TAIPEI, Oct. 22, 2014 /PRNewswire/ --
Highlights
- Continued success monetizing the mobile game Three Kingdoms
Partner, with revenues up 17 percent quarter-over-quarter.
- New mobile game revenue stream continues to expand: mobile
games accounted for approximately 33 percent of total game revenues
in the third quarter, up from 29 percent in the prior
quarter.
- Consolidated 3Q revenues held steady at $2.5 million: revenues from core mobile and MMO
game products grew quarter-over-quarter; revenues from legacy PC
games contributions decreased during the period.
- GigaMedia launching six new games products in 4Q: four new
mobile games, one MMO, and one social games platform.
- Consolidated 4Q revenues expected to increase 20-30 percent
to approximately $3.0 million to $3.5
million, boosted by new game products and a small increase
in cloud revenues.
- Revenue mix in 2015 to improve on 1) self-developed social
games products and 2) other original IP products that include two
mobile games and one MMO.
- Total revenues expected to grow in 2015 on expansion to top
Asian games markets and new products.
- Solid financial position: cash and cash equivalents,
restricted cash, marketable securities-current, and the market
value of GigaMedia's holdings of a listed game company as of
September 30, 2014 totaled
approximately $80.4 million, or
approximately $1.45 per share. This
total excludes cash proceeds of approximately $2.6 million that resulted from sales of
marketable securities-current in late September and that due to a
processing time lag were included in GigaMedia's third-quarter
balance sheets under "other receivables."
GigaMedia Limited (NASDAQ: GIGM) today announced its unaudited
financial results for the third quarter of 2014.
"In Q3, revenues were flat reflecting portfolio and business
model weaknesses in our online games business," stated GigaMedia
Limited Chief Executive Officer Collin
Hwang. "We have addressed these issues and expect results to
improve quickly going forward."
"Our team has done a tremendous job executing new strategic
growth initiatives," stated CEO Collin
Hwang. "We have built a strong pipeline and also taken
initial steps to create a more powerful business model."
"We now expect to launch five titles in the fourth quarter,
including four mobile games and one MMO," stated CEO Collin Hwang. "And we anticipate another strong
launch schedule in Q1 2015."
"In addition to building our pipeline, we have taken first steps
to vertically integrate – to strengthen the company's development,
distribution, and operations of games and services," stated CEO
Collin Hwang. "As a result, for the
first time, our games business is positioned to benefit from
operating self-developed products and licensing out GigaMedia's
original IP."
"A new business model is emerging that will enable us to deliver
increased revenues from expanding to larger markets and higher
quality revenues from self-developed products and from licensing
out," stated CEO Collin Hwang. "In
4Q, we are starting operations of our new self-developed social
games platform in Greater China,
and in 1Q15 we plan to start licensing out another new social games
platform plus two new original IP mobile games and one MMO to
operators in some of Asia's
largest markets."
"Complementing this, in cloud computing, we continue moving
toward becoming a full-service provider, adding new products and
services," stated CEO Collin Hwang.
"In 4Q, our cloud business forecasts revenue growth on higher sales
of IaaS services and SaaS solutions."
"In sum: retooling and improvements continue, momentum is
growing," stated CEO Collin Hwang.
"We believe we have reached a turning point and are confident in
delivering growth and improved financial performance going forward
as we execute our strategic growth plans."
Unaudited Consolidated Financial Results
GigaMedia Limited is a diversified provider of online games and
cloud computing services. Unaudited consolidated results of
GigaMedia are summarized in the table below.
