GigaMedia Announces Third-Quarter 2019 Financial Results
TAIPEI, Oct. 31, 2019 /PRNewswire/ -- GigaMedia Limited (NASDAQ: GIGM) today announced its third-quarter 2019 unaudited financial results.
Comments from Management
In the third quarter of 2019, total revenues increased by 9.0% to approximately $1.91 million, from $1.75 million last quarter. While the increase of revenues was mainly due to seasonalities exhibited in certain games for summer peak and anniversary promotions, the overall gross margin widened to 55.0%, compared to 44.0% in last quarter and 41.8% in the same quarter last year, as a result of an improved cost structure.
And we were also making progress in developing in-house offerings, among which a new casual game platform will be released to the closed and then open beta testing tracks in the next quarter.
"During past quarters in 2019, besides pursuing an internally-driven growth by developing our own offerings, we continued improving the cost structure of our licensed game operations, as well as calibrating our marketing and promotional strategies for better effectiveness," said GigaMedia CEO James Huang, "and the efforts now gradually began to bear fruits."
Third Quarter Overview
-- Revenues increased approximately by 9.0% quarter-on-quarter to $1.91 million from $1.75 million in the second quarter of this year, and by 14.8% year-over-year from $1.66 million in the same period last year. -- Gross profit increased to $1.05 million from $0.77 million in the second quarter of 2019. -- Net loss reduced considerably to $0.24 million from $0.61 million in last quarter, and from $1.08 million in the same period last year. -- The net asset value was around $5.13 per share.
Unaudited Consolidated Financial Results
GigaMedia Limited is a diversified provider of digital entertainment services. GigaMedia's digital entertainment service business FunTown develops and operates a suite of digital entertainments in Taiwan and Hong Kong, with focus on browser/mobile games and casual games.
Unaudited consolidated results of GigaMedia are summarized in the table below.
For the third Quarter
GIGAMEDIA3Q19 UNAUDITED CONSOLIDATED FINANCIAL RESULTS --- (unaudited, all figures in US$ thousands, except per share amounts) 3Q19 2Q19 Change 3Q19 3Q18 Change (%) (%) --- Revenues 1,908 1,750 9.0 1,908 1,662 14.8 % % Gross Profit 1,049 769 36.4 1,049 694 51.2 % % Loss from Operations (544) (1,122) NM (544) (1,484) NM Net Loss Attributable to GigaMedia (242) (614) NM (242) (1,083) NM Loss Per Share Attributable to GigaMedia, Diluted (0.02) (0.06) NM (0.02) (0.10) NM EBITDA (A) (585) (1,000) NM (585) (1,393) NM Cash , Restricted Cash and Cash Equivalents 58,164 58,015 0.3 58,164 60,439 -3.8 % % 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.)
Third-Quarter Financial Results
-- Consolidated revenues for the third quarter of 2019 increased by 9.0% to $1.91 million from $1.75 million in the prior quarter and by 14.8% year-over-year from $1.66 million in the third quarter 2018. The increase was mainly due to the summer peak of Tales Runner, and the 4th anniversary promotions for Yume100, while Senran Kagura: New Link, a new game launched last quarter, recorded a flat performance in this quarter. -- Consolidated gross profit increased by 36.4% quarter-on-quarter to $1.05 million from $0.77 million and 51.2% year-over-year from $0.69 million the third quarter last year. -- Consolidated operating expenses were $1.59 million in the third quarter of 2019, representing a decrease of $0.30 million from the second quarter of 2019. The decrease was due to higher expenses in last quarter, mainly for the launch of Senran Kagura in addition to certain administrative activities. -- Consolidated loss from operation of the third quarter of 2019 was $0.54 million, a decrease of loss by approximately $0.58 million from a loss of $1.12 million in last quarter. -- Consolidated net loss of the third quarter of 2019 was $0.24 million, reduced from $0.61 million in last quarter. -- Cash, restricted cash and cash equivalents as of the end of the third quarter of 2019 amounted to $58.16 million, increased by 0.3% from $58.02 million at the end of the second quarter of 2019.
Financial Position
GigaMedia maintained its solid financial position, with cash, restricted cash and cash equivalents accounted for $58.16 million, or $5.26 per share, as of September 30, 2019.
Business Outlook
The following forward-looking statements reflect GigaMedia's expectations as of October 31, 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 2018 Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission as referenced below, actual results may differ materially.
"Following our strategic plan outlined in the beginning of 2019, we have steadily built up healthier operations for both our licensed and self-developed games, and have accumulated momentums for future growth," said GigaMedia CEO James Huang. "In the coming quarter, we will continue to boost productivities by improving existing products and services, introducing own offerings, along with adopting strategies of promoting customer relationships."
