Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 30, 2018 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | RNWK | |
Entity Registrant Name | REALNETWORKS INC | |
Entity Central Index Key | 1,046,327 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 37,567,385 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 49,785 | $ 51,196 |
Short-term investments | 4,548 | 8,779 |
Trade accounts receivable, net of allowances of $736 and $937 | 13,740 | 12,689 |
Deferred costs, current portion | 444 | 426 |
Prepaid expenses and other current assets | 4,420 | 3,715 |
Current assets of discontinued operations | 5,500 | 17,456 |
Total current assets | 78,437 | 94,261 |
Equipment, software, and leasehold improvements, at cost: | ||
Equipment and software | 43,881 | 46,417 |
Leasehold improvements | 3,619 | 3,536 |
Total equipment, software, and leasehold improvements, at cost | 47,500 | 49,953 |
Less accumulated depreciation and amortization | 43,848 | 46,093 |
Net equipment, software, and leasehold improvements | 3,652 | 3,860 |
Restricted cash equivalents | 2,400 | 2,400 |
Other assets | 6,049 | 5,588 |
Deferred costs, non-current portion | 800 | 955 |
Deferred tax assets, net | 1,087 | 1,047 |
Other intangible assets, net | 243 | 325 |
Goodwill | 13,106 | 13,060 |
Total assets | 105,774 | 121,496 |
Current liabilities: | ||
Accounts payable | 3,640 | 3,785 |
Accrued and other current liabilities | 12,806 | 12,365 |
Commitment to Napster | 2,750 | 2,750 |
Deferred revenue, current portion | 2,142 | 3,097 |
Current liabilities of discontinued operations | 5,373 | 17,107 |
Total current liabilities | 26,711 | 39,104 |
Deferred revenue, non-current portion | 397 | 443 |
Deferred rent | 1,009 | 982 |
Deferred tax liabilities, net | 20 | 19 |
Other long-term liabilities | 1,295 | 1,775 |
Total liabilities | 29,432 | 42,323 |
Commitments and contingencies | ||
Preferred stock, $0.001 par value, no shares issued and outstanding: | ||
Common stock, $0.001 par value authorized 250,000 shares; issued and outstanding 37,564 shares in 2018 and 37,341 shares in 2017 | 37 | 37 |
Additional paid-in capital | 639,652 | 638,727 |
Accumulated other comprehensive loss | (59,150) | (59,547) |
Retained deficit | (504,197) | (500,044) |
Total shareholders’ equity | 76,342 | 79,173 |
Total liabilities and shareholders’ equity | 105,774 | 121,496 |
Preferred stock, Series A | ||
Preferred stock, $0.001 par value, no shares issued and outstanding: | ||
Preferred stock | 0 | 0 |
Preferred stock, Undesignated series | ||
Preferred stock, $0.001 par value, no shares issued and outstanding: | ||
Preferred stock | $ 0 | $ 0 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Allowance for Doubtful Accounts Receivable, Current | $ 736,000 | $ 937,000 |
Preferred stock, par value (USD per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 0 | |
Preferred stock, shares outstanding | 0 | |
Common stock, par value (USD per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 250,000,000 | 250,000,000 |
Common stock, issued | 37,289,000 | 37,341,000 |
Common stock, outstanding | 37,289,000 | 37,341,000 |
Preferred stock, Series A | ||
Preferred stock, authorized | 200,000 | 200,000 |
Preferred stock, Undesignated series | ||
Preferred stock, authorized | 59,800,000 | 59,800,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | ||
Income Statement [Abstract] | |||
Net revenue | [1] | $ 19,650 | $ 19,691 |
Cost of revenue | [2] | 5,136 | 6,569 |
Gross profit | 14,514 | 13,122 | |
Operating expenses: | |||
Research and development | 7,694 | 7,349 | |
Sales and marketing | 5,997 | 7,155 | |
General and administrative | 5,601 | 5,303 | |
Restructuring and other charges | 501 | 1,564 | |
Lease exit and related benefit | (325) | 0 | |
Total operating expenses | 19,468 | 21,371 | |
Operating loss | (4,954) | (8,249) | |
Other income (expenses): | |||
Interest income, net | 87 | 128 | |
Equity in net loss of Napster investment | 0 | (748) | |
Other income (expense), net | (41) | (226) | |
Total other income (expenses), net | 46 | (846) | |
Loss from continuing operations before income taxes | (4,908) | (9,095) | |
Income tax expense | 270 | 455 | |
Net loss from continuing operations | (5,178) | (9,550) | |
Income (Loss) from Discontinued Operations, Net of Tax, Attributable to Parent | 0 | 126 | |
Net loss | $ (5,178) | $ (9,424) | |
Income (Loss) from Continuing Operations, Per Basic Share | $ (0.14) | $ (0.26) | |
Discontinued Operation, Income (Loss) from Discontinued Operation, Net of Tax, Per Basic Share | 0 | 0.01 | |
Basic net income (loss) per share (USD per share) | (0.14) | (0.25) | |
Income (Loss) from Continuing Operations, Per Diluted Share | (0.14) | (0.26) | |
Discontinued Operation, Income (Loss) from Discontinued Operation, Net of Tax, Per Diluted Share | 0 | 0.01 | |
Diluted net income (loss) per share (USD per share) | $ (0.14) | $ (0.25) | |
Shares used to compute basic net income (loss) per share | 37,449 | 37,030 | |
Shares used to compute diluted net income (loss) per share | 37,449 | 37,030 | |
Comprehensive income (loss): | |||
Unrealized investment holding gains, net of reclassification adjustments | $ 4 | ||
Foreign currency translation adjustments, net of reclassification adjustments | 594 | ||
Total other comprehensive income | $ 397 | 598 | |
Net loss | (5,178) | (9,424) | |
Comprehensive loss | $ (4,781) | $ (8,826) | |
[1] | Quarters ended March 31,Components of Revenue2018 2017License Fees7,414 7,153Service Revenue12,236 12,538Net Revenue19,650 19,691 Three Months Ended March 31,Components of Revenue2018 2017 | ||
[2] | Quarters ended March 31,Components of Cost of Revenue2018 2017License Fees1,755 1,909Service Revenue3,381 4,660Net Revenue Costs5,136 6,569 Three Months Ended March 31,Components of Cost of Revenue2018 2017 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | ||
Income Statement [Abstract] | |||
Net loss | $ (5,178) | $ (9,424) | |
Components of net revenue: | |||
License fees | 7,414 | 7,153 | |
Service revenue | 12,236 | 12,538 | |
Net revenue | [1] | 19,650 | 19,691 |
Components of cost of revenue: | |||
License fees | 1,755 | 1,909 | |
Service revenue | 3,381 | 4,660 | |
Cost of revenue | [2] | $ 5,136 | $ 6,569 |
[1] | Quarters ended March 31,Components of Revenue2018 2017License Fees7,414 7,153Service Revenue12,236 12,538Net Revenue19,650 19,691 Three Months Ended March 31,Components of Revenue2018 2017 | ||
[2] | Quarters ended March 31,Components of Cost of Revenue2018 2017License Fees1,755 1,909Service Revenue3,381 4,660Net Revenue Costs5,136 6,569 Three Months Ended March 31,Components of Cost of Revenue2018 2017 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (5,178) | $ (9,424) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 620 | 921 |
Stock-based compensation | 1,157 | 1,434 |
Equity in net loss of Napster | 0 | 748 |
Deferred income taxes, net | (40) | (20) |
Fair value of warrants granted in 2015 and 2017, net of subsequent mark to market adjustments in 2018 and 2017 | 21 | (471) |
Trade accounts receivable | 11,188 | (3,451) |
Prepaid expenses and other assets | (917) | 452 |
Accounts payable | (10,622) | 147 |
Accrued and other liabilities | (1,654) | 254 |
Net cash used in operating activities | (5,425) | (9,410) |
Cash flows from investing activities: | ||
Purchases of equipment, software, and leasehold improvements | (316) | (207) |
Purchases of short-term investments | 0 | (6,142) |
Proceeds from sales and maturities of short-term investments | 4,231 | 21,695 |
Advance to Napster | 0 | (1,500) |
Net cash provided by investing activities | 3,915 | 13,846 |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock (stock options and stock purchase plan) | 0 | 34 |
Tax payments from shares withheld upon vesting of restricted stock | (232) | (181) |
Net cash used in financing activities | (232) | (147) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 331 | 488 |
Net increase (decrease) in cash, cash equivalents and restricted cash | (1,411) | 4,777 |
Cash, cash equivalents and restricted cash, beginning of period | 53,596 | 36,421 |
Cash, cash equivalents, and restricted cash end of period | 52,185 | 41,198 |
Supplemental disclosure of cash flow information: | ||
Cash received from income tax refunds | 70 | 0 |
Cash paid for income taxes | 183 | 446 |
Non-cash investing activities: | ||
Increase (decrease) in accrued purchases of equipment, software, and leasehold improvements | $ (32) | $ 37 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | Note 1 Description of Business and Summary of Significant Accounting Policies Description of Business. RealNetworks, Inc. and subsidiaries is a global provider of network-delivered digital media applications and services that make it easy to manage, play and share digital media. The Company also develops and markets software products and services that enable the creation, distribution and consumption of digital media, including audio and video. Inherent in our business are various risks and uncertainties, including a limited history of certain of our product and service offerings. RealNetworks' success will depend on the acceptance of our technology, products and services and the ability to generate related revenue. In this Quarterly Report on Form 10-Q (10-Q or Report), RealNetworks, Inc. and Subsidiaries is referred to as “RealNetworks”, the “Company”, “we”, “us”, or “our”. Basis of Presentation. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal, recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations for the periods presented. Operating results for the quarter ended March 31, 2018 are not necessarily indicative of the results that may be expected for any subsequent period or for the year ending December 31, 2018 . Certain information and disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2017 (the 10-K). Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Note 2 Recent Accounting Pronouncements Recently adopted accounting pronouncements In May 2014, and subsequently updated and amended in 2015 and 2016, the Financial Accounting Standards Board (FASB) issued new revenue recognition guidance (Topic 606), which replaced most existing revenue recognition guidance in U.S. GAAP. The guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. We adopted Topic 606 as of January 1, 2018 using the modified retrospective transition method. Refer to Note 3 Revenue Recognition for further details. In November 2016, the FASB issued guidance on the classification and presentation of changes in restricted cash on the statement of cash flows. We adopted this guidance on January 1, 2018, and retroactively applied the changes to the Statement of Cash Flows for all periods presented. As a result, we no longer classify changes in restricted cash within the investing section of our Statement of Cash flows, and instead include restricted cash with unrestricted cash as a combined total. The impact of the adoption did not have a material impact on the Condensed Consolidated Financial Statements. Recently issued accounting pronouncements not yet adopted In February 2016, the FASB issued new guidance related to the accounting for leases. A major change in the new guidance is that lessees will be required to present right-of-use assets and lease liabilities on the balance sheet. The new guidance will be effective for us on January 1, 2019, including interim periods within 2019. We continue to evaluate the effect that the guidance will have on our consolidated financial statements and related disclosures. We expect that the guidance will result in a material change to our Consolidated Balance Sheet as a result of capitalizing certain of our operating leases. In January 2017, the FASB issued new guidance simplifying the test for goodwill impairment. The new guidance eliminates Step 2 from the goodwill impairment test, instead requiring an entity to recognize a goodwill impairment charge for the amount by which the reporting unit's carrying amount exceeds the reporting unit's fair value. This guidance is effective for interim and annual goodwill impairment tests beginning on December 15, 2019, with early adoption permitted. We will be evaluating the impact of the guidance, but do not currently expect the adoption to have a material impact on our consolidated financial statements and related disclosures. |
Revenue Recognition Revenue Rec
Revenue Recognition Revenue Recognition | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Note 3 Revenue Recognition Adoption of New Revenue Standard On January 1, 2018 we adopted the new revenue recognition standard by applying the modified retrospective approach to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under the new revenue recognition standard, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior periods. We recorded a net decrease to opening retained deficit of $1.0 million as of January 1, 2018 due to the cumulative impact of adopting the new revenue recognition standard, with the impact primarily related to licensing of our RealPlayer product and full recognition of non-recurring engineering fees which were previously deferred and amortized over the life of the contract. The net impact to revenues as a result of adopting the new standard was an increase of $3.5 million for the three months ended March 31, 2018. Performance Obligations We generate all of our revenue through contracts with customers. Revenue is either recognized over time as the service is provided, or at a point in time when the product is transferred to the customer, depending on the contract type. Our performance obligations typically have an original duration of one year or less. Our software licensing revenue stream generates revenue through the on-premises licensing of our codec technologies and integrated RealTimes platform. We recognize revenue upfront at the point in time when the software is made available to the customer. In cases where a sale or usage-based royalty is promised in exchange for a license of our codec technologies, revenue is recognized as the subsequent usage occurs for the contractual amount owed by the customer for that usage, as is allowed under the licensing of intellectual property section of Topic 606. Software licensing in our Mobile Services segment is invoiced on a monthly basis either based on usage of the respective product, or on a fixed fee basis. Our Consumer Media licensing is invoiced either quarterly or annually based on the usage of the respective product, or on a fixed fee basis. For each of these, the timing of payment generally does not vary significantly from the timing of invoice, however, certain of our long-term Consumer Media licensing contracts have extended payment schedules which may exceed one year. Our subscription services revenue stream allows customers to use hosted software over the respective contract period without taking possession of the technology. The stream is primarily comprised of our intercarrier messaging service, ringback tones, PC-based games subscriptions and our RealPlayer and SuperPass services. Revenues related to subscription service products are recognized ratably over the contract period, or as we have the right to invoice as a practical expedient when that amount corresponds directly with the value to the customer of our performance completed to date. Consumer subscription products are paid in advance, typically on a monthly or quarterly basis. Subscription services offered to businesses are invoiced on a monthly basis, generally based upon the amount of usage for the previous month, and the timing of payment generally does not vary significantly from the timing of invoice. Our product sales revenue stream includes purchases of mobile and wholesale games, as well as our RealPlayer product. Retail purchases are recognized and paid for at the point in time the product is made available to the end user. For games which are sold through third-party application storefronts, we evaluate the transaction for gross or net revenue recognition. As we typically are the primary obligor in our third-party transactions, we recognize revenues gross of any app store fees. We then receive monthly payments from the respective app store for all purchases within the respective month. Other revenues consist primarily of advertising and the distribution of third-party products, which are recognized and paid on a cost per impression or cost per download basis. Disaggregation of Revenue The following table presents our disaggregated revenue by source and segment (in thousands): Quarter Ended March 31, 2018 Consumer Media Mobile Services Games Business Line Software License $ 3,337 $ 1,335 $ — Subscription Services 1,285 7,369 2,693 Product sales 340 — 2,402 Advertising and other 521 — 368 Total $ 5,483 $ 8,704 $ 5,463 The following table presents our disaggregated revenue by sales channel (in thousands): Quarter Ended March 31, 2018 Consumer Media Mobile Services Games Sales Channel Business to Business $ 3,858 $ 8,530 $ 751 Direct to Consumer 1,625 174 4,712 Total $ 5,483 $ 8,704 $ 5,463 Contract Balances The timing of revenue recognition may differ from the timing of invoicing to our customers. We record accounts receivable when the right to consideration becomes unconditional, except for the passage of time. For certain contracts, payment schedules may exceed one year; for those contracts we recognize a long-term receivable. As of March 31, 2018, our balance of long-term accounts receivable was $0.5 million , and is included in other long-term assets on our condensed consolidated balance sheets. During the quarter ended March 31, 2018, we recorded no impairments to our contract assets. We record deferred revenue when cash payments are received or due in advance of our completion of the underlying performance obligation. As of March 31, 2018 we had a deferred revenue balance of $2.5 million , a decrease of $1.0 million from December 31, 2017. The decrease is due primarily to our transition to Topic 606, with $0.8 million recorded to retained earnings on January 1, 2018. The decrease is further due to $0.2 million of revenues recognized which were included in the deferred balance at December 31, 2017. Significant Estimates For certain of our contracts, we recognize revenues using the sales- and usage-based exception as defined in the licensing guidance of Topic 606. For these contracts, we typically receive reporting of actual usage a quarter in arrears, and as such, we are required to estimate the current quarter's usage. To make these estimates, we utilize historical reporting information, as well as industry trends and interim reporting to quantify total quarterly usage. As actual usage information is received, we record a true-up in the following quarter to reflect any variance from our estimate. Practical Expedients For those contracts for which we recognize revenue at the amount to which we have the right to invoice for service performed, we do not disclose the value of any unsatisfied performance obligations. We also do not disclose the remaining unsatisfied performance obligations which have an original duration of one year or less. Additionally, we immediately expense sales commissions when incurred as the amortization period would have been less than one year. These costs are recorded within sales and marketing expense. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Note 4 Stock-Based Compensation Total stock-based compensation expense recognized in our unaudited condensed consolidated statements of operations and comprehensive income (loss) includes amounts related to stock options, restricted stock, and employee stock purchase plans and was as follows (in thousands): Quarter Ended 2018 2017 Total stock-based compensation expense $ 1,157 $ 1,434 The fair value of options granted determined using the Black-Scholes model used the following weighted-average assumptions: Quarter Ended 2018 2017 Expected dividend yield 0 % 0 % Risk-free interest rate 2.48 % 2.23 % Expected life (years) 4.1 6.8 Volatility 35 % 38 % The total stock-based compensation amounts for 2018 and 2017 disclosed above are recorded in their respective line items within operating expenses in the unaudited condensed consolidated statements of operations and comprehensive income (loss). Included in the expense for the three months ended March 31, 2018 and 2017 was stock compensation expense recorded in the first quarter of 2018 and 2017 related to our 2017 and 2016 incentive bonuses paid in fully vested restricted stock units, which were authorized and granted in the first quarter of 2018 and 2017, respectively. As of March 31, 2018 , $3.1 million of total unrecognized compensation cost, net of estimated forfeitures, related to stock awards. The unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 3 years. |
