GigaMedia Announces Fourth-Quarter and Full Year 2019 Financial Results
TAIPEI, April 7, 2020 /PRNewswire/ -- GigaMedia Limited (NASDAQ: GIGM) today announced its unaudited financial results for the fourth quarter and full year of 2019.
Highlights for Year Ended December 31, 2019
For 2019, GigaMedia reported revenues of $6.6 million, with a gross profit of $3.6 million, an operating loss of $2.9 million and the net loss of $1.5 million.
"In spite of the mild decrease in revenues," said GigaMedia CEO James Huang, "in 2019 we continued improving our cost structure through strategic cost management, and applied effective KPIs to drive performance of departments across our Company."
Compared to the prior year, the 2019 results exhibited overall improvements. Our gross margin rate has risen by 4.4% to 53.9% from 49.5% in 2018, and consequently the gross profit was even slightly higher than $3.5 million in the prior year, in spite of the decrease in revenues. The loss from operations was also cut by 40.1% from $4.8 million in 2018, and the net loss approximately halved.
"In the past year of 2019, we kept emphasizing on developing our in-house offerings," continued GigaMedia CEO James Huang, "and in the fourth quarter, our new mobile platform of casual games passed the closed and open beta testing tracks. It is now in trial operations, through which we are establishing marketing rhythm, expanding product lines, and strengthening customer's loyalty."
As for the current coronavirus (COVID-19) pandemic, CEO James Huang said, "While the virus ravages many countries in the world, our operations in Taiwan and Hong Kong have so far not been affected severely. Nonetheless, we have implemented strict hygiene and social distancing practices in our daily operations in order to protect the safety and health of our employees. We have also drawn up a contingency plan to ensure our business continuity against the escalating coronavirus situation."
Fourth Quarter and Full Year Overview
-- Consolidated 4Q revenues decreased 21.2% quarter-on-quarter, mainly due
to seasonality. The year-over-year comparison was a decrease of 7.1%,
mainly in licensed games, partly offset by increase in in-house casual
games. Full year revenues decreased 6.4% to $6.6 million from $7.1
million in 2018.
-- Loss from operations for 4Q was $0.3 million, representing a loss
reduction from $0.5 million in 3Q, mainly due to a decrease in general
and administrative expenses. Full year operating loss was $2.9 million,
representing a loss reduction of $1.9 million from approximately $4.8
million for 2018.
-- The net asset value was approximately $5.04 per share as of the end of
2019.
Unaudited Consolidated Financial Results
GigaMedia Limited is a diversified provider of digital entertainment services. GigaMedia's digital entertainment service business FunTown develops and operates a suite of digital entertainments in Taiwan and Hong Kong, with focus on mobile games and casual games.
Unaudited consolidated results of GigaMedia are summarized in the table below.
For the Full Year 2019
GIGAMEDIA FY19 UNAUDITED CONSOLIDATED FINANCIAL RESULTS
---
(unaudited, all figures in US$ thousands, except per share amounts) FY19 FY18 Change
(%)
---
Revenues 6,645 7,101 -6.4
%
Gross Profit 3,581 3,516 1.8
%
Loss from Operations (2,891) (4,823) NM
Net Loss Attributable to GigaMedia (1,535) (3,193) NM
Net Loss Per Share Attributable to GigaMedia, Diluted (0.14) (0.29) NM
EBITDA
(A) (2,896) (4,360) NM
Cash, Restricted Cash and Cash Equivalents 58,274 59,826 -2.6
%
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, 2019 was $6.6
million, decreased from $7.1 million in the prior year. The decrease was
mainly due to a decline in our licensed mobile games.
-- Consolidated loss from operations for 2019 was $2.9 million, compared to
a loss of $4.8 million in the last year. The decrease of loss was due to
improved cost-effectiveness across the Company.
-- Consolidated net loss for 2019 was $1.5 million, compared to a net loss
of $3.2 million in the prior year. Loss per share for 2019 was $0.14 per
share, compared to a loss of $0.29 per share for the prior year.
For the Fourth Quarter
GIGAMEDIA 4Q19 UNAUDITED CONSOLIDATED FINANCIAL RESULTS
---
(unaudited, all figures in US$ thousands, except 4Q19 3Q19 Change 4Q19 4Q18 Change
per share amounts)
(%) (%)
---
Revenues 1,504 1,908 -21.17 1,504 1,619 -7.10
%
%
Gross Profit 1,025 1,049 -2.29 1,025 880 16.48
% %
Loss from Operations (276) (544) NM (276) (1,021) NM
Net Loss Attributable to GigaMedia (148) (242) NM (148) (503) NM
Net Loss Per Share Attributable to (0.01) (0.02) NM (0.01) (0.05) NM
GigaMedia, Diluted
EBITDA
(A) (435) (585) NM (435) (806) NM
Cash, Restricted Cash and Cash 58,274 58,164 0.19 58,274 59,826 -2.59
%
%
Equivalents
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 2019 decreased by 21.2%
quarter-on-quarter from $1.9 million to $1.5 million mainly due to
seasonality, and decreased by 7.1% year-over-year mainly as revenues
from certain licensed games dwindled.
-- Consolidated loss from operations of the fourth quarter of 2019 was $0.3
million, compared to a loss of $0.5 million in the last quarter.
-- Consolidated net loss of the fourth quarter of 2019 was $0.1 million,
slightly improved from a net loss of $0.2 million in the last quarter.
-- Cash, restricted cash and cash equivalents at the end of the fourth
quarter of 2019 amounted to $58.3 million, which slightly increased from
$58.2 million at the end of the prior quarter.
