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.

# # #

(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)

View original content:http://www.prnewswire.com/news-releases/gigamedia-announces-third-quarter-2019-financial-results-300949069.html

SOURCE GigaMedia Limited