Rhapsody Joint Venture
Rhapsody Joint Venture | 3 Months Ended |
Mar. 31, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Rhapsody Joint Venture | Note 5 Napster Joint Venture As of March 31, 2018 we owned approximately 42% of the issued and outstanding stock of Rhapsody International Inc., doing business as Napster, and account for our investment using the equity method of accounting. Rhapsody America LLC was initially formed in 2007 as a joint venture between RealNetworks and MTV Networks, a division of Viacom International Inc. (MTVN), to own and operate a business-to-consumer digital audio music service originally branded as Rhapsody. The service was re-branded in 2016 as Napster. In this Note, we refer to the business as Napster, although the legal entity in which we hold our investment is Rhapsody International, Inc. Following certain restructuring transactions effective March 31, 2010, we began accounting for our investment using the equity method of accounting. As part of the 2010 restructuring transactions, RealNetworks contributed $18.0 million in cash, the Rhapsody brand and certain other assets, including content licenses, in exchange for shares of convertible preferred stock of Rhapsody, carrying a $10.0 million preference upon certain liquidation events. We recorded our share of losses of Napster of $0.0 million and $0.7 million for the quarters ended March 31, 2018 and 2017, respectively. Because of the $10.0 million liquidation preference on the preferred stock we hold in Napster, under the equity method of accounting we did not record any share of Napster losses that would reduce our carrying value of Napster, which is impacted by Napster equity transactions, below $10.0 million , until Napster's book value was reduced below $10.0 million . This occurred in the first quarter of 2015. As of March 31, 2018 , the carrying value of our Napster equity investment was zero , as we do not have any further commitment to provide future support to Napster, with the exception of the guaranty discussed below. Unless we commit to provide future financial support to Napster, we do not record any further share of Napster losses that would reduce our carrying value of Napster below zero; in accordance with GAAP, we currently track those suspended losses outside of our financial statements. In December 2016, RealNetworks entered into an agreement to loan up to $5 million to Napster for general operating purposes, as did Napster's other 42% owner. Each entity fully funded its loan, providing $3.5 million each in December 2016 and the remaining $1.5 million each in January 2017. These 12-month loans are subordinate to senior creditors, and bear an interest a rate of 10% per annum, which accretes into the outstanding principal balance. At the time of signing the agreement we recognized previously suspended Napster losses, and, consequently, we did not record a receivable related to this loan. The parties have agreed to extend the term of these loans. As discussed in Note 4 to our 2017 Form 10-K, during November 2017, Napster entered into an amendment to its revolving credit facility. In conjunction with the amendment, both RealNetworks and Napster's other 42% owner entered into an arrangement to guarantee up to $2.75 million each of Napster's outstanding indebtedness on the credit facility. As a result of this guaranty, in December 2017 we recognized previously suspended Napster losses up to the full $2.75 million guaranty in our consolidated statement of operations. As of the date of this filing, RealNetworks has not been required to pay any amounts under the guaranty, and the amount is reflected on our condensed consolidated balance sheets as Commitment to Napster. Summarized financial information for Napster, which represents 100% of its financial information, is as follows (in thousands): Quarter Ended 2018 2017 Net revenue $ 40,290 $ 47,462 Gross profit 9,278 6,583 Operating income (loss) 6,415 (5,111 ) Net income (loss) 4,448 (5,640 ) |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 6 Fair Value Measurements Items Measured at Fair Value on a Recurring Basis The following table presents information about our financial assets that have been measured at fair value on a recurring basis as of March 31, 2018 and December 31, 2017 , and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands). Fair Value Measurements as of Amortized Cost as of March 31, 2018 March 31, 2018 Level 1 Level 2 Level 3 Total Cash and cash equivalents: Cash $ 30,332 $ — $ — $ 30,332 $ 30,332 Money market funds 19,453 — — 19,453 19,453 Total cash and cash equivalents 49,785 — — 49,785 49,785 Short-term investments: Corporate notes and bonds — 4,548 — 4,548 4,547 Total short-term investments — 4,548 — 4,548 4,547 Restricted cash equivalents — 2,400 — 2,400 2,400 Warrants issued by Napster (included in Other assets) — — 968 968 — Total $ 49,785 $ 6,948 $ 968 $ 57,701 $ 56,732 Fair Value Measurements as of Amortized Cost as of December 31, 2017 December 31, 2017 Level 1 Level 2 Level 3 Total Cash and cash equivalents: Cash $ 31,065 $ — $ — $ 31,065 $ 31,065 Money market funds 20,131 — — 20,131 20,131 Total cash and cash equivalents 51,196 — — 51,196 51,196 Short-term investments: Corporate notes and bonds — 8,779 — 8,779 8,779 Total short-term investments — 8,779 — 8,779 8,779 Restricted cash equivalents — 2,400 — 2,400 2,400 Warrants issued by Napster (included in Other assets) — — 989 989 — Total $ 51,196 $ 11,179 $ 989 $ 63,364 $ 62,375 Restricted cash equivalents as of March 31, 2018 and December 31, 2017 relates to cash pledged as collateral against letters of credit in connection with lease agreements. Realized gains or losses on sales of short-term investment securities for the quarters ended March 31, 2018 and 2017 were not significant. Gross unrealized gains and gross unrealized losses on short-term investment securities as of March 31, 2018 and December 31, 2017 were also not significant. Investments with remaining contractual maturities of five years or less are classified as short-term because the investments are marketable and highly liquid, and we have the ability to utilize them for current operations. Contractual maturities of short-term investments as of March 31, 2018 (in thousands): Estimated Fair Value Within one year $ 4,187 Between one year and five years 361 Total short-term investments $ 4,548 In February 2015, Napster issued warrants to purchase Napster common shares to each of RealNetworks and Napster's one other large stockholder, Columbus Nova. The warrants were issued as compensation for past services provided by RealNetworks and Columbus Nova, and both warrants covered the same number of underlying shares, with a 10 year contractual term. The exercise price of the warrants was equal to the fair value of the underlying shares on the issuance date, and we used the Black-Scholes option-pricing model to calculate the fair value of the warrant, using an expected term of 5 years and expected volatility of 55% . On the date of issuance, we recognized and recorded the $1.2 million fair value of the warrant issued to RealNetworks within Other assets in the unaudited condensed consolidated balance sheets, and as an expense reduction within General and administrative expense in the unaudited condensed consolidated statements of operations. The warrants are free-standing derivatives and as such their fair value is determined each quarter using updated inputs in the Black-Scholes option-pricing model. At December 31, 2017 due to the management change and strategic shift undertaken by Napster, we determined that a change to the expected term was necessary. As a result, we extended the expected term by 3.25 years , resulting in a total expected term for the warrant of 8.25 years . During the three months ended March 31, 2018 , the decrease in the fair value of the warrants was insignificant. In February 2017, Napster issued additional warrants to purchase Napster common shares to both RealNetworks and Columbus Nova. Consistent with the warrants issued in 2015, the 2017 warrants were issued as compensation for past services provided by RealNetworks and Columbus Nova, and both warrants covered the same number of underlying shares, with a 10 year contractual term. The exercise price of the warrants exceeded the fair value of the underlying shares on the issuance date, and we used the Black-Scholes option-pricing model to calculate the fair value of the warrant, using an expected term of 5 years and expected volatility of 55% , resulting in a recognized fair value of $0.5 million in Other assets in the unaudited condensed consolidated balance sheets, and as an expense reduction within general and administrative expense in the unaudited condensed consolidated statements of operations. At December 31, 2017, due to the management change and strategic shift undertaken by Napster, we determined that a change to the expected term was necessary. As a result, we extended the expected term by 1 year, resulting in a total expected term for the warrant of 6 years . During the three months ended March 31, 2018 , the decrease in the fair value of the warrants was insignificant. Items Measured at Fair Value on a Non-recurring Basis Certain of our assets and liabilities are measured at estimated fair value on a non-recurring basis, using Level 3 inputs. These instruments are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). During the three months ended March 31, 2018 and 2017 , we did not record any impairments on those assets required to be measured at fair value on a non-recurring basis. See Note 11 , Lease Exit and Related Charges , for a discussion of the losses related to reductions in the use of RealNetworks' office space, which were recorded at the estimated fair value of remaining lease obligations, less expected sub-lease income. |