GIGAMEDIA 3Q14
UNAUDITED CONSOLIDATED FINANCIAL RESULTS
|
(unaudited, all figures
in US$ thousands, except per share amounts)
|
3Q14
|
2Q14
|
Change
(%)
|
3Q14
|
3Q13
|
Change
(%)
|
Revenues
|
2,472
|
2,471
|
0
|
2,472
|
3,810
|
-35
|
Gross
Profit
|
205
|
819
|
-75
|
205
|
2,030
|
-90
|
Loss from Operations
|
3,631
|
2,945
|
NM
|
3,631
|
4,552
|
NM
|
Net Loss Attributable
to GigaMedia
|
4,839
|
2,677
|
NM
|
4,839
|
3,112
|
NM
|
Net Loss Per Share
Attributable to GigaMedia, Diluted
|
0.09
|
0.05
|
NM
|
0.09
|
0.06
|
NM
|
EBITDA (A)
|
(4,589)
|
(2,448)
|
NM
|
(4,589)
|
(2,582)
|
NM
|
Cash, Cash Equivalents,
Restricted Cash, and Marketable Securities-
Current
|
65,947
|
71,934
|
-8
|
65,947
|
74,281
|
-11
|
|
|
|
|
|
|
|
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 third quarter of 2014 were
$2.5 million, flat compared to
$2.5 million in the second quarter of
2014 and down from $3.8 million in
the third quarter of 2013. Quarter-over-quarter, both online games
revenues and cloud services revenues were flat. In online games,
contributions from the mobile game Three Kingdoms Partner
and the MMO game Tales Runner grew quarter-over-quarter but
were offset by decreased contributions from legacy PC game
products. Year-over-year results reflected the loss of the MMO
A.V.A., as well as lower contributions from legacy PC game
products and Tales Runner.
In online games, average monthly revenue per active paying
account was $36.39 during the third
quarter of 2014 compared to $35.36 in
the previous quarter. Peak concurrent users were
approximately 11,000 in the third quarter compared to approximately
10,000 in the second quarter of 2014.
Consolidated gross profit for the third quarter of 2014,
excluding new game development expenses of $925 thousand, was approximately $1.1 million; including the aforementioned
expenses, the company's consolidated gross profit was $205 thousand. This compared to $819 thousand in the second quarter of 2014 and
to $2.0 million in the third quarter
of 2013. Third-quarter 2014 consolidated gross profit margin
excluding the aforementioned new game development expenses, was
45.7 percent; including the aforementioned expenses, the company's
consolidated gross profit margin was 8.3 percent. This compared to
33.1 percent in the second quarter of 2014 and 53.3 percent in the
third quarter of 2013.
During the third quarter of 2014, GigaMedia's cost of revenues
included expenses of approximately $925
thousand related to the out-sourced development of an MMO
game and two mobile games. The games are scheduled for completion
in the first quarter of 2015. GigaMedia will have global rights to
the games.
Consolidated operating expenses for the third quarter of
2014 were $3.8 million. This compared
to $3.8 million in the second quarter
of 2014, and to $6.6 million in the
third quarter of 2013.
Consolidated product development and engineering expenses were
$198 thousand in the third quarter of
2014 compared to $228 thousand in the
previous quarter and $510 thousand in
the third quarter of 2013.
Consolidated selling and marketing expenses were $1.8 million in the third quarter of 2014
compared to $1.7 million in the
previous quarter and $1.3 million in
the third quarter of 2013.
Consolidated general and administrative expenses were
$1.9 million in the third quarter of
2014 versus $1.9 million in the
previous quarter and $1.7 million in
the third quarter of 2013. Corporate operating expenses were
approximately $990 thousand in the
third quarter of 2014, in line with $900
thousand in the second quarter of 2014.
Consolidated loss from operations for the third quarter of 2014,
excluding new game development expenses of $925 thousand, was $2.7
million; including the aforementioned expenses, the
company's consolidated loss from operations was $3.6 million. This compared to $2.9 million in the second quarter of 2014 and to
$4.6 million in the third quarter of
2013. The quarter-over-quarter and year-over-year variations were
in line with management expectations as GigaMedia continues to
invest in, transition and grow its businesses.
Consolidated non-operating expenses/income during the third
quarter of 2014 was a loss of $1.2
million compared to income of $157
thousand in the second quarter of 2014 and income of
$1.3 million recorded in the third
quarter of 2013. During the third quarter of 2014, GigaMedia
disposed of a portion of its marketable securities-current,
resulting in a gain of $2.5 million.
This gain was more than offset by an unrealized investment loss of
$3.9 million related to a decrease in
market value of GigaMedia's holdings of a listed games company,
resulting in a negative net impact on consolidated non-operating
income in the third quarter of 2014 of approximately $1.4 million.
Consolidated net loss for the third quarter of 2014, excluding
the aforementioned new game development expenses and the unrealized
loss in investment income, was approximately $5 thousand; including the aforementioned new
game development expenses and the unrealized loss in investment
income the company's net loss was $4.8
million. This compared to $2.7
million in the previous quarter and to a loss of
$3.1 million in the third quarter of
2013.
