Work in progress. RealNetworks (RNWK) reported record revenue of $89.4 million in 2Q06, up 8 percent from $82.7 million in 2Q05. The net income looks va-va-va-voom — $38.9 million or $0.22 per share — until you remember that includes the Microsoft settlement and other special items. The adjusted net is $4.8 million, or $0.03 per share, still a healthy increase from $1.8 million or $0.01 per share in 2Q05. Analysts expected $0.20 cents per share on revenue of $89.4 million.
— Casual gaming continues to deliver for RNWK, $21.2 million in 2Q06 for a 55 percent increase over the same quarter last year.
— Music brought in $30.1 million, up 21 percent over the same quarter last year.
— Media Software and Services revenue dropped 18 percent to $26.1 million.
— Technology Products and Solutions revenue was down slightly to $12 million.
— Subscriptions: RNWK ended the quarter with 2.4 million subscribers including 1.6 million music subscribers.
Earnings call:
— Music plans: Chairman and CEO Rob Glaser talked up the company’s plans for an end-to-end music solution without owning hardware and software but in the vaguest of terms. “It will be very different from anything anyone else has done in music,” he said while declining to provide any details. “That’s a topic for another day,” he told an analyst. But Glaser had plenty to say about Microsoft’s plans and his belief that Real stands to benefit. Real’s settlement with Microsoft including a 10-year license for Microsoft’s DRM, which Glaser said means Real will be able to remain compatible with MSFT even if Microsoft “abandons” its current partners … then he said emphatically that “Microsoft has abandoned these guys. … That’s a great gift from them and we intend to capitalize on it.” (More on this coming in another post but even before the Real call began Microsoft’s Robbie Bach assured the financial community that the company is not abandoning the Plays For Sure program).
— In-game advertising: Glaser said the initiative that began in June was not a material contributor to revenue for the second quarter and was not expected to be in the third quarter. It’s in six games and so far the click-thru rates exceed expectations and it shows no impact in terms of inhibiting use. He compared the way the ads are presented to the activities between innings of a baseball game. Games pause, go the next level; it’s a logical time for an ad.
Earnings | Webcast/slides (5 p.m. eastern)| Financials
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