GigaMedia Announces Fourth-Quarter and Full Year 2018 Financial Results
TAIPEI, Taiwan, April 3, 2019 /PRNewswire/ -- GigaMedia Limited (NASDAQ: GIGM) today announced its unaudited financial results for the fourth quarter and full year of 2018.
Highlights for Year Ended December 31, 2018
Besides continuing our efforts in improving productivity, in formulating GigaMedia's 2018 business plan, we conducted a comprehensive strategic business review. And it became clear that:
-- Compared to our in-house offerings, the operations of licensed games
bear an uncompetitive cost structure where licensing costs and channel
costs usually take a huge bite out of earnings, leaving little room for
any marketing strategies.
-- The operations of licensed games are inherently dependent on the
licensors and hard to take the initiative, and therefore often slow in
responding to a fad, a market trend or even a permanent change in
customers' preference.
Accordingly, in 2018 GigaMedia moved boldly forward to executing the strategy of optimizing our product portfolio by trimming off or terminating products or services that were below requirements, and introducing license game more selectively. On the other hand, we set in motion consolidating substantial resources for developing our own offerings, into which direct investment was more than $1 million during 2018.
"With the high margin of our in-house products, we are allowed latitude to act proactively for a flexible combination of marketing and promotional means to boost productivities," stated GigaMedia Limited CEO James Huang, "and for our own offerings, it is all the more essential and valuable to develop long-term customer relationships."
In 2018, we invested further to enhance CRM system, which will contribute to our operations in building up relationships, saving marketing costs, and creating capacity for providing augmented products and services. The cultivation of a loyal customer base will eventually further boost customer value and create revenues and profits.
Fourth Quarter and Full Year Overview
-- Consolidated 4Q revenues decreased 2.59% quarter-over-quarter and 20.17%
year-over-year. Full year revenues decreased 38.77% to $7.1 million from
$11.6 million in 2017.
-- Income from operations for 4Q was a loss of $1.0 million, representing a
loss reduction from $1.5 million in 3Q, mainly due to a decrease in
advertising expenses. Full year operating loss, if excluding impairment
losses and gain on termination of agreement, was a loss of $4.6 million
for 2018, representing a loss increase of $2.4 million from
approximately $2.2 million for 2017.
-- The net asset value was approximately $5.26 per share as of the end of
2018.
Unaudited Consolidated Financial Results
GigaMedia Limited is a diversified provider of digital entertainment services. GigaMedia's digital entertainment service business FunTown develops and operates a suite of digital entertainments in Taiwan and Hong Kong, with focus on browser/mobile games and casual games.
Unaudited consolidated results of GigaMedia are summarized in the table below.
For the Fourth Quarter
GIGAMEDIA
4Q18 UNAUDITED CONSOLIDATED FINANCIAL RESULTS
---
(unaudited, all figures in
US$ thousands, except per
share amounts) 4Q18 3Q18 Change 4Q18 4Q17 Change
(%) (%)
---
Revenues 1,619 1,662 -2.59% 1,619 2,028 -20.17%
Gross Profit 880 694 26.80% 880 1,007 -12.61%
Loss from Operations (1,021) (1,484) NM (1,021) 988 NM
Net Income (Loss)
Attributable to GigaMedia (503) (1,083) NM (503) 1,070 NM
Net Income (Loss) Per Share
Attributable to GigaMedia,
Diluted (0.05) (0.10) NM (0.05) 0.10 NM
EBITDA
(A) (806) (1,393) NM (806) (785) NM
Cash, Restricted Cash and
Cash Equivalents 59,826 60,439 -1.01% 59,826 64,177 -6.78%
NM= Not Meaningful
(A)
EBITDA (earnings before interest, taxes, depreciation, and amortization) is provided as a supplement to results provided in accordance with U.S. generally accepted accounting principles ("GAAP"). (See, "Use of
Non-GAAP Measures," for more details.)
Fourth-Quarter Financial Results
-- Consolidated revenues for the fourth quarter of 2018 slightly decreased
by 2.59% quarter-on-quarter from $1.7 million to $1.6 million, and
decreased by 20.17% year-over-year.
-- Consolidated loss from operation of the fourth quarter of 2018 was a
loss of $1.0 million, compared to a loss of $ 1.5 million in the last
quarter.
-- Consolidated net income of the fourth quarter of 2018 was a net loss of
$0.5 million, with a loss reduction of $0.6 million from a net loss of
$1.1 million in the last quarter.
-- Cash, restricted cash and cash equivalents at the end the fourth quarter
of 2018 amounted to $59.8 million, which slightly decreased from $60.4
million at the end the third quarter of 2018.
-- Consolidated EBITDA for the fourth quarter of 2018 was a loss of $0.8
million compared to a loss of $1.4 million in the third quarter of 2018.
Financial Position
GigaMedia maintained its solid financial position. Cash, restricted cash and cash equivalents amounted to $59.8 million, or approximately $5.4 per share, along with zero bank loan and $58.2M of shareholders' equity, as of December 31, 2018.
