GigaMedia Announces Second-Quarter 2022 Financial Results

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Jul 29, 2022, 09:00 ET

TAIPEI, July 29, 2022 /PRNewswire/ -- GigaMedia Limited (NASDAQ: GIGM) today announced its second-quarter 2022 unaudited financial results.

Comments from Management

In the second quarter of 2022, GigaMedia reported revenues of $1.36 million, with a gross profit $0.77 million, an operating loss of $0.84 million and the net loss of $1.13 million. Total revenues decreased by 11.8% if compared to the previous quarter.

The decrease in revenues was mainly as a result of a weaker consumer sentiment on entertainment, which was undermined by inflation, downturn in financial markets, and an unprecedented COVID-19 upsurge in Taiwan.

"The first half of 2022 had posed challenges for us," said GigaMedia CEO James Huang, "nonetheless, we managed to minimize the adverse impacts to our business and continued making progress in improving our products and services."

Second Quarter Overview

Operating revenues decreased by approximately 11.8% quarter-on-quarter, to $1.36 million from $1.55 million in last quarter, but increased by 11.3% year-over-year from $1.22 million the same period last year. The decrease from last quarter was mainly due to reduced consumer spending on entertainment amid a worsening economic environment.
Gross profit decreased by 14.1% to $0.77 million from $0.90 million in last quarter, and increased by 22.3% compared to $0.63 million in the same period last year.
The net asset value was $4.46 per share.

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 Second Quarter

GIGAMEDIA 2Q22 UNAUDITED CONSOLIDATED FINANCIAL RESULTS
(unaudited, all figures in US$ thousands, except per share amounts)	2Q22		1Q22		Change (%)		2Q22		2Q21		Change (%)
Revenues		1,363		1,546		-11.84 %		1,363		1,225		11.27 %
Gross Profit		774		901		-14.10 %		774		633		22.27 %
Loss from Operations		(844)		(828)	NM			(844)		(1,079)	NM
Net Loss Attributable to GigaMedia		(1,131)		(1,099)	NM			(1,131)		(836)	NM
Net Loss Per Share Attributable to GigaMedia, Diluted		(0.10)		(0.10)	NM			(0.10)		(0.08)	NM
EBITDA (A)		(1,190)		(1,154)	NM			(1,190)		(911)	NM
Cash, Cash Equivalent and Restricted Cash		39,631		40,534		-2.23 %		39,631		43,650		-9.21 %

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 2022 decreased by 11.8% quarter-on-quarter to $1.36 million from $1.55 million in last quarter, but increased by 11.3% year-over-year from $1.22 million the same period last year.
Consolidated gross profit was $0.77 million, decreased by 14.1% quarter-on-quarter but increased by 22.3% year-over-year.
Consolidated loss from operation of the second quarter of 2022 was a loss of $0.84 million, comparable to the operating loss in the first quarter.
Net loss in the second quarter of 2022 was $1.13 million, increased slightly from a net loss of $1.10 million in the first quarter.
Cash, cash equivalents and restricted cash at the end of the second quarter of 2022 amounted to $39.6 million, decreased by 2.2% from $40.5 million as of the end of the first quarter.

Financial Position

GigaMedia maintained its solid financial position, with cash, cash equivalents and restricted cash amounted to $39.6 million, or $3.59 per share, as of June 30, 2022.

Business Outlook

The following forward-looking statements reflect GigaMedia's expectations as of July 29, 2022. 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 2021 Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission as referenced below, actual results may differ materially.

"In the second half of 2022, we will be committing ourselves to boosting the productivity of our products and services by enhancing customer loyalty to our platforms, and expanding customer base with effective marketing strategies," stated GigaMedia CEO James Huang.

Meanwhile, our management continues exploring possibilities of expanding our business through strategic investments to create greater shareholder value. And the recent upheaval in the global capital market may exhibit a chance of acquiring quality assets at a discount, for which we will pursue promising investment opportunities prudently but boldly.

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 2022 performance upon the release, investors may send the questions via email to [email protected], 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 2022 and its other filings with the United States Securities and Exchange Commission.

(Tables to follow)

