GigaMedia Announces Third-Quarter 2017 Financial Results

TAIPEI, Taiwan, Oct. 31, 2017 /PRNewswire/ -- GigaMedia Limited (NASDAQ: GIGM) today announced its third-quarter 2017 unaudited financial results.

Comments from Management

In the third quarter of 2017, a good progress in curbing net cash outflow can be seen in GigaMedia. As we have switched our focus to developing and cultivating long-term relationship with customers, even with no new game published in the past three quarters, stable revenue generated from the long-lifecycle games and the effort we put in to optimize the marketing cost in acquiring new users had led our game division reaching the break-even point.

Strategies of focusing on long-lifespan mobile games and executing effective resource planning and management help the Company to increase gamers' satisfaction and stickiness. At the same time, we add new contents onto our social casino game platform to boost gamers' retention and return rate.

To have reasonable margins and positive cash flow in game sector also helps GigaMedia to bring in profit to the Company and Shareholders.

Third Quarter Overview

• Gross Profit increases 2.32% to approximately $1.5 million compared to the prior year third quarter.
• Operating expenses decreased 28.69% to $1.8 million compared to $2.5 million for comparable prior quarter period.
• Total current assets were $65.9 million and the total assets were $66.9 million as of September 30, 2017. The total liabilities decreased $3.1 million quarter-on-quarter from $9.9 million to $6.8 million.
• The net asset value remained $5.4 per share.
• Short-term debt came to zero, compared to $2.6 million as of both the end of second quarter of 2017 and the third quarter of 2016.
• Adjusted EBITDA for the nine months ended September 30, 2017 was minus $0.1 million, compared to adjusted EBITA of minus $3.2 million in the same period last year.

Unaudited Consolidated Financial Results

GigaMedia Limited is a diversified provider of online games. GigaMedia's online games business FunTown develops and operates a suite of games in Taiwan and Hong Kong, with focus on browser/mobile games and social casino games.

Unaudited consolidated results of GigaMedia are summarized in the table below.

For the third Quarter

Third-Quarter Financial Results

• Consolidated revenues for the third quarter of 2017 decreased 26.08% quarter-on-quarter from $3.1 million to $2.3 million and slightly decreased year-over-year from $2.5 million to $2.3 million. For the nine months ended September 30, 2017, revenue was $9.6 million, compared to $6.9 million in the same period last year.
• Consolidated gross profit decreased 16.79% quarter-on-quarter from $1.8 million to $1.5 million and increased 2.33% year-over-year from $1.4 million to $1.5 million. Gross profit for the nine months ended September 30, 2017 was $5.5 million, compared to $3.9 million in the same period last year.
• Consolidated operating expenses were $1.8 million in the third quarter of 2017. A decrease of $0.7 million which is about 28.69% from the second quarter of 2017 which reflected the effective budgeting and cost management on both selling and marketing expenses and general and administrative expenses. 
  
  The Company has saved $1.2 million in total on online game costs and expenses since the last quarter, from $3.2 million to $2.1 million.
• Consolidated loss from operation of the third quarter of 2017 was $0.3 million, and the decreased loss reflected low operating costs and expenses.
  
  Game division reached break-even point. Income from operation in the third quarter of 2017 was $0.2 million, comparing to a loss of $0.1 million of the second quarter of 2017.
  
  Consolidated loss from operation for the nine months ended September 30, 2017 was $1.5 million, compared to $2.7 million in the same period last year.
• Consolidated net income of the third quarter of 2017 was a loss of $0.1 million compared to a loss of $2.2 million in the third quarter of 2016. 
  
  For the nine months ended September 30, 2017, net income was $15 thousands, compared to a loss of $3.3 million in the same period last year. And net income per diluted share for the nine months ended September 30, 2017 was $0.01, compared to net income per diluted share of minus $0.29 in the same period last year.
• Cash and marketable securities-current in the third quarter of 2017 accounted for $63.8 million which decreased 4.04% from $66.4 million in the second quarter of 2017.

Financial Position

GigaMedia maintained its solid financial position with cash and cash equivalents, marketable securities-current and restricted cash accounted for $64.3 million as of September 30, 2017, or $5.8 per share.

Business Outlook

The following forward-looking statements reflect GigaMedia's expectations as of October 31, 2017. 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 2016 Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission as referenced below, actual results may differ materially.

GigaMedia CEO James Huang stated: "We are working on content enrichment and platform optimization for our social casino games to maintain stable cash flow. Two to three female-oriented games are scheduled to be released in the next twelve months. This will also build a stronger revenue stream for GigaMedia.

With spend smart approach, stable revenues and improved cash flow, we are confident that we are on the right track to deliver resilient financial performance. We continue reaching out to a wide range of business targets and having full studies on them, and we will carefully select investment objects with comprehensive consideration."

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 third quarter 2017 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 online games. GigaMedia's online games business develops and operates a suite of games in Taiwan and Hong Kong, with focus on browser/mobile games and social casino 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 2017 and its other filings with the United States Securities and Exchange Commission.

(Tables to follow)

For further information contact:

Annie Sun
Investor Relations Department
+886-2-2656-8096
[email protected]

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SOURCE GigaMedia Limited

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