GigaMedia Announces First-Quarter 2014 Financial Results

           GigaMedia Announces First-Quarter 2014 Financial Results

PR Newswire

TAIPEI, May 13, 2014

TAIPEI, May 13, 2014 /PRNewswire/ -- GigaMedia Limited (NASDAQ: GIGM) today
announced its unaudited financial results for the first quarter of 2014.

"Late in Q1 we successfully launched a new mobile game, an important first
step in the transformation and growth of our games business," stated GigaMedia
Limited Chief Executive Officer Collin Huang. "We also made progress in
forming partnerships that will support our social casino games growth
initiatives planned for later this year."

"We will soon add a popular new browser game to our portfolio to drive further
growth," stated CEO Collin Huang. "And in cloud computing we recently launched
a promising new, cutting-edge product: desktop-as-a-service."

"Visibility on revenue growth is increasing," stated CEO Collin Huang. "We
forecast revenue growth to begin in the second quarter and accelerate in the
third and fourth quarters driven by multiple initiatives."

Highlights

  oFirst new growth driver added: GigaMedia successfully added a key new
    revenue stream in the first quarter, recording approximately one month of
    contributions from the mobile game Three Kingdoms Partner. Mobile games
    accounted for approximately nine percent of total game revenues in the
    first quarter and represented the first of multiple new revenue streams
    anticipated in 2014 from growth initiatives.
  oResults in line with expectations: Overall results were in line with
    expectations, reflecting mainly the unfinished transition of GigaMedia's
    online games business to browser/mobile games and social casino games.
    Growth in the company's MMO game Tales Runner and approximately one month
    of new contributions from Three Kingdoms Partner were more than offset by
    lower contributions from legacy PC games and the cloud computing business.
    As a result, revenues decreased to $2.2 million. Revenues from GigaMedia's
    growth initiatives in browser/mobile games and social casino games are
    expected to increasingly displace revenues from legacy PC games offerings
    and drive growth going forward. (See "Recent Developments" and "Business
    Outlook.") Net loss was approximately $3.1 million.
  oStrong balance sheet: Cashand marketable securities-current of
    approximately $78.8 million, or approximately $1.54 per share, compared to
    $80.3 million at the end of the fourth quarter of 2013. Short-term debt
    was $4.3 million.

Recent Developments

  oRevenue growth forecast: Revenue growth is expected to begin in the second
    quarter and accelerate in the second half of 2014. (See "Business
    Outlook.")
  oNew licensed MMO: The online games business expects to soon announce the
    licensing of a popular browser-based MMO game. Following localization,
    planning and testing, management expects to launch the game in late 2014.
  oNew affiliated marketing partners: The social casino games platform
    business has signed agreements with multiple new affiliated marketing
    partners in mainland China; launch is expected in the second half of 2014.
  oNew strategic partnerships for social casino games: The social casino
    games platform business expects to soon finalize agreements with multiple
    strategic partners to strengthen the social casino games platform.
  oNew virtual desktop product from GigaCloud: The cloud computing business
    launched a new virtual desktop product in May. GigaCloud's virtual desktop
    provides flexible anytime, anywhere Desktop as a Service (DaaS) and
    delivers cost savings to enterprises by eliminating needs for IT
    investments and managing complex infrastructure.
  oShare buyback: As part of its plans to increase shareholder value,
    management intends to implement a share buyback in the near future. 

Unaudited 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 1Q14 UNAUDITED CONSOLIDATED FINANCIAL RESULTS
(unaudited, all figures                       Change                   Change
in US$ thousands, except 1Q14      4Q13       (%)     1Q14     1Q13    (%)
per share amounts)
Revenues                 2,175     3,381      -36     2,175    4,187   -48
Gross Profit             1,015     1,157      -12     1,015    2,333   -57
Loss from Operations     2,567     31,338     NM      2,567    1,268   NM
Net Loss Attributable to 3,076     30,363     NM      3,076    1,389   NM
GigaMedia
Net Loss Per Share
Attributable to          0.06      0.60       NM      0.06     0.03    NM
GigaMedia, Diluted
EBITDA ^ ^(A) ^          (2,806)   (29,841)   NM      (2,806)  (817)   NM
Cash, Cash Equivalents,
Restricted Cash, and     78,821    80,262     -2      78,821   77,832  1
Marketable
Securities-Current
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 first quarter of 2014 were $2.2 million; this
compared to $3.4 million in the fourth quarter of 2013 and $4.2 million in the
first quarter of 2013. The quarter-over-quarter revenue decline was due to
decreased contributions from Giga's online games and cloud computing
businesses. In online games, the decrease resulted from lower contributions
from legacy PC-based casual games reflecting the continuing shift in player
preferences for browser/mobile games. This decrease offset growth in the
company's MMO game Tales Runner and approximately one month of new
contributions from the mobile game Three Kingdoms Partner, launched late in
the first quarter. In cloud computing, the quarter-over-quarter variation
reflected the impact of special projects completed in the fourth quarter.
Year-over-year results mainly reflected the effect on Giga's currently
PC-based online games business of the shift in player preferences for
browser/mobile games, as well as lower contributions from Tales Runner.

