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GigaMedia Announces Second-Quarter 2017 Financial Results

  (July 31, 2017)

TAIPEI, Taiwan, July 31, 2017 /PRNewswire/ -- GigaMedia Limited (NASDAQ: GIGM) today announced its second-quarter 2017 unaudited financial results.

Comments from Management

In the second quarter, the Company went through the transition to a new CEO and the Management has been reviewing the business strategies.


"In the past years, we could see some big fluctuation in traffic for social games. In order not to make our business seems like it's on the roller coaster, we now focus on seeking licensed games which have the potentials to be long-term hits instead of the ones live shortly like a flash in the pan.

GigaMedia will launch a new game this year and we are looking forward to improving performance and delivering positive operating income from mobile games which have long lifespan." said GigaMedia Limited Chief Executive Officer James Huang.

Second Quarter Overview

  • Comparing with the same quarter of 2016, operating revenue increased 51% and the gross profit increased 65.5% this quarter.
  • $1.75 million was received for transferring the license right of ArcheAge to XL Games Inc. and recorded in the non-operating income.
  • Cash flow from operation was with a net inflow of $1 million.
  • Total current assets increased $0.5 million and the total assets remain $70 million quarter-on-quarter.
  • Short-term debt remained the same amount at approximately $2.6 million comparing with the first quarter of 2017 and showed a decrease of almost $3 million comparing with the same quarter of 2016.
  • The net asset value was $5.4 per share.

Unaudited Consolidated Financial Results

GigaMedia Limited is a diversified provider of online games. 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.

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

GIGAMEDIA2Q17 UNAUDITED CONSOLIDATED FINANCIAL RESULTS

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


2Q17


1Q17


Change
(%)


2Q17


2Q16


Change
(%)

Revenues


3,117


4,147


-24.84%


3,117


2,062


51.16%

Gross Profit


1,751


2,282


-23.27%


1,751


1,058


65.50%

Loss from Operations


734


429


NM


734


1,283


NM

Net Income (Loss) Attributable to GigaMedia


904


(760)


NM


904


(2,146)


NM

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


0.08


(0.07)


NM


0.08


(0.19)


NM

EBITDA (A)


812


(821)


NM


812


(2,144)


NM

Cash and Marketable Securities-Current


66,452


65,354


1.68%


66,452


70,585


-5.86%

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.) 

Second-Quarter Financial Results

  • Consolidated revenues for the second quarter of 2017 decreased 24.8% quarter-on-quarter from $4.1 million to $3.1 million and increased 51.2% year-over-year from $2 million to $3.1 million.
  • Consolidated gross profit decreased 23.3% quarter-on-quarter from $2.3 million to $1.8 million and increased 65.5% year-over-year from $1.1 million to $1.8 million.
  • Consolidated operating expenses were $2.5 million in the second quarter of 2017. A decrease of $0.2 million from the first quarter of 2017 which reflected the decease of selling and marketing expense.
  • Consolidated loss from operation of the second quarter of 2017 was $0.7 million, slightly increased from the first quarter of 2017. The increased loss reflected lower proportions of game business revenues. However, a decrease of $0.5 million was seen in year-over-year comparison, the loss was down to $0.7 million from $1.3 million.
  • Consolidated non-operating income during the second quarter of 2017 was $1.6 million compared to a loss of $0.3 million in the first quarter of 2017 and $0.9 million in the second quarter of 2016. Results in the second quarter of 2017 primarily included gains from the transaction of ArcheAge.
  • Consolidated net income of the second quarter of 2017 was $0.9 million compared to a loss of $0.8 million in the first quarter of 2017 and a loss of $2.1 million in the second quarter of 2016. The period variations primarily reflected the factors affecting income from operations and consolidated non-operating income.
  • Cash and marketable securities-current in the second quarter of 2017 accounted for $66.5 million which increased 1.68% from the first quarter of 2017.

Financial Position

GigaMedia maintained its solid financial position with cash and cash equivalents, marketable securities-current and restricted cash accounted for $67 million as of June 30, 2017, or $6 per share.

Business Outlook

The following forward-looking statements reflect GigaMedia's expectations as of July 31, 2017. 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 2016 Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission as referenced below, actual results may differ materially.

Online Games Business

GigaMedia is repositioning its online games business to align itself with steady growth in licensed games. The Company is focusing on licensing in long-lifecycle games which allow us to build up communities, network our customers and accumulate games awareness; hence we will be able to maintain the stability in revenues. Management also targets to launch a new licensed game this year.

As for social games, the Company continues upgrading game server system and integrating the game development environment to enhance efficiencies and strengthen operations. One new slot game is targeted to launch in the third quarter.

Investment

The Company continues seeking suitable strategic investment and acquisition targets with sustainable business models worldwide to increase corporate growth and maximize shareholder value.

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 second quarter 2017 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 online games. 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. 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 2017 and its other filings with the United States Securities and Exchange Commission.

