GigaMedia Announces Second-Quarter 2023 Financial Results

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Jul 31, 2023, 09:00 ET

TAIPEI, July 31, 2023 /PRNewswire/ -- GigaMedia Limited (NASDAQ: GIGM) today announced its second-quarter 2023 unaudited financial results.

Comments from Management

In the second quarter of 2023, GigaMedia reported revenues of $1.03 million, with a gross profit $0.57 million, an operating loss of $0.92 million and the net loss of $0.56 million. Total revenues decreased by 22.6% if compared to the previous quarter.

The decrease in revenues was mainly as a result of seasonality, as the second quarter is usually a slower season than the first. Currently we focused on fine-tuning the operation of our casual games and customer platform for upcoming summer vacation.

Second Quarter Overview

Operating revenues decreased by approximately 22.6% quarter-on-quarter, to $1.03 million from $1.33 million in last quarter, and decreased by 24.8% year-over-year from $1.36 million the same period last year. The decrease from last quarter was mainly due to seasonality from high peak during winter vacation in the previous quarter.
Gross profit decreased by 28.5% to $0.57 million from $0.79 million in last quarter, and decreased by 26.9% compared to $0.77 million in the same period last year.
The net asset value was $4.32 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 2Q23 UNAUDITED CONSOLIDATED FINANCIAL RESULTS
(unaudited, all figures in US$ thousands, except per share amounts)	2Q23		1Q23		Change (%)			2Q23		2Q22		Change (%)
Revenues		1,025		1,325		-22.64	%		1,025		1,363		-24.80	%
Gross Profit		566		792		-28.54	%		566		774		-26.87	%
Loss from Operations		(919)		(698)	NM				(919)		(844)	NM
Net Loss Attributable to GigaMedia		(562)		(313)	NM				(562)		(1,131)	NM
Net Loss Per Share Attributable to GigaMedia, Diluted		(0.05)		(0.03)	NM				(0.05)		(0.10)	NM
EBITDA (A)		(982)		(704)	NM				(982)		(1,190)	NM
Cash, Cash Equivalent and Restricted Cash		37,775		38,119		-0.90	%		37,775		39,631		-4.68	%

NM= Nt 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 2023 decreased by 22.6% quarter-on-quarter to $1.03 million from $1.33 million in last quarter, and decreased by 24.8% year-over-year from $1.36 million the same period last year.
Consolidated gross profit was $0.57 million, decreased by 28.5% quarter-on-quarter and decreased by 26.9% year-over-year.
Consolidated loss from operation of the second quarter of 2023 was a loss of $0.92 million, comparable to the operating loss of $0.70 in the first quarter.
Net loss in the second quarter of 2023 was $0.56 million, increased slightly from a net loss of $0.31 million in the first quarter.
Cash, cash equivalents and restricted cash at the end of the second quarter of 2023 amounted to $37.8 million, decreased by 0.9% from $38.1 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 $37.8 million, or $3.42 per share, as of June 30, 2023.

Business Outlook

The following forward-looking statements reflect GigaMedia's expectations as of July 31, 2023. 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 2022 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 2023, we will dedicate ourselves to boosting the productivity of our products and services. GigaMedia will stick to the strategy of pursuing healthy growth with a lean operation while seeking for strategic expansion and new business," stated GigaMedia CEO James Huang.

