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GigaMedia Announces First-Quarter 2019 Financial Results

TAIPEI, Taiwan, May 2, 2019 /PRNewswire/ -- GigaMedia Limited (GIGM) today announced its first-quarter 2019 unaudited financial results.

Comments from Management

In the first quarter of 2019, we continued our streamlined operations of licensed games while growing and developing our own offerings. In spite of an 8.4% decrease in revenues during this quarter, operating loss maintained at approximately $0.9 million, comparable to the previous quarter.

"The strategy we have adopted since 2018," said Giga GigaMedia CEO James Huang, "is making a difference. By trimming off or terminating underperforming products or services and selectively introducing new ones, an improved allocation of resources now delivers a more solid productivity and opens up possibilities for exploring a long-term growth path."

We prepared for in the first quarter, and launched in early the second quarter of 2019, Senran Kagura: New Link, a licensed card battle game. It is one of the popular Senran Kagura series that is developed by a subsidiary of Marvelous Inc., a Japanese game developer. By targeting a niche audience that loves the series, this game is well received. While we have just launched it and are still fine-tuning the operations, based on the initial results, we are very optimistic about its contribution to our following quarters.

Meanwhile, we were also making progress in renovating and developing our offerings, as well as building up an advanced framework for promoting customer relationships. We believe the cultivation of a loyal customer base on our own offerings will eventually further boost customer value and create revenues and profits

First Quarter Overview

  • Operating revenue decreased by $0.1 million or 8.4% in quarter-on-quarter comparison, and decreased by 0.7 million or 31.3% in year- over -year comparison.
  • Loss from operations amounted to approximately $0.9 million and net loss approximatley $0.5 million, comparable to the fourth quarter of 2018 and slightly improved when compared with the same quarter last year.

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 First Quarter

GIGAMEDIA 1Q19 UNAUDITED CONSOLIDATED FINANCIAL RESULTS


(unaudited, all figures in US$ thousands, except per share amounts)


1Q19



4Q18



Change

(%)



1Q19



1Q18



Change

(%)


Revenues



1,483




1,619




(8.4)

%



1,483




2,160




(31.3)

%

Gross Profit



738




880




(16.1)

%



738




1,214




(39.2)

%

Loss from Operations



(949)




(1,021)



NM




(949)




(975)



NM


Net Loss Attributable to GigaMedia



(532)




(503)



NM




(532)




(853)



NM


Net Loss Per Share Attributable to GigaMedia, Diluted



(0.05)




(0.05)



NM




(0.05)




(0.08)



NM


EBITDA (A)



(876)




(806)



NM




(876)




(1,104)



NM


Cash and Restricted Cash and Cash Equivalents



58,494




59,826




(2.2)

%



58,494




62,618




(6.6)

%

 

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.)

First-Quarter Financial Results

  • Consolidated revenues for the first quarter of 2019 decreased by 8.4% quarter-on-quarter to $1.5 million, from $1.6 million in the fourth quarter of 2018, or by 31.3% year-over-year from $2.2 million in the first quarter of 2018.
  • Consolidated gross profit decreased to $0.7 million from $0.9 million in last quarter and from $1.2 million the same quarter last year.
  • Consolidated operating expenses were $1.7 million in the first quarter of 2019, representing a decrease by $0.2 million quarter-on-quarter, or a decrease by $0.5 million from $2.2 million year-over-year. The year-over-year and quarter-on-quarter change were due to reduced marketing expenses.
  • Loss from operation of the first quarter of 2019 was a loss of $0.9 million, approximately comparable to a loss of $1.0 million last quarter and approximately the same as in the first quarter of 2018.
  • Net loss of the first quarter of 2019 was a net loss of $0.5 million, approximately comparable to a loss of $0.5 million in the fourth quarter of 2018, and improved by $0.3 million when compared from the same quarter last year.
  • Cash, restricted cash and cash equivalents at the first quarter-end of 2019 accounted for $58.5 million, decreased by $1.3 million from the end of 2018.

Financial Position

As of March 31, 2019, GigaMedia had $58.5 million in cash and restricted cash, approximately $5.3 per share, compared to $62.6 million, or $5.7 per share, at the end of the first quarter of 2018. The decrease mostly reflected the net cash used in operating activities.

Business Outlook

The following forward-looking statements reflect GigaMedia's expectations as of May 2, 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.

