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 RealNetworks Announces Fourth Quarter And Full Year 2019 Financial Results
   Wednesday, February 05, 2020 4:01:00 PM ET

SEATTLE, Feb. 5, 2020 /PRNewswire/ -- RealNetworks, Inc. (Nasdaq: RNWK), a leader in digital media software and services, today announced its financial results for the fourth quarter and full year ended December 31, 2019.

  • 2019 revenue of $172.1 million
  • 2019 Games revenue up 18% year-over-year driven by success of free-to-play strategy
  • Continued traction with SAFR with new customers and partners around the world

Management Commentary

"Strategically, I consider 2019 to be a very successful year," said Rob Glaser, Chairman and CEO of RealNetworks. "We achieved significant traction on two of our key growth initiatives: free-to-play casual mobile games and SAFR. Our free-to-play strategy drove significant topline growth in our Games business. Delicious World is already our highest revenue generating game ever despite having launched globally in mid-2019. SAFR also remains a top growth focus of the Company. We continue to get good initial traction with customers and partners around the world."

Mr. Glaser added, "Our focus for 2020 will be to continue to drive these key initiatives forward while also running our operations efficiently. While we will make ongoing investments to support our key growth initiatives, we are committed to thoughtfully managing costs along the way as we did during 2019. Our progress in this regard can be seen in our significant improvement in adjusted EBITDA loss in the second half of 2019 as compared to the first half of 2019."

Full Year 2019 Financial Highlights

  • Revenue was $172.1 million (inclusive of $106.3 million from Napster) compared to $69.5 million in 2018.
  • Games revenue was $25.5 million, up 18% compared to $21.7 million in 2018.
  • Operating expenses increased by $27.4 million, or 37%, from 2018. Napster's operating expenses were $25.8 million in 2019.
  • Net loss attributable to RealNetworks was $(20.0) million, or $(0.53) per diluted share, compared to net loss of $(25.0) million, or $(0.66) per diluted share in 2018. Included in net income attributable to RealNetworks was a gain of $12.3 million in the first quarter of 2019 related to the acquisition of Napster.
  • Adjusted EBITDA was a loss of $(20.1) million compared to a loss of $(16.2) million in 2018. 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 December 31, 2019, the Company had $16.8 million in unrestricted cash and cash equivalents compared to $18.1 million at September 30, 2019.

Fourth Quarter 2019 Financial Highlights

  • Revenue was $43.4 million (inclusive of $26.1 million from Napster) compared to $45.0 million (inclusive of $27.3 million from Napster) in the prior quarter and $16.6 million in the prior year period.
  • Games revenue was $6.6 million, down 8% compared to $7.2 million in the prior quarter and up 17% compared to $5.6 million in the prior year period.
  • Gross profit margin was 43%, up from 42% in the prior quarter and down from 77% in the prior year period. Napster's gross profit margin for the fourth quarter of 2019 was 21%, while RealNetworks' gross profit margin without Napster was 76%.
  • Operating expenses decreased $0.4 million, or 2%, from the prior quarter and increased $6.2 million, or 34%, from the prior year period. Napster's operating expenses were $7.1 million for the fourth quarter of 2019.
  • Net loss attributable to RealNetworks was $(6.4) million, or $(0.17) per diluted share, compared to net loss of $(6.0) million, or $(0.16) per diluted share, in the prior quarter and a net loss of $(6.9) million, or $(0.18) per diluted share, in the prior year period.
  • Adjusted EBITDA was a loss of $(2.7) million compared to a loss of $(3.2) million in the prior quarter and a loss of $(4.1) million in the prior year period.

Corporate Developments

  • On January 9, 2020, the Company announced the hiring of Mike Ensing as interim Chief Financial Officer following Cary Baker's resignation to pursue a new opportunity. Mr. Ensing joined RealNetworks as a full-time strategic advisor on January 10, 2020 and will succeed Mr. Baker as interim CFO on February 15, 2020. The Company has retained an executive search firm and has commenced a formal search for a permanent CFO.
  • On December 3, 2019, the Company strengthened its Board of Directors with the appointment of two new directors, Tim Wan and Erik Prusch. Mr. Wan has 20 years of financial and business experience, including 15 years with RealNetworks, and is currently the Chief Financial Officer at Asana, Inc., a privately held company that develops and offers a SaaS-based work management platform. Mr. Prusch has over 25 years of executive experience, having successfully led several technology and consumer-facing businesses through periods of innovation and adaptation.

Business Outlook

For the first quarter ending March 31, 2020, RealNetworks expects to achieve the following results including noncontrolling interests:

  • Total revenue is expected to be in the range of $40.0 million to $43.0 million.
  • Adjusted EBITDA loss is expected to be in the range of $(4.0) million to $(1.0) million.

Conference Call and Webcast Information

The Company 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 1-877-451-6152 (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 Wednesday, February 26, 2020, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (International) and entering the replay pin number: 13697915.

A live webcast will be available on RealNetworks' Investor Relations site under the Events & Presentations section at  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 ( ) 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 ( ) 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 .

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 financial condition and liquidity, 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 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; 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







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