GIGAMEDIA LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS



Three months ended



6/30/2017


03/31/2017


6/30/2016



unaudited


unaudited


unaudited



USD


USD


USD

Operating revenues







Asian online game and service revenues


3,117,035


4,147,068


2,061,392

Other revenues


-


-


283



3,117,035


4,147,068


2,061,675

Operating costs







Cost of Asian online game and service revenues


1,366,009


1,864,588


1,003,828

Cost of other revenues


-


-


296



1,366,009


1,864,588


1,004,124

Gross profit


1,751,026


2,282,480


1,057,551

Operating expenses







Product development and engineering expenses


288,371


276,697


167,563

Selling and marketing expenses


1,174,915


1,470,628


1,426,594

General and administrative expenses


1,021,624


964,524


746,910

Other


-


-


-



2,484,910


2,711,849


2,341,067

Loss from operations


(733,884)


(429,369)


(1,283,516)

Non-operating income (expense)







Interest income


108,580


77,174


80,925

Interest expense


(11,717)


(11,730)


(25,981)

Foreign exchange (loss) gain - net


(74,523)


(377,450)


(94,062)

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


965


-


8,090

Equity in net loss on equity method investments


(311)


(23,265)


(858,492)

Gain on disposal of investments


-


-


8,567

Impairment loss on marketable securities and investments


(52,242)


-


-

Other - net


1,667,257


5,501


15,237



1,638,009


(329,770)


(865,716)

(Loss) Income from continuing operations before income taxes


904,125


(759,139)


(2,149,232)

Income tax benefit (expense)


-


(456)


2,961

(Loss) Income from continuing operations


904,125


(759,595)


(2,146,271)

Net (loss) income


904,125


(759,595)


(2,149,271)

Less: Net loss attributable to noncontrolling interest




-


-

Net (loss) income attributable to shareholders of GigaMedia


904,125


(759,595)


(2,149,271)

(Loss) Earnings per share attributable to GigaMedia







Basic:







(Loss) Income from continuing operations


0.08


(0.07)


(0.19)

Loss from discontinued operations


0.00


0.00


0.00



0.08


(0.07)


(0.19)

Diluted:







(Loss) Income from continuing operations


0.08


(0.07)


(0.19)

Loss from discontinued operations


0.00


0.00


0.00



0.08


(0.07)


(0.19)

Weighted average shares outstanding:







Basic


11,052,235


11,052,235


11,052,332

Diluted


11,052,235


11,052,235


11,052,235

 

GIGAMEDIA LIMITED

CONSOLIDATED BALANCE SHEETS



6/30/2017


3/31/2017


6/30/2016



unaudited


audited


unaudited



USD


USD


USD

Assets







Current assets







Cash and cash equivalents


66,449,544


65,351,207


70,581,209

Marketable securities - current


2,617


2,617


3,830

Accounts receivable - net


724,508


1,247,420


820,603

Prepaid expenses


510,432


493,229


488,851

Restricted cash


503,640


500,000


1,004,110

Other receivables


913,366


949,225


30,059

Other current assets


146,242


176,686


192,924

Total current assets


69,250,349


68,720,384


73,121,586








Marketable securities - noncurrent







Investments


-


52,790


3,720,766

Property, plant & equipment - net


29,445


22,434


400,831

Intangible assets - net


4,848


4,824


111,064

Prepaid licensing and royalty fees


389,886


904,404


912,055

Other assets


384,468


367,749


414,857

Total assets


70,058,996


70,072,585


78,681,159








Liabilities and equity







Short-term borrowings


2,629,849


2,637,652


5,577,072

Accounts payable


291,215


434,631


272,203

Accrued compensation


375,393


225,287


392,706

Accrued expenses


2,628,643


3,332,207


2,560,114

Unearned revenue


2,111,474


2,150,001


1,661,640

Other current liabilities


169,352


404,262


1,614,011

Total current liabilities


8,205,926


9,184,040


12,077,746

Other liabilities


1,671,511


1,671,511


1,712,015

Total liabilities


9,877,437


10,855,551


13,789,761

GigaMedia's shareholders' equity


60,181,559


59,217,034


64,891,398

Noncontrolling interest


-


-


-

Total equity


60,181,559


59,217,034


64,891,398

Total liabilities and equity


70,058,996


70,072,585


78,681,159

 

GIGAMEDIA LIMITED

RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS



Three months ended



6/30/2017


3/31/2017


6/30/2016



unaudited


unaudited


unaudited



USD


USD


USD

Reconciliation of Net Income (Loss) to EBITDA







Net income (loss) attributable to GigaMedia


904,125


(759,595)


(2,146,271)

Depreciation


1,657


953


29,306

Amortization


3,005


2,798


30,947

Interest income


(108,580)


(77,174)


(80,925)

Interest expense


11,717


11,730


25,981

Income tax (benefit) expense


-


456


(2,961)

EBITDA


811,924


(820,832)


(2,143,923)

For further information contact:

Annie Sun
Investor Relations Department
Country/City Code 8862 Tel: 2656-8096
IR@gigamedia.com.tw

View original content:http://www.prnewswire.com/news-releases/gigamedia-announces-second-quarter-2017-financial-results-300496493.html

SOURCE GigaMedia

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