RealNetworks Announces Third Quarter 2012 Results

RealNetworks Announces Third Quarter 2012 Results

SEATTLE, Oct. 30, 2012 /PRNewswire/ -- RealNetworks, Inc. (Nasdaq: RNWK) today announced results for the third quarter ended Sept. 30, 2012.

Quarterly Summary:


-- Revenue of $59.1 million
-- Net loss of $(22.2) million or $(0.63) per share
-- Adjusted EBITDA of $(6.0) million
-- Cash and short term investments of $273.7 million as of Sept. 30, 2012
"We are working hard to put RealNetworks on a path to growth and profitability," said Rob Glaser, Chairman and interim CEO of RealNetworks. "We have made progress and have a strategy that we are in the process of implementing."

Third Quarter Results

For the third quarter of 2012, revenue was $59.1 million, a sequential decrease of 10% from the second quarter of 2012, and a decrease of 30% compared with the third quarter of 2011. Revenue trends in each of RealNetworks' businesses in the third quarter of 2012 compared with the year-earlier quarter were: a 6% decrease in Emerging Products revenue to $10.1 million, a 33% decrease in Core Products revenue to $34.1 million, and a 35% decrease in Games revenue to $14.9 million.

Net loss for the third quarter of 2012 was $(22.2) million, or $(0.63) per share, compared with a net loss of $(5.2) million, or $(0.15) per share, in the third quarter of 2011. Net loss for the most-recent quarter included restructuring charges of $11.0 million primarily for employee severance costs, costs associated with the transfer of some SaaS contracts to Livewire Mobile, Inc., and a loss on excess office facilities; and $2.2 million in gains on the sale of a portion of the company's investment in LoEn Entertainment, Inc. RealNetworks' share of Rhapsody losses increased to $(1.6) million in the third quarter of 2012 from $(1.4) million in the third quarter of 2011.

Adjusted EBITDA loss for the third quarter was $(6.0) million, compared with adjusted EBITDA of $4.1 million for the third 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 Sept. 30, 2012, RealNetworks had $273.7 million in unrestricted cash, cash equivalents and short-term investments, of which approximately $40.8 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 in the second quarter of 2012 and other asset sales in the second and third quarters of 2012, partially offset by cash used in operations and restructuring expenses over the first three quarters of the year. In addition, RealNetworks had $46.9 million in restricted cash and available-for-sale securities as of Sept. 30, 2012.




Segment Operating Results

2012 2012 2011
---- ----
Q3 Q2 Q3
--- --- ---
(in thousands)
Revenue
Core
Products $34,078 $38,250 $50,705
Emerging
Products 10,134 9,913 10,764
Games 14,876 17,363 22,945
Corporate - - -
---------
Total $59,088 $65,526 $84,414
----- ------- ------- -------

Operating Income (loss)
Core
Products $1,180 $4,140 $8,815
Emerging
Products (152) 1,021 (2,033)
Games (1,708) (1,302) 1,589
Corporate (22,495) 100,309 (11,854)
---------
Total $(23,175) $104,168 $(3,483)
----- -------- -------- -------

Adjusted EBITDA
Core
Products $3,736 $6,628 $11,617
Emerging
Products 158 1,266 (1,711)
Games (894) (619) 2,275
Corporate (9,042) (13,784) (8,094)
---------
Total $(6,042) $(6,509) $4,087
----- ------- ------- ------


Business Outlook

For the fourth quarter of 2012, RealNetworks expects revenue of $60.0 million to $63.0 million. The company expects revenue from Core Products to increase, revenue from Emerging Products to be flat and revenue from Games to decline sequentially. Year-over-year, revenue is expected to decline in all segments. RealNetworks expects to report a fourth-quarter adjusted EBITDA loss of $(4.0) million to $(7.0) million.

The foregoing forward-looking statements reflect RealNetworks' expectations as of October 30, 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 third quarter at5:00 p.m. ET on October 30. The Webcast will be available at: http://investor.realnetworks.com.

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

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

Conference Call Details
5 p.m. ET / 2 p.m. PT

Dial in:

888-790-3162 Domestic

415-228-4854 International

Passcode: Third Quarter Earnings

Leader: Rob Glaser

Telephonic replay will be available until 8 p.m. ET, Nov. 13, 2012.
Replay dial in:

866-425-0182 Domestic

203-369-0874 International

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 http://www.realnetworks.com.

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 third 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 total and segment revenue; adjusted EBITDA; the development of its business plans; and the implementation of a strategy for growth and profitability. 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: 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; fluctuations in foreign currencies; 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.