Other Intangible Assets
Other Intangible Assets | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other Intangible Assets | Note 7 Other Intangible Assets Other intangible assets (in thousands): March 31, 2018 December 31, 2017 Gross Amount Accumulated Amortization Net Gross Amount Accumulated Amortization Net Amortizing intangible assets: Customer relationships $ 32,534 $ 32,310 $ 224 $ 32,286 $ 31,997 $ 289 Developed technology 25,313 25,313 — 25,177 25,177 — Patents, trademarks and tradenames 3,979 3,960 19 3,932 3,896 36 Service contracts 5,614 5,614 — 5,576 5,576 — Total $ 67,440 $ 67,197 $ 243 $ 66,971 $ 66,646 $ 325 No impairments of other intangible assets were recognized in either of the three months ended March 31, 2018 or 2017 . |
Goodwill
Goodwill | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Note 8 Goodwill Changes in goodwill (in thousands): Balance, December 31, 2017 $ 13,060 Effects of foreign currency translation 46 Balance, March 31, 2018 $ 13,106 Goodwill by segment (in thousands): March 31, Consumer Media $ 580 Mobile Services 2,228 Games 10,298 Total goodwill $ 13,106 No impairment of goodwill was recognized in either of the three months ended March 31, 2018 or in 2017 . |
Accrued and Other Current Liabi
Accrued and Other Current Liabilities | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
Accrued and Other Current Liabilities | Note 9 Accrued and Other Current Liabilities Accrued and other current liabilities (in thousands): March 31, 2018 December 31, 2017 Royalties and other fulfillment costs $ 3,197 $ 2,965 Employee compensation, commissions and benefits 4,757 4,384 Sales, VAT and other taxes payable 1,668 1,782 Other 3,184 3,234 Total accrued and other current liabilities $ 12,806 $ 12,365 |
Restructuring Charges
Restructuring Charges | 3 Months Ended |
Mar. 31, 2018 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Charges | Note 10 Restructuring Charges Restructuring and other charges in 2018 and 2017 consist of costs associated with the ongoing reorganization of our business operations and our ongoing expense re-alignment efforts. The expense amounts in both years relate primarily to severance costs due to workforce reductions. Restructuring charges are as follows (in thousands): Employee Separation Costs Costs incurred and charged to expense for the three months ended March 31, 2018 $ 501 Costs incurred and charged to expense for the three months ended March 31, 2017 $ 1,564 Changes to the accrued restructuring liability (which is included in Accrued and other current liabilities) for 2018 (in thousands) are as follows: Employee Separation Costs Accrued liability at December 31, 2017 $ 244 Costs incurred and charged to expense for the three months ended March 31, 2018 501 Cash payments (41 ) Accrued liability at March 31, 2018 $ 704 |
Lease Exit and Related Charges
Lease Exit and Related Charges | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure Changes To Accrued Loss On Excess Office Facilities [Abstract] | |
Lease Exit and Related Charges | Note 11 Lease Exit and Related Charges As a result of the reduction in use of RealNetworks' office space, lease exit and related charges have been recognized representing rent and contractual operating expenses over the remaining life of the leases, including estimates of sublease income expected to be received. In the first quarter of 2018, we renegotiated the lease for our Seattle headquarters, reducing our total leased space by 15% . Consequently, we recorded a reduction to our lease loss accrual to reflect our reduced future obligations. This reduction has also been recorded as a benefit of $0.3 million in our condensed consolidated statement of operations for the quarter ended March 31, 2018. We continue to regularly evaluate the market for office space. If the market for such space changes further in future periods, we may have to revise our estimates which may result in future adjustments to expense for excess office facilities. Changes to accrued lease exit and related charges (which is included in Accrued and other current liabilities) for 2018 (in thousands) are as follows: Accrued loss at December 31, 2017 $ 2,058 Additions and adjustments to the lease loss accrual, including estimated sublease income (325 ) Less amounts paid, net of sublease amounts (152 ) Accrued loss at March 31, 2018 1,581 Less current portion (included in Accrued and other current liabilities) (350 ) Accrued loss, non-current portion (included in Other long term liabilities) $ 1,231 |
Shareholders_ Equity
Shareholders’ Equity | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Shareholders’ Equity | Note 12 Shareholders’ Equity Accumulated Other Comprehensive Income (Loss) Changes in components of accumulated other comprehensive income (loss) (in thousands): Quarter Ended 2018 2017 Investments Accumulated other comprehensive income (loss), beginning of period $ 2 $ (6 ) Unrealized gains (losses), net of tax effects of $0, and $2 1 4 Net current period other comprehensive income (loss) 1 4 Accumulated other comprehensive income (loss) balance, end of period $ 3 $ (2 ) Foreign currency translation Accumulated other comprehensive income (loss), beginning of period $ (59,549 ) $ (61,639 ) Translation adjustments 396 594 Net current period other comprehensive income (loss) 396 594 Accumulated other comprehensive income (loss) balance, end of period $ (59,153 ) $ (61,045 ) Total accumulated other comprehensive income (loss), end of period $ (59,150 ) $ (61,047 ) |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 13 Income Taxes As of March 31, 2018 , there have been no material changes to RealNetworks’ uncertain tax positions disclosures as provided in Note 14 of the 2017 10-K. We do not anticipate that the total amount of unrecognized tax benefits will significantly change within the next twelve months. We file numerous consolidated and separate income tax returns in the U.S. including federal, state and local, as well as foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal income tax examinations for tax years before 2013 or state, local, or foreign income tax examinations for years before 1993. We are currently under audit by various states and foreign jurisdictions for certain tax years subsequent to 1993. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | Note 14 Loss Per Share Basic net loss per share (EPS) is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net loss by the weighted average number of common and dilutive potential common shares outstanding during the period. Basic and diluted EPS (in thousands, except per share amounts): Quarter Ended 2018 2017 Net loss from continuing operations $ (5,178 ) $ (9,550 ) Weighted average common shares outstanding used to compute basic EPS 37,449 37,030 Dilutive effect of stock based awards — — Weighted average common shares outstanding used to compute diluted EPS 37,449 37,030 Basic EPS from continuing operations $ (0.14 ) $ (0.26 ) Diluted EPS from continuing operations $ (0.14 ) $ (0.26 ) During the quarters ended March 31, 2018 , and March 31, 2017 , 6.2 million and 4.9 million shares of common stock, respectively, of potentially issuable shares from stock awards were excluded from the calculation of diluted EPS because of their antidilutive effect. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 16 Commitments and Contingencies From time to time we are and may be subject to legal proceedings, governmental investigations and claims in the ordinary course of business, including employment claims, contract-related claims, and claims of alleged infringement of third-party patents, trademarks and other intellectual property rights. Although we believe that resolving such claims, individually or in aggregate, will not have a material adverse impact on our business or financial condition, these matters are subject to inherent uncertainties. Such claims, even if not meritorious, could force us to expend significant financial and managerial resources. In addition, given the broad distribution of some of our consumer products, any individual claim related to those products could give rise to liabilities that may be material to us. In the event of a determination adverse to us, we may incur substantial monetary liability, and/or be required to change our business practices. Either of these could have a material adverse effect on our consolidated financial statements. |
Guarantees
Guarantees | 3 Months Ended |
Mar. 31, 2018 | |
Guarantees [Abstract] | |
