omniture

GigaMedia Announces Third-Quarter 2015 Financial Results

2015-11-04 23:00 1395

TAIPEI, Taiwan, November 4, 2015 /PRNewswire/ -- GigaMedia Limited (NASDAQ: GIGM) today announced its third-quarter 2015 unaudited financial results.

Message from Management

For the third quarter of 2015, the sales revenues were $2.0 million. The contribution made by the mobile games, the social casino games and the cloud computing business accounted for about 52.4%, 30.4% and 17.2% respectively.

In the third quarter, the Company streamlined the mobile gaming business. The Company reviewed all the existing games, halted the ones with weak monetization and repackaged the ones considered better monetization for re-launch. It is expected to see its margin improve by the end of this year.

In addition to the social casino games platform, it has started to hold the online qualifying tournaments of the World Series of Mahjong 2015. It is also a good opportunity to testify the quality and loading capacity of this in-house developed platform.

With regard to cloud computing business, for the nine months of 2015 compared with the same period of 2014, the business grew by approximately 128% and the gross loss narrowed. For the third quarter of 2015 compared with the previous quarter, although the business went down, the Company believes that the cloud computing business will outperform its last year performance.

Last but not least, due to the recent slowdown of global economy and stock market, management decided to terminate the acquisition of Strawberry Cosmetics. In consequence of the termination of the acquisition, the Company had to pay $2.0 million consideration to Strawberry Cosmetics as stated in the announcement dated October 7th, 2015 and the $2.0 million payment will impact its 4Q 2015 financial results.

Before the market rebounds, management will remain conservative in investment. At the present stage, management will make more effort to streamline the current operations, continue to maintain a healthy financial structure and meanwhile, look for other potential investment opportunities in Asia.

Consolidated Financial Results

GigaMedia Limited is a diversified provider of online games and cloud computing services. GigaMedia's online games business FunTown develops and operates a suite of games in Taiwan and Hong Kong, with focus on browser/mobile games and social casino games. GigaMedia's cloud computing business GigaCloud was launched in early April 2013 and is focused on providing small and medium-sized enterprises in Greater China with critical communications services and IT solutions that increase flexibility, efficiency and competitiveness.

Unaudited consolidated results of GigaMedia are summarized in the table below.

GIGAMEDIA 3Q15 UNAUDITED CONSOLIDATED FINANCIAL RESULTS

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

3Q15

2Q15

Change (%)

3Q15

3Q14

Change (%)

9M15

9M14

Change (%)

Revenues

2,006

2,728

-26.5%

2,006

2,472

-18.9%

7,895

7,119

10.9%

Gross Profit/ Loss

-598

217

-375.6%

-598

205

-391.7%

358

2,038

-82.4%

Loss from Operations

-5,240

-3,801

-37.9%

-5,240

-3,631

-44.3%

-12,457

-9,143

-36.2%

Net Income/ Loss Attributable to GigaMedia

-301

1,377

-121.9%

-301

-4,839

93.8%

6,315

-10,592

159.6%

Net Income/ Loss Per Share Attributable to GigaMedia, Diluted

-0.01

0.02

-150.0%

-0.01

-0.09

88.9%

0.11

-0.20

155.0%

EBITDA(A)

-207

1,463

-114.1%

-207

-4,589

95.5%

6,591

-9,844

167.0%

Cash and Marketable Securities-Current

74,824

68,305

9.5%

74,824

56,940

31.4%

74,824

56,940

31.4%

(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.)

Financial Highlights

9M2015

  • Operating revenues reached to $7.9 million, a 10.9% increase compared with the same period of 2014 attributable to the growth of cloud computing business.
  • Operating expenses increased resulting from an increase of selling and marketing expenses for more mobile games launched, particularly in the first half of 2015.
  • Net income was $6.3 million primarily due to the capital gain on disposal of marketable securities.

3Q2015

  • Consolidated revenues were $ 2.0 million, dropped by 26.5% quarter-on-quarter and 18.9% quarter-over-quarter respectively mainly due to a decline of the overall business.
  • Gross profit reported a loss of $0.6 million primarily resulting from the expenses associated with licensing fees and outsource.
  • Consolidated operating expenses were $4.6 million in 3Q15, up by 15.0% quarter-on-quarter and 21.0% quarter-over-quarter mainly due to an increase on general and administrative expenses, including the expenses related to Strawberry Cosmetics Acquisition Proposal.
  • Consolidated non-operating income was $5.0 million, slightly decreased by 2.8% due to investment loss recognized under equity method and foreign exchange loss.
  • Net loss was $0.3 million mainly due to a reduction of operating revenues and an increase of operating expenses.
  • Cash and cash equivalents in 3Q15 accounted for $74.8 million, increased by 9.5% from $68.3 million in 2Q15 resulting from a disposal of marketable securities-noncurrent.

