GigaMedia Announces Fourth-Quarter and Full Year 2019 Financial Results

TAIPEI, April 7, 2020 /PRNewswire/ — GigaMedia Limited (NASDAQ: GIGM) today announced its unaudited financial results for the fourth quarter and full year of 2019.

Highlights for Year Ended December 31, 2019

For 2019, GigaMedia reported revenues of $6.6 million, with a gross profit of $3.6 million, an operating loss of $2.9 million and the net loss of $1.5 million.

“In spite of the mild decrease in revenues,” said GigaMedia CEO James Huang, “in 2019 we continued improving our cost structure through strategic cost management, and applied effective KPIs to drive performance of departments across our Company.”

Compared to the prior year, the 2019 results exhibited overall improvements. Our gross margin rate has risen by 4.4% to 53.9% from 49.5% in 2018, and consequently the gross profit was even slightly higher than $3.5 million in the prior year, in spite of the decrease in revenues. The loss from operations was also cut by 40.1% from $4.8 million in 2018, and the net loss approximately halved.

“In the past year of 2019, we kept emphasizing on developing our in-house offerings,” continued GigaMedia CEO James Huang, “and in the fourth quarter, our new mobile platform of casual games passed the closed and open beta testing tracks. It is now in trial operations, through which we are establishing marketing rhythm, expanding product lines, and strengthening customer’s loyalty.”

As for the current coronavirus (COVID-19) pandemic, CEO James Huang said, “While the virus ravages many countries in the world, our operations in Taiwan and Hong Kong have so far not been affected severely. Nonetheless, we have implemented strict hygiene and social distancing practices in our daily operations in order to protect the safety and health of our employees. We have also drawn up a contingency plan to ensure our business continuity against the escalating coronavirus situation.”

Fourth Quarter and Full Year Overview

  • Consolidated 4Q revenues decreased 21.2% quarter-on-quarter, mainly due to seasonality. The year-over-year comparison was a decrease of 7.1%, mainly in licensed games, partly offset by increase in in-house casual games. Full year revenues decreased 6.4% to $6.6 million from $7.1 million in 2018.
  • Loss from operations for 4Q was $0.3 million, representing a loss reduction from $0.5 million in 3Q, mainly due to a decrease in general and administrative expenses. Full year operating loss was $2.9 million, representing a loss reduction of $1.9 million from approximately $4.8 million for 2018.
  • The net asset value was approximately $5.04 per share as of the end of 2019.

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 mobile games and casual games.

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

For the Full Year 2019

GIGAMEDIA FY19 UNAUDITED CONSOLIDATED FINANCIAL RESULTS

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

FY19

FY18

Change

(%)

Revenues

6,645

7,101

-6.4

%

Gross Profit

3,581

3,516

1.8

%

Loss from Operations

(2,891)

(4,823)

NM

Net Loss Attributable to GigaMedia

(1,535)

(3,193)

NM

Net Loss Per Share Attributable to GigaMedia, Diluted

(0.14)

(0.29)

NM

EBITDA (A)

(2,896)

(4,360)

NM

Cash, Restricted Cash and Cash Equivalents

58,274

59,826

-2.6

%

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, 2019 was $6.6 million, decreased from $7.1 million in the prior year. The decrease was mainly due to a decline in our licensed mobile games.
  • Consolidated loss from operations for 2019 was $2.9 million, compared to a loss of $4.8 million in the last year. The decrease of loss was due to improved cost-effectiveness across the Company.
  • Consolidated net loss for 2019 was $1.5 million, compared to a net loss of $3.2 million in the prior year. Loss per share for 2019 was $0.14 per share, compared to a loss of $0.29 per share for the prior year.

For the Fourth Quarter

GIGAMEDIA 4Q19 UNAUDITED CONSOLIDATED FINANCIAL RESULTS

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

4Q19

3Q19

Change

(%)

4Q19

4Q18

Change

(%)

Revenues

1,504

1,908

-21.17

%

1,504

1,619

-7.10

%

Gross Profit

1,025

1,049

-2.29

%

1,025

880

16.48

%

Loss from Operations

(276)

(544)

NM

(276)

(1,021)

NM

Net Loss Attributable to GigaMedia

(148)

(242)

NM

(148)

(503)

NM

Net Loss Per Share Attributable to
GigaMedia, Diluted

(0.01)

(0.02)

NM

(0.01)

(0.05)

NM

EBITDA (A)

(435)

(585)

NM

(435)

(806)

NM

Cash, Restricted Cash and Cash
Equivalents

58,274

58,164

0.19

%

58,274

59,826

-2.59

%

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 2019 decreased by 21.2% quarter-on-quarter from $1.9 million to $1.5 million mainly due to seasonality, and decreased by 7.1% year-over-year mainly as revenues from certain licensed games dwindled.
  • Consolidated loss from operations of the fourth quarter of 2019 was $0.3 million, compared to a loss of $0.5 million in the last quarter.
  • Consolidated net loss of the fourth quarter of 2019 was $0.1 million, slightly improved from a net loss of $0.2 million in the last quarter.
  • Cash, restricted cash and cash equivalents at the end of the fourth quarter of 2019 amounted to $58.3 million, which slightly increased from $58.2 million at the end of the prior quarter.
  • Consolidated EBITDA for the fourth quarter of 2019 was a loss of $0.4 million compared to a loss of $0.6 million in the third quarter of 2019.

Financial Position

GigaMedia maintained its solid financial position. Cash, restricted cash and cash equivalents amounted to $58.3 million, or approximately $5.27 per share, along with zero bank loan and $55.7 million of shareholders’ equity, as of December 31, 2019.