As for the customer platform, "while it is still at a nascent stage and we are working on creating capacity for providing more diverse products and services, it presents a great potential on saving marketing and channel costs," continued CEO James Huang. "And we consider it essential in broadening and cultivating a loyal and profitable customer base, where we can take various initiatives to promote customer values."
Meanwhile, our business strategies always include expanding through mergers and acquisitions. "We will also continue reviewing prospects that can provide synergies to our business for accelerating our growth and enhancing shareholders' value," stated CEO James Huang.
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 third quarter 2019 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 2019 and its other filings with the United States Securities and Exchange Commission.
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(Tables to follow)
GIGAMEDIA LIMITED CONSOLIDATED STATEMENTS OF OPERATIONS Three months ended Nine months ended 9/30/2019 6/30/2019 9/30/2018 9/30/2019 9/30/2018 unaudited unaudited unaudited unaudited unaudited USD USD USD USD USD Operating revenues Digital entertainment service revenues 1,908,261 1,749,583 1,662,324 5,141,077 5,481,704 Other revenues 1,908,261 1,749,583 1,662,324 5,141,077 5,481,704 Operating costs Cost of digital entertainment service revenues 859,511 980,448 968,442 2,584,861 2,845,551 Cost of other revenues 859,511 980,448 968,442 2,584,861 2,845,551 Gross profit 1,048,750 769,135 693,882 2,556,216 2,636,153 Operating expenses Product development and engineering expenses 326,419 325,144 286,015 972,057 875,820 Selling and marketing expenses 461,653 580,539 963,444 1,568,194 2,720,380 General and administrative expenses 800,015 974,648 923,288 2,610,650 2,823,151 Other 4,723 11,165 5,514 21,103 18,564 1,592,810 1,891,496 2,178,261 5,172,004 6,437,915 Loss from operations (544,060) (1,122,361) (1,484,379) (2,615,788) (3,801,762) Non-operating income (expense) Interest income 364,539 414,450 351,262 1,160,788 968,808 Foreign exchange (loss) gain -net (62,487) 90,922 49,285 17,033 137,203 Gain on disposal of property, plant and equipment 31 Other - net 119 3,416 728 50,448 5,196 302,171 508,788 401,275 1,228,269 1,111,238 Loss before income taxes (241,889) (613,573) (1,083,104) (1,387,519) (2,690,524) Income tax benefit (expense) Net loss attributable to GigaMedia (241,889) (613,573) (1,083,104) (1,387,519) (2,690,524) Loss per share attributable to GigaMedia Basic: (0.02) (0.06) (0.10) (0.13) (0.24) Diluted: (0.02) (0.06) (0.10) (0.13) (0.24) 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 9/30/2019 6/30/2019 9/30/2018 unaudited unaudited unaudited USD USD USD Assets Current assets Cash and cash equivalents 57,635,576 57,489,563 59,923,784 Accounts receivable -net 591,302 591,905 835,013 Prepaid expenses 142,819 275,551 237,635 Restricted cash 528,387 525,354 514,770 Other receivables 457,168 458,383 316,540 Other current assets 165,294 131,150 129,114 Total current assets 59,520,546 59,471,906 61,956,856 Property, plant & equipment -net 101,998 92,580 147,600 Intangible assets -net 78,828 23,545 41,109 Prepaid licensing and royalty fees 468,722 574,274 1,097,911 Other assets 918,556 1,035,529 278,356 Total assets 61,088,650 61,197,834 63,521,832 Liabilities and equity Accounts payable 140,676 119,597 279,485 Accrued compensation 371,212 253,262 606,547 Accrued expenses 1,470,179 1,340,539 2,066,188 Unearned revenue 1,504,176 1,617,881 1,971,039 Other current liabilities 241,788 197,776 196,516 Total current liabilities 3,728,031 3,529,055 5,119,775 Other liabilities 662,530 781,187 Total liabilities 4,390,561 4,310,242 5,119,775 Total equity 56,698,089 56,887,592 58,402,057 Total liabilities and equity 61,088,650 61,197,834 63,521,832
GIGAMEDIA LIMITED RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS Three months ended Nine months ended 9/30/2019 6/30/2019 9/30/2018 9/30/2019 9/30/2018 unaudited unaudited unaudited unaudited unaudited USD USD USD USD USD Reconciliation of Net Loss to EBITDA Net loss attributable to GigaMedia (241,889) (613,573) (1,083,104) (1,387,519) (2,690,524) Depreciation 9,919 14,769 25,318 50,076 74,334 Amortization 11,126 12,830 16,516 36,854 31,876 Interest income (364,539) (414,450) (351,262) (1,160,788) (968,808) Interest expense Income tax (benefit) expense EBITDA (585,383) (1,000,424) (1,392,532) (2,461,377) (3,553,122)
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SOURCE GigaMedia Limited