Financial Position

GigaMedia maintained its solid financial position with cash and cash equivalents, marketable securities-current and restricted cash accounted for $75.8 million as of September 30, 2015, or approximately $1.37 per share. In consideration of short-term borrowings, its net cash was estimated at $70.0 million as of September 30, 2015, or approximately $1.27 per share.

Business Outlook

The following forward-looking statements reflect GigaMedia's expectations as of November 4, 2015. 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 2014 Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission as referenced below, actual results may differ materially.

The mobile gaming business has been underperforming. In the third quarter, we continued to work on the integration of the resources of our gaming business in Taiwan and Hong Kong in order to streamline the operations. We hope to see significant effect on the cost reduction and margin improvement in the next two quarters. Besides, the Company published a new popular game "Yume100" from Japan targeting teenage girls and young single women who really indulge into fanfiction and this game has high monetization in Japan. We expect it to have the same performance in Taiwan and Hong Kong markets by bringing stable revenues and creating margin. This game has been launched for about one month in Taiwan and Hong Kong and received a huge response from the players; moreover, achieved to break even upon the launch on the market.

In addition to social casino game platform, for the next quarter it will continue to hold the online qualifying tournaments for World Series of Mahjong 2015 until the land-based finals in Macau.

As for cloud computing business, the Company launched a new platform "Tesseratic" (http://www.tesseratic.com/index.php/en/) for the container cluster management on OpenStack, which is an integration solution with high availability, low cost on building and good scalability. The Company will increase its marketing events in order to have widespread promotion for this new platform on the market.

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.

Webcast Schedule

For Q&A regarding the third quarter 2015 performance upon the release, investors may send the questions via email to IR@gigamedia.com.tw by November 10, and the responses will be replied in the webcast. Webcast will be available on the company's official website www.gigamedia.com on November 20.

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 develops and operates a suite of games in Taiwan and Hong Kong, with focus on browser/mobile games and social casino games. The company's cloud computing business is focused on providing SMEs 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 2013 and its other filings with the United States Securities and Exchange Commission.

For further information contact:
Amanda Chang
Investor Relations Department
Tel: +886-2-2656-8080
amanda.chang@gigamedia.com.tw

(Tables to follow)

GIGAMEDIA LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS
















Three months ended

Nine months ended




9/30/2015


6/30/2015


9/30/2014


9/30/2015


9/30/2014




unaudited


unaudited


unaudited


unaudited


unaudited




USD


USD


USD


USD


USD

Operating revenues












Asian online game and service revenues



1,660,013


2,014,922


2,237,498


6,393,327


6,459,770

Other revenues



345,516


712,646


234,987


1,501,854


658,819




2,005,529


2,727,568


2,472,485


7,895,181


7,118,589













Operating costs












Cost of Asian online game and service revenues



2,230,148


1,777,811


1,972,295


5,974,124


4,176,186

Cost of other revenues



373,245


732,775


294,982


1,563,539


904,102




2,603,393


2,510,586


2,267,277


7,537,663


5,080,288













Gross profit (loss)



(597,864)


216,982


205,208


357,518


2,038,301













Operating expenses












Product development and engineering expenses



151,621


164,085


197,745


497,413


671,583

Selling and marketing expenses



1,649,356


2,262,207


1,759,991


6,598,679


5,009,682

General and administrative expenses



1,997,787


1,265,399


1,878,580


4,549,022


5,500,141

Impairment losses



805,746


0


0


805,746


0

Other



37,291


326,594


0


363,885


0




4,641,801


4,018,285


3,836,316


12,814,745


11,181,406













Loss from operations



(5,239,665)


(3,801,303)


(3,631,108)


(12,457,227)


(9,143,105)













Non-operating income (expense)












Interest income



62,153


106,324


187,194


271,006


535,584

Gain on sales of marketable securities



5,844,306


4,703,500


2,447,065


20,020,869


2,609,357

Interest expense



(24,142)


(48,224)


(78,714)


(154,479)


(162,694)

Foreign exchange (loss) gain - net



(346,248)


(17,655)


20,058


(380,146)


(311,755)

Equity in net (loss) earnings on equity method investments



(615,990)


22,954


(3,848,048)


(552,936)


(4,069,323)

Changes in the fair value of an instrument recognized at fair value



637


879,472


0


(71,552)


0

Gain on disposal of investments



37,364


0


0


37,364


0

Other



33,477


(508,926)


22,550


(457,074)


