GigaMedia Announces Fourth-Quarter and Full Year 2018 Financial Results

TAIPEI,April 3,2019 -- GigaMedia Limited (NASDAQ: GIGM) today announced its unaudited financial results for the fourth quarter and full year of 2018.

Highlights for Year Ended December 31,2018

Besides continuing our efforts in improving productivity,in formulating GigaMedia's 2018 business plan,we conducted a comprehensive strategic business review. And it became clear that:

Compared to our in-house offerings,the operations of licensed games bear an uncompetitive cost structure where licensing costs and channel costs usually take a huge bite out of earnings,leaving little room for any marketing strategies.

The operations of licensed games are inherently dependent on the licensors and hard to take the initiative,and therefore often slow in responding to a fad,a market trend or even a permanent change in customers' preference.

Accordingly,in 2018 GigaMedia moved boldly forward to executing the strategy of optimizing our product portfolio by trimming off or terminating products or services that were below requirements,and introducing license game more selectively. On the other hand,we set in motion consolidating substantial resources for developing our own offerings,into which direct investment was more than $1 million during 2018.

"With the high margin of our in-house products,we are allowed latitude to act proactively for a flexible combination of marketing and promotional means to boost productivities," stated GigaMedia Limited CEO James Huang,"and for our own offerings,it is all the more essential and valuable to develop long-term customer relationships."

In 2018,we invested further to enhance CRM system,which will contribute to our operations in building up relationships,saving marketing costs,and creating capacity for providing augmented products and services. The cultivation of a loyal customer base will eventually further boost customer value and create revenues and profits.

Fourth Quarter and Full Year Overview

Consolidated 4Q revenues decreased 2.59% quarter-over-quarter and 20.17% year-over-year. Full year revenues decreased 38.77% to $7.1 million from $11.6 million in 2017.

Income from operations for 4Q was a loss of $1.0 million,representing a loss reduction from $1.5 million in 3Q,mainly due to a decrease in advertising expenses. Full year operating loss,if excluding impairment losses and gain on termination of agreement,was a loss of $4.6 million for 2018,representing a loss increase of $2.4 million from approximately $2.2 million for 2017.

The net asset value was approximately $5.26 per share as of the end of 2018.

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 Fourth Quarter

GIGAMEDIA4Q18 UNAUDITED CONSOLIDATED FINANCIAL RESULTS

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

4Q18

3Q18

Change

(%)

4Q18

4Q17

Change

(%)

Revenues

1,619

1,662

-2.59%

1,619

2,028

-20.17%

Gross Profit

880

694

26.80%

880

1,007

-12.61%

Loss from Operations

(1,021)

(1,484)

NM

(1,021)

988

NM

Net Income (Loss) Attributable to GigaMedia

(503)

(1,083)

NM

(503)

1,070

NM

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

(0.05)

(0.10)

NM

(0.05)

0.10

NM

EBITDA (A)

(806)

(1,393)

NM

(806)

(785)

NM

Cash,Restricted Cash and Cash Equivalents

59,826

60,439

-1.01%

59,826

64,177

-6.78%

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 revenuesfor the fourth quarter of 2018 slightly decreased by 2.59% quarter-on-quarter from $1.7 million to $1.6 million,and decreased by 20.17% year-over-year.

Consolidated loss from operationof the fourth quarter of 2018 was a loss of $1.0 million,compared to a loss of $ 1.5 million in the last quarter.

Consolidated net incomeof the fourth quarter of 2018 was a net loss of $0.5 million,with a loss reduction of $0.6 million from a net loss of $1.1 million in the last quarter.

Cash,restricted cash and cash equivalentsat the end the fourth quarter of 2018 amounted to $59.8 million,which slightly decreased from $60.4 million at the end the third quarter of 2018.

Consolidated EBITDAfor the fourth quarter of 2018 was a loss of $0.8 million compared to a loss of $1.4 million in the third quarter of 2018.

Financial Position

GigaMedia maintained its solid financial position. Cash,restricted cash and cash equivalents amounted to $59.8 million,or approximately $5.4 per share,along with zero bank loan and $58.2M of shareholders' equity,as of December 31,2018.

For the Full Year 2018

GIGAMEDIA FY18UNAUDITED CONSOLIDATED FINANCIAL RESULTS

(unaudited,except per share amounts)

FY18

FY17

Change

(%)

Revenues

7,101

11,596

-38.76%

Gross Profit

3,516

6,498

-45.89%

Loss from Operations

(4,823)

(490)

NM

Net Loss Attributable to GigaMedia

(3,193)

1,086

NM

Net Loss Per Share Attributable to GigaMedia,Diluted

(0.29)

0.10

NM

EBITDA (A)

(4,360)

(1,099)

NM

Cash," for more details.)

Consolidated revenuesfor the year ended December 31,2018 was $7.1 million,decreased from $11.6 million in the prior year.

Consolidated loss from operationsfor 2018 was a loss of $4.8 million,compared to a loss of $0.5 million in the last year. The loss increase was mainly due to lower revenues in 2018,as well as a gain of $1.7 million on termination of licensing agreement was recognized in 2017.

Consolidated net Income (loss)for 2018 was a net loss of $3.2 million,compared to a net income of $1.1 million in the prior year. Earnings per share for 2018 was a loss of $0.29 per share,compared to a net income of $0.1 per share for the prior year.

Business Outlook

The following forward-looking statements reflect GigaMedia's expectations as of April03,2019. 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 2017Annual Report on Form20-F filedwith the U.S. Securities and Exchange Commission as referenced below,actual results may differ materially.