In response to market trends, GigaMedia is rebuilding its portfolio with
browser/mobile games and social casino games. The company launched its first
mobile game of 2014 in March and plans additional launches of browser/mobile
games and social casino games throughout 2014.

In online games, average monthly revenue per active paying account was $23.95
during the first quarter of 2014 compared to $27.82 in the previous quarter,
with the variation reflecting mainly the impact of the MMO A.V.A. on
fourth-quarter results, prior to the termination of its operation in December.
Peak concurrent users were approximately 12,000 in the first quarter compared
to approximately 16,000 in the fourth quarter of 2013.

Consolidated gross profit for the first quarter of 2014 was $1.0 million
compared to $1.2 million in the fourth quarter of 2013 and to $2.3 million in
the first quarter of 2013. First-quarter 2014 consolidated gross profit margin
was 46.6 percent compared to 34.2 percent in the fourth quarter of 2013 and
55.7 percent in the first quarter of 2013.

Consolidated operating expenses  for the first quarter of 2014 were $3.6
million. This compared to $32.5 million in the fourth quarter of 2013, which
included non-cash impairment losses of approximately $30.0 million related
primarily to the write-off of goodwill and intangible assets of GigaMedia's
legacy PC games business, acquired in 2006, and to $3.6 million in the first
quarter of 2013.

Consolidated product development and engineering expenses were $246 thousand
in the first quarter of 2014 compared to $497 thousand in the previous quarter
and $372 thousand in the first quarter of 2013.

Consolidated selling and marketing expenses were $1.6 million in the first
quarter of 2014 compared to $935 thousand in the previous quarter and $1.4
million in the first quarter of 2013.

Consolidated general and administrative expenses were $1.8 million in the
first quarter versus $1.1 million in the previous quarter and $1.8 million in
the first quarter of 2013. Corporate operating expenses were approximately
$860 thousand in the first quarter of 2014, in line with $523 thousand in the
fourth quarter of 2013.

Consolidated loss from operations for the first quarter of 2014 was $2.6
million compared to $31.3 million in the fourth quarter of 2013, which
included non-cash impairment losses of approximately $30.0 million, and to
$1.3 million in the first quarter of 2013. The quarter-over-quarter variation
mainly reflected the impact of the fourth-quarter 2013 non-cash impairment
losses. The year-over-year increase in consolidated operating loss was
attributable to revenue decline during the period, which outpaced decreases in
operating expenses, and led to lower gross margin.

Consolidated non-operating expenses/income during the first quarter of 2014
was a loss of $208 thousand compared to income of $1.2 million in the fourth
quarter of 2013 and a loss of $137 thousand recorded in the first quarter of
2013.

Consolidated net income for the first quarter of 2014 was a loss of $3.1
million compared to $30.4 million in the previous quarter, which included
non-cash impairment losses of approximately $30.0 million, and to $1.4 million
in the first quarter of 2013.

Consolidated EBITDA for the first quarter of 2014 was a loss of $2.8 million
compared to $29.8 million in the previous quarter, which included non-cash
impairment losses of approximately $30.0 million, and to $817 thousand in the
first quarter of 2013.

Strong Financial Position

During the first quarter, GigaMedia continued to maintain a strong balance
sheet. As of March 31 2014, GigaMedia had $78.8 million in cash and marketable
securities-current, or approximately $1.54 per share, compared to $80.3
million at the end of the fourth quarter of 2013. Cash flow from operations
was an outflow of approximately $2.5 million, an increase from cash outflow in
the fourth quarter of $1.8 million, due primarily to termination of the game
A.V.A. in the fourth quarter, lower contributions from GigaCloud, promotions
surrounding the launch of Three Kingdoms Partner, and investments in the first
quarter in developing new game products and services.  Short-term debt was
$4.3 million at the end of the first quarter.