 "While we feel quite positive about the new licensed game we just launched in early April 2019," said CEO James Huang, "we believe the strategy of in-house developing own offerings and creating customer value is of vital importance for GigaMedia's future."

"At the same time, we keep seeking strategic investment targets with expertise of AI or big data," said CEO James Huang. "These technologies are changing the world with enormous potentials of enhancing efficiencies, unlocking hidden values, or even creating new businesses. With such a strategic investment, we can exploit our techniques of data analytics at exploring applications of these technologies. Such an investment also presents synergies for elevating our customer experiences and extracting value from our vast database."

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

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 first 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. GigaMedia's digital entertainment service business develops and operates a suite of digital entertainments in Taiwan and Hong Kong, with focus on browser/mobile games and casual games. 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 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




3/31/2019



12/31/2018





3/31/2018




unaudited



unaudited





unaudited




USD



USD





USD


Operating revenues















Digital entertainment service revenues



1,483,233




1,618,931






2,160,466


Operating costs















Cost of digital entertainment service revenues



744,901




739,324






946,688


Gross profit



738,332




879,607






1,213,778


Operating expenses















Product development and engineering expenses



320,494




215,625






289,171


Selling and marketing expenses



526,003




576,256






996,751


General and administrative expenses



835,987




860,903






896,504


Impairment losses






243,966







Other



5,214




3,946






6,494





1,687,698




1,900,696






2,188,920


Loss from operations



(949,366)




(1,021,089)






(975,142)


Non-operating income (expense)















Interest income



381,799




333,338






278,943


Foreign exchange (loss) gain - net



(11,402)




129,052






(158,912)


Other-net



46,912




56,162






2,346





417,309




518,552






122,377


Loss before income taxes



(532,057)




(502,537)






(852,765)


Income tax benefit (expense)












Net loss attributable to shareholders of GigaMedia



(532,057)




(502,537)






(852,765)

















Loss per share attributable to GigaMedia















Basic:



(0.05)




(0.05)






(0.08)


Diluted:



(0.05)




(0.05)






(0.08)

















Weighted average shares outstanding:















Basic



11,052,235




11,052,235






11,052,235


Diluted



11,052,235




11,052,235






11,052,235


 

GIGAMEDIA LIMITED
CONSOLIDATED BALANCE SHEETS














3/31/2019



12/31/2018



3/31/2018




unaudited



audited



unaudited




USD



USD



USD


Assets













Current assets













Cash and cash equivalents



57,976,503




59,307,829




62,111,308


Accounts receivable - net



589,520




523,004




626,225


Prepaid expenses



208,919




122,434




384,051


Restricted cash



517,815




517,815




506,981


Other receivables



375,192




2,998




314,331


Other current assets



127,377




120,802




140,241


Total current assets



59,795,326




60,594,882




64,083,137















Property, plant & equipment - net



100,148




121,585




203,992


Intangible assets - net



32,492




37,726




9,353


Prepaid licensing and royalty fees



383,681




435,156




993,833


Other assets



1,034,278




255,604




289,821


Total assets



61,345,925




61,444,953




65,580,136















Liabilities and equity













Accounts payable



98,921




104,030




364,977


Accrued compensation



134,243




170,470




207,524


Accrued expenses



1,228,483




1,262,707




2,148,836


Unearned revenue



1,290,792




1,369,769




1,845,355


Other current liabilities



177,073




366,167




336,062


Total current liabilities



2,929,512




3,273,143




4,902,754


Other liabilities



779,919








Total liabilities



3,709,431




3,273,143




4,902,754


Total GigaMedia's shareholders' equity



57,636,494




58,171,810




60,677,382


Total liabilities and equity



61,345,925




61,444,953




65,580,136


 

GIGAMEDIA LIMITED
Reconciliations of Non-GAAP Results of Operations






Three months ended




3/31/2019



12/31/2018



3/31/2018




unaudited



unaudited



unaudited




USD



USD



USD


Reconciliation of Net Loss to EBITDA













Net loss attributable to GigaMedia



(532,057)




(502,537)




(852,765)


Depreciation



25,388




25,301




23,454


Amortization



12,899




4,137




3,828


Interest income



(381,799)




(333,338)




(278,943)


Interest expense










Income tax (benefit) expense










EBITDA



(875,569)




(806,437)




(1,104,426)


Cision

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