98,395




4,991,557


5,137,445


(1,249,895)


18,713,052


(1,300,436)













(Loss) Income from continuing operations before income taxes



(248,108)


1,336,142


(4,881,003)


6,255,825


(10,443,541)

Income tax (expense) benefit



(125)


170


125


13,396


60,254













(Loss) Income from continuing operations



(248,233)


1,336,312


(4,880,878)


6,269,221


(10,383,287)













Net (loss) income



(248,233)


1,336,312


(4,880,878)


6,269,221


(10,383,287)

Less: Net (income) loss attributable to noncontrolling interest



(53,111)


40,525


41,966


45,545


(208,419)













Net (loss) income attributable to shareholders of GigaMedia



(301,344)


1,376,837


(4,838,912)


6,314,766


(10,591,706)

























(Loss) earnings per share attributable to GigaMedia












Basic:












(Loss) income from continuing operations



(0.01)


0.02


(0.09)


0.11


(0.20)

Loss from discontinued operations



0.00


0.00


0.00


0.00


0.00




(0.01)


0.02


(0.09)


0.11


(0.20)

Diluted:












(Loss) income from continuing operations



(0.01)


0.02


(0.09)


0.11


(0.20)

Loss from discontinued operations



0.00


0.00


0.00


0.00


0.00




(0.01)


0.02


(0.09)


0.11


(0.20)













Weighted average shares outstanding:












Basic



55,261,661


55,261,661


55,261,661


55,261,661


53,477,178

Diluted



55,261,661


55,262,036


55,261,661


55,261,873


53,477,178

GIGAMEDIA LIMITED

CONSOLIDATED BALANCE SHEETS












9/30/2015


6/30/2015


9/30/2014




unaudited


unaudited


unaudited




USD


USD


USD

Assets








Current assets








Cash and cash equivalents


74,818,341


68,299,828


38,899,281

Marketable securities - current


5,307


5,307


18,041,022

Accounts receivable - net


982,186


1,675,561


1,327,883

Prepaid expenses


420,918


1,019,249


534,534

Restricted cash



1,000,000


1,000,000


9,006,571

Other receivables


74,327


186,994


2,739,712

Other current assets


258,117


273,500


166,917

Total current assets


77,559,196


72,460,439


70,715,920









Marketable securities - noncurrent


0


4,744,000


9,073,630

Investments



5,798,904


6,740,252


20,775,344

Property, plant & equipment - net


1,502,697


1,675,312


1,753,309

Intangible assets - net


137,532


206,780


592,482

Prepaid licensing and royalty fees


3,150,519


5,026,779


5,061,593

Other assets



333,006


369,685


309,549

Total assets



88,481,854


91,223,247


108,281,827









Liabilities and equity







Short-term borrowings


5,780,347


4,536,617


19,395,135

Accounts payable


280,738


557,599


453,885

Accrued compensation


672,966


464,384


1,144,451

Accrued expenses


2,233,313


3,739,583


2,508,376

Unearned revenue


1,591,386


1,673,170


2,172,611

Other current liabilities


1,632,963


1,800,582


3,781,432

Total current liabilities


12,191,713


12,771,935


29,455,890

Other liabilities



1,937,864


1,933,173


181,193

Total liabilities



14,129,577


14,705,108


29,637,083

GigaMedia's shareholders' equity


74,352,277


76,607,057


78,589,516

Noncontrolling interest


0


(88,918)


55,228

Total equity



74,352,277


76,518,139


78,644,744









Total liabilities and equity


88,481,854


91,223,247


108,281,827

GIGAMEDIA LIMITED




Reconciliations of Non-GAAP Results of Operations

















Three months ended

Nine months ended



9/30/2015


6/30/2015


9/30/2014


9/30/2015


9/30/2014



unaudited


unaudited


unaudited


unaudited


unaudited



USD


USD


USD


USD


USD

Reconciliation of Net Income (Loss) to EBITDA






















Net income (loss) attributable to GigaMedia


(301,344)


1,376,837


(4,838,912)


6,314,766


(10,591,706)

Depreciation


73,079


80,296


76,182


227,587


229,470

Amortization


59,838


64,129


282,115


179,283


951,569

Interest income


(62,153)


(106,302)


(187,194)


(270,985)


(535,383)

Interest expense


23,934


47,975


78,714


154,011


162,694

Income tax (benefit) expense


125


(170)


(125)


(13,396)


(60,254)

EBITDA


(206,521)


1,462,765


(4,589,220)


6,591,266


(9,843,610)

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/gigamedia-announces-third-quarter-2015-financial-results-300172207.html

Source: GigaMedia Limited
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