RealNetworks : November 2020 Investor Presentation
11/13/2020 | 01:21pm EST
Investor Presentation | November 2020
Safe harbor statement
This presentation contains forward-looking statements that involve risks and uncertainties, including statements relating to our current expectations regarding our future growth, profitability, and market position, our financial condition and liquidity, our strategic focus and initiatives, product plans, agreements with partners, and expectations and contingencies relating to the sale of Napster. All statements contained in this presentation that do not relate to matters of historical fact should be considered forward-looking statements. These statements reflect our expectations as of today, and actual results may differ materially from the results predicted. Factors that could cause actual results for RealNetworks, on a consolidated basis, to differ from the results predicted include: our ability to realize operating efficiencies, growth and other benefits from the implementation of our growth initiatives and restructuring efforts; cash usage and conservation, and the pursuit of additional funding sources; successful monetization of our products and services; competitive risks, including the emergence or growth of competing technologies, products and services; potential outcomes and effects of claims and legal proceedings; risks associated with key customer or strategic relationships and business acquisitions; challenges caused by the COVID-19 pandemic; disruptions in the global financial markets, including changes in consumer spending and impacts to credit availability; fluctuations in foreign currencies; and unique risk factors that relate to our Napster segment, such as risks stemming from its streaming music service and related music royalties. More information about potential risk factors that could affect our business and financial results is included in RealNetworks' annual report on Form 10-K for the most recent year ended December 31, 2019, its quarterly reports on Form 10-Q and in other reports and documents filed by RealNetworks from time to time with the Securities and Exchange Commission. The preparation of our financial statements and forward-looking financial guidance requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, and revenues and expenses during the reported period. Actual results may differ materially from these estimates under different assumptions or conditions. RealNetworks assumes no obligation to update any forward-looking statements or information, which are in effect as of their respective dates.
SAFR™, Kontxt™, RealMedia® HD, RealPlayer®, GameHouse®, RealVideo®, RealAudio®, RealTimes®, LISTEN®, and other trademarks of
ours are used throughout this presentation.
SLIDE | 2
About us
RealNetworks, the inventor of the streaming media category, creates next-generation products that employ best-in-class artificial intelligence and machine learning to enhance and secure our daily lives.
SLIDE | 3
Investment highlights
Emerging turnaround story
Continued legacy of innovation
Diverse business portfolio
Promising new products in market to drive top-line growth
Fostering worldwide technology and distribution partnerships
Aligning and rightsizing business operations to enhance profitability
SLIDE | 4
2002
1995
Helix DNA
RealAudio brings
1998
transcodes media
streaming audio to
into multiple
the web
RealJukebox lets
formats
2007
The streaming
users download
Ringback Tones
First DVR-like
media category is
and manage digital
enhance the
recording of
born
music
mobile experience
internet video
2015
RealTimes uses AI to
2020
automate the creation of
2018
sharable videos from photo
Rhapsody
libraries
SAFR facial
acquisition by
MelodyVR Group
GameHouse Original Stories
recognition offers
PLC announced
brings unique narrative
advanced AI to
and supported by
games to engage and
improve secure access
RealNetworks
entertain
and convenience
1997
2000
2003
RealVideo brings
First video
Rhapsody is the
mainstream TV to
streaming
first music
the internet
subscription
subscription
service
service to stream
music from the top
five labels
A legacy of innovation
2013
2017
RealPlayer Cloud
Kontxt AI gives mobile
lets users move,
carriers class-of-service
watch, and share
message handling
video content
RealMedia HD next-
LISTEN offers
generation codec achieves
more ways to use
unprecedented size and
ringback tones
quality with 4K video
streaming
2019
