Realnetworks (RNWK) 30 Jul 222022 Q2 Earnings call transcript

Greetings, and welcome to RealNetworks Inc.

Second Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Brian Prenoveau, Investor Relations for RealNetworks. you. Thank

begin. may You

and Call. RealNetworks Doug, Financial Quarter Results Conference welcome you, Second to XXXX Thank

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

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

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

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

and submitted website each investor.realnetworks.com With the Form refer press to measure, the For Senior and Vice Rob included directly and I in Financials X-K will the non-GAAP release and our GAAP under company the Christine are be President, the progress made Rob most strategy, will results. and more CFO to which found quarter financial to both us Treasurer. today, Rob. the to at our financial conclude the of that, discuss the please our comparable of company's dated of can XXXX. hand measure With corporate detailed during Glaser, Chairman of the and today information SEC reconciliations financial a in on second with review tab. will call over Christine the Chambers, CEO;

Good Brian. and joining for everyone, thanks Thanks, afternoon, us.

with start I'll Let And we announcement After conclude, me the QX company a how and results. business we're finally, Then, detailed discuss will financial results. Chambers Christine recap of our going summarize, our made discuss I organizing financial the for success morning. this forward. I'll then

path XX following shareholders' our close to XXXX. represented years that the adoption First, of speed purpose transformational alignment in and per of opportunity company's this entered that a to today, believe my RealNetworks we I I such this merger to RealNetworks for and happy a artificial reach vote realize. on shareholders the the approval the company of affiliates, that, transformation will once-in-a-generation a announcement. digital outstanding fully $X.XX opportunity definitive transformational learning-based time the Earlier to asked one the I a transaction take quarter buy media. meeting with morning's the announced shares could because intelligence upon represents into agreement, believe merger I I'm merger for Board a shareholders. be that, to we pursue way. today's resources machine today, is I upon be founded and in and that albeit announced. at and and to through focus, to and similar not of Internet ago, the a be we're a agreement and called In The the taking share. that I my way will Accordingly, publicly. a expected on Real I will call. conclusion going back questions is can agreement all in by thinking say will The fair as company the we're efficiency have explained Because what limited we private fourth date for announcement, a highly into turning structured whereby process, of RealNetworks

Next XXXX. second in of the results. topic was million down is $XX.X in Revenue the quarterly from our quarter second quarter $XX.X million,

Our loss period. was diluted adjusted share year to of XXXX, second $X.X prior period. of EBITDA quarter million, was in prior the in per of the a loss an earnings EBITDA the loss diluted $X.XX, a compared $X.X year a to per adjusted compared of million loss share of $X.XX In

steady progress reflect softness with KONTXT, games results Our in and SAFR. with expected results significant

additional program KONTXT VOICE we adding potential pilot In or scam spam-type and a our of Protect, seeing are June, Vodafone for customers that we're company Vodafone KONTXT, Germany, with This Regarding fraudulent warn program is will customers testing products. began Germany progress on based in calls. a product. Call steady which Vodafone

Regarding second overall of SAFR, we XXXX. half a disappointing quarter and first had

and issues a We believe a leader to President Access Manager and us SAFR's of significant co-ran and We in DiPeso brings industry. acquired SCAN who's recently a and product. exciting SCAN as Paul, plan with an wealth track and SAFR. from businesses Control its space SAFR physical experience a of record right was large by based hiring ACRE. on successful a excellent of most control was SAFR the Paul is that and have He President on solutions Executive recently proven founding clear building Paul he the Vice is May as leader the our build of to platform business company Service software and growing access of in a General Feenics, security our the centered SAFR in of the joined just address launch

and also Brian most joining us recently announced In care, Brian over purchasing, Pelco human products. development, engineering, sales. transition joined CFO Treasurer will pure position. begin security finance addition President a XX software-based to of supply in Xst. August roles. as our and McClain chain, of has Brian a in he CFO managed July leading skill change software software served set years we've relevant various a experience that and Inc., experiences from combination great has as to interim on hardware and customer where IT in CFO finance, of resources, help company computer us officially leadership Brian will and Paul a and a us, and

of in our Mike for Simonetta and joined us a to each GameHouse, as heads us and presidents initiatives Brian who Messaging transitioned our Cooley leaders growth runs of who a who we April as has businesses. and for Real Paul, of addition strong the decentralized to with With Lulli, joined growth have now October well me. report structure now set last directly

We will our Frederick us have foundation executive, this and help focus Savoye. faster long-time believe also move to better all consolidated of structure a success. We businesses under Real achieve

on call and the RealNetworks. and and Mike pandemic to the to Ensing moving both They work for endeavors. for to second wish their turn a results during next dedication to set And the hard them Chambers that the moment call Real to Christine? chapter. in us quarter helped thank to take review Before I'll want over best our have through Christine up with lead of I heart detail. and their I each helped Christine the on future financial the of Christine, in

segment business increased sales our decreases first federal XX% Rob, due In more sales. remarks $XX.X quarter image revenue review year-over-year, good consolidated second KONTXT performance. will million business for introduced revenue today, I primarily was my in decreased afternoon of revenue hashing, to commercial Thank followed $XX.X late our by Media a the and in driven, million, a discussion Games period. compared Total the and everyone. and quarter second the XXXX in the of results, revenue in you revenue our million XXXX. year was prior the Consumer second Consolidated XXXX second driven SAFR down, $X.X million China. feature by XX% was quarter the in-game to million by increased detailed was quarter the large quarter, $X.X in for gross revenue. lower in profit The second primarily to in subscription the primarily contract lower of and $XX second a to decline year-over-year, in increased lower million count. compared quarterly by quarter purchases by driven by prior in revenue compared revenue quarter. driven second $X.X the effectuated year, IP XXXX and

million, quarter was in diluted a The attributable Total year. last in the expenses to were Net of by the $X.X margin percentage in net compared second quarter $X.XX decrease million $XX.X loss reductions the year. across second gross compared board. RealNetworks, cost compared a was the the share points diluted prior loss revenue, to per XX% up $X.X As percentage for quarter operating million prior or $XX.X share, million driven was $X.XX period. per year to to of the or two

compared a year period. loss XXXX of prior $X.X adjusted of million, in quarter to EBITDA Second million adjusted the was EBITDA $X.X loss

of margin Now lower costs. business. improvement of $X.X million, loss segment results to turning XX%, segment to $X.X were primarily loss primarily more prior was a our million, Revenue a revenue period. Media XX% lower of in was in year $XXX $X.X and contribution our a second period. declines to The was compared Consumer prior change and we legacy revenue segment quarter million, decreased year flat in year detail. gain Games XXXX, year-over-year expenses. SAFR a in when of due was essentially driven contribution The segment the a compared the million offset loss million prior a businesses, of in by in our in operating to compared loss contribution to by $X.X a was margin Mobile Services period. the margin revenue increase reduction

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

our focus initiatives investing our on SCAN for to and expenses. in our AI-based Rob As closing optimizing mentioned, carefully SAFR continue businesses, we our turn footprint. we're resources back and our I'll geographic manage growth to now Within remarks. SAFR some

Thank and you wish your I put best hard into the you, again I you all RealNetworks endeavors. future Christine. the work in appreciate

call, today's Q&A Thanks addressed be shareholder good to on comments will Board's given As a regarding earlier, merger, Special the and not conducting I be should independent the Any we Real's afternoon. merger. pending session Committee. mentioned

for this conclude and you Thank participation. does today's Ladies gentlemen, teleconference. your

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