Business Outlook

The following forward-looking statements reflect GigaMedia's expectations as
of May 13, 2014. 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 2013 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

In response to the ongoing downturn in the PC-based games market in which
GigaMedia has historically operated, management is repositioning its online
games business to align itself with strong growth in browser/mobile games and
social casino games. Investments in rebuilding GigaMedia's game pipeline and
upgrading systems are ongoing to support anticipated future growth.

In 2014, management expects accelerating revenue growth in its online games
business, with contributions from 1) new browser/mobile games; 2) new social
casino games; and 3) new licensed games to more than offset declines in its
legacy PC games products. The company expects to update content in its new
mobile game late in Q2 2014 and plans launches of, a new social casino game
platform, and a new browser-based MMO game in the next six months. In the next
4-6 weeks, management expects to begin testing a new mobile social game
platform planned for operations in 2015.

The pace of future growth will be subject to the timing of these growth
initiatives, as well as potential new strategic transactions, making near-term
forecasts difficult. Nonetheless, based on progress to date in strengthening
the pipeline, building a new technology platform, and executing new growth
plans, management is confident the online games business will deliver growing
revenues in 2014.

Cloud services business

GigaMedia's cloud services business was launched in April 2013 with a
cloud-based Software as a Service (SaaS) offering of hosted phone, fax,
storage, and video security systems for SMEs. Management plans to expand the
scope, reach, and quality of its cloud offerings going forward. Expansion of
GigaCloud in 2014 has begun with new private SaaS applications and services
for SMEs and larger enterprises. A new virtual desktop product was launched in
May and additional new public and private SaaS applications and consulting
services are planned for 2014.

Management expects GigaCloud to make small revenue contributions in the second
quarter of 2014. Based on results to date and the company's strategic growth
plans, management is confident the cloud business will deliver growing
revenues in 2014.

Overall Outlook

Management expects a small sequential revenue increase in the second quarter
of 2014, with contributions from the mobile game Three Kingdoms Partner more
than offsetting declines in GigaMedia's legacy PC games products. Management
forecasts revenue growth to accelerate in the third and fourth quarter,
following the implementation of growth initiatives in its online games and
cloud computing businesses. 

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.

Conference Call and Webcast

Management will hold an investor conference call and webcast on May 13, 2014
at 8:00 p.m. Eastern Standard Time, which is 8:00 a.m. Taipei Time on May 14,
2014, to discuss GigaMedia's first-quarter 2014 performance.

Dial-in numbers:

U.S.: +1-845-675-0437
International: +65-6723-9381
Passcode: 42510401

A replay will be available from 11:00 p.m. Eastern Standard Time on May 13,
2014 for seven days.

U.S.: +1-646-254-3697
International: +612-8199-0299
Passcode: 42510401

A link to the live and archived webcast will be available at
www.gigamedia.com.

Conference Call Format

The call will consist of brief prepared remarks, followed by live Q&A and
management responses to questions submitted via email. Questions may be sent
in advance to IR@gigamedia.com.tw.

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 2014 and its other filings with the United
States Securities and Exchange Commission.