Guarantees | Note 17 Guarantees In the ordinary course of business, RealNetworks is subject to potential obligations for standard warranty and indemnification provisions that are contained within many of our customer license and service agreements. Our warranty provisions are consistent with those prevalent in our industry, and we do not have a history of incurring losses on warranties; therefore, we do not maintain accruals for warranty-related obligations. With regard to indemnification provisions, nearly all of our carrier contracts obligate us to indemnify our carrier customers for certain liabilities that may be incurred by them. We have received in the past, and may receive in the future, claims for indemnification from some of our carrier customers. In relation to certain patents and other technology assets we sold to Intel in the second quarter of 2012, we have specific obligations to indemnify Intel for breaches of the representations and warranties that we made and covenants that we agreed to in the asset purchase agreement for certain potential future intellectual property infringement claims brought by third parties against Intel. The amount of any potential liabilities related to our indemnification obligations to Intel will not be determined until a claim has been made, but we are obligated to indemnify Intel up to the amount of the gross purchase price that we received in the sale. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | Note 18 Segment Information We manage our business and report revenue and operating income (loss) in three segments: (1) Consumer Media, which includes licensing of our codec technology and our PC-based RealPlayer products, including RealPlayer Plus and related products; (2) Mobile Services, which includes our subscription services and our integrated RealTimes platform which is sold to mobile carriers ; and (3) Games, which includes all our games-related businesses, including sales of mobile games, sales of games licenses, online games subscription services, advertising on games sites and social network sites, and microtransactions from online and social games. We allocate to our reportable segments certain corporate expenses which are directly attributable to supporting our businesses, including but not limited to a portion of finance, legal, human resources and headquarters facilities. Remaining expenses, which are not directly attributable to supporting the business, are reported as corporate items. Also reported in our corporate segment are restructuring charges, lease exit and related charges, as well as stock compensation charges. RealNetworks reports three reportable segments based on factors such as how we manage our operations and how our Chief Operating Decision Maker (CODM) reviews results. The CODM reviews financial information presented on both a consolidated basis and on a business segment basis. The accounting policies used to derive segment results are the same as those described in Note 1, Description of Business and Summary of Significant Accounting Policies, in the 10-K. Segment results for the quarters ended March 31, 2018 and 2017 (in thousands): Consumer Media Quarter Ended 2018 2017 Revenue $ 5,483 $ 5,669 Cost of revenue 993 1,405 Gross profit 4,490 4,264 Operating expenses 3,918 4,010 Operating income $ 572 $ 254 Mobile Services Quarter Ended 2018 2017 Revenue $ 8,704 $ 8,199 Cost of revenue 2,316 3,190 Gross profit 6,388 5,009 Operating expenses 7,366 8,119 Operating loss $ (978 ) $ (3,110 ) Games Quarter Ended 2018 2017 Revenue $ 5,463 $ 5,823 Cost of revenue 1,817 1,937 Gross profit 3,646 3,886 Operating expenses 4,917 4,947 Operating loss $ (1,271 ) $ (1,061 ) Corporate Quarter Ended 2018 2017 Cost of revenue $ 10 $ 37 Operating expenses 3,267 4,295 Operating loss $ (3,277 ) $ (4,332 ) Our customers consist primarily of consumers and corporations located in the U.S., Europe, and various foreign countries (Rest of the World). Revenue by geographic region (in thousands): Quarter Ended 2018 2017 United States $ 11,434 $ 9,740 Europe 3,025 3,195 Rest of the World 5,191 6,756 Total net revenue $ 19,650 $ 19,691 Long-lived assets (which consist of primarily of goodwill, but also includes equipment, software, leasehold improvements, and other intangible assets) by geographic region (in thousands) are as follows: March 31, December 31, United States $ 12,076 $ 12,236 Europe 3,387 3,437 Rest of the World 1,538 1,572 Total long-lived assets $ 17,001 $ 17,245 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 19 Related Party Transactions See Note 5 , Napster Joint Venture , and Note 6 , Fair Value Measurements , for details on transactions involving Napster. |
Discontinued Operations Discont
Discontinued Operations Discontinued Operations | 3 Months Ended |
Mar. 31, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Note 15 Discontinued Operations On December 31, 2017, our contract with our low-margin music on demand customer LOEN expired. The activity for this contract represented our only revenue source relating to music on demand services, and we did not renew the sole contract for this service, resulting in the abandonment of the related business. As the exit of the music on demand business represented a strategic shift, and the amounts were financially significant to our consolidated results, at December 31, 2017 we determined this business should be reported as a discontinued operation, and treated it as such beginning in our fourth quarter of 2017. The following table summarizes the results of operations, which were recorded in our Mobile Services segment, relating to the discontinued operation (in thousands): Quarter Ended 2018 2017 Net revenue $ — $ 10,885 Cost of revenue — 10,724 Gross profit — 161 Income taxes — 35 Income from discontinued operations, net of tax $ — $ 126 The following table summarizes the remaining carrying amounts of major classes of assets and liabilities of the discontinued operation (in thousands). These assets and liabilities relate to final settlements of prior year activity between various parties. We expect these balances to be fully settled prior to the end of fiscal year 2018. March 31, December 31, Trade accounts receivable, net $ 5,500 $ 17,456 Total current assets of discontinued operations 5,500 17,456 Accounts payable $ 5,373 $ 15,836 Accrued and other current liabilities — 1,271 Total current liabilities of discontinued operations $ 5,373 $ 17,107 The cash flows related to the discontinued operation have not been segregated, and are included in the Consolidated Statements of Cash Flows. For all periods presented, depreciation and amortization, capital expenditures and significant operating non-cash items from the discontinued operation were not material. |
Subsequent Event
Subsequent Event | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Event | Note 20 Subsequent Event On April 16, 2018, in order to acquire the entire workforce of a small, privately-held Netherlands-based game developer, we entered into an agreement to acquire all the outstanding shares of the company at a net purchase price of €3.6 million . Included within the purchase price is the settlement of certain outstanding liabilities which are due to the purchased company and included within current liabilities on our condensed consolidated balance sheet as of March 31, 2018. We will complete our purchase accounting in the second quarter of 2018. |
Description of Business and S27
Description of Business and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business. RealNetworks, Inc. and subsidiaries is a global provider of network-delivered digital media applications and services that make it easy to manage, play and share digital media. The Company also develops and markets software products and services that enable the creation, distribution and consumption of digital media, including audio and video. Inherent in our business are various risks and uncertainties, including a limited history of certain of our product and service offerings. RealNetworks' success will depend on the acceptance of our technology, products and services and the ability to generate related revenue. In this Quarterly Report on Form 10-Q (10-Q or Report), RealNetworks, Inc. and Subsidiaries is referred to as “RealNetworks”, the “Company”, “we”, “us”, or “our”. |
Basis of Presentation | Basis of Presentation. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal, recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations for the periods presented. Operating results for the quarter ended March 31, 2018 are not necessarily indicative of the results that may be expected for any subsequent period or for the year ending December 31, 2018 . Certain information and disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2017 (the 10-K). |
Use of Estimates | Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Segments | We manage our business and report revenue and operating income (loss) in three segments: (1) Consumer Media, which includes licensing of our codec technology and our PC-based RealPlayer products, including RealPlayer Plus and related products; (2) Mobile Services, which includes our subscription services and our integrated RealTimes platform which is sold to mobile carriers ; and (3) Games, which includes all our games-related businesses, including sales of mobile games, sales of games licenses, online games subscription services, advertising on games sites and social network sites, and microtransactions from online and social games. We allocate to our reportable segments certain corporate expenses which are directly attributable to supporting our businesses, including but not limited to a portion of finance, legal, human resources and headquarters facilities. Remaining expenses, which are not directly attributable to supporting the business, are reported as corporate items. Also reported in our corporate segment are restructuring charges, lease exit and related charges, as well as stock compensation charges. RealNetworks reports three reportable segments based on factors such as how we manage our operations and how our Chief Operating Decision Maker (CODM) reviews results. The CODM reviews financial information presented on both a consolidated basis and on a business segment basis. The accounting policies used to derive segment results are the same as those described in Note 1, Description of Business and Summary of Significant Accounting Policies, in the 10-K. |
Revenue Recognition Revenue R28
Revenue Recognition Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Disaggregation of Revenue The following table presents our disaggregated revenue by source and segment (in thousands): Quarter Ended March 31, 2018 Consumer Media Mobile Services Games Business Line Software License $ 3,337 $ 1,335 $ — Subscription Services 1,285 7,369 2,693 Product sales 340 — 2,402 Advertising and other 521 — 368 Total $ 5,483 $ 8,704 $ 5,463 The following table presents our disaggregated revenue by sales channel (in thousands): Quarter Ended March 31, 2018 Consumer Media Mobile Services Games Sales Channel Business to Business $ 3,858 $ 8,530 $ 751 Direct to Consumer 1,625 174 4,712 Total $ 5,483 $ 8,704 $ 5,463 Games Quarter Ended 2018 2017 Revenue $ 5,463 $ 5,823 Cost of revenue 1,817 1,937 Gross profit 3,646 3,886 Operating expenses 4,917 4,947 Operating loss $ (1,271 ) $ (1,061 ) Mobile Services Quarter Ended 2018 2017 Revenue $ 8,704 $ 8,199 Cost of revenue 2,316 3,190 Gross profit 6,388 5,009 Operating expenses 7,366 8,119 Operating loss $ (978 ) $ (3,110 ) Corporate Quarter Ended 2018 2017 Cost of revenue $ 10 $ 37 Operating expenses 3,267 4,295 Operating loss $ (3,277 ) $ (4,332 ) Consumer Media Quarter Ended 2018 2017 Revenue $ 5,483 $ 5,669 Cost of revenue 993 1,405 Gross profit 4,490 4,264 Operating expenses 3,918 4,010 Operating income $ 572 $ 254 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation Expense | Total stock-based compensation expense recognized in our unaudited condensed consolidated statements of operations and comprehensive income (loss) includes amounts related to stock options, restricted stock, and employee stock purchase plans and was as follows (in thousands): Quarter Ended 2018 2017 Total stock-based compensation expense $ 1,157 $ 1,434 |