Rhapsody became majority owned by RealNetworks after it doubled its stake to become 84% owner of Napster
SLIDE | 5
A diversified business portfolio
The premier facial recognition platform for live video in the real world
Intelligent message classification and analysis to drive new revenue and stop spam
High quality, low overhead 8K video codec delivered to any screen without taxing networks, bandwidth, or batteries
Original subscription and free-to-play mobile games to engage and entertain
Napster is a music and audio streaming platform that provides consumer subscriptions and a B2B platform as a service
Also: Inter Carrier Messaging, Ringback Tones
MOBILE SERVICES
Also: RealPlayer, RMVB
CONSUMER MEDIA
Also: Zylom.com
GAMES
DIGITAL MUSIC
SLIDE | 6
The premier facial recognition platform for live video in the real world
SAFR ranks as one of the fastest and most accurate facial recognition systems in the world
SAFR is a top growth focus for RealNetworks
Focused primarily on the traditional security and safety markets
Creating innovations focused on new needs at the intersection of public health and public safety
The facial recognition market is expected to grow by an average of 21.3% over the next four years, to $9.6 billion by 2022*
Best-in-class streaming media codec delivering crystal-clear 8K video at half the bitrate, allowing crisp and smooth playback on any device
Ideal balance of quality vs. efficiency
Higher compression efficiency, faster encoding time, and lower costs
Mobile friendly, with low CPU consumption
Commercial deployment in China with CIBN OTT TV, reaching 110 million subscribers
SLIDE | 9
A unique category of narrative games with rich character development and engaging storylines
Growth continues to be driven by the success of free- to-play casual mobile games
Three live free-to play games in market
Two new games in development
40+ story games
Four wholly owned studios
160+ million downloads
3 million players per month
$70M in mobile revenue
SLIDE | 10
RealNetworks announced support for the acquisition of Rhapsody International, Inc., which does business as Napster, by MelodyVR Group PLC on August 24, 2020
RealNetworks is the majority owner of Napster, with an approximate 84% stake
Transaction value: $70M (comprising payment by MelodyVR of $26.3M in combined cash and MelodyVR stock at closing, and assumption by MelodyVR of approximately $44M in Napster liabilities)
Consideration payable to RealNetworks is subject to several factors, including deal costs, Napster repaying $3.9 million in debt, an escrow of $3.0 million, the mix of cash vs Melody stock and the market value of that stock, and payment to Columbus Nova that's tied to the January 2019 acquisition of CN's stake in Napster.
The acquisition is expected to close in the fourth quarter of 2020
The Napster platform began
2020 with over 3 million users on four continents, delivering more than 90 million licensed tracks to consumers and the many B2B and Platform-as-a- Service partners. It served
10.8 billion streams in 2019 with revenues of $113 million.
SLIDE | 11
Quarterly revenue by business
$10.0
6.9 7.2
7.5
7.6
7.0
6.9
6.9
6.3 6.6
6.7 6.6
6.5
6.4
Millions
6.0
5.6
5.7
$5.0
4.4
$
4.1
3.6
3.5
3.2
2.5
2.6
2.5
$0.0
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
Consumer Media
Mobile Services
Games
Notes: In the third quarter of 2020, RealNetworks announced its support for the acquisition of Napster by MelodyVR Group. The transaction is expected to close in the fourth quarter of 2020. Napster is treated as a discontinued operation for accounting and disclosure purposes; therefore, results relate to the continuing operations of RealNetworks, which exclude Napster.
SLIDE | 12
Equity snapshot | Nasdaq: RNWK
Share Price(1):
$1.31
Shares Outstanding(2):
38.3M
Market Capitalization(1):
$50.1M
Net Debt(3):
($6.5)M
Enterprise Value(1):
$43.7M
Values for Share Price, Market Capitalization and Enterprise Value are based off the closing share price on FactSet on November 4, 2020.
Shares Outstanding is the number of shares of RNWK Common Stock as of October 29, 2020, as reported on Form 10-Q for the Fiscal Quarter ended September 30, 2020.
Net Debt is total debt of $6.8M less the combined total of cash and cash equivalents of $13.2M, which is ($6.5)M, for the Fiscal Quarter ended September 30, 2020.
RealNetworks Inc. published this content on 13 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 November 2020 18:20:01 UTC
Canada
Deutschland
España
France
Italia
Schweiz (DE)
United Kingdom
Report
