omniture

GigaMedia Announces Fourth-Quarter and Full Year 2018 Financial Results

2019-04-03 21:00 10842

TAIPEI, Taiwan, April 3, 2019 /PRNewswire/ -- GigaMedia Limited (NASDAQ: GIGM) today announced its unaudited financial results for the fourth quarter and full year of 2018.

Highlights for Year Ended December 31, 2018

Besides continuing our efforts in improving productivity, in formulating GigaMedia's 2018 business plan, we conducted a comprehensive strategic business review. And it became clear that:

  • Compared to our in-house offerings, the operations of licensed games bear an uncompetitive cost structure where licensing costs and channel costs usually take a huge bite out of earnings, leaving little room for any marketing strategies.
  • The operations of licensed games are inherently dependent on the licensors and hard to take the initiative, and therefore often slow in responding to a fad, a market trend or even a permanent change in customers' preference.

Accordingly, in 2018 GigaMedia moved boldly forward to executing the strategy of optimizing our product portfolio by trimming off or terminating products or services that were below requirements, and introducing license game more selectively. On the other hand, we set in motion consolidating substantial resources for developing our own offerings, into which direct investment was more than $1 million during 2018.

"With the high margin of our in-house products, we are allowed latitude to act proactively for a flexible combination of marketing and promotional means to boost productivities," stated GigaMedia Limited CEO James Huang, "and for our own offerings, it is all the more essential and valuable to develop long-term customer relationships."

In 2018, we invested further to enhance CRM system, which will contribute to our operations in building up relationships, saving marketing costs, and creating capacity for providing augmented products and services. The cultivation of a loyal customer base will eventually further boost customer value and create revenues and profits.

Fourth Quarter and Full Year Overview

  • Consolidated 4Q revenues decreased 2.59% quarter-over-quarter and 20.17% year-over-year. Full year revenues decreased 38.77% to $7.1 million from $11.6 million in 2017.
  • Income from operations for 4Q was a loss of $1.0 million, representing a loss reduction from $1.5 million in 3Q, mainly due to a decrease in advertising expenses. Full year operating loss, if excluding impairment losses and gain on termination of agreement, was a loss of $4.6 million for 2018, representing a loss increase of $2.4 million from approximately $2.2 million for 2017.
  • The net asset value was approximately $5.26 per share as of the end of 2018.

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 Fourth Quarter

GIGAMEDIA 4Q18 UNAUDITED CONSOLIDATED FINANCIAL RESULTS

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


4Q18


3Q18


Change

(%)


4Q18


4Q17


Change

(%)

Revenues


1,619


1,662


-2.59%


1,619


2,028


-20.17%

Gross Profit


880


694


26.80%


880


1,007


-12.61%

Loss from Operations


(1,021)


(1,484)


NM


(1,021)


988


NM

Net Income (Loss) Attributable to GigaMedia


(503)


(1,083)


NM


(503)


1,070


NM

Net Income (Loss) Per Share Attributable to GigaMedia, Diluted


(0.05)


(0.10)


NM


(0.05)


0.10


NM

EBITDA (A)


(806)


(1,393)


NM


(806)


(785)


NM

Cash, Restricted Cash and Cash Equivalents


59,826


60,439


-1.01%


59,826


64,177


-6.78%


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.) 

Fourth-Quarter Financial Results

  • Consolidated revenues for the fourth quarter of 2018 slightly decreased by 2.59% quarter-on-quarter from $1.7 million to $1.6 million, and decreased by 20.17% year-over-year.
  • Consolidated loss from operation of the fourth quarter of 2018 was a loss of $1.0 million, compared to a loss of $ 1.5 million in the last quarter.
  • Consolidated net income of the fourth quarter of 2018 was a net loss of $0.5 million, with a loss reduction of $0.6 million from a net loss of $1.1 million in the last quarter.
  • Cash, restricted cash and cash equivalents at the end the fourth quarter of 2018 amounted to $59.8 million, which slightly decreased from $60.4 million at the end the third quarter of 2018.
  • Consolidated EBITDA for the fourth quarter of 2018 was a loss of $0.8 million compared to a loss of $1.4 million in the third quarter of 2018.