Consolidated EBITDA for the third quarter of 2014 was a loss of
$4.6 million compared to a loss of
$2.4 million in the previous quarter
and to a loss of $2.6 million in the
third quarter of 2013.
Financial Position
During the third quarter, GigaMedia continued to maintain a
solid financial position with cash and cash equivalents, restricted
cash, marketable securities-current, and the market value of
GigaMedia's holdings of a listed game company totaling
approximately $80.4 million, or
approximately $1.45 per share, as of
September 30, 2014. This total excludes cash proceeds of approximately
$2.6 million that resulted from sales
of marketable securities-current in late September and that due to
a processing time lag were included in GigaMedia's third-quarter
balance sheets under "other receivables." The third
quarter total of $80.4 million
compared to $90.9 million at the end
of the second quarter of 2014, with the difference reflecting
mainly a) variation in the market value of GigaMedia's investment
in a listed game company of approximately $4
million, b) marketable
securities-current disposals of approximately $4.2 million, and c) net cash outflow of
approximately $1.8
million.
Cash flow from operations was an outflow of approximately
$3.0 million, an increase from cash
outflow in the second quarter of $2.0
million, with the variation reflecting increased game
licensing and development fees in the third quarter totaling
approximately $1.5 million.
Short-term debt was $19.4 million at
the end of the third quarter, of which approximately $16.5 million was incurred in the second quarter
of 2014 at a rate of 1.35 percent to finance the aforementioned
investment in a game company.
Business Outlook
The following forward-looking statements reflect GigaMedia's
expectations as of October
23, 2014. 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 2013 Annual Report
on Form 20-F filed with the U.S. Securities
and Exchange Commission as referenced below, actual
results may differ materially.
In the fourth quarter, GigaMedia expects total revenues to
increase to approximately $3.0 million to
$3.5 million, boosted by new game products and a small
increase in cloud revenues.
Management expects the following online game initiatives to
begin making contributions in the fourth quarter and represent the
main revenue streams in the period:
- New licensed mobile games -- GigaMedia has scheduled four
new mobile games for launch during the fourth quarter that it has
licensed from Asian developers.
- New Web-based MMO game KingsRoad -- GigaMedia
expects to launch Rumble's acclaimed next-generation browser
action/role-playing game KingsRoad by December.
- New social game platforms -- GigaMedia has completed
development and testing of its first self-developed social games
product, Fortune Casino, an open platform that creates a new
distribution channel for gaming operators targeting Asia. The platform features a broad selection
of play-for-fun social casino games. GigaMedia expects to launch
the platform in Greater China by
November. GigaMedia plans to begin offering operators a second
self-developed solution, ClubOne, in January
2015. ClubOne is a complete, proprietary solution that will
feature a broader variety of play-for-free social games from which
operators may select. GigaMedia expects to begin white labeling the
software to online gaming operators in early 2015.
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.
Conference Call and Webcast
Management will hold an investor conference call and webcast on
October 23, 2014 at 8:00 p.m. Eastern Standard Time, which is 8:00
a.m. Taipei Time on October 24, 2014,
to discuss GigaMedia's third-quarter 2014 performance.
Dial-in numbers:
U.S.: +1-845-507-1610
International: +61-283-733-610
Passcode: 20981940
A replay will be available from 11:00
p.m. Eastern Standard Time on October
23, 2014 for seven days.
U.S.: +1-646-254-3697
International: +612-8199-0299
Passcode: 20981940
A link to the live and archived webcast will be available at
www.gigamedia.com.
Conference Call Format
The call will consist of brief prepared remarks, followed by
live Q&A and management responses to questions submitted via
email. Questions may be sent in advance to IR@gigamedia.com.tw.
About GigaMedia
Headquartered in Taipei,
Taiwan, GigaMedia Limited (Singapore registration number: 199905474H) is
a diversified provider of online games and cloud computing
services. GigaMedia's online games business is an innovative leader
in Asia with growing game
development, distribution and operation capabilities, as well as
platform services for games; focus is on mobile games and social
casino games. The company's cloud computing business is focused on
providing enterprises in Greater
China with critical communications services and IT solutions
that increase flexibility, efficiency and competitiveness. More
information on GigaMedia can be obtained from
www.gigamedia.com.
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 2014 and its
other filings with the United States Securities and Exchange
Commission.