RealNetworks, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)

Quarters Ended Nine Months Ended
September 30, September 30,
------------- -------------

2012 2011 2012 2011
---- ---- ---- ----
(in thousands, except per share data)

Net revenue $59,088 $84,414 $191,578 $255,467

Cost of revenue 25,244 31,816 78,633 94,548

Gross profit 33,844 52,598 112,945 160,919
------ ------ ------- -------

Sale of patents and other
technology assets, net
of costs (A) - - 116,353 -
--- --- ------- ---

Operating expenses:
Research and development 15,321 16,496 49,167 54,200
Sales and marketing 21,972 28,625 68,462 85,958
General and
administrative 8,759 10,522 35,103 27,018
Restructuring and other
charges 10,724 438 13,872 7,850
Loss (gain) on excess
office facilities 243 - 243 (174)

Total operating expenses 57,019 56,081 166,847 174,852
------ ------ ------- -------

Operating income (loss) (23,175) (3,483) 62,451 (13,933)
------- ------ ------ -------

Other income (expenses):
Interest income, net 164 672 1,033 1,362
Gain (loss) on sale of
equity and other
investments, net 2,210 - 5,288 -
Equity in net loss of
Rhapsody investment (1,613) (1,440) (4,095) (5,739)
Other income (expense),
net 248 (228) 1,674 (661)
--- ---- ----- ----

Total other income
(expense), net 1,009 (996) 3,900 (5,038)
----- ---- ----- ------

Income (loss) before
income taxes (22,166) (4,479) 66,351 (18,971)
Income tax (expense)
benefit (48) (703) (24,583) (5,365)
--- ---- ------- ------

Net income (loss) $(22,214) $(5,182) $41,768 $(24,336)
======== ======= ======= ========

Basic net income (loss)
per share $(0.63) $(0.15) $1.20 $(0.71)
Diluted net income (loss)
per share $(0.63) $(0.15) $1.19 $(0.71)

Shares used to compute
basic net income (loss)
per share 34,998 34,199 34,747 34,081
Shares used to compute
diluted net income
(loss) per share 34,998 34,199 35,000 34,081





(A) On April 5, 2012, RealNetworks
completed the sale of certain
patents and other technology
assets to Intel for a cash
purchase of $120.0 million.



RealNetworks, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)

September 30, December 31,
2012 2011
---- ----
(in thousands)
ASSETS

Current assets:
Cash and
cash
equivalents $170,702 $106,333
Short-
term
investments 103,046 78,739
Trade
accounts
receivable,
net 35,716 41,165
Deferred
costs,
current
portion 1,910 1,424
Prepaid
expenses
and other
current
assets 19,901 21,902
------ ------

Total
current
assets 331,275 249,563
------- -------

Equipment, software, and leasehold
improvements, at cost:
Equipment
and
software 100,053 104,352
Leasehold
improvements 26,184 25,947
------ ------
Total
equipment,
software,
and
leasehold
improvements 126,237 130,299
Less
accumulated
depreciation
and
amortization 93,287 92,825
------ ------

Net
equipment,
software,
and
leasehold
improvements 32,950 37,474

Restricted
cash
equivalents
and
investments 10,064 10,168
Equity
method
investments 3,703 7,798
Available
for sale
securities 36,819 37,204
Other
assets 3,197 2,954
Deferred
costs,
non-
current
portion 170 843
Deferred
tax
assets,
net, non-
current
portion 4,566 18,419
Other
intangible
assets,
net 4,085 7,169
Goodwill 6,375 6,198
----- -----

Total
assets $433,204 $377,790
======== ========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts
payable $21,350 $17,151
Accrued
and other
liabilities 62,215 59,194
Deferred
revenue,
current
portion 11,558 11,835
Accrued
loss on
excess
office
facilities,
current
portion 747 596
--- ---

Total
current
liabilities 95,870 88,776

Deferred
revenue,
non-
current
portion 159 195
Accrued
loss on
excess
office
facilities,
non-
current
portion 1,229 2,151
Deferred
rent 2,712 2,944
Deferred
tax
liabilities,
net, non-
current
portion 1,085 1,443
Other
long-
term
liabilities 10,290 10,994
------ ------

Total
liabilities 111,345 106,503
------- -------


Shareholders'
equity 321,859 271,287
------- -------

Total
liabilities
and
shareholders'
equity $433,204 $377,790
======== ========



RealNetworks, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)