-- Consolidated EBITDA for the fourth quarter of 2019 was a loss of $0.4
million compared to a loss of $0.6 million in the third quarter of 2019.
Financial Position
GigaMedia maintained its solid financial position. Cash, restricted cash and cash equivalents amounted to $58.3 million, or approximately $5.27 per share, along with zero bank loan and $55.7 million of shareholders' equity, as of December 31, 2019.
Business Outlook
The following forward-looking statements reflect GigaMedia's expectations as of April 7, 2020. Given potential changes in economic conditions and consumer spending, the evolving nature of digital entertainments, 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.
"It is very difficult to foretell anything in current global economic turmoil, even for our digital entertainment business, which is comparatively less affected," said GigaMedia CEO James Huang, "but reassuringly, we have kept abundant financial resources to weather the storm, and we will continue to boost productivities by improving existing products and services, introducing own offerings, along with adopting strategies of promoting customer relationships."
In the meantime, the global economic downturn may exhibit good M&A chances for us, as potential targets may be available at bargain prices. Therefore, we will continue, very cautiously, seeking suitable strategic investment and acquisition targets for increasing corporate growth and maximizing shareholder value.
Use of Non-GAAP Measures
To supplement GigaMedia's consolidated financial statements presented in accordance with U.S. 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
Unaudited results
All quarterly and certain annual 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 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 digital entertainment products or services that are appealing to users, our ability to retain existing users and attract new users, and our ability to launch digital entertainment products and services 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 Twelve months ended
12/31/2019 09/30/2019 12/31/2018 12/31/2019 12/31/2018
unaudited unaudited unaudited unaudited audited
USD USD USD USD USD
Operating revenues
Digital entertainment service
revenues 1,503,848 1,908,261 1,618,931 6,644,924 7,100,636
Operating costs
Cost of digital entertainment
service 479,341 859,511 739,324 3,064,201 3,584,875
revenues
Gross profit 1,024,507 1,048,750 879,607 3,580,723 3,515,761
Operating expenses
Product development and
engineering 213,241 326,419 215,625 1,185,299 1,091,445
expenses
Selling and marketing
expenses 427,090 461,653 576,256 1,995,285 3,296,636
General and administrative
expenses 571,563 800,015 860,903 3,182,212 3,684,054
Impairment losses 85,199 243,966 85,199 243,966
Other 2,957 4,723 3,946 24,060 22,510
1,300,050 1,592,810 1,900,696 6,472,055 8,338,611
Loss from operations (275,543) (544,060) (1,021,089) (2,891,332) (4,822,850)
Non-operating income
(expense)
Interest income 322,587 364,539 333,338 1,483,375 1,302,145
Interest expense (14,866) (14,866)
Foreign exchange (loss) gain
-net (84,774) (62,487) 129,052 (67,741) 266,255
Gain on disposal of property,
plant 31
and equipment
Other - net (95,154) 119 56,162 (44,705) 61,358
127,793 302,171 518,552 1,356,063 1,629,789
Loss before income taxes (147,750) (241,889) (502,537) (1,535,269) (3,193,061)
Income tax benefit (expense)
Net loss attributable to
shareholders of (147,750) (241,889) (502,537) (1,535,269) (3,193,061)
GigaMedia
Loss per share attributable
to
GigaMedia
Basic: (0.01) (0.02) (0.05) (0.14) (0.29)
Diluted: (0.01) (0.02) (0.05) (0.14) (0.29)
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
12/31/2019 09/30/2019 12/31/2018
unaudited unaudited audited
USD USD USD
Assets
Current assets
Cash and cash equivalents 57,742,696 57,635,576 59,307,829
Accounts receivable -net 368,445 591,302 523,004
Prepaid expenses 112,243 142,819 122,434
Restricted cash 530,984 528,387 517,815
Other receivables 261 457,168 2,998
Other current assets 138,601 165,295 120,802
Total current assets 58,893,230 59,520,547 60,594,882
Property, plant & equipment
-net 111,770 101,998 121,585
Intangible assets -net 15,551 78,828 37,726
Prepaid licensing and
royalty fees 43,915 468,722 435,156
Other assets 285,072 918,556 255,604
Total assets 59,349,538 61,088,651 61,444,953
Liabilities and equity
Accounts payable 64,337 140,676 104,030
Accrued compensation 200,455 371,212 170,470
Accrued expenses 1,178,363 1,470,179 1,262,707
Unearned revenue 1,364,749 1,504,176 1,369,769
Other current liabilities 775,305 241,789 366,167
Total current liabilities 3,583,209 3,728,032 3,273,143
Other liabilities 94,385 662,530
Total liabilities 3,677,594 4,390,562 3,273,143
GigaMedia's shareholders'
equity 55,671,944 56,698,089 58,171,810
Total liabilities and equity 59,349,538 61,088,651 61,444,953
GIGAMEDIA LIMITED
RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS
Three months ended Twelve months ended
12/31/2019 9/30/2019 12/31/2018 12/31/2019 12/31/2018
unaudited unaudited unaudited unaudited unaudited
USD USD USD USD USD
Reconciliation of Net Income
(Loss) to
EBITDA
Net loss attributable to
GigaMedia (147,750) (241,889) (502,537) (1,535,269) (3,193,061)
Depreciation 10,888 9,919 25,301 60,964 99,635
Amortization 9,669 11,126 4,137 46,523 36,013
Interest income (322,587) (364,539) (333,338) (1,483,375) (1,302,145)
Interest expense 14,866 14,866
Income tax (benefit) expense
EBITDA (434,914) (585,383) (806,437) (2,896,291) (4,359,558)
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SOURCE GigaMedia Limited