Weighted-Average Assumptions Used to Determine Fair Value of Options Granted | The fair value of options granted determined using the Black-Scholes model used the following weighted-average assumptions: Quarter Ended 2018 2017 Expected dividend yield 0 % 0 % Risk-free interest rate 2.48 % 2.23 % Expected life (years) 4.1 6.8 Volatility 35 % 38 % |
Rhapsody Joint Venture (Tables)
Rhapsody Joint Venture (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Summarized Financial Operating Information for Rhapsody | Summarized financial information for Napster, which represents 100% of its financial information, is as follows (in thousands): Quarter Ended 2018 2017 Net revenue $ 40,290 $ 47,462 Gross profit 9,278 6,583 Operating income (loss) 6,415 (5,111 ) Net income (loss) 4,448 (5,640 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Financial Assets Measured at Fair Value on a Recurring Basis | The following table presents information about our financial assets that have been measured at fair value on a recurring basis as of March 31, 2018 and December 31, 2017 , and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands). Fair Value Measurements as of Amortized Cost as of March 31, 2018 March 31, 2018 Level 1 Level 2 Level 3 Total Cash and cash equivalents: Cash $ 30,332 $ — $ — $ 30,332 $ 30,332 Money market funds 19,453 — — 19,453 19,453 Total cash and cash equivalents 49,785 — — 49,785 49,785 Short-term investments: Corporate notes and bonds — 4,548 — 4,548 4,547 Total short-term investments — 4,548 — 4,548 4,547 Restricted cash equivalents — 2,400 — 2,400 2,400 Warrants issued by Napster (included in Other assets) — — 968 968 — Total $ 49,785 $ 6,948 $ 968 $ 57,701 $ 56,732 Fair Value Measurements as of Amortized Cost as of December 31, 2017 December 31, 2017 Level 1 Level 2 Level 3 Total Cash and cash equivalents: Cash $ 31,065 $ — $ — $ 31,065 $ 31,065 Money market funds 20,131 — — 20,131 20,131 Total cash and cash equivalents 51,196 — — 51,196 51,196 Short-term investments: Corporate notes and bonds — 8,779 — 8,779 8,779 Total short-term investments — 8,779 — 8,779 8,779 Restricted cash equivalents — 2,400 — 2,400 2,400 Warrants issued by Napster (included in Other assets) — — 989 989 — Total $ 51,196 $ 11,179 $ 989 $ 63,364 $ 62,375 |
Schedule of Contractual Maturity Date | Contractual maturities of short-term investments as of March 31, 2018 (in thousands): Estimated Fair Value Within one year $ 4,187 Between one year and five years 361 Total short-term investments $ 4,548 |
Other Intangible Assets (Tables
Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other Intangible Assets | Other intangible assets (in thousands): March 31, 2018 December 31, 2017 Gross Amount Accumulated Amortization Net Gross Amount Accumulated Amortization Net Amortizing intangible assets: Customer relationships $ 32,534 $ 32,310 $ 224 $ 32,286 $ 31,997 $ 289 Developed technology 25,313 25,313 — 25,177 25,177 — Patents, trademarks and tradenames 3,979 3,960 19 3,932 3,896 36 Service contracts 5,614 5,614 — 5,576 5,576 — Total $ 67,440 $ 67,197 $ 243 $ 66,971 $ 66,646 $ 325 |
Goodwill (Tables)
Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in Goodwill | Changes in goodwill (in thousands): Balance, December 31, 2017 $ 13,060 Effects of foreign currency translation 46 Balance, March 31, 2018 $ 13,106 |
Goodwill Assigned by Segments | Goodwill by segment (in thousands): March 31, Consumer Media $ 580 Mobile Services 2,228 Games 10,298 Total goodwill $ 13,106 |
Accrued and Other Current Lia34
Accrued and Other Current Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
Accrued and Other Liabilities | Accrued and other current liabilities (in thousands): March 31, 2018 December 31, 2017 Royalties and other fulfillment costs $ 3,197 $ 2,965 Employee compensation, commissions and benefits 4,757 4,384 Sales, VAT and other taxes payable 1,668 1,782 Other 3,184 3,234 Total accrued and other current liabilities $ 12,806 $ 12,365 |
Restructuring Charges (Tables)
Restructuring Charges (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring Charges by Type of Cost | Restructuring charges are as follows (in thousands): Employee Separation Costs Costs incurred and charged to expense for the three months ended March 31, 2018 $ 501 Costs incurred and charged to expense for the three months ended March 31, 2017 $ 1,564 Changes to the accrued restructuring liability (which is included in Accrued and other current liabilities) for 2018 (in thousands) are as follows: Employee Separation Costs Accrued liability at December 31, 2017 $ 244 Costs incurred and charged to expense for the three months ended March 31, 2018 501 Cash payments (41 ) Accrued liability at March 31, 2018 $ 704 |
Lease Exit and Related Charges
Lease Exit and Related Charges (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure Changes To Accrued Loss On Excess Office Facilities [Abstract] | |
Changes to Accrued Loss on Excess Office Facilities | Changes to accrued lease exit and related charges (which is included in Accrued and other current liabilities) for 2018 (in thousands) are as follows: Accrued loss at December 31, 2017 $ 2,058 Additions and adjustments to the lease loss accrual, including estimated sublease income (325 ) Less amounts paid, net of sublease amounts (152 ) Accrued loss at March 31, 2018 1,581 Less current portion (included in Accrued and other current liabilities) (350 ) Accrued loss, non-current portion (included in Other long term liabilities) $ 1,231 |
Shareholders_ Equity (Tables)
Shareholders’ Equity (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | Changes in components of accumulated other comprehensive income (loss) (in thousands): Quarter Ended 2018 2017 Investments Accumulated other comprehensive income (loss), beginning of period $ 2 $ (6 ) Unrealized gains (losses), net of tax effects of $0, and $2 1 4 Net current period other comprehensive income (loss) 1 4 Accumulated other comprehensive income (loss) balance, end of period $ 3 $ (2 ) Foreign currency translation Accumulated other comprehensive income (loss), beginning of period $ (59,549 ) $ (61,639 ) Translation adjustments 396 594 Net current period other comprehensive income (loss) 396 594 Accumulated other comprehensive income (loss) balance, end of period $ (59,153 ) $ (61,045 ) Total accumulated other comprehensive income (loss), end of period $ (59,150 ) $ (61,047 ) |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Calculation of Basic and Diluted Earnings Per Share | Basic and diluted EPS (in thousands, except per share amounts): Quarter Ended 2018 2017 Net loss from continuing operations $ (5,178 ) $ (9,550 ) Weighted average common shares outstanding used to compute basic EPS 37,449 37,030 Dilutive effect of stock based awards — — Weighted average common shares outstanding used to compute diluted EPS 37,449 37,030 Basic EPS from continuing operations $ (0.14 ) $ (0.26 ) Diluted EPS from continuing operations $ (0.14 ) $ (0.26 ) |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Results | Disaggregation of Revenue The following table presents our disaggregated revenue by source and segment (in thousands): Quarter Ended March 31, 2018 Consumer Media Mobile Services Games Business Line Software License $ 3,337 $ 1,335 $ — Subscription Services 1,285 7,369 2,693 Product sales 340 — 2,402 Advertising and other 521 — 368 Total $ 5,483 $ 8,704 $ 5,463 The following table presents our disaggregated revenue by sales channel (in thousands): Quarter Ended March 31, 2018 Consumer Media Mobile Services Games Sales Channel Business to Business $ 3,858 $ 8,530 $ 751 Direct to Consumer 1,625 174 4,712 Total $ 5,483 $ 8,704 $ 5,463 Games Quarter Ended 2018 2017 Revenue $ 5,463 $ 5,823 Cost of revenue 1,817 1,937 Gross profit 3,646 3,886 Operating expenses 4,917 4,947 Operating loss $ (1,271 ) $ (1,061 ) Mobile Services Quarter Ended 2018 2017 Revenue $ 8,704 $ 8,199 Cost of revenue 2,316 3,190 Gross profit 6,388 5,009 Operating expenses 7,366 8,119 Operating loss $ (978 ) $ (3,110 ) Corporate Quarter Ended 2018 2017 Cost of revenue $ 10 $ 37 Operating expenses 3,267 4,295 Operating loss $ (3,277 ) $ (4,332 ) Consumer Media Quarter Ended 2018 2017 Revenue $ 5,483 $ 5,669 Cost of revenue 993 1,405 Gross profit 4,490 4,264 Operating expenses 3,918 4,010 Operating income $ 572 $ 254 |
Revenue by Geographic Region | Our customers consist primarily of consumers and corporations located in the U.S., Europe, and various foreign countries (Rest of the World). Revenue by geographic region (in thousands): Quarter Ended 2018 2017 United States $ 11,434 $ 9,740 Europe 3,025 3,195 Rest of the World 5,191 6,756 Total net revenue $ 19,650 $ 19,691 |
Long-Lived Assets by Geographic Region | Long-lived assets (which consist of primarily of goodwill, but also includes equipment, software, leasehold improvements, and other intangible assets) by geographic region (in thousands) are as follows: March 31, December 31, United States $ 12,076 $ 12,236 Europe 3,387 3,437 Rest of the World 1,538 1,572 Total long-lived assets $ 17,001 $ 17,245 |
Discontinued Operations Disco40