For the Full Year 2018
GIGAMEDIA FY18UNAUDITED CONSOLIDATED FINANCIAL RESULTS
---
(unaudited, all figures in
US$ thousands, except per
share amounts) FY18 FY17 Change
(%)
---
Revenues 7,101 11,596 -38.76%
Gross Profit 3,516 6,498 -45.89%
Loss from Operations (4,823) (490) NM
Net Loss Attributable to
GigaMedia (3,193) 1,086 NM
Net Loss Per Share
Attributable to GigaMedia,
Diluted (0.29) 0.10 NM
EBITDA
(A) (4,360) (1,099) NM
Cash, Restricted Cash and
Cash Equivalents 59,826 64,177 -6.78%
NM= Not Meaningful
(A)
EBITDA (earnings before interest, taxes, depreciation, and amortization) is provided as a supplement to
results provided in accordance with U.S. generally accepted accounting principles ("GAAP"). (See, "Use of Non-GAAP
Measures," for more details.)
-- Consolidated revenues for the year ended December 31, 2018 was $7.1
million, decreased from $11.6 million in the prior year.
-- Consolidated loss from operations for 2018 was a loss of $4.8 million,
compared to a loss of $0.5 million in the last year. The loss increase
was mainly due to lower revenues in 2018, as well as a gain of $1.7
million on termination of licensing agreement was recognized in 2017.
-- Consolidated net Income (loss) for 2018 was a net loss of $3.2 million,
compared to a net income of $1.1 million in the prior year. Earnings per
share for 2018 was a loss of $0.29 per share, compared to a net income
of $0.1 per share for the prior year.
Business Outlook
The following forward-looking statements reflect GigaMedia's expectations as of April 03, 2019. Given potential changes in economic conditions and consumer spending, the evolving nature of online games, and various other risk factors, including those discussed in the Company's 2017 Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission as referenced below, actual results may differ materially.
We believe it is critical for us to adopt the strategy of developing in-house offerings and promoting customer relationships. We expect these endeavors will begin contributing to our productivities and profitability in the second half of 2019.
"Meanwhile, we keep seeking strategic investment targets with expertise of AI or big data, in order to strengthen our business and maximize shareholders' value," said GigaMedia CEO James Huang, "Such a capacity presents synergies for us in elevating customer experiences and refining our data analytics techniques of extracting value from our vast database."
Use of Non-GAAP Measures
To supplement GigaMedia's consolidated financial statements presented in accordance with US GAAP, the company uses the following measure defined as non-GAAP by the SEC: EBITDA. Management believes that EBITDA (earnings before interest, taxes, depreciation, and amortization) is a useful supplemental measure of performance because it excludes certain non-cash items such as depreciation and amortization and that EBITDA is a measure of performance used by some investors, equity analysts and others to make informed investment decisions. EBITDA is not a recognized earnings measure under GAAP and does not have a standardized meaning. Non-GAAP measures such as EBITDA should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, other financial measures prepared in accordance with GAAP. A limitation of using EBITDA is that it does not include all items that impact the company's net income for the period. Reconciliations to the GAAP equivalents of the non-GAAP financial measures are provided on the attached unaudited financial statements.
About the Numbers in This Release
Quarterly results
All quarterly results referred to in the text, tables and attachments to this release are unaudited. The financial statements from which the financial results reported in this press release are derived have been prepared in accordance with U.S. GAAP, unless otherwise noted as "non-GAAP," and are presented in U.S. dollars.
Q&A
For Q&A regarding the fourth quarter and full year 2018 performance upon the release, investors may send the questions via email to IR@gigamedia.com.tw, and the responses will be replied individually.
About GigaMedia
Headquartered in Taipei, Taiwan, GigaMedia Limited (Singapore registration number: 199905474H) is a diversified provider of digital entertainment services in Taiwan and Hong Kong. GigaMedia's digital entertainment service business is an innovative leader in Asia with growing capabilities of development, distribution and operation of digital entertainments, as well as platform services for games with a focus on mobile games and casual games. More information on GigaMedia can be obtained from www.gigamedia.com.tw.
The statements included above and
elsewhere in this press release that
are not historical in nature are
"forward-looking statements" within
the meaning of the "safe harbor"
provisions of the Private Securities
Litigation Reform Act of 1995. These
forward-looking statements include
statements regarding expected
financial performance (as described
without limitation in the "Business
Outlook" section and in quotations
from management in this press
release) and GigaMedia's strategic
and operational plans. These
statements are based on management's
current expectations and are subject
to risks and uncertainties and
changes in circumstances. There are
important factors that could cause
actual results to differ materially
from those anticipated in the
forward looking statements,
including but not limited to, our
ability to license, develop or
acquire additional online games that
are appealing to users, our ability
to retain existing online game
players and attract new players, and
our ability to launch online games
in a timely manner and pursuant to
our anticipated schedule. Further
information on risks or other
factors that could cause results to
differ is detailed in GigaMedia's
Annual Report on Form 20-F filed in
April 2018 and its other filings
with the United States Securities
and Exchange Commission.
