GigaMedia Announces Second-Quarter 2019 Financial Results

TAIPEI,Aug. 2,2019 --GigaMedia Limited (NASDAQ: GIGM) todayannounced its second-quarter 2019 unaudited financial results.

Comments from Management

In the first half of year 2019,we continued devoting efforts to optimizing our product portfolio,building up brand strength and enhancing operational efficiency. For our business in licensed games,the successful launch of Senran Kagura: New Link in April has brought us a satisfactory amount of revenues in its introductory stage,while two underperforming games were terminated.

For in-house offerings,besides improving the existing self-developed games,we also have made progress in developing a new casual games platform,aiming to launch it in the second half of 2019. "As discussed in previous release guidance,we put emphasis on enhancing our in-house products. The direct investment into in-house product development was over $600 thousand in the first half of 2019,which was 9.5% higher than in the same period last year," said GigaMedia CEO James Huang.

We were also developing a customer platform,which will contribute to our operations in establishing relationships,saving marketing costs,and creating capacity for providing augmented products and services. "The customer platform is currently under small-scale test-run,but we believe the growing interaction of the customer platform and our wide range of diverse game offerings will generate synergistic effect for one another in the future," said CEO James Huang.

"The numbers might look similar as in prior quarters," stated CEO James Huang,"but the robustness is now exhibited in our operations,and momentums have gradually accumulated."

Second Quarter Overview

Operating revenues increased by approximately 18% quarter-on-quarter,to $1.8 million from $1.5 million last quarter,and 5.49% year-over-year from $1.7 million the same period last year. The increase was mainly attributable to Senran Kagura,a new game launched in April.

Gross profit increased slightly to $0.8 million from $0.7 million in the first quarter of 2019.

The net asset value was $5.15 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 2Q19 UNAUDITED CONSOLIDATED FINANCIAL RESULTS

(unaudited,all figures in US$ thousands,except

per share amounts)

2Q19

1Q19

Change

(%)

2Q19

2Q18

Change

(%)

Revenues

1,750

1,483

18.00

%

1,659

5.49

%

Gross Profit

769

738

4.20

%

769

728

5.63

%

Loss from Operations

(1,122)

(949)

NM

(1,122)

(1,342)

NM

Net Loss Attributable to GigaMedia

(614)

(532)

NM

(614)

(755)

NM

Net Loss Per Share Attributable to

GigaMedia,Diluted

(0.06)

(0.05)

NM

(0.06)

(0.07)

NM

EBITDA (A)

(1,000)

(876)

NM

(1,000)

(1,056)

NM

Cash,Restricted Cash and Cash

Equivalents

58,015

58,494

-0.82

%

58,015

61,244

-5.27

%

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 revenuesfor the second quarter of 2019 increased by 18% quarter-on-quarter to $1.8 million from $1.5 million in last quarter,and by 5.49% year-over-year from $1.7 million the same period last year,due to a boost from Senran Kagura,a new game launched in April that generated cash revenues of $1.0 million,where $0.4 million were deferred to next quarter in accordance with accounting requirements. Revenues from other games decreased mainly due to seasonality.

Consolidated gross profitwas $0.8 million,slightly increased quarter-on-quarter and year-over-year. The gross margin rate was slightly lower due to initial costs incurred for the launch of a new game.

Consolidated operating expenseswere $1.9 million,or increased by 12.1% the second quarter of 2019,comparable to that in last quarter,and decreased by 8.7% if compared to that in the same period last year,reflecting an increase marketing expenses for the launch of Senran Kagura,and certain general expenses incurred in this quarter.

Consolidated loss from operationof the second quarter of 2019 was $1.1million,an increase of $0.2 million loss from the first quarter of 2019.

Net lossin the second quarter of 2019 was $0.6 million,comparable to a net loss of $0.5 million in the first quarter this year,and slightly improved from a net loss of $0.8 million in the second quarter of 2018.

Cash,restricted cash and cash equivalentsat the end of the second quarter of 2019 amounted to $58.0 million,slightly decreased by 0.8% from $58.5 million as of the end of the first quarter of this year.

Financial Position

GigaMedia maintained its solid financial position,with cash,restricted cash and cash equivalents amounted to $58.0 million,or $5.25 per share,as of June 30,2019.

Business Outlook

The following forward-looking statements reflect GigaMedia's expectations as of August 2,2019. 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 Form20-F filedwith the U.S. Securities and Exchange Commission as referenced below,actual results may differ materially.

In the second half of 2019,we will continue to improve productivities of the existing games,in which the newly launched Senran Kagura and our female-oriented games are expected to contribute soundly to our revenues. We are also optimistic with the renovations of our in-house casual game offerings with customer platform,which will gradually accumulate to an upward trend for us.

"We are leveraging our deep expertise in self-developed games and creating an advanced framework for promoting customer relationships. We believe that loyal customer base will eventually help to boost in revenues and profits," stated CEO James Huang.

Meanwhile,our business strategies always include expanding through mergers and acquisitions. "We will also continue reviewing potential targets that would enable us to accelerate our growth and enhance shareholders' value," said CEO James Huang.

