RealNetworks Announces Record Fourth Quarter and
Annual Revenues
Company Reaches Major Milestone With 50 Million Registered Users of RealPlayer
Commercial Release of RealSystem G2, Relationships With @Home, AOL, Excite, Intel, Lotus,
Netscape, Inktomi and Others Solidify RealNetworks Lead in Streaming Media Delivery Business
SEATTLE, Jan. 26 /PRNewswire/ -- RealNetworks, Inc. (Nasdaq: RNWK - news), the recognized leader in streaming media, today
announced record results for the quarter and year ended December 31, 1998.
RealNetworks reported net revenues of $20.0 million for the fourth quarter of 1998, an increase of 94% from net revenues of $10.3
million in the fourth quarter of 1997. This represents the 14th consecutive quarter of sequential revenue growth. Pro forma net loss for
the fourth quarter of 1998 was $0.6 million, or ($0.02) per share, excluding the effects of amortization of intangible assets from the
March 1998 acquisition of Vivo Software, Inc. This compares with a net loss of $2.6 million, or ($0.09) per share on a pro forma basis,
for the fourth quarter of 1997.
For the year ended December 31, 1998, the Company reported net revenues of $64.8 million, an increase of 98% from net revenues of
$32.7 million in 1997. Pro forma net loss for 1998 was $6.1 million, or ($0.19) per share, excluding the effects of amortization of
intangible assets and a one-time charge for in-process research and development from the acquisition of Vivo. This compares with a net
loss of $11.2 million, or ($0.40) per share on a pro forma basis, for 1997.
''We are very pleased by this quarter's results, which reflect continued strong acceptance of our products and the rapid growth of the
streaming media market,'' said Rob Glaser, chairman and CEO, RealNetworks, Inc. ''With 50 million registered users of the RealPlayer
and the unduplicated reach of RealPlayer more than tripling this year, it's clear that RealNetworks and its many strategic partners have
created a business which now provides the services, programs and software to make the Internet the next mass medium.''
In light of the Securities and Exchange Commission's recent interpretation of the accounting for acquired in-process research and
development, the Company has decided to voluntarily restate the amount of special charges taken in connection with the Company's
acquisition of Vivo. Although RealNetworks had reported its first quarter results in accordance with established accounting practices
and the valuation provided by an independent third party, the Company is voluntarily responding to new guidance from the Securities
and Exchange Commission revising the valuation methodology used in determining charges associated with acquired in-process research
and development. As a result, the Company has reduced the in-process research and development one-time charge in the first quarter
of 1998 from $17.9 million to $8.7 million, and increased the amortization expense of related intangible assets, which is a noncash
charge, by $458,000 per quarter.
Includthg the effects of these adjustments, the Company reported a net loss of $1.1 million, or ($0.03) per share for the fourth quarter
of 1998 and a net loss of $16.4 million, or ($0.51) per share, for fiscal year 1998.
''We're very pleased with the performance we've made across all three of RealNetworks core businesses,'' said Paul Bialek, CFO,
RealNetworks, Inc. ''With more than $100 million in cash and equivalents and more than $83 million of shareholders' equity, we have a
very solid balance sheet from which to continue growing our businesses.''
On November 23, 1998, RealNetworks began delivering the commercial version of RealSystem(TM) G2, the next-generation media
delivery system that provides broadcast quality, reliability and scalability for the Internet and corporate Intranets. In conjunction with this
release of RealSystem G2, RealNetworks announced an agreement with Excite to integrate RealAudio® and RealVideo® search
directly into RealPlayer® G2, providing consumers with an easy way to find and access the broadest range of streaming media available
on the Web. On January 15, 1999, RealNetworks and @Home Networks announced an agreement to develop the first end-to-end,
RealSystem G2-based broadband streaming media platform, to deliver unprecedented media experiences to consumers. On January
21, 1999, RealNetworks and Enron Communications announced an agreement to deliver broadband streaming media services over the
Enron Intelligent Network. As part of this strategic agreement, Enron Communications will deploy RealSystem G2 technology over the
Enron Intelligent Network. These announcements build on the existing strategic relationships RealNetworks established in 1998 with
AOL, Intel, Netscape, Lotus and Inktomi as well as RealNetworks RealChannels(TM) relationships with media companies such as
ABC, CNN, ESPN, Broadcast.com and the Wall Street Journal.
The use of RealNetworks RealPlayer has increased significantly in 1998. RealNetworks also announced today (see separate news
release) that the number of registered users of RealPlayer has now reached a record 50 million, with unduplicated reach of RealPlayer
growing more than 300% in 1998 [Source: Media Metrix]. RealPlayer had the largest absolute growth of any consumer desktop
application in 1998 and is among the fifteen most used US home PC applications [Source: Media Metrix].
About RealNetworks
RealNetworks, Inc., based in Seattle, WA, is the recognized leader in the streaming media market. It develops and markets software
products and services designed to enable users of personal computers and other consumer electronic devices to send and receive audio,
video and other multimedia services using the Web. RealNetworks can be found on the World Wide Web at www.real.com.
This announcement contains forward looking statements that involve risks and uncertainties, including those relating to the company's
ability to continue to maintain its leadership in streaming media and to advance its product and service offerings. Actual results may differ
materially from the results predicted and reported results should not be considered an indication of future performance. The potential
risks and uncertainties include, among others, the company's limited operating history; the unpredictability of future revenues; the
increasingly competitive environment for streaming media products and services; the evolving nature of the market for the company's
products and services; the ability of the company to continue to innovate and sustain or grow demand for its products; the importance of
strategic relationships with leading companies in the broadcast, entertainment and technology industries, and the company's dependence
on third parties for sales, technology, content and distribution. More information about potential risk factors that could affect the
company's business and financial results is included in the Company's annual report on Form 10-K for the year ended December 31,
1997, and from time to time, in other reports filed by the Company with the Securities and Exchange Commission.
NOTE: RealSystem, RealPlayer, RealAudio, RealVideo and RealChannels are trademarks or registered trademarks of RealNetworks,
Inc. All other companies or products listed herein are trademarks or registered trademarks of their respective owners. |
