GigaMedia Announces First-Quarter 2023 Financial Results
TAIPEI,May 3,2023 --GigaMedia Limited (NASDAQ: GIGM) today announced its first quarter 2023 unaudited financial results.
Comments from Management
For the first quarter of 2023,GigaMedia reported revenues of $1.33 million with a gross profit of $0.79 million,an operating loss of $0.70 million and the net loss of $0.31 million.
If compared to the previous quarter,the revenues increased by 20.2% and gross profit increased by 26.5%,exhibiting not only the seasonality arising from the new year and students' winter vacation,but also our efforts in streamlining the workforce and improving the operating cost structure.
Now with a slimmer team in place,for 2023 we plan to continue our exploration of digital entertainment to further develop and promote our own products and services.
First Quarter Overview
Operating revenues increased by 20.2% in quarter-on-quarter comparison but decreased by 14.3% year-over-year.
Loss from operations slightly increased to $0.70 million from $0.68 million last quarter,and net loss was $0.31 million from net income $0.35 million last quarter mainly due to the fluctuation in foreign exchange and certain year-end evaluation in the previous quarter.
Unaudited Consolidated Financial Results
GigaMedia Limited is a diversified provider of digital entertainment services. GigaMedia's digital entertainment service business FunTown develops and operates a suite of digital entertainments in Taiwan and Hong Kong,with focus on mobile games and casual games. Unaudited consolidated results of GigaMedia are summarized in the table below.
For the First Quarter
GIGAMEDIA 1Q23 UNAUDITED CONSOLIDATED FINANCIAL RESULTS
(unaudited,all figures in US$ thousands,except per share amounts)
1Q23
4Q22
Change
(%)
1Q23
1Q22
Change
(%)
Revenues
1,325
1,102
20.2
%
1,546
(14.3
)%
Gross Profit
792
626
26.5
%
792
901
(12.1
)%
Loss from Operations
(698
)
(675
)
NM
(698
)
(828
)
NM
Net Income (Loss) Attributable to GigaMedia
(313
)
347
NM
(313
)
(1,099
)
NM
Net Income (Loss) Per Share Attributable to GigaMedia,Diluted
(0.03
)
0.03
NM
(0.03
)
(0.10
)
NM
EBITDA (A)
(704
)
13
NM
(704
)
(1,154
)
NM
Cash,Cash Equivalents and Restricted Cash
38,119
39,107
(2.5
)%
38,119
40,534
(6.0
)%
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.)
First-Quarter Financial Results
Consolidated revenues for the first quarter of 2023 increased by 20.2% quarter-on-quarter to $1.3 million,from $1.1 million in the fourth quarter of 2022,but decreased by 14.3% year-over-year from $1.5 million in the first quarter of 2022.
Consolidated gross profitincreased to $0.8 million from $0.6 million in last quarter and decreased by 12.1% from $0.9 million in the same quarter last year.
Consolidated operating expenseswere $1.5 million in the first quarter of 2023,approximately increased by 14.6% when compared to prior quarter.
Net lossfor the first quarter of 2023 was $0.3 million,which was an increase of loss from an income of $0.3 million last quarter,but a decrease from a loss of $1.1 million in the same quarter last year.
Cash,cash equivalents and restricted cashat the first quarter-end of 2023 amounted to $38.1 million,decreased by approximately $1.0 million from $39.1 million at the fourth quarter-end of 2022.
Financial Position
GigaMedia maintained its solid financial position,with cash,cash equivalents and restricted cash amounting to $38.1 million,or approximately $3.45 per share as of March 31,2023.
Business Outlook
The following forward-looking statements reflect GigaMedia's expectations as of May 3,2023. 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.
"As life is gradually returning to a post-COVID normal routine," said GigaMedia CEO James Huang,"we are optimistic for the rebounding of consumer confidence and therefore digital entertainment spendings." And as always,we will be pursuing sustainable growth and healthy margin by improving our existing products while developing and promoting new offerings in effective ways.
Meanwhile,our business strategies always include expanding through mergers and acquisitions. We will keep looking for investment opportunities that have strategic capacity to accelerate our growth and enhance shareholders' value.