For further information contact:
Brad Miller, Investor Relations Director
Country/City Code 8862 Tel: 2656-8016
Brad.Miller@GigaMedia.com
GIGAMEDIA
LIMITED
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
|
9/30/2014
|
|
6/30/2014
|
|
9/30/2013
|
|
|
|
unaudited
|
|
unaudited
|
|
unaudited
|
|
|
|
USD
|
|
USD
|
|
USD
|
Operating
revenues
|
|
|
|
|
|
|
|
Asian online game and
service revenues
|
|
|
2,237,498
|
|
2,180,171
|
|
3,803,430
|
Other
revenues
|
|
|
234,987
|
|
290,627
|
|
6,521
|
|
|
|
2,472,485
|
|
2,470,798
|
|
3,809,951
|
|
|
|
|
|
|
|
|
Operating
costs
|
|
|
|
|
|
|
|
Cost of Asian online
game and service revenues
|
|
|
1,972,295
|
|
1,291,889
|
|
1,709,214
|
Cost of other
revenues
|
|
|
294,982
|
|
360,349
|
|
70,586
|
|
|
|
2,267,277
|
|
1,652,238
|
|
1,779,800
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
205,208
|
|
818,560
|
|
2,030,151
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Product development
and engineering expenses
|
|
|
197,745
|
|
227,509
|
|
510,189
|
Selling and marketing
expenses
|
|
|
1,759,991
|
|
1,677,455
|
|
1,253,071
|
General and
administrative expenses
|
|
|
1,878,580
|
|
1,858,949
|
|
1,678,765
|
Impairment
losses
|
|
|
0
|
|
0
|
|
3,139,999
|
|
|
|
3,836,316
|
|
3,763,913
|
|
6,582,024
|
|
|
|
|
|
|
|
|
Loss from
operations
|
|
|
(3,631,108)
|
|
(2,945,353)
|
|
(4,551,873)
|
|
|
|
|
|
|
|
|
Non-operating
income (expense)
|
|
|
|
|
|
|
|
Interest
income
|
|
|
187,194
|
|
174,559
|
|
48,499
|
Gain on sales of
marketable securities
|
|
|
2,447,065
|
|
162,051
|
|
539,840
|
Interest (expense)
recoveries
|
|
|
(78,714)
|
|
(68,399)
|
|
72
|
Foreign exchange gain
- net
|
|
|
20,058
|
|
115,438
|
|
339,274
|
(Loss) gain on equity
method investments - net
|
|
|
(3,848,048)
|
|
(244,775)
|
|
378,014
|
Other
|
|
|
22,550
|
|
18,402
|
|
19,184
|
|
|
|
(1,249,895)
|
|
157,276
|
|
1,324,883
|
|
|
|
|
|
|
|
|
Loss from continuing
operations before income taxes
|
|
|
(4,881,003)
|
|
(2,788,077)
|
|
(3,226,990)
|
Income tax benefit
(expense)
|
|
|
125
|
|
60,849
|
|
(1,403)
|
|
|
|
|
|
|
|
|
Loss from continuing
operations
|
|
|
(4,880,878)
|
|
(2,727,228)
|
|
(3,228,393)
|
Income from
discontinued operations, net of tax
|
|
|
0
|
|
0
|
|
116,272
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(4,880,878)
|
|
(2,727,228)
|
|
(3,112,121)
|
Less: Net loss
attributable to noncontrolling interest
|
|
|
41,966
|
|
50,537
|
|
92
|
|
|
|
|
|
|
|
|
Net loss attributable
to shareholders of GigaMedia
|
|
|
(4,838,912)
|
|
(2,676,691)
|
|
(3,112,029)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings per
share attributable to GigaMedia
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
Loss from continuing
operations
|
|
|
(0.09)
|
|
(0.05)
|
|
(0.06)
|
Loss from
discontinued operations
|
|
|
0.00
|
|
0.00
|
|
0.00
|
|
|
|
(0.09)
|
|
(0.05)
|
|
(0.06)
|
Diluted:
|
|
|
|
|
|
|
|
Loss from continuing
operations
|
|
|
(0.09)
|
|
(0.05)
|
|
(0.06)
|
Loss from
discontinued operations
|
|
|
0.00
|
|
0.00
|
|
0.00
|
|
|
|
(0.09)
|
|
(0.05)
|
|
(0.06)
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
|
55,261,661