We believe it is critical for us to adopt the strategy of developing in-house offerings and promoting customer relationships. We expect these endeavors will begin contributing to our productivities and profitability in the second half of 2019.

"Meanwhile,we keep seeking strategic investment targets with expertise of AI or big data,in order to strengthen our business and maximize shareholders' value," said GigaMedia CEO James Huang,"Such a capacity presents synergies for us in elevating customer experiences and refining our data analytics techniques of extracting value from our vast database."

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,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 fourth quarter and full year 2018 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 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 2018 and its other filings with the United States Securities and Exchange Commission.

GIGAMEDIA LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended

Twelve months ended

12/31/2018

09/30/2018

12/31/2017

12/31/2018

12/31/2017

unaudited

unaudited

unaudited

unaudited

audited

USD

USD

USD

USD

USD

Operating revenues

Digital entertainment service revenues

1,618,931

1,662,324

2,027,831

7,100,636

11,596,221

Other revenues

—

—

—

—

—

1,221

Operating costs

Cost of digital entertainment service revenues

739,324

968,442

1,020,993

3,584,875

5,098,495

Cost of other revenues

—

—

—

—

—

739,495

Gross profit

879,607

693,882

1,006,838

3,515,761

6,497,726

Operating expenses

Product development and engineering expenses

215,625

286,015

237,744

1,091,445

1,072,350

Selling and marketing expenses

576,256

963,444

745,169

3,296,636

3,992,351

General and administrative expenses

860,903

923,288

741,253

3,684,054

3,527,799

Impairment losses

243,966

—

—

243,966

—

Gain on termination of licensing agreement

—

—

(1,731,592)

—

(1,592)

Other

3,946

5,514

26,060

22,510

126,575

1,900,696

2,178,261

18,634

8,338,611

6,987,483

Income (loss) from operations

(1,021,089)

(1,484,379)

988,204

(4,822,850)

(489,757)

Non-operating income (expense)

Interest income

333,338

351,262

207,775

1,302,145

602,224

Gain on sales of marketable securities

—

—

1,618

—

1,618

Interest expense

—

—

(112)

—

(33,544)

Foreign exchange (loss) gain - net

129,052

49,285

(85,955)

266,255

(551,167)

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

—

—

(1)

31

962

Equity in net loss on equity method investments

—

—

(79)

—

(23,761)

Impairment loss on marketable securities and investments

—

—

(176)

—

(52,651)

Other - net

56,162

728

(1,712,323)

61,358

(38,702)

518,552

401,275

(1,589,253)

1,629,789

(95,021)

(Loss) income before income taxes

(502,537)

(1,083,104)

(601,049)

(3,193,061)

(584,778)

Income tax benefit (expense)

—

—

1,671,511

—

1,048

Net (loss) income attributable to shareholders of GigaMedia

(502,104)

1,070,462

(3,061)

1,086,270

(Loss) earnings per share attributable to GigaMedia

Basic:

(0.05)

(0.10)

0.10

(0.29)

0.10

Diluted:

(0.05)

(0.10)

0.10

(0.29)

0.10

Weighted average shares outstanding:

Basic

11,052,235

11,235

Diluted

11,235

GIGAMEDIA LIMITED

CONSOLIDATED BALANCE SHEETS

12/31/2018

09/30/2018

12/31/2017

unaudited

unaudited

audited

USD

USD

USD

Assets

Current assets

Cash and cash equivalents

59,307,829

59,923,784

63,670,458

Accounts receivable - net

523,004

835,013

751,114

Prepaid expenses

122,434

237,635

389,984

Restricted cash

517,815

514,770

506,981

Other receivables

2,998

316,540

67,884

Other current assets

120,802

129,114

124,595

Total current assets

60,594,882

61,956,856

65,511,016

Property,plant & equipment - net

121,585

147,600

157,730

Intangible assets - net

37,726

41,109

3,409

Prepaid licensing and royalty fees

435,156

1,097,911

458,914

Other assets

255,604

278,356

282,036

Total assets

61,444,953

63,521,832

66,413,105

Liabilities and equity

Short-term borrowings

—

—

—

Accounts payable

104,030

279,485

313,557

Accrued compensation

170,470

606,547

548,903

Accrued expenses

1,262,707

2,066,188

2,157,790

Unearned revenue

1,369,769

1,971,039

1,863,308

Other current liabilities

366,167

196,516

163,703

Total current and total liabilities

3,273,143

5,119,775

5,047,261

GigaMedia's shareholders'equity

58,171,810

58,402,057

61,365,844

Total liabilities and equity

61,105

GIGAMEDIA LIMITED

RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS

Three months ended

Twelve months ended

12/31/2018

9/30/2018

12/31/2017

12/31/2018

12/31/2017

unaudited

unaudited

unaudited

unaudited

unaudited

USD

USD

USD

USD

USD

Reconciliation of Net Income (Loss) to EBITDA

Net income (loss) attributable to GigaMedia

(502,270

Depreciation

25,301

25,318

20,886

99,635

42,424

Amortization

4,137

16,516

3,315

36,013

12,419

Interest income

(333,338)

(351,262)

(207,775)

(1,145)

(602,224)

Interest expense

—

—

112

—

33,544

Income tax (benefit) expense

—

—

(1,511)

—

(1,048)

EBITDA

(806,437)

(1,392,532)

(784,511)

(4,359,558)

(1,615)

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