Discontinued Operations Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Disposal Groups, Including Discontinued Operations [Table Text Block] | The following table summarizes the results of operations, which were recorded in our Mobile Services segment, relating to the discontinued operation (in thousands): Quarter Ended 2018 2017 Net revenue $ — $ 10,885 Cost of revenue — 10,724 Gross profit — 161 Income taxes — 35 Income from discontinued operations, net of tax $ — $ 126 The following table summarizes the remaining carrying amounts of major classes of assets and liabilities of the discontinued operation (in thousands). These assets and liabilities relate to final settlements of prior year activity between various parties. We expect these balances to be fully settled prior to the end of fiscal year 2018. March 31, December 31, Trade accounts receivable, net $ 5,500 $ 17,456 Total current assets of discontinued operations 5,500 17,456 Accounts payable $ 5,373 $ 15,836 Accrued and other current liabilities — 1,271 Total current liabilities of discontinued operations $ 5,373 $ 17,107 |
Revenue Recognition (Additional
Revenue Recognition (Additional Information) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Retained deficit | $ (504,197) | $ (500,044) | |
Long-term accounts receivable | 500 | ||
Deferred revenue | 2,500 | ||
Decrease in deferred revenue | 1,000 | ||
Revenue recognized | 200 | ||
Accounting Standards Update 2014-09 | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Retained deficit | $ 1,000 | ||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Revenue | $ 3,500 | ||
Deferred revenue recorded to retained earnings | $ 800 |
Revenue Recognition (Disaggrega
Revenue Recognition (Disaggregation of Revenue) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Consumer Media | |
Disaggregation of Revenue [Line Items] | |
Revenue | $ 5,483 |
Consumer Media | Business to Business | |
Disaggregation of Revenue [Line Items] | |
Revenue | 3,858 |
Consumer Media | Direct to Consumer | |
Disaggregation of Revenue [Line Items] | |
Revenue | 1,625 |
Consumer Media | Software License | |
Disaggregation of Revenue [Line Items] | |
Revenue | 3,337 |
Consumer Media | Subscription Services | |
Disaggregation of Revenue [Line Items] | |
Revenue | 1,285 |
Consumer Media | Product sales | |
Disaggregation of Revenue [Line Items] | |
Revenue | 340 |
Consumer Media | Advertising and other | |
Disaggregation of Revenue [Line Items] | |
Revenue | 521 |
Mobile Services | |
Disaggregation of Revenue [Line Items] | |
Revenue | 8,704 |
Mobile Services | Business to Business | |
Disaggregation of Revenue [Line Items] | |
Revenue | 8,530 |
Mobile Services | Direct to Consumer | |
Disaggregation of Revenue [Line Items] | |
Revenue | 174 |
Mobile Services | Software License | |
Disaggregation of Revenue [Line Items] | |
Revenue | 1,335 |
Mobile Services | Subscription Services | |
Disaggregation of Revenue [Line Items] | |
Revenue | 7,369 |
Mobile Services | Product sales | |
Disaggregation of Revenue [Line Items] | |
Revenue | 0 |
Mobile Services | Advertising and other | |
Disaggregation of Revenue [Line Items] | |
Revenue | 0 |
Games | |
Disaggregation of Revenue [Line Items] | |
Revenue | 5,463 |
Games | Business to Business | |
Disaggregation of Revenue [Line Items] | |
Revenue | 751 |
Games | Direct to Consumer | |
Disaggregation of Revenue [Line Items] | |
Revenue | 4,712 |
Games | Software License | |
Disaggregation of Revenue [Line Items] | |
Revenue | 0 |
Games | Subscription Services | |
Disaggregation of Revenue [Line Items] | |
Revenue | 2,693 |
Games | Product sales | |
Disaggregation of Revenue [Line Items] | |
Revenue | 2,402 |
Games | Advertising and other | |
Disaggregation of Revenue [Line Items] | |
Revenue | $ 368 |
Stock-Based Compensation (Recog
Stock-Based Compensation (Recognized Stock-Based Compensation Expense) (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Total stock-based compensation expense | $ 1,157 | $ 1,434 |
Stock-Based Compensation (Weigh
Stock-Based Compensation (Weighted-Average Assumptions Used to Determine Fair Value of Options Granted) (Detail) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Expected dividend yield | 0.00% | 0.00% |
Risk-free interest rate | 2.48% | 2.23% |
Expected life | 4 years 1 month 9 days | 6 years 9 months 18 days |
Volatility | 35.00% | 38.00% |
Stock-Based Compensation (Addit
Stock-Based Compensation (Additional Information) (Detail) $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Total unrecognized compensation cost | $ 3.1 |
Total unrecognized compensation cost, expected recognition period (in years) | 3 years |
Rhapsody Joint Venture (Additio
Rhapsody Joint Venture (Additional Information) (Detail) - USD ($) | 1 Months Ended | 3 Months Ended | |||||
Jan. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2010 | Nov. 30, 2017 | Dec. 01, 2016 | |
Schedule of Equity Method Investments [Line Items] | |||||||
Losses recorded in the operations of Rhapsody | $ 0 | $ 748,000 | |||||
Advance to Rhapsody | $ 0 | $ 1,500,000 | |||||
Rhapsody America LLC | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Percentage of ownership interest in Rhapsody | 42.00% | ||||||
Payments for restructuring | $ 18,000,000 | ||||||
Liquidation preference amount | $ 10,000,000 | ||||||
Losses recorded in the operations of Rhapsody | 0 | ||||||
Carrying value | 0 | ||||||
Loan principal to related party | $ 5,000,000 | ||||||
Advance to Rhapsody | $ 1,500,000 | $ 3,500,000 | |||||
Related party loan rate | 10.00% | ||||||
Line of Credit [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 2,750,000 | $ 2,750,000 |
Rhapsody Joint Venture (Summari
Rhapsody Joint Venture (Summarized Financial Operating Information for Rhapsody) (Detail) - Rhapsody America LLC - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Schedule of Equity Method Investments [Line Items] | ||
Net revenue | $ 40,290 | $ 47,462 |
Gross profit | 9,278 | 6,583 |
Operating income (loss) | 6,415 | (5,111) |
Net loss | $ 4,448 | $ (5,640) |
Fair Value Measurements (Financ
Fair Value Measurements (Financial Assets Measured at Fair Value on a Recurring Basis) (Detail) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | $ 57,701 | $ 63,364 |
Amortized Cost | 56,732 | 62,375 |
Cash and Cash Equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 49,785 | 51,196 |
Amortized Cost | 49,785 | 51,196 |
Cash and Cash Equivalents | Cash | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 30,332 | 31,065 |
Amortized Cost | 30,332 | 31,065 |
Cash and Cash Equivalents | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 19,453 | 20,131 |
Amortized Cost | 19,453 | 20,131 |
Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 4,548 | 8,779 |
Amortized Cost | 4,547 | 8,779 |
Short-term Investments | Corporate notes and bonds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 4,548 | 8,779 |
Amortized Cost | 4,547 | 8,779 |
Restricted cash equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 2,400 | 2,400 |
Amortized Cost | 2,400 | 2,400 |
Related Party Transaction | Warrants issued by Rhapsody | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 968 | 989 |
Amortized Cost | 0 | 0 |
Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 49,785 | 51,196 |
Level 1 | Cash and Cash Equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 49,785 | 51,196 |
Level 1 | Cash and Cash Equivalents | Cash | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 30,332 | 31,065 |
Level 1 | Cash and Cash Equivalents | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 19,453 | 20,131 |
Level 1 | Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 1 | Short-term Investments | Corporate notes and bonds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 1 | Restricted cash equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 1 | Related Party Transaction | Warrants issued by Rhapsody | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 6,948 | 11,179 |
Level 2 | Cash and Cash Equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 2 | Cash and Cash Equivalents | Cash | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 2 | Cash and Cash Equivalents | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 2 | Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 4,548 | 8,779 |
Level 2 | Short-term Investments | Corporate notes and bonds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 4,548 | 8,779 |
Level 2 | Restricted cash equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 2,400 | 2,400 |
Level 2 | Related Party Transaction | Warrants issued by Rhapsody | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 968 | 989 |
Level 3 | Cash and Cash Equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | Cash and Cash Equivalents | Cash | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | Cash and Cash Equivalents | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | Short-term Investments | Corporate notes and bonds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | Restricted cash equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | 0 | 0 |
Level 3 | Related Party Transaction | Warrants issued by Rhapsody | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value | $ 968 | $ 989 |
Fair Value Measurements (Short-
Fair Value Measurements (Short-term Investments) (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | $ 57,701 | $ 63,364 |
Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 4,548 | $ 8,779 |
Estimate of Fair Value Measurement | Short-term Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Within one year | 4,187 | |
Between one year and five years | 361 | |
Total short-term investments | $ 4,548 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Feb. 28, 2017 | Feb. 28, 2015 | Mar. 31, 2018 | Dec. 31, 2017 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Financial assets fair value | $ 57,701 | $ 63,364 | ||
Warrants issued by Rhapsody | Related Party Debt Obligation | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Increase in expected term | 3 years 3 months | |||
Total expected term for warrant | 8 years 3 months | |||
Warrants issued by Rhapsody | Related Party Debt Obligation | Rhapsody America LLC | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Expected term | 5 years | 5 years | ||
Expected volatility rate | 55.00% | 55.00% | ||
Financial assets fair value | $ 500 | $ 1,200 | ||
Warrants Issued To Purchase Napster | Related Party Debt Obligation | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Increase in expected term | 1 year | |||