Financial Position

GigaMedia maintained its solid financial position. Cash, restricted cash and cash equivalents amounted to $59.8 million, or approximately $5.4 per share, along with zero bank loan and $58.2M of shareholders' equity, as of December 31, 2018.

 For the Full Year 2018

GIGAMEDIA FY18UNAUDITED CONSOLIDATED FINANCIAL RESULTS

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


FY18


FY17


Change

(%)

Revenues


7,101


11,596


-38.76%

Gross Profit


3,516


6,498


-45.89%

Loss from Operations


(4,823)


(490)


NM

Net Loss Attributable to GigaMedia


(3,193)


1,086


NM

Net Loss Per Share Attributable to GigaMedia, Diluted


(0.29)


0.10


NM

EBITDA (A)


(4,360)


(1,099)


NM

Cash, Restricted Cash and Cash Equivalents


59,826


64,177


-6.78%








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 year ended December 31, 2018 was $7.1 million, decreased from $11.6 million in the prior year.  
  • Consolidated loss from operations for 2018 was a loss of $4.8 million, compared to a loss of $0.5 million in the last year. The loss increase was mainly due to lower revenues in 2018, as well as a gain of $1.7 million on termination of licensing agreement was recognized in 2017.
  • Consolidated net Income (loss) for 2018 was a net loss of $3.2 million, compared to a net income of $1.1 million in the prior year. Earnings per share for 2018 was a loss of $0.29 per share, compared to a net income of $0.1 per share for the prior year.

Business Outlook

The following forward-looking statements reflect GigaMedia's expectations as of April 03, 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 2017 Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission as referenced below, actual results may differ materially.

We believe it is critical for us to adopt the strategy of developing in-house offerings and promoting customer relationships. We expect these endeavors will begin contributing to our productivities and profitability in the second half of 2019.

"Meanwhile, we keep seeking strategic investment targets with expertise of AI or big data, in order to strengthen our business and maximize shareholders' value," said GigaMedia CEO James Huang, "Such a capacity presents synergies for us in elevating customer experiences and refining our data analytics techniques of extracting value from our vast database."

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.

Q&A

For Q&A regarding the fourth quarter and full year 2018 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 in Taiwan and Hong Kong. GigaMedia's digital entertainment service business is an innovative leader in Asia with growing capabilities of development, distribution and operation of digital entertainments, as well as platform services for games with a focus on mobile games and casual games. More information on GigaMedia can be obtained from www.gigamedia.com.tw.

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 2018 and its other filings with the United States Securities and Exchange Commission.

 

GIGAMEDIA LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS




Three months ended

Twelve months ended



12/31/2018


09/30/2018


12/31/2017


12/31/2018


12/31/2017



unaudited


unaudited


unaudited


unaudited


audited



USD


USD


USD


USD


USD

Operating revenues











Digital entertainment service revenues


1,618,931


1,662,324


2,027,831


7,100,636


11,596,221

Other revenues








1,618,931


1,662,324


2,027,831


7,100,636


11,596,221

Operating costs











Cost of digital entertainment service revenues


739,324


968,442


1,020,993


3,584,875


5,098,495

Cost of other revenues








739,324


968,442


1,020,993


3,584,875


5,098,495

Gross profit


879,607


693,882


1,006,838


3,515,761


6,497,726

Operating expenses











Product development and engineering expenses


215,625


286,015


237,744


1,091,445


1,072,350

Selling and marketing expenses


576,256


963,444


745,169


3,296,636


3,992,351

General and administrative expenses


860,903


923,288


741,253


3,684,054


3,527,799

Impairment losses


243,966




243,966


Gain on termination of licensing agreement




(1,731,592)



(1,731,592)

Other


3,946


5,514


26,060


22,510


126,575



1,900,696


2,178,261


18,634


8,338,611


6,987,483

Income (loss) from operations


(1,021,089)