GIGAMEDIA LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS

	Three months ended						Six months ended
	06/30/2022		03/31/2022		06/30/2021		06/30/2022		06/30/2021
	unaudited		unaudited		unaudited		unaudited		unaudited
	USD		USD		USD		USD		USD
Operating revenues
Digital entertainment service revenues		1,363,287		1,545,575		1,224,749		2,908,862		2,671,025
Other revenues		—		—		—		—		—
		1,363,287		1,545,575		1,224,749		2,908,862		2,671,025
Operating costs
Cost of Digital entertainment service revenues		588,907		644,369		591,687		1,233,276		1,247,444
Cost of other revenues		—		—		—		—		—
		588,907		644,369		591,687		1,233,276		1,247,444
Gross profit		774,380		901,206		633,062		1,675,586		1,423,581
Operating expenses
Product development and engineering expenses		320,965		322,438		373,057		643,403		718,955
Selling and marketing expenses		376,899		435,205		376,914		812,104		773,947
General and administrative expenses		920,189		971,101		960,474		1,891,290		1,906,666
Other		712		226		2,103		938		4,703
		1,618,765		1,728,970		1,712,548		3,347,735		3,404,271
Income (loss) from operations		(844,385)		(827,764)		(1,079,486)		(1,672,149)		(1,980,690)
Non-operating income (expense)
Interest income		66,575		62,835		80,184		129,410		158,779
Foreign exchange (loss) gain - net		(380,540)		(339,131)		163,139		(719,671)		113,782
Changes in the fair value of an instrument recognized at fair value		11,138		—		—		11,138		—
Other - net		16,349		4,922		176		21,271		(2,633)
		(286,478)		(271,374)		243,499		(557,852)		269,928
(Loss) Income from continuing operations before income taxes		(1,130,863)		(1,099,138)		(835,987)		(2,230,001)		(1,710,762)
Income tax benefit (expense)		—		—		—		—		—
(Loss) Income from continuing operations		(1,130,863)		(1,099,138)		(835,987)		(2,230,001)		(1,710,762)
Net (loss) income		(1,130,863)		(1,099,138)		(835,987)		(2,230,001)		(1,710,762)
Less: Net loss attributable to noncontrolling interest		—		—		—		—		—
Net (loss) income attributable to shareholders of GigaMedia		(1,130,863)		(1,099,138)		(835,987)		(2,230,001)		(1,710,762)
(Loss) Earnings per share attributable to GigaMedia
Basic:
(Loss) Earnings from continuing operations		(0.10)		(0.10)		(0.08)		(0.20)		(0.15)
Loss from discontinued operations		0.00		0.00		0.00		0.00		0.00
		(0.10)		(0.10)		(0.08)		(0.20)		(0.15)
Diluted:
(Loss) Earnings from continuing operations		(0.10)		(0.10)		(0.08)		(0.20)		(0.15)
Loss from discontinued operations		0.00		0.00		0.00		0.00		0.00
		(0.10)		(0.10)		(0.08)		(0.20)		(0.15)
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 SHEET

	06/30/2022		03/31/2022		06/30/2021
	unaudited		unaudited		unaudited
	USD		USD		USD
Assets
Current assets
Cash and cash equivalents		39,317,946		40,221,362		43,350,182
Accounts receivable - net		192,716		245,742		282,780
Prepaid expenses		574,021		728,280		242,488
Restricted cash		312,746		312,772		300,000
Other receivables		42,222		21,143		52,422
Other current assets		144,983		151,560		154,622
Total current assets		40,584,634		41,680,859		44,382,494

Marketable securities - noncurrent		10,322,000		10,322,000		10,000,000
Property, plant & equipment - net		70,913		79,266		48,349
Intangible assets - net		6,718		9,166		9,625
Prepaid licensing and royalty fees		249,965		299,117		73,762
Other assets		2,155,254		2,322,368		2,586,685
Total assets		53,389,484		54,712,776		57,100,915

Liabilities and equity
Accounts payable		31,757		47,916		44,870
Accrued compensation		268,124		188,353		279,896
Accrued expenses		1,104,625		1,436,606		1,138,777
Unearned revenue		824,361		890,395		930,026
Other current liabilities		819,888		820,580		787,009
Total current liabilities		3,048,755		3,383,850		3,180,578
Other liabilities		1,064,777		1,262,455		1,636,271
Total liabilities		4,113,532		4,646,305		4,816,849
GigaMedia's shareholders' equity		49,275,952		50,066,471		52,284,066
Noncontrolling interest		—		—		—
Total equity		49,275,952		50,066,471		52,284,066
Total liabilities and equity		53,389,484		54,712,776		57,100,915

GIGAMEDIA LIMITED
RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS

	Three months ended						Six months ended
	06/30/2022		03/31/2022		06/30/2021		06/30/2022		06/30/2021
	unaudited		unaudited		unaudited		unaudited		unaudited
	USD		USD		USD		USD		USD
Reconciliation of Net Income (Loss) to EBITDA
Net income (loss) attributable to GigaMedia		(1,130,863)		(1,099,138)		(835,987)		(2,230,001)		(1,710,762)
Depreciation		5,472		5,764		2,920		11,236		4,822
Amortization		2,125		2,239		2,242		4,364		4,252
Interest income		(66,574)		(62,835)		(80,184)		(129,409)		(158,779)
Interest expense		—		—		—		—		—
Income tax (benefit) expense		—		—		—		—		—
EBITDA		(1,189,840)		(1,153,970)		(911,009)		(2,343,810)		(1,860,467)