|
|
53,901,371
|
|
50,719,976
|
Diluted
|
|
|
55,261,661
|
|
53,901,371
|
|
50,719,976
|
GIGAMEDIA
LIMITED
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
9/30/2014
|
|
6/30/2014
|
|
9/30/2013
|
|
|
|
unaudited
|
|
unaudited
|
|
unaudited
|
|
|
|
USD
|
|
USD
|
|
USD
|
Assets
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
38,899,281
|
|
40,660,576
|
|
54,658,747
|
Marketable securities
- current
|
|
18,041,022
|
|
22,348,693
|
|
19,622,706
|
Accounts receivable -
net
|
|
1,327,883
|
|
1,352,875
|
|
2,480,216
|
Prepaid
expenses
|
|
534,534
|
|
648,190
|
|
616,367
|
Restricted
cash
|
|
|
9,006,571
|
|
8,924,513
|
|
0
|
Other
receivables
|
|
2,739,712
|
|
273,032
|
|
645,557
|
Other current
assets
|
|
166,917
|
|
143,465
|
|
922,309
|
Total current
assets
|
|
70,715,920
|
|
74,351,344
|
|
78,945,902
|
|
|
|
|
|
|
|
|
Marketable securities
- noncurrent
|
|
9,073,630
|
|
9,214,270
|
|
4,263,473
|
Investments
|
|
|
20,775,344
|
|
25,476,917
|
|
5,828,209
|
Property, plant &
equipment - net
|
|
1,753,309
|
|
1,695,953
|
|
1,744,797
|
Goodwill
|
|
|
0
|
|
0
|
|
16,630,544
|
Intangible assets -
net
|
|
592,482
|
|
884,979
|
|
14,569,242
|
Prepaid licensing and
royalty fees
|
|
5,061,593
|
|
4,843,848
|
|
4,683,692
|
Other
assets
|
|
|
309,549
|
|
329,422
|
|
431,908
|
Total
assets
|
|
|
108,281,827
|
|
116,796,733
|
|
127,097,767
|
|
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
|
Accounts
payable
|
|
453,885
|
|
332,166
|
|
183,702
|
Accrued
compensation
|
|
1,144,451
|
|
785,562
|
|
1,127,221
|
Accrued
expenses
|
|
2,508,376
|
|
2,717,972
|
|
3,007,902
|
Short-term
borrowings
|
|
19,395,135
|
|
19,755,567
|
|
0
|
Other current
liabilities
|
|
5,954,043
|
|
6,099,614
|
|
6,950,036
|
Total current
liabilities
|
|
29,455,890
|
|
29,690,881
|
|
11,268,861
|
Other
liabilities
|
|
|
181,193
|
|
182,150
|
|
845,164
|
Total
liabilities
|
|
|
29,637,083
|
|
29,873,031
|
|
12,114,025
|
|
|
|
|
|
|
|
|
GigaMedia's
shareholders' equity
|
|
78,589,516
|
|
86,825,311
|
|
115,322,174
|
Noncontrolling
interest
|
|
55,228
|
|
98,391
|
|
(338,432)
|
Total
equity
|
|
|
78,644,744
|
|
86,923,702
|
|
114,983,742
|
Total liabilities and
equity
|
|
108,281,827
|
|
116,796,733
|
|
127,097,767
|
|
GIGAMEDIA
LIMITED
|
|
Reconciliations of
Non-GAAP Results of Operations
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
|
9/30/2014
|
|
6/30/2014
|
|
9/30/2013
|
|
|
|
unaudited
|
|
unaudited
|
|
unaudited
|
|
|
|
USD
|
|
USD
|
|
USD
|
|
Reconciliation of
Net Loss to EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to GigaMedia
|
|
(4,838,912)
|
|
(2,676,691)
|
|
(3,112,029)
|
|
Depreciation
|
|
76,182
|
|
75,599
|
|
99,130
|
|
Amortization
|
|
282,115
|
|
319,683
|
|
477,940
|
|
Interest
income
|
|
(187,194)
|
|
(174,362)
|
|
(48,718)
|
|
Interest expense
(recoveries)
|
|
78,714
|
|
68,399
|
|
(72)
|
|
Income tax (benefit)
expense
|
|
(125)
|
|
(60,849)
|
|
1,403
|
|
EBITDA
|
|
(4,589,220)
|
|
(2,448,221)
|
|
(2,582,346)
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/gigamedia-announces-third-quarter-2014-financial-results-119935998.html
SOURCE GigaMedia Limited