Realnetworks (RNWK) 5 May 222022 Q1 Earnings call transcript

Good day and welcome to the RealNetworks, Inc.

First Quarter 2022 Earnings Conference Call. Today's conference is being recorded. At this time, I would like turn the conference over to Mr. Brian Prenoveau, Investor Relations. sir. ahead, go Please

And call. RealNetworks Cody. financial quarter results conference welcome you, first to XXXX Thank

begin, like regarding we well for today operating Before future I'd and as are matters that expenses businesses forward-looking, discussed trends some growth affecting including and EBITDA and statements adjusted RealNetworks' its restructuring revenue, to future as in as remind prospects include to implement plans expected liquidity financial its and and from profitability, products company's other and well condition. these the Other efforts initiatives profitability growth, activities. and strategy, the forward-looking invest as statements benefits its you

and In on SEC of and and our call other set We certain those SEC the our factors all risks could cause website. our copy and the that and A to be historical in Statements expectations than most filings Relations section including Investor addition, other forward-looking XX-K from today's of uncertainties corporate materially statements. risk statements that forward-looking the of can Form our obtained forward-looking statements. results from these filings, in risks statements facts other reports. describe actual and number contains differ a in from belief recent or and these are reports express forth of in XX-Q involve

as duty future whether Forward-looking no call, reason. or update to statements events RealNetworks XXXX. as expectation during or today any this The statements revise of reflect other made company result of today, undertakes new any made X, forward-looking a May information,

under this considered certain will that we on the will Regulation non-GAAP present addition, SEC's In G. call measures be financial

directly on Senior COO; are a and the made Rob Ensing, Mike website us Christine our found discuss Chambers, quarter dated please update Officer President, and to a and the After non-GAAP and of our press And remarks, call Treasurer. corporate SEC, review each Christine to investor.realnetworks.com Glaser, the will will financial Financials to the With financial Rob the information and X-K will be detailed most comparable Rob, Mike company's the company Financial to more President the results. open provide financial GAAP then of measure, at we and today's in call Real's conclude strategy detailed today you. of the Vice refer submitted AI tab. more Form under with questions. will which Chairman Chief reconciliations prepared release in the included I turn over on during and measure can to For both of CEO; businesses. the XXXX. first progress the the

afternoon, My Thanks, growth profit. set detail. discuss each Then Brian. after will our Mike will After SAFR discuss conclude, today for steps main and financial initiatives detailed other success initiatives Christine in us. everyone. the three and Mike, results. focus we've Good taken and Thanks will I our on Ensing for our Chambers KONTXT long-term to joining up remarks more

quarterly me first overview a with results. our high of Let start level

XXXX and Our million, was with flat first million XXXX. of essentially $XX.X the $XX.X revenue from total in quarter quarter compared the of QX down in

a period. loss the in to diluted diluted per per of was $X.XX earnings share compared Our of loss prior share a $X.XX

loss was million to of a the EBITDA compared an million EBITDA adjusted quarter loss in First period. $X.X adjusted $X prior-year of

to balance solid to us million no with a sheet available have continue We $XX debt. and of cash

focus The of in the combination first The and securities about SAFR-based in at the initiatives, the significant is quarter both compared for sharpen AI-based SCAN, commercial moving embodies hardware biggest targeted history. growth steps our a In SAFR We turbocharge want touchless revenue to is SAFR initiative delivering for increased for increased first SAFR on need this by are the software first SAFR biometric XX% announced in happen. revenue Revenue we KONTXT. and turbocharge basis, to and compared down access complete door growth quarter. software. show. our main I to control KONTXT. KONTXT to In XX% trade first last at SAFR that is product quarter, way Real's to is the which SCAN products markets. SAFR to the was that SAFR West, relying built-from-scratch which year's On cases, rather talk SAFR taking XXXX. main X% business is change X% business Next, ISC the we're our US on sequential than station see licensing the to March a industry's by purely make down SCAN

of SCAN SAFR technology, is computer accurate, previous we use such think into that facial vision because to SCAN the first This recognition the and can delivers first the While bring and the isn't is mainstream. half it's price FR door fast less results products. product highly than station at and SAFR excellent

is competing to team the the We're complete SCAN enables this building SAFR of partnerships out SCAN May. lot has it Building deliver at to we a in from been initiatives. commercial us has refocusing SAFR Our begins SCAN run is and product SAFR will enables do SAFR narrowing successful hardware/software The deployments. industry encouraging. SAFR initial algorithms. SAFR and and channels lower reception the about much sales product of necessary FR as our our our With we create Because process launch, be to towards hardware customer a the concurrently think of prospects. shipping very end licensing that sauce cost itself. SCAN to than secret on fast excellent us highly can SAFR compact, differentiated that technology well a

share we'll SAFR minutes. software to focus federal and We [indiscernible] platform the to will on details will Mike Ensing leveraged additional a and on continue but in biggest customers, license work our that plan the on few opportunities. SAFR most