Nine Months Ended
September 30,
------------------
2012 2011
---- ----
(in thousands)

Cash flows from
operating
activities:
Net income (loss) $41,768 $(24,336)
Adjustments to
reconcile net
income (loss) to
net cash used in
operating
activities:
Depreciation and
amortization 12,478 12,519
Stock-based
compensation 6,419 9,086
Loss (gain) on
disposal of
equipment,
software, and
leasehold
improvements 1,965 81
Equity in net loss
of Rhapsody
investment 4,095 5,739
Excess tax benefit
from stock option
exercises - (57)
Deferred income
taxes, net 22,399 (429)
Gain on sale of
patent and other
technology assets,
net of costs (116,353) -
Gain on sale of
equity and other
investments, net (5,288) -
Realized
translation gain (1,968) -
Other - (19)
Net change in
certain operating
assets and
liabilities 3,735 (9,960)
----- ------

Net cash provided
by (used in)
operating
activities (30,750) (7,376)
------- ------

Cash flows from
investing
activities:
Purchases of
equipment,
software, and
leasehold
improvements (6,478) (6,013)
Proceeds from sale
of patents and
other technology
assets, net of
costs 116,353 -
Proceeds from sale
of equity and
other investments 7,244 -
Purchases of short-
term investments (76,191) (77,078)
Proceeds from sales
and maturities of
short-term
investments 51,885 95,104
Decrease (increase)
in restricted cash
equivalents and
investments, net 103 (141)
Payment of
acquisition costs,
net of cash
acquired - (2,888)

Net cash provided
by (used in)
investing
activities 92,916 8,984
------ -----

Cash flows from
financing
activities:
Proceeds from
issuance of common
stock (stock
options and stock
purchase plan) 3,240 1,940
Tax payments from
shares withheld
upon vesting of
restricted stock (964) -
Excess tax benefit
from stock option
exercises - 57
Payment of common
stock cash
dividend - (136,793)
--- --------

Net cash provided
by (used in)
financing
activities 2,276 (134,796)
----- --------

Effect of exchange
rate changes on
cash and cash
equivalents (73) (19)
--- ---

Net increase
(decrease) in cash
and cash
equivalents 64,369 (133,207)

Cash and cash
equivalents,
beginning of
period 106,333 236,018
------- -------

Cash and cash
equivalents, end
of period $170,702 $102,811
======== ========



RealNetworks, Inc. and Subsidiaries
Supplemental Financial Information
(Unaudited)

2012 2011
---- ----
Q3 Q2 Q1 Q4 Q3 Q2 Q1
--- --- --- --- --- --- ---
(in thousands)
Net Revenue by Line of Business:
Core Products (A) $34,078 $38,250 $37,697 $46,693 $50,705 $45,735 $48,107
Emerging Products (B) 10,134 9,913 10,159 11,974 10,764 12,717 11,135
Games (C) 14,876 17,363 19,108 21,552 22,945 25,300 28,059
------ ------ ------ ------ ------ ------ ------
Total net revenue $59,088 $65,526 $66,964 $80,219 $84,414 $83,752 $87,301
======= ======= ======= ======= ======= ======= =======

Core Products Revenue by Product:
SaaS (D) $20,697 $23,286 $23,463 $28,255 $30,381 $30,216 $30,526
Systems Integration /Professional
Services (E) 247 965 426 771 3,844 388 1,840
Technology Licensing (F) 6,079 7,189 6,207 9,246 6,250 6,508 6,425
Consumer Subscriptions (G) 7,055 6,810 7,601 8,421 10,230 8,623 9,316
Total Core Products net revenue $34,078 $38,250 $37,697 $46,693 $50,705 $45,735 $48,107
======= ======= ======= ======= ======= ======= =======

Net Revenue by Geography:
United States $29,101 $28,614 $31,814 $37,298 $38,969 $41,984 $44,469
Rest of world 29,987 36,912 35,150 42,921 45,445 41,768 42,832
------ ------ ------ ------ ------ ------ ------

Total net revenue $59,088 $65,526 $66,964 $80,219 $84,414 $83,752 $87,301
======= ======= ======= ======= ======= ======= =======

Product Metrics (subscribers and ICM
presented as greater than):
Addressable subscribers of mobile
operators under contract (H) 700,000 725,000 725,000 725,000 700,000 775,000 775,000
SaaS subscribers (I) 26,500 30,600 30,500 30,050 34,000 34,550 35,900
Monthly SaaS ARPU (in cents) (J) $0.17 $0.16 $0.15 $0.19 $0.17 $0.18 $0.18
ICM delivered in billions (K) 173 162 166 165 162 157 151
Consumer subscribers(L) 350 350 400 425 500 475 500



Net Revenue by
Line of
Business:
(A) The Core Products segment primarily includes revenue from SaaS
services, system integration and professional services to carriers
and mobile handset companies, sales of technology licenses of our
software products such as Helix for handsets, consumer subscriptions
such as SuperPass and our international radio subscription services.