(1,484,379)


988,204


(4,822,850)


(489,757)

Non-operating income (expense)











Interest income


333,338


351,262


207,775


1,302,145


602,224

Gain on sales of marketable securities




1,618



1,618

Interest expense




(112)



(33,544)

Foreign exchange (loss) gain - net


129,052


49,285


(85,955)


266,255


(551,167)

(Loss) Gain on disposal of property, plant and equipment




(1)


31


962

Equity in net loss on equity method investments




(79)



(23,761)

Impairment loss on marketable securities and investments




(176)



(52,651)

Other - net


56,162


728


(1,712,323)


61,358


(38,702)



518,552


401,275


(1,589,253)


1,629,789


(95,021)

(Loss) income before income taxes


(502,537)


(1,083,104)


(601,049)


(3,193,061)


(584,778)

Income tax benefit (expense)




1,671,511



1,671,048

Net (loss) income attributable to shareholders of GigaMedia


(502,537)


(1,083,104)


1,070,462


(3,193,061)


1,086,270

(Loss) earnings per share attributable to GigaMedia











Basic:


(0.05)


(0.10)


0.10


(0.29)


0.10

Diluted:


(0.05)


(0.10)


0.10


(0.29)


0.10

Weighted average shares outstanding:











Basic


11,052,235


11,052,235


11,052,235


11,052,235


11,052,235

Diluted


11,052,235


11,052,235


11,052,235


11,052,235


11,052,235

 

GIGAMEDIA LIMITED

CONSOLIDATED BALANCE SHEETS




12/31/2018


09/30/2018


12/31/2017



unaudited


unaudited


audited



USD


USD


USD

Assets







Current assets







Cash and cash equivalents


59,307,829


59,923,784


63,670,458

Accounts receivable - net


523,004


835,013


751,114

Prepaid expenses


122,434


237,635


389,984

Restricted cash


517,815


514,770


506,981

Other receivables


2,998


316,540


67,884

Other current assets


120,802


129,114


124,595

Total current assets


60,594,882


61,956,856


65,511,016








Property, plant & equipment - net


121,585


147,600


157,730

Intangible assets - net


37,726


41,109


3,409

Prepaid licensing and royalty fees


435,156


1,097,911


458,914

Other assets


255,604


278,356


282,036

Total assets


61,444,953


63,521,832


66,413,105








Liabilities and equity







Short-term borrowings




Accounts payable


104,030


279,485


313,557

Accrued compensation


170,470


606,547


548,903

Accrued expenses


1,262,707


2,066,188


2,157,790

Unearned revenue


1,369,769


1,971,039


1,863,308

Other current liabilities


366,167


196,516


163,703

Total current and total liabilities


3,273,143


5,119,775


5,047,261

GigaMedia's shareholders' equity


58,171,810


58,402,057


61,365,844

Total liabilities and equity


61,444,953


63,521,832


66,413,105


 

 

GIGAMEDIA LIMITED

RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS




Three months ended

Twelve months ended



12/31/2018


9/30/2018


12/31/2017


12/31/2018


12/31/2017



unaudited


unaudited


unaudited


unaudited


unaudited



USD


USD


USD


USD


USD

Reconciliation of Net Income (Loss) to EBITDA











Net income (loss) attributable to GigaMedia


(502,537)


(1,083,104)


1,070,462


(3,193,061)


1,086,270

Depreciation


25,301


25,318


20,886


99,635


42,424

Amortization


4,137


16,516


3,315


36,013


12,419

Interest income


(333,338)


(351,262)


(207,775)


(1,302,145)


(602,224)

Interest expense




112



33,544

Income tax (benefit) expense




(1,671,511)



(1,671,048)

EBITDA


(806,437)


(1,392,532)


(784,511)


(4,359,558)


(1,098,615)

Cision View original content:http://www.prnewswire.com/news-releases/gigamedia-announces-fourth-quarter-and-full-year-2018-financial-results-300823843.html

Source: GigaMedia Limited
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