Let now our to me turn business. messaging

of the I'm KONTXT. Cooley to up to marketing we Messaging appointment we with is our think product, created Simonetta In will the we take changes our position messaging and retooling minutes. and announced of that Mike ago, a scale involve newly KONTXT sales KONTXT, start that growth results. Because the time significant new perspective right few our she's for six mobile Now focus and the setting effort squarely Simonetta and mature Lulli. core in that months KONTXT leading up XXXX to of games is in market highly we the Telecom. over excellent business. you In growth significant drive to of sausage additional confident know, making we're sum, drive for in commercial years and President he's off as scale I'm That Simonetta of changes the a delivering to games said, growth month, games has initiatives. have and up about the in leader, Mike portfolio, Mike significant is beyond. and confident leader messaging on brought a a XX and these provide Ensing phase main making in information Last current of that business the our an will business, and experience,

short-term Our financial reflect and current this reality. results

and through hard our to. go clear need resources carefully when and wisely tradeoffs these make we and transitions, we will sometimes we manage As

prospects. we'd expected, While this me the let be bumpier to long-term pass And Mike. remain I with about that Real's I'm mic disappointed will that, than optimistic very transition

of with Cooley and as Rob. the KONTXT appointment Telecom of Thanks, KONTXT, I'd Mike today's start President Messaging. discussion like and to

Mike the and acumen, up tech and great have built. interoperability, startups on suite messaging and secure messaging product learning great digital led capabilities on business messages, voice anti-spam to million maximize enables platform Pinsight his where through business Mike build leveraging and sales including patented enhance value-added Neustar categorizes ad operators and through and of Today, calls up message We services. XX held KONTXT We efforts Nextel, NLP be and leading carriers text in will AI customer help and drive KONTXT group. per and executive experience global for our day. have are machine KONTXT, text at and Mike he loyalty, led and Media. activity. their we voice tremendously focused is revenue most classification us mobile and customer which new to brings Sprint excited board. the development cofounded and Sundial.com ventures spent has career sales scaling blocks strategy new our roles digital over He and images edge the fraudulent and business,

that combines Interest our with to last and the call, focus provider management messages. our among processing spectrum determine was of have efforts CNM, name screener on of learning earnings antispam KONTXT speech call and solutions, and and the features unique proactive the leading in US KONTXT. of remains and and unified our Cloudli a voice caller. voice help goal caller a solution Communications, it powered data our service, feature we As of recently while providers. natural launched by machine fingerprinting I messaging is fact, text carriers in experience It with new types customers of antifraud building and, the these patterns analysis voice, on language communication UCaaS, as UCaaS to needs to that announced intent discussed bridge broadening its international is audio include

SAFR. to turning Now

and strategy. SAFR our We launching customer call, of believe quarter's we on great authentication a is of we in for space. focus the control demonstrated of access and products. access use touchless delivering that discussed the market need application control provides products on cases announcement recognition and control be step plan to This our that last suite increase there's access first facial During biometric growing Real's on a a for would and The space algorithm. large SCAN

option SAFR audit being access usage, while viable operating all to security, selling At directly $XX option. fingerprint, and and can of do real cards provide price providing represent being SCAN compact, $X,XXX, comparable edge. while form and several centric face differentiated an key and cards, dominant technology solves embed and reader customers and Currently, to valuable super eliminate SAFR is estimate base. to products control affordable anywhere in to by accurate about for facial for occupancy, is is office devices analytics it today that significant monitor attractive approximate can detection not badges software key of security SCAN is fingerprint market. for believe between thorough the person affordable billion and place liveness approximate badges cards an are alternative XX% security. in cards spoofing and Our a key touchless an seeking of a $X.X represent Contrary the or access especially fast, We being problems physical We and recognition the tailgating, an and the recognition, customer $X,XXX businesses. key point at making of but market about XX% with trail

ISC West. from at validation, on As launch fit a of and we integrators there customers, for we this SAFR systems initial our points end feedback SCAN. Based believe market favorable feedback substantial at product received product is strong PACs,

was XXXX we believe SCAN a SAFR In for the addition, award control in a in Platinum software From Government being scalable, SCAN strategic for complete Govies provides confidence our Award SAFR. recently path to perspective, Today a Security Security division. the product business SAFR versus a product. SAFR biometrics a the This awarded access that SCAN technology reinforces repeatable