As for new business, our management continues evaluating and pursuing prospects of strategic investment targets that are with potential to expand our business and create greater 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 2023 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 2023 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
	06/30/2023		03/31/2023		06/30/2022		06/30/2023		06/30/2022
	unaudited		unaudited		unaudited		unaudited		unaudited
	USD		USD		USD		USD		USD
Operating revenues
Digital entertainment service revenues		1,025,056		1,325,352		1,363,287		2,350,408		2,908,862
		1,025,056		1,325,352		1,363,287		2,350,408		2,908,862
Operating costs
Cost of Digital entertainment service revenues		458,667		533,136		588,907		991,803		1,233,276
		458,667		533,136		588,907		991,803		1,233,276
Gross profit		566,389		792,216		774,380		1,358,605		1,675,586
Operating expenses
Product development and engineering expenses		188,457		178,192		320,965		366,649		643,403
Selling and marketing expenses		406,876		431,089		376,899		837,965		812,104
General and administrative expenses and others		890,636		879,655		920,190		1,770,291		1,891,290
Other		(101)		1,082		712		981		938
		1,485,868		1,490,018		1,618,766		2,975,886		3,347,735
Loss from operations		(919,479)		(697,802)		(844,386)		(1,617,281)		(1,672,149)
Non-operating income (expense)
Interest income		435,038		404,550		66,576		839,588		129,410
Foreign exchange loss - net		(135,898)		(826)		(380,540)		(136,724)		(719,671)
Changes in the fair value of an instrument recognized at fair value		52,092		(18,729)		11,138		33,363		11,138
Other - net		6,659		107		16,349		6,766		21,271
		357,891		385,102		(286,477)		742,993		(557,852)
Loss from continuing operations before income taxes		(561,588)		(312,700)		(1,130,863)		(874,288)		(2,230,001)
Income tax expense		—		—		—		—		—
Net loss attributable to shareholders of GigaMedia		(561,588)		(312,700)		(1,130,863)		(874,288)		(2,230,001)
Loss per share attributable to GigaMedia
Basic:		(0.05)		(0.03)		(0.10)		(0.08)		(0.20)
Diluted:		(0.05)		(0.03)		(0.10)		(0.08)		(0.20)
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

	06/30/2023		03/31/2023		06/30/2022
	unaudited		unaudited		unaudited
	USD		USD		USD
Assets
Current assets
Cash and cash equivalents		37,462,050		37,806,540		39,317,946
Marketable securities-current		7,950,000		7,950,000		—
Accounts receivable - net		187,385		154,890		192,716
Prepaid expenses		225,334		368,322		574,021
Restricted cash		312,762		312,739		312,746
Other receivables		765,741		766,871		42,222
Other current assets		118,950		122,895		144,983
Total current assets		47,022,222		47,482,257		40,584,634

Marketable securities - noncurrent		2,371,000		2,371,000		10,322,000
Property, plant & equipment - net		131,758		146,094		70,913
Intangible assets - net		13,188		16,537		6,718
Prepaid licensing and royalty fees		101,919		140,850		249,965
Other assets		1,510,307		1,546,465		2,155,254
Total assets		51,150,394		51,703,203		53,389,484

Liabilities and equity
Accounts payable		28,747		78,604		31,757
Accrued compensation		230,931		133,645		268,124
Accrued expenses		855,201		878,269		1,104,625
Unearned revenue		847,887		871,981		824,361
Other current liabilities		718,266		636,631		819,888
Total current liabilities		2,681,032		2,599,130		3,048,755

Other liabilities		714,650		793,946		1,064,777
Total liabilities		3,395,682		3,393,076		4,113,532
Total equity		47,754,712		48,310,127		49,275,952
Total liabilities and equity		51,150,394		51,703,203		53,389,484

GIGAMEDIA LIMITED
RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS

	Three months ended						Six months ended
	06/30/2023		03/31/2023		06/30/2022		06/30/2023		06/30/2022
	unaudited		unaudited		unaudited		unaudited		unaudited
	USD		USD		USD		USD		USD
Reconciliation of Net Income (Loss) to EBITDA
Net income (loss) attributable to GigaMedia		(561,588)		(312,700)		(1,130,863)		(874,288)		(2,230,001)
Depreciation		11,259		10,326		5,472		21,585		11,236
Amortization		3,024		3,054		2,125		6,078		4,364
Interest income		(435,038)		(404,550)		(66,577)		(839,588)		(129,409)
Interest expense		—		—		—		—		—
Income tax (benefit) expense		—		—		—		—		—
EBITDA		(982,343)		(703,870)		(1,189,843)		(1,686,213)		(2,343,810)