworks expects to report a third-quarter adjusted EBITDA loss of $(9) million to $(12) million.

Anticipating significant restructuring activities in the second half of 2012, RealNetworks is not providing full-year guidance for 2012.

The foregoing forward-looking statements reflect RealNetworks' expectations as of August 8, 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 second quarter at 5:00 p.m. ET on August 8. 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: 
888-790-3162 Domestic
415-228-4854 International

Second Quarter Earnings

Rob Glaser

Telephonic replay will be available until 8 p.m. (Eastern), August 22, 2012.

Replay dial in:
866-425-0182 Domestic
203-369-0874 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 second 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 business plans; and plans to undertake restructuring activities.  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.