We security SCAN our resources federal space SAFR access in space. and the and with on safety the and markets are exception the be away from of control key will increasing focus shifting

to pivot's potential financial over SAFR. Christine that, greater Christine? With our to detail. growth I will about it in will for optimistic believe substantial this results lead discuss to now the are turn We call and

to I we our late to segment $XX.X detailed business $XX.X by increased performance. good results, in consolidated KONTXT SAFR was a first increased followed Mike. quarter decline was revenue the everyone. million by year-over-year to discussion compared to our first by primarily by XXXX. revenue essentially Thanks, first revenue. Total for Media feature SAFR first in $XX.X today, sales, my business. profit quarter Games The the hashing, will million Consolidated afternoon, purchases. XX%, due first primarily XXXX. by driven driven in $X.X the the approximately XXXX the million compared lower in-games revenue quarter more of year-over-year, in prior-year million image revenue the remarks was In driven of prior quarter year, driven a Consumer down And in year-over-year, quarter the compared year, our decreased gross for IP first the was prior and revenue compared XX% million to period. flat revenue primarily quarter review million introduced $X.X of of fourth XXXX primarily $XX.X

$XX.X were operating $XXX,XXX the The gross first year. attributable percentage Total prior to was XXXX. the $X.X prior-year up a $X.XX was X expenses As of million net compared the quarter $X.X Net $X.XX first quarter quarter compared the last of the share compared first revenue, in of or loss in to quarter million in of for percentage million margin to was to restructuring in a XXXX million taken XX%, primarily $XX.X diluted or period. the million charges compared decrease per in year. $XX.X share points to to RealNetworks loss attributable QX diluted per

First $X.X million of loss was a essentially loss Sequentially, the $X compared EBIT of adjusted quarter EBITDA was million adjusted XXXX period. adjusted in flat. loss to prior-year EBITDA

The Media revenue in year. to approximately legacy our period. revenues longer our contribution segment prior-year of detail. loss of gain due $XXX,XXX a that primarily our loss offset year-over-year The to was contribution offset segment [ph] related costs. million declines $XXX,XXX a to consolidate the a turning primarily million and XXXX of prior-year $XXX,XXX lower in Consumer Services Now loss were first margin segment a was more in was change to the to by by Games lower by $XXX,XXX to compared was Mobile businesses. segment decreased the gain compared results compared we of period. contribution quarter in of expenses driven in decrease margin prior a Ciena margin results. $X.X in $X Revenue was no

no At Turning facility. revolving million million and cash sheet. We to cash $XX.X on XX, in our to we borrowings our balance December no compared had equivalents XX, outstanding $XX.X XXXX. credit and had on unrestricted March XXXX, debt

continue mentioned, expenses. our optimizing we're our SCAN growth investing As our carefully resources on to focus manage Within intentionally SAFR our initiatives AI-based SAFR we our business, and in geographic and footprint.

outlook. to turning our Now

single-digit slower XXXX, XXXX, the loss to ending in currently we total million EBITDA open to business. $X now expected, in second we of now range million. million from anticipate be we'll adjusted be $XX.X in Because million we revenue the expect Operator? for the $X.X revenue SAFR questions. quarter For in revenue XX, Games excluding call $XX the expect June we that, and range to of achieving growth previously XXXX than growth the With to

our Markets. Lake take Stephan Capital Jacob We'll from first Instructions]. through Street question [Operator

quarter. Solid

revenue wanted growth. Just the that more in to dig in headwinds SAFR are on segment? What seeing you're the that primary

amount part that security quarters. And projects of to space, control. headwind primary and getting safety seeing the into that's actually and the just So, a we're large the seen delayed is have within further on focus and decision something SAFR we of access it's more SCAN and

up But moving looking just quarter. outlook at nicely It decreased the that our do Maybe was this slightly you had quarter about where forward? what we year-over-year. numbers, given gross think margins from margin revenue next is

But to like remarks, did So, we quarter. for We saw we don't guide the yes, as given guide I have to see an specifically. QX. my from gross improvement, expectations you year-over-year. And, I margins said, EBITDA margin specifically for don't gross

last just Maybe one.

has information on bit a get where's little Or the that more NTT that? ramping? looking to been So, Docomo deal,

of management and projects controls, activity, physical very cases. such a So, and wide across then analytics. as include well, amount set cases deployments as use Those access use very of also actually security, significant workforce custom with

actually So, pleased with very with Docomo. we're progress we're making that the very,

[Operator any that session. conclude to over remarks. to I'd Instructions]. turn closing the And question-and-answer for conference additional does management back like today's

stays this Thank us to would afternoon. the that up everyone healthy in we to you I do look until Rob. I take you, for those to and And following operator. to and of with you days care. want will Look is soon. to everyone well ahead. then, joining This talking so thank Thanks. forward forward hope like

your you all for today's you. that conclude conference. Thank We do does participation. thank And

You now disconnect. may