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 second quarter 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 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 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

Six months ended

06/30/2019

03/31/2019

06/30/2018

06/30/2019

06/30/2018

unaudited

unaudited

unaudited

unaudited

unaudited

USD

USD

USD

USD

USD

Operating revenues

Digital entertainment service revenues

1,749,583

1,483,233

1,658,914

3,232,816

3,819,380

Other revenues

—

—

—

—

—

1,380

Operating costs

Cost of Digital entertainment service

revenues

980,448

744,901

930,421

1,725,350

1,877,109

Cost of other revenues

—

—

—

—

—

980,109

Gross profit

769,135

738,332

728,493

1,507,466

1,942,271

Operating expenses

Product development and engineering

expenses

325,144

320,494

300,635

645,638

589,806

Selling and marketing expenses

580,539

526,003

760,185

1,106,542

1,756,936

General and administrative expenses

974,648

835,987

1,003,359

1,810,634

1,899,863

Other

11,165

5,214

6,555

16,380

13,049

1,891,496

1,687,698

2,070,734

3,579,194

4,259,654

Income (loss) from operations

(1,122,361)

(949,366)

(1,342,241)

(2,071,728)

(2,317,383)

Non-operating income (expense)

Interest income

414,450

381,799

338,602

796,250

617,546

Foreign exchange (loss) gain - net

90,922

(11,402)

246,830

79,520

87,917

(Loss) Gain on disposal of property,plant

and equipment

—

—

31

—

31

Other - net

3,416

46,912

2,122

50,328

4,468

508,788

417,309

587,585

926,098

709,962

(Loss) Income from continuing operations

before income taxes

(613,573)

(532,057)

(754,656)

(1,145,630)

(1,607,421)

Income tax benefit (expense)

—

—

—

—

—

(Loss) Income from continuing operations

(613,421)

Net (loss) income

(613,421)

Less: Net loss attributable to

noncontrolling interest

—

Net (loss) income attributable to

shareholders of GigaMedia

(613,421)

(Loss) Earnings per share attributable to

GigaMedia

Basic:

(Loss) Earnings from continuing

operations

(0.06)

(0.05)

(0.07)

(0.10)

(0.15)

Loss from discontinued operations

0.00

0.00

0.00

0.00

0.00

(0.06)

(0.05)

(0.07)

(0.10)

(0.15)

Diluted:

(Loss) Earnings from continuing

operations

(0.06)

(0.05)

(0.07)

(0.10)

(0.15)

Loss from discontinued operations

0.00

0.00

0.00

0.00

0.00

(0.06)

(0.05)

(0.07)

(0.10)

(0.15)

Weighted average shares outstanding:

Basic

11,052,235

11,235

Diluted

11,235

GIGAMEDIA LIMITED

CONSOLIDATED BALANCE SHEETS

06/30/2019

03/31/2019

06/30/2018

unaudited

unaudited

unaudited

USD

USD

USD

Assets

Current assets

Cash and cash equivalents

57,489,563

57,976,503

60,732,757

Marketable securities - current

—

—

—

Accounts receivable - net

591,905

589,520

672,143

Prepaid expenses

275,551

208,919

309,952

Restricted cash

525,354

517,815

511,710

Other receivables

458,383

375,192

335,119

Other current assets

131,150

127,377

121,693

Total current assets

59,471,906

59,795,326

62,683,374

Property,plant & equipment - net

92,580

100,148

173,051

Intangible assets - net

23,545

32,492

48,473

Prepaid licensing and royalty fees

574,274

383,681

1,043,823

Other assets

1,035,529

1,034,278

279,616

Total assets

61,197,834

61,345,925

64,228,337

Liabilities and equity

Short-term borrowings

—

—

—

Accounts payable

119,597

98,921

244,240

Accrued compensation

253,262

134,243

405,416

Accrued expenses

1,340,539

1,483

2,098,418

Unearned revenue

1,617,881

1,290,792

1,877

Other current liabilities

197,776

177,073

176,174

Total current liabilities

3,529,055

2,929,512

4,681,125

Other liabilities

781,187

779,919

—

Total liabilities

4,310,242

3,709,431

4,125

GigaMedia's shareholders' equity

56,887,592

57,636,494

59,547,212

Noncontrolling interest

—

—

—

Total equity

56,212

Total liabilities and equity

61,337

GIGAMEDIA LIMITED

RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS

Three months ended

Six months ended

06/30/2019

03/31/2019

06/30/2018

06/30/2019

06/30/2018

unaudited

unaudited

unaudited

unaudited

unaudited

USD

USD

USD

USD

USD

Reconciliation of Net Income (Loss) to

EBITDA

Net income (loss) attributable to GigaMedia

(613,421)

Depreciation

14,769

25,388

25,563

40,156

49,017

Amortization

12,830

12,899

11,532

25,729

15,360

Interest income

(414,450)

(381,799)

(338,602)

(796,250)

(617,546)

Interest expense

—

—

—

—

—

Income tax (benefit) expense

—

—

—

—

—

EBITDA

(1,000,424)

(875,569)

(1,056,163)

(1,875,995)

(2,160,590)

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