GIGAMEDIA LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Twelve months ended
12/31/2018 09/30/2018 12/31/2017 12/31/2018 12/31/2017
unaudited unaudited unaudited unaudited audited
USD USD USD USD USD
Operating revenues
Digital entertainment
service revenues 1,618,931 1,662,324 2,027,831 7,100,636 11,596,221
Other revenues
1,618,931 1,662,324 2,027,831 7,100,636 11,596,221
Operating costs
Cost of digital
entertainment service
revenues 739,324 968,442 1,020,993 3,584,875 5,098,495
Cost of other revenues
739,324 968,442 1,020,993 3,584,875 5,098,495
Gross profit 879,607 693,882 1,006,838 3,515,761 6,497,726
Operating expenses
Product development and
engineering expenses 215,625 286,015 237,744 1,091,445 1,072,350
Selling and marketing
expenses 576,256 963,444 745,169 3,296,636 3,992,351
General and administrative
expenses 860,903 923,288 741,253 3,684,054 3,527,799
Impairment losses 243,966 243,966
Gain on termination of
licensing agreement (1,731,592) (1,731,592)
Other 3,946 5,514 26,060 22,510 126,575
1,900,696 2,178,261 18,634 8,338,611 6,987,483
Income (loss) from
operations (1,021,089) (1,484,379) 988,204 (4,822,850) (489,757)
Non-operating income
(expense)
Interest income 333,338 351,262 207,775 1,302,145 602,224
Gain on sales of marketable
securities 1,618 1,618
Interest expense (112) (33,544)
Foreign exchange (loss) gain
-net 129,052 49,285 (85,955) 266,255 (551,167)
(Loss) Gain on disposal of
property, plant and
equipment (1) 31 962
Equity in net loss on equity
method investments (79) (23,761)
Impairment loss on
marketable securities and
investments (176) (52,651)
Other - net 56,162 728 (1,712,323) 61,358 (38,702)
518,552 401,275 (1,589,253) 1,629,789 (95,021)
(Loss) income before income
taxes (502,537) (1,083,104) (601,049) (3,193,061) (584,778)
Income tax benefit (expense) 1,671,511 1,671,048
Net (loss) income
attributable to
shareholders of GigaMedia (502,537) (1,083,104) 1,070,462 (3,193,061) 1,086,270
(Loss) earnings per share
attributable to GigaMedia
Basic: (0.05) (0.10) 0.10 (0.29) 0.10
Diluted: (0.05) (0.10) 0.10 (0.29) 0.10
Weighted average shares
outstanding:
Basic 11,052,235 11,052,235 11,052,235 11,052,235 11,052,235
Diluted 11,052,235 11,052,235 11,052,235 11,052,235 11,052,235
GIGAMEDIA LIMITED
CONSOLIDATED BALANCE SHEETS
12/31/2018 09/30/2018 12/31/2017
unaudited unaudited audited
USD USD USD
Assets
Current assets
Cash and cash equivalents 59,307,829 59,923,784 63,670,458
Accounts receivable -net 523,004 835,013 751,114
Prepaid expenses 122,434 237,635 389,984
Restricted cash 517,815 514,770 506,981
Other receivables 2,998 316,540 67,884
Other current assets 120,802 129,114 124,595
Total current assets 60,594,882 61,956,856 65,511,016
Property, plant & equipment
-net 121,585 147,600 157,730
Intangible assets -net 37,726 41,109 3,409
Prepaid licensing and
royalty fees 435,156 1,097,911 458,914
Other assets 255,604 278,356 282,036
Total assets 61,444,953 63,521,832 66,413,105
Liabilities and equity
Short-term borrowings
Accounts payable 104,030 279,485 313,557
Accrued compensation 170,470 606,547 548,903
Accrued expenses 1,262,707 2,066,188 2,157,790
Unearned revenue 1,369,769 1,971,039 1,863,308
Other current liabilities 366,167 196,516 163,703
Total current and total
liabilities 3,273,143 5,119,775 5,047,261
GigaMedia's shareholders'
equity 58,171,810 58,402,057 61,365,844
Total liabilities and equity 61,444,953 63,521,832 66,413,105
GIGAMEDIA LIMITED
RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS
Three months ended Twelve months ended
12/31/2018 9/30/2018 12/31/2017 12/31/2018 12/31/2017
unaudited unaudited unaudited unaudited unaudited
USD USD USD USD USD
Reconciliation of Net Income
(Loss) to EBITDA
Net income (loss) attributable
to GigaMedia (502,537) (1,083,104) 1,070,462 (3,193,061) 1,086,270
Depreciation 25,301 25,318 20,886 99,635 42,424
Amortization 4,137 16,516 3,315 36,013 12,419
Interest income (333,338) (351,262) (207,775) (1,302,145) (602,224)
Interest expense 112 33,544
Income tax (benefit) expense (1,671,511) (1,671,048)
EBITDA (806,437) (1,392,532) (784,511) (4,359,558) (1,098,615)
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SOURCE GigaMedia Limited