Use of Non-GAAP Measures
To supplement GigaMedia's consolidated financial statements presented in accordance with U.S. 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 first quarter 2023 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. GigaMedia's digital entertainment service business develops and operates a suite of digital entertainments in Taiwan and Hong Kong,with focus on browser/mobile games and casual games. 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 2023 and its other filings with the United States Securities and Exchange Commission.
GIGAMEDIA LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended
3/31/2023
12/31/2022
3/31/2022
unaudited
unaudited
unaudited
USD
USD
USD
Operating revenues
Digital entertainment service revenues
1,325,352
1,101,507
1,545,575
1,575
Operating costs
Cost of digital entertainment service revenues
533,136
475,714
644,369
533,369
Gross profit
792,216
625,793
901,206
Operating expenses
Product development and engineering expenses
178,192
163,043
322,438
Selling and marketing expenses
431,089
406,749
435,205
General and administrative expenses
879,655
730,850
971,101
Other
1,082
(245
)
226
1,490,018
1,300,397
1,728,970
Loss from operations
(697,802
)
(674,604
)
(827,764
)
Non-operating income (expense)
Interest income
404,550
343,762
62,835
Foreign exchange (loss) gain - net
(826
)
413,529
(339,131
)
Changes in the fair value of an instrument recognized at fair value
(18,729
)
227,384
—
Other-net
107
37,289
4,922
385,102
1,021,964
(271,374
)
Income (loss) from continuing operations before income taxes
(312,700
)
347,360
(1,099,138
)
Income tax expense
—
(263
)
—
Net income (loss) attributable to shareholders of GigaMedia
(312,097
(1,138
)
Earnings (loss) per share attributable to GigaMedia
Basic:
Earnings (loss) from continuing operations
(0.03
)
0.03
(0.10
)
Diluted:
Earnings (loss) from continuing operations
(0.03
)
0.03
(0.10
)
Weighted average shares outstanding:
Basic
11,052,235
11,235
Diluted
11,235
GIGAMEDIA LIMITED
CONSOLIDATED BALANCE SHEETS
3/31/2023
12/31/2022
3/31/2022
unaudited
audited
unaudited
USD
USD
USD
Assets
Current assets
Cash and cash equivalents
37,806,540
38,794,467
40,221,362
Marketable securities-current
7,950,000
7,000
—
Accounts receivable - net
154,890
199,109
245,742
Prepaid expenses
368,322
60,059
728,280
Restricted cash
312,739
312,823
312,772
Other receivables
766,871
374,025
21,143
Other current assets
122,895
135,624
151,560
Total current assets
47,482,257
47,826,107
41,680,859
Marketable securities - noncurrent
2,371,000
2,000
10,322,000
Property,plant & equipment - net
146,094
102,729
79,266
Intangible assets - net
16,537
19,421
9,166
Prepaid licensing and royalty fees
140,850
176,530
299,117
Other assets
1,546,465
1,640,443
2,368
Total assets
51,703,203
52,136,230
54,712,776
Liabilities and equity
Accounts payable
78,604
52,660
47,916
Accrued compensation
133,645
186,984
188,353
Accrued expenses
878,269
964,203
1,436,606
Unearned revenue
871,981
817,446
890,395
Other current liabilities
636,631
616,151
820,580
Total current liabilities
2,599,130
2,637,444
3,383,850
Other liabilities
793,946
893,174
1,262,455
Total liabilities
3,393,076
3,530,618
4,646,305
Total equity
48,310,127
48,605,612
50,066,471
Total liabilities and equity
51,776
GIGAMEDIA LIMITED
Reconciliations of Non-GAAP Results of Operations
Three months ended
3/31/2023
12/31/2022
3/31/2022
unaudited
unaudited
unaudited
USD
USD
USD
Reconciliation of Net Income (Loss) to EBITDA
Net income (loss) attributable to GigaMedia
(312,138
)
Depreciation
10,326
6,998
5,764
Amortization
3,054
2,803
2,239
Interest income
(404,550
)
(343,762
)
(62,835
)
Interest expense
—
—
—
Income tax expense
—
263
—
EBITDA
(703,870
)
13,399
(1,153,970
)