(B) The Emerging Products segment primarily includes revenue from
RealPlayer and related products, such as the distribution of third
party software products, advertising on RealPlayer websites and
sales of RealPlayerPlus software licenses to consumers.

(C) The Games segment primarily includes revenue from sales of games
licenses, online games subscription services, advertising on game
sites and social network sites, games syndication services,
microtransactions from online and social games and sales of mobile
games.

Core Products Revenue by
Product:
(D) Software as a Service (SaaS) revenue includes revenue from music
on demand (MOD), video on demand (VOD), ringtones, ringback tones
(RBT) and intercarrier messaging services provided to network
service providers, who are largely mobile phone networks.

(E) Systems Integrations /Professional Services revenue includes
professional services, other than those associated with software
sales, provided to mobile carriers and handset manufacturers.

(F) Technology Licensing includes revenue from sales of software and
other intellectual property licenses such as Helix server licenses
and Helix software licenses for handsets.

(G) Consumer Subscriptions includes revenue from SuperPass as well
as our international radio subscription services.

Product
Metrics:
(H) Total subscribers reported at the end of the quarter of mobile
carriers that offer one or more of our SaaS services, other than
intercarrier messaging services, to their customers.

(I) SaaS subscribers include RBT, MOD and VOD services, measured at
the end of the quarter.

(J) Monthly SaaS ARPU (Average Revenue Per User) is calculated by
dividing (a) the total quarterly revenue from SaaS subscription
services, including RBT, MOD, VOD, by (b) the number of SaaS
subscribers at the end of the quarter, and dividing the resulting
quotient by three.

(K) ICM (Intercarrier message) represents the total number of
messages delivered across our messaging platform during the quarter.

(L) Consumer subscribers primarily includes our SuperPass and
GamePass products.



RealNetworks, Inc. and Subsidiaries
Segment Results of Operations
(Unaudited)

2012 2011 2012 2011
---- ---- ---- ----
Q3 Q2 Q3 YTD YTD
--- --- --- --- ---
(in thousands)
-------------
Core Products
-------------

Net revenue $34,078 $38,250 $50,705 $110,025 $144,547
Cost of revenue 17,323 17,681 22,492 52,832 62,829
------ ------ ------ ------ ------
Gross profit 16,755 20,569 28,213 57,193 81,718

Gross margin 49% 54% 56% 52% 57%

Operating expenses 15,575 16,429 19,398 50,072 57,958
------ ------ ------ ------ ------
Operating income (loss) $1,180 $4,140 $8,815 $7,121 $23,760

Adjusted EBITDA $3,736 $6,628 $11,617 $14,764 $31,777

Emerging Products
-----------------

Net revenue $10,134 $9,913 $10,764 $30,206 $34,616
Cost of revenue 2,041 1,800 3,913 5,946 8,431
----- ----- ----- ----- -----
Gross profit 8,093 8,113 6,851 24,260 26,185

Gross margin 80% 82% 64% 80% 76%

Operating expenses 8,245 7,092 8,884 22,883 28,144
----- ----- ----- ------ ------
Operating income (loss) $(152) $1,021 $(2,033) $1,377 $(1,959)

Adjusted EBITDA $158 $1,266 $(1,711) $2,178 $(1,192)

Games
-----

Net revenue $14,876 $17,363 $22,945 $51,347 $76,304
Cost of revenue 4,936 5,572 7,197 17,169 23,771
----- ----- ----- ------ ------
Gross profit 9,940 11,791 15,748 34,178 52,533

Gross margin 67% 68% 69% 67% 69%

Operating expenses 11,648 13,093 14,159 38,171 46,184
------ ------ ------ ------ ------
Operating income (loss) $(1,708) $(1,302) $1,589 $(3,993) $6,349

Adjusted EBITDA $(894) $(619) $2,275 $(1,837) $8,363

Corporate
---------

Net revenue $ - $ - $ - $ - $ -
Cost of revenue 944 909 (1,786) 2,686 (483)
--- --- ------ ----- ----
Gross profit (944) (909) 1,786 (2,686) 483

