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MarketScreener Homepage  >  Equities  >  Nasdaq  >  RealNetworks, Inc.    RNWK

REALNETWORKS, INC.

(RNWK)
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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*

*Allied Market Research

SLIDE | 7

Intelligent message classification and analysis to drive new revenue and stop spam

  • Unmanaged mobile message delivery represents estimated carrier revenue loss of $15 billion annually
  • Yearly A2P message volume will surge to 3.5 trillion by 2023*
  • Enables new carrier service tiers and revenue streams eg 10DLC services in USA
  • Next-generationspam filtering and gray route protection

*According to Juniper Research https://www.juniperresearch.com/press/press-releases/a2p-business-messages-to-reach-3-5-tn-2023

Traffic Analytics

Inline Spam Detection

Revenue growth enablement

Content Classification

Offline Spam Detection

Antispam

Clustering

Smishing Detection

Policy Control

Compliance

MSISDN Registry

SLIDE | 8

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

  1. Values for Share Price, Market Capitalization and Enterprise Value are based off the closing share price on FactSet on November 4, 2020.
  2. 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.
  3. 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.

SLIDE | 13

Executive Management

Rob Glaser

Mike Ensing

Judd Lee

Michael Parham

Founder, Chairman and CEO

President and COO

SVP, CFO

SVP, General Counsel

Mr. Glaser has long been intrigued with

Mr. Ensing joined RealNetworks in

Mr. Lee serves as SVP, CFO, and

Mr. Parham has served as

the nexus of media, computing, and

August 2020 as President and COO.

Treasurer of RealNetworks since April

RealNetworks' General Counsel and

communications. Since founding Real

He served as RealNetworks' interim

2020. Mr. Lee worked as an

Corporate Secretary since August

in 1994, Mr. Glaser has played an

CFO and a strategic advisor from

independent consultant from March

2012, and previously had served as

integral role in the transformation of the

January through early May 2020. Mr.

2019 until joining Real, prior to which

Associate General Counsel since

internet into the next great mass

Ensing is a skilled business leader with

he was CFO of desktop virtualization

January 2004. Prior to joining

medium. By creating innovative

over 25 years of experience in

provider Parallels Inc. from November

RealNetworks in March 2000, Mr.

technology and services that make it

executive finance and operations at

2016 until March 2019, after its

Parham was an attorney with IBM,

easy for people to connect with and

large-scale organizations.

December 2018 sale to Corel

serving as Regional Counsel for IBM's

enjoy digital media, RealNetworks and

Corporation.

Midwest region in Chicago.

Mr. Glaser are at the forefront of the

digital media revolution.

SLIDE | 14

Board of Directors

Rob Glaser

Bruce Jaffe

Chris Jones

Dawn G. Lepore

Mr. Glaser has long been intrigued with

Mr. Jaffe has been a director of

Mr. Jones has been a director of

Ms. Lepore has been a director of

the nexus of media, computing, and

RealNetworks since October 2015. He

RealNetworks since 2016. He currently

RealNetworks since October 2013. Ms.

communications. Since founding Real in

is a consultant and investor with Three

serves as SVP of Product for Amperity,

Lepore served as interim Chief

1994, Mr. Glaser has played an integral

Point Group, LLC, which he founded in

Inc., a privately held company providing

Executive Officer of Prosper

role in the transformation of the internet

2008 and which focuses on early stage

the world's first intelligent customer data

Marketplace, Inc., a privately held peer-

into the next great mass medium. By

and growth technology companies.

platform.

to-peer lending marketplace, from

creating innovative technology and

March 2012 to January 2013.

services that make it easy for people to

connect with and enjoy digital media,

RealNetworks and Mr. Glaser are at the

forefront of the digital media revolution.

Erik Prusch

Michael Slade

Tim Wan

Mr. Prusch has been a director of

Mr. Slade has been a director of

Mr. Wan has been a director of

RealNetworks since December 2019. He

RealNetworks since November 2011. Mr.

RealNetworks since December 2019. He

has served as Chief Executive Officer at

Slade is a co-founder of Second Avenue

is currently the Chief Financial Officer at

several companies, including Harland

Partners, a provider of management,

Asana, Inc., a publicly traded company

Clarke Holdings Corp., Outerwall Inc.

strategy and capital for early stage

that develops and offers a SaaS-based

(formerly, Coinstar, Inc.), NetMotion

companies, where he has served as a

work management platform.

Wireless, Inc., Lumension Security, Inc.,

partner since 2000.

Clearwire Corporation, and Borland

Software Corporation.

SLIDE | 15

Disclaimer

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


© Publicnow 2020
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Financials (USD)
Sales 2019 172 M - -
Net income 2019 -20,0 M - -
Net Debt 2019 7,70 M - -
P/E ratio 2019 -2,26x
Yield 2019 -
Capitalization 97,2 M 97,2 M -
EV / Sales 2018 0,74x
EV / Sales 2019 0,31x
Nbr of Employees 453
Free-Float 54,4%
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Income Statement Evolution
Managers and Directors
NameTitle
Robert Glaser Chairman & Chief Executive Officer
Michael J. Ensing President & Chief Operating Officer
Judd Charles Lee Chief Financial Officer
Mike B. Slade Independent Director
Dawn G. Lepore Independent Director
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