(Tables to follow)
GIGAMEDIA LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                Three months ended
                                                                3/31/2014    12/31/2013    3/31/2013
                                                                unaudited    unaudited     unaudited
                                                                USD          USD           USD
Operating revenues
Asian online game and service revenues                          2,042,102    2,463,125     4,186,767
Other revenues                                                  133,204      917,736       0
                                                                2,175,306    3,380,861     4,186,767
Operating costs
Cost of Asian online game and service revenues                  912,002      1,231,969     1,817,078
Cost of other revenues                                          248,772      991,980       36,236
                                                                1,160,774    2,223,949     1,853,314
Gross profit                                                    1,014,532    1,156,912     2,333,453
Operating expenses
Product development and engineering expenses                   246,328      497,083       371,519
Selling and marketing expenses                                 1,572,235    934,726       1,417,610
General and administrative expenses                            1,751,163    1,093,795     1,839,645
Bad debt expenses (recoveries )                                 11,450       51,818        (27,247)
Impairment losses                                               0            29,917,344    0
                                                                3,581,176    32,494,766    3,601,527
Loss from operations                                            (2,566,644)  (31,337,854)  (1,268,074)
Non-operating income (expense)
Interest income                                                 173,830      85,717        50,191
Gain on sales of marketable securities                          241          1,199,533     0
Interest expense                                                (15,580)     (7,549)       (27,237)
Foreign exchange (loss) gain - net                              (447,252)    24,262        (186,438)
Gain(loss)ondisposalofproperty,plantandequipment        15           603           (4,872)
Gain (loss) on equity method investments - net                  23,501       (59,304)      22,917
Other                                                           57,428       (41,504)      8,228
                                                                (207,817)    1,201,758     (137,211)
Loss from continuing operations before income taxes             (2,774,461)  (30,136,096)  (1,405,285)
Income tax (expense) benefit                                    (721)        (76,099)      16,570
Loss from continuing operations                                 (2,775,182)  (30,212,195)  (1,388,715)
Loss from discontinued operations, net of tax                   0            (431,910)     (345)
Net loss                                                        (2,775,182)  (30,644,105)  (1,389,060)
Less:Net(gain)lossattributabletononcontrollinginterest   (300,921)    281,157       0
Net loss attributable to shareholders of GigaMedia              (3,076,103)  (30,362,948)  (1,389,060)
(Loss) earnings per share attributable to GigaMedia
Basic:
Loss from continuing operations                                 (0.06)       (0.59)        (0.03)
Loss from discontinued operations                               0.00         (0.01)        0.00
                                                                (0.06)       (0.60)        (0.03)
Diluted:
Loss from continuing operations                                 (0.06)       (0.59)        (0.03)
Loss from discontinued operations                               0.00         (0.01)        0.00
                                                                (0.06)       (0.60)        (0.03)
Weighted average shares outstanding:
Basic                                                           51,224,134   50,720,498    50,719,976
Diluted                                                         51,224,134   50,720,498    50,719,976





GIGAMEDIA LIMITED
CONSOLIDATED BALANCE SHEETS
                                    3/31/2014    12/31/2013   3/31/2013
                                    unAIdited    unaudited    unaudited
                                    USD          USD          USD
Assets
Current assets
Cash and cash equivalents           49,667,405   58,801,533   60,313,323
Marketable securities - current     29,153,315   21,460,119   17,518,275
Accounts receivable - net           1,159,243    2,026,891    3,630,552
Prepaid expenses                    681,611      749,598      849,549
Restricted cash                     1,491,139    0            0
Other receivables                   208,249      211,006      2,197
Other current assets                145,424      82,244       922,066
Total current assets                82,506,386   83,331,391   83,235,962
Marketable securities - noncurrent  10,178,480   6,048,080    4,250,550
Investments                         5,279,776    5,822,332    5,059,876
Property, plant & equipment - net   1,663,286    1,676,772    1,826,313
Goodwill                            0            0            16,485,591
Intangible assets - net             1,151,311    1,461,304    15,125,057
Prepaid licensing and royalty fees  4,629,954    4,665,992    8,118,402
Other assets                        301,240      315,327      2,515,525
Total assets                        105,710,433  103,321,198  136,617,276
Liabilities and equity
Accounts payable                    297,595      1,178,357    159,133
Accrued compensation                572,948      379,905      440,810
Accrued expenses                    2,262,425    2,616,623    4,947,557
Short-term borrowings               4,266,492    4,360,953    7,542,742
Other current liabilities           6,082,274    6,302,847    7,396,623
Total current liabilities           13,481,734   14,838,685   20,486,865
Other liabilities                   177,449      181,485      834,643
Total liabilities                   13,659,183   15,020,170   21,321,508
GigaMedia's shareholders' equity    91,904,862   88,447,894   115,634,182
Noncontrolling interest             146,388      (146,866)    (338,414)
Total equity                        92,051,250   88,301,028   115,295,768
Total liabilities and equity        105,710,433  103,321,198  136,617,276



GIGAMEDIA LIMITED
Reconciliations of Non-GAAP Results of Operations
                                        Three months ended
                                        3/31/2014    12/31/2013    3/31/2013
                                        unaudited    unaudited     unaudited
                                        USD          USD           USD
Reconciliation of Net Loss Income to
EBITDA
Net loss attributable to GigaMedia      (3,076,103)  (30,362,948)  (1,389,060)
Depreciation                            77,689       89,778        111,651
Amortization                           349,771      434,343       500,084
Interest income                         (173,826)    (85,652)      (50,574)
Interest expense                        15,580       7,549         27,237
Income tax expense                      721          76,099        (16,570)
EBITDA                                  (2,806,168)  (29,840,831)  (817,232)

For further information contact:

Brad Miller, Investor Relations Director
+886-2-2656-8016
Brad.Miller@GigaMedia.com

SOURCE GigaMedia Limited

Website: http://www.gigamedia.com
 
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