Gross margin N/A N/A N/A N/A N/A

Gain on sale of patents and
other technology assets, net of
costs - 117,933 - 116,353 -
Operating expenses 21,551 16,715 13,640 55,721 42,566
------ ------ ------ ------ ------
Operating income (loss) $(22,495) $100,309 $(11,854) $57,946 $(42,083)

Adjusted EBITDA $(9,042) $(13,784) $(8,094) $(35,073) $(25,097)

Total
-----

Net revenue $59,088 $65,526 $84,414 $191,578 $255,467
Cost of revenue 25,244 25,962 31,816 78,633 94,548
------ ------ ------ ------ ------
Gross profit 33,844 39,564 52,598 112,945 160,919

Gross margin 57% 60% 62% 59% 63%

Gain on sale of patents and
other technology assets, net of
costs - 117,933 - 116,353 -
Operating expenses 57,019 53,329 56,081 166,847 174,852
------ ------ ------ ------- -------
Operating income (loss) $(23,175) $104,168 $(3,483) $62,451 $(13,933)

Adjusted EBITDA $(6,042) $(6,509) $4,087 $(19,968) $13,851



RealNetworks, Inc. and Subsidiaries
Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment
(Unaudited)

2012 2011 2012 2011
---- ---- ---- ----
Q3 Q2 Q3 YTD YTD
--- --- --- --- ---
(in thousands)
-------------
Core Products
-------------

Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment:

Operating income (loss) $1,180 $4,140 $8,815 $7,121 $23,760
Acquisitions related intangible
asset amortization 796 786 833 2,384 2,017
Depreciation and amortization 1,760 1,702 1,969 5,259 6,000
----- ----- ----- -----
Adjusted EBITDA $3,736 $6,628 $11,617 $14,764 $31,777

Emerging Products
-----------------

Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment:

Operating income (loss) $(152) $1,021 $(2,033) $1,377 $(1,959)
Acquisitions related intangible
asset amortization 62 79 79 220 132
Depreciation and amortization 248 166 243 581 635
--- --- --- --- ---
Adjusted EBITDA $158 $1,266 $(1,711) $2,178 $(1,192)

Games
-----

Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment:

Operating income (loss) $(1,708) $(1,302) $1,589 $(3,993) $6,349
Acquisitions related intangible
asset amortization 171 207 257 587 767
Depreciation and amortization 643 476 429 1,569 1,247
Adjusted EBITDA $(894) $(619) $2,275 $(1,837) $8,363

Corporate
---------

Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by reporting segment:

Operating income (loss) $(22,495) $100,309 $(11,854) $57,946 $(42,083)
Other income (expense), net 248 (49) (228) 1,674 (661)
Depreciation and amortization 636 628 593 1,878 1,721
Restructuring and other charges 10,724 1,539 438 13,872 7,850
Stock-based compensation 1,602 1,722 2,957 5,667 8,250
Gain on sale of patents and
other technology assets, net
of costs - (117,933) - (116,353) -
Loss (Gain) on excess office
facilities 243 - - 243 (174)
--- --- --- --- ----
Adjusted EBITDA $(9,042) $(13,784) $(8,094) $(35,073) $(25,097)

Total
-----

Reconciliation of GAAP
operating income (loss) to
adjusted EBITDA:

Operating income (loss) $(23,175) $104,168 $(3,483) $62,451 $(13,933)
Other income (expense), net 248 (49) (228) 1,674 (661)
Acquisitions related intangible
asset amortization 1,029 1,072 1,169 3,191 2,916
Depreciation and amortization 3,287 2,972 3,234 9,287 9,603
Loss (Gain) on excess office
facilities 243 - - 243 (174)
Restructuring and other charges 10,724 1,539 438 13,872 7,850
Stock-based compensation 1,602 1,722 2,957 5,667 8,250
Gain on sale of patents and
other technology assets, net
of costs - (117,933) - (116,353) -
--- -------- --- -------- ---
Adjusted EBITDA $(6,042) $(6,509) $4,087 $(19,968) $13,851


SOURCE RealNetworks, Inc.

RealNetworks, Inc.

CONTACT: Marj Charlier, Investor Relations at RealNetworks, Inc., +1-206-892-6785, mcharlier@realnetworks.com; or Press, Barbara Krause, Krause Taylor Associates for RealNetworks, Inc., +1-408-981-2429, barbara@krause-taylor.com

Web Site: http://www.realnetworks.com


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