Business Outlook

The following forward-looking statements reflect GigaMedia’s expectations as of April 7, 2020. Given potential changes in economic conditions and consumer spending, the evolving nature of digital entertainments, and various other risk factors, including those discussed in the Company’s 2018 Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission as referenced below, actual results may differ materially.

“It is very difficult to foretell anything in current global economic turmoil, even for our digital entertainment business, which is comparatively less affected,” said GigaMedia CEO James Huang, “but reassuringly, we have kept abundant financial resources to weather the storm, and we will continue to boost productivities by improving existing products and services, introducing own offerings, along with adopting strategies of promoting customer relationships.”

In the meantime, the global economic downturn may exhibit good M&A chances for us, as potential targets may be available at bargain prices. Therefore, we will continue, very cautiously, seeking suitable strategic investment and acquisition targets for increasing corporate growth and maximizing shareholder value.

Use of Non-GAAP Measures

To supplement GigaMedia’s consolidated financial statements presented in accordance with U.S. 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

Unaudited results

All quarterly and certain annual 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 2019 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 digital entertainment products or services that are appealing to users, our ability to retain existing users and attract new users, and our ability to launch digital entertainment products and services 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 2019 and its other filings with the United States Securities and Exchange Commission.

(Tables to follow)

GIGAMEDIA LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended

Twelve months ended

12/31/2019

09/30/2019

12/31/2018

12/31/2019

12/31/2018

unaudited

unaudited

unaudited

unaudited

audited

USD

USD

USD

USD

USD

Operating revenues

Digital entertainment service revenues

1,503,848

1,908,261

1,618,931

6,644,924

7,100,636

Operating costs

Cost of digital entertainment service
revenues

479,341

859,511

739,324

3,064,201

3,584,875

Gross profit

1,024,507

1,048,750

879,607

3,580,723

3,515,761

Operating expenses

Product development and engineering
expenses

213,241

326,419

215,625

1,185,299

1,091,445

Selling and marketing expenses

427,090

461,653

576,256

1,995,285

3,296,636

General and administrative expenses

571,563

800,015

860,903

3,182,212

3,684,054

Impairment losses

85,199

243,966

85,199

243,966

Other

2,957

4,723

3,946

24,060

22,510

1,300,050

1,592,810

1,900,696

6,472,055

8,338,611

Loss from operations

(275,543)

(544,060)

(1,021,089)

(2,891,332)

(4,822,850)

Non-operating income (expense)

Interest income

322,587

364,539

333,338

1,483,375

1,302,145

Interest expense

(14,866)

(14,866)

Foreign exchange (loss) gain – net

(84,774)

(62,487)

129,052

(67,741)

266,255

Gain on disposal of property, plant
and equipment

31

Other – net

(95,154)

119

56,162

(44,705)

61,358

127,793

302,171

518,552

1,356,063

1,629,789

Loss before income taxes

(147,750)

(241,889)

(502,537)

(1,535,269)

(3,193,061)

Income tax benefit (expense)

Net loss attributable to shareholders of
GigaMedia

(147,750)

(241,889)

(502,537)

(1,535,269)

(3,193,061)

Loss per share attributable to
GigaMedia

Basic:

(0.01)

(0.02)

(0.05)

(0.14)

(0.29)

Diluted:

(0.01)

(0.02)

(0.05)

(0.14)

(0.29)

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

12/31/2019

09/30/2019

12/31/2018

unaudited

unaudited

audited

USD

USD

USD

Assets

Current assets

Cash and cash equivalents

57,742,696

57,635,576

59,307,829

Accounts receivable – net

368,445

591,302

523,004

Prepaid expenses

112,243

142,819

122,434

Restricted cash

530,984

528,387

517,815

Other receivables

261

457,168

2,998

Other current assets

138,601

165,295

120,802

Total current assets

58,893,230

59,520,547

60,594,882

Property, plant & equipment – net

111,770

101,998

121,585

Intangible assets – net

15,551

78,828

37,726

Prepaid licensing and royalty fees

43,915

468,722

435,156

Other assets

285,072

918,556

255,604

Total assets

59,349,538

61,088,651

61,444,953

Liabilities and equity

Accounts payable

64,337

140,676

104,030

Accrued compensation

200,455

371,212

170,470

Accrued expenses

1,178,363

1,470,179

1,262,707

Unearned revenue

1,364,749

1,504,176

1,369,769

Other current liabilities

775,305

241,789

366,167

Total current liabilities

3,583,209

3,728,032

3,273,143

Other liabilities

94,385

662,530

Total liabilities

3,677,594

4,390,562

3,273,143

GigaMedia’s shareholders’ equity

55,671,944

56,698,089

58,171,810

Total liabilities and equity

59,349,538

61,088,651

61,444,953

 

GIGAMEDIA LIMITED

RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS

Three months ended

Twelve months ended

12/31/2019

9/30/2019

12/31/2018

12/31/2019

12/31/2018

unaudited

unaudited

unaudited

unaudited

unaudited

USD

USD

USD

USD

USD

Reconciliation of Net Income (Loss) to
EBITDA

Net loss attributable to GigaMedia

(147,750)

(241,889)

(502,537)

(1,535,269)

(3,193,061)

Depreciation

10,888

9,919

25,301

60,964

99,635

Amortization

9,669

11,126

4,137

46,523

36,013

Interest income

(322,587)

(364,539)

(333,338)

(1,483,375)

(1,302,145)

Interest expense

14,866

14,866

Income tax (benefit) expense

EBITDA

(434,914)

(585,383)

(806,437)

(2,896,291)

(4,359,558)

 

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SOURCE GigaMedia Limited

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