Total expected term for warrant | 6 years |
Allowance for Doubtful Accounts
Allowance for Doubtful Accounts Receivable and Sales Returns (Additional Information) (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | ||
Concentration Risk [Line Items] | |||
Revenue | [1] | $ 19,650 | $ 19,691 |
[1] | Quarters ended March 31,Components of Revenue2018 2017License Fees7,414 7,153Service Revenue12,236 12,538Net Revenue19,650 19,691 Three Months Ended March 31,Components of Revenue2018 2017 |
Other Intangible Assets (Detail
Other Intangible Assets (Detail) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Amount | $ 67,440 | $ 66,971 |
Accumulated Amortization | 67,197 | 66,646 |
Net | 243 | 325 |
Customer relationships | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Amount | 32,534 | 32,286 |
Accumulated Amortization | 32,310 | 31,997 |
Net | 224 | 289 |
Developed technology | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Amount | 25,313 | 25,177 |
Accumulated Amortization | 25,313 | 25,177 |
Net | 0 | 0 |
Patents, trademarks and tradenames | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Amount | 3,979 | 3,932 |
Accumulated Amortization | 3,960 | 3,896 |
Net | 19 | 36 |
Service contracts | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Amount | 5,614 | 5,576 |
Accumulated Amortization | 5,614 | 5,576 |
Net | $ 0 | $ 0 |
Goodwill (Changes in Goodwill)
Goodwill (Changes in Goodwill) (Detail) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Goodwill [Roll Forward] | |
Beginning Balance | $ 13,060 |
Effects of foreign currency translation | 46 |
Ending Balance | $ 13,106 |
Goodwill (Goodwill by Segments)
Goodwill (Goodwill by Segments) (Detail) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Goodwill [Line Items] | ||
Goodwill | $ 13,106 | $ 13,060 |
Consumer Media | ||
Goodwill [Line Items] | ||
Goodwill | 580 | |
Mobile Services | ||
Goodwill [Line Items] | ||
Goodwill | 2,228 | |
Games | ||
Goodwill [Line Items] | ||
Goodwill | $ 10,298 |
Accrued and Other Current Lia55
Accrued and Other Current Liabilities (Detail) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
Royalties and other fulfillment costs | $ 3,197 | $ 2,965 |
Employee compensation, commissions and benefits | 4,757 | 4,384 |
Sales, VAT and other taxes payable | 1,668 | 1,782 |
Other | 3,184 | 3,234 |
Total accrued and other liabilities | $ 12,806 | $ 12,365 |
Restructuring Charges (Details)
Restructuring Charges (Details) - Employee Separation Costs - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Restructuring Cost and Reserve [Line Items] | ||
Costs incurred and charged to expense | $ 501 | $ 1,564 |
Restructuring Reserve [Roll Forward] | ||
Accrued liability beginning balance | 244 | |
Costs incurred and charged to expense | 501 | |
Cash payments | (41) | |
Accrued liability ending balance | $ 704 |
Lease Exit and Related Charge57
Lease Exit and Related Charges (Changes to Accrued Loss on Excess Office Facilities) (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Disclosure Changes To Accrued Loss On Excess Office Facilities [Abstract] | ||
Reduction in lease space (as a percent) | 15.00% | |
Lease exit and related charges (benefit) | $ 325 | $ 0 |
Accrued Loss on Excess Office Facilities [Roll Forward] | ||
Accrued loss at December 31, 2017 | 2,058 | |
Additions and adjustments to the lease loss accrual, including estimated sublease income | (325) | |
Less amounts paid, net of sublease amounts | (152) | |
Accrued loss at March 31, 2018 | 1,581 | |
Less current portion (included in Accrued and other current liabilities) | (350) | |
Accrued loss, non-current portion (included in Other long term liabilities) | $ 1,231 |
Shareholders_ Equity (Accumulat
Shareholders’ Equity (Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Accumulated other comprehensive income (loss), beginning of period | $ 79,173 | ||
Unrealized gains (losses), net of tax effects of $0, and $2 | $ 4 | ||
Total other comprehensive income | 397 | 598 | |
Accumulated other comprehensive income (loss) balance, end of period | 76,342 | ||
Total accumulated other comprehensive income (loss), end of period | (59,150) | (61,047) | $ (59,547) |
Investments | |||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Accumulated other comprehensive income (loss), beginning of period | 2 | (6) | |
Unrealized gains (losses), net of tax effects of $0, and $2 | 1 | 4 | |
Total other comprehensive income | 1 | 4 | |
Accumulated other comprehensive income (loss) balance, end of period | 3 | (2) | |
Accumulated Other Comprehensive Income (Loss), Tax [Abstract] | |||
Unrealized gains (losses), tax effects | 0 | 2 | |
Foreign currency translation | |||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Accumulated other comprehensive income (loss), beginning of period | (59,549) | (61,639) | |
Translation adjustments | 396 | 594 | |
Total other comprehensive income | 396 | 594 | |
Accumulated other comprehensive income (loss) balance, end of period | $ (59,153) | $ (61,045) |
Earnings (Loss) Per Share (Calc
Earnings (Loss) Per Share (Calculation of Basic and Diluted Earnings Per Share) (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings Per Share [Abstract] | ||
Net loss from continuing operations | $ (5,178) | $ (9,550) |
Net loss | (5,178) | (9,424) |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent | $ (4,781) | $ (8,826) |
Weighted average common shares outstanding used to compute basic EPS | 37,449 | 37,030 |
Dilutive effect of stock based awards | 0 | 0 |
Weighted average common shares outstanding used to compute diluted EPS | 37,449 | 37,030 |
Basic EPS from continuing operations (in dollars per share) | $ (0.14) | $ (0.26) |
Diluted EPS from continuing operations (in dollars per share) | $ (0.14) | $ (0.26) |
Earnings (Loss) Per Share (Addi
Earnings (Loss) Per Share (Additional Information) (Detail) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings Per Share [Abstract] | ||
Shares of common stock excluded from the calculation of diluted net income per share because of antidilutive effect | 6.2 | 4.9 |
Segment Information (Additional
Segment Information (Additional Information) (Detail) | 3 Months Ended |
Mar. 31, 2018Segment | |
Segment Reporting [Abstract] | |
Number of reporting segments | 3 |
Segment Information (Segment Re
Segment Information (Segment Results) (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | ||
Segment Reporting Information [Line Items] | |||
Revenue | [1] | $ 19,650 | $ 19,691 |
Cost of revenue | [2] | 5,136 | 6,569 |
Gross profit | 14,514 | 13,122 | |
Operating expenses | 19,468 | 21,371 | |
Operating income (loss) | (4,954) | (8,249) | |
Operating Segments | Consumer Media | |||
Segment Reporting Information [Line Items] | |||
Revenue | 5,483 | 5,669 | |
Cost of revenue | 993 | 1,405 | |
Gross profit | 4,490 | 4,264 | |
Operating expenses | 3,918 | 4,010 | |
Operating income (loss) | 572 | 254 | |
Operating Segments | Mobile Services | |||
Segment Reporting Information [Line Items] | |||
Revenue | 8,704 | 8,199 | |
Cost of revenue | 2,316 | 3,190 | |
Gross profit | 6,388 | 5,009 | |
Operating expenses | 7,366 | 8,119 | |
Operating income (loss) | (978) | (3,110) | |
Operating Segments | Games | |||
Segment Reporting Information [Line Items] | |||
Revenue | 5,463 | 5,823 | |
Cost of revenue | 1,817 | 1,937 | |
Gross profit | 3,646 | 3,886 | |
Operating expenses | 4,917 | 4,947 | |
Operating income (loss) | (1,271) | (1,061) | |
Corporate | |||
Segment Reporting Information [Line Items] | |||
Cost of revenue | 10 | 37 | |
Operating expenses | 3,267 | 4,295 | |
Operating income (loss) | $ (3,277) | $ (4,332) | |
[1] | Quarters ended March 31,Components of Revenue2018 2017License Fees7,414 7,153Service Revenue12,236 12,538Net Revenue19,650 19,691 Three Months Ended March 31,Components of Revenue2018 2017 | ||
[2] | Quarters ended March 31,Components of Cost of Revenue2018 2017License Fees1,755 1,909Service Revenue3,381 4,660Net Revenue Costs5,136 6,569 Three Months Ended March 31,Components of Cost of Revenue2018 2017 |
Segment Information (Revenue by
Segment Information (Revenue by Geographic Region) (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Revenue | [1] | $ 19,650 | $ 19,691 |
United States | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Revenue | 11,434 | 9,740 | |
Europe | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Revenue | 3,025 | 3,195 | |
Rest of the World | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Revenue | $ 5,191 | $ 6,756 | |
[1] | Quarters ended March 31,Components of Revenue2018 2017License Fees7,414 7,153Service Revenue12,236 12,538Net Revenue19,650 19,691 Three Months Ended March 31,Components of Revenue2018 2017 |
Segment Information (Long-Lived
Segment Information (Long-Lived Assets by Geographic Region) (Detail) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 17,001 | $ 17,245 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 12,076 | 12,236 |
Europe | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 3,387 | 3,437 |
Rest of the World | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 1,538 | $ 1,572 |
Discontinued Operations (Result
Discontinued Operations (Results of Operations Relating to Discontinued Operations) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Income from discontinued operations, net of tax | $ 0 | $ 126 |
LOEN | Discontinued Operations | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Net revenue | 0 | 10,885 |
Cost of revenue | 0 | 10,724 |
Gross profit | 0 | 161 |
Income taxes | 0 | 35 |
Income from discontinued operations, net of tax | $ 0 | $ 126 |
Discontinued Operations (Carryi
Discontinued Operations (Carrying Amounts of Assets and Liabilities) (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Total current assets of discontinued operations | $ 5,500 | $ 17,456 |
Total current liabilities of discontinued operations | 5,373 | 17,107 |
LOEN | Discontinued Operations | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Trade accounts receivable, net | 5,500 | 17,456 |
Total current assets of discontinued operations | 5,500 | 17,456 |
Accounts payable | 5,373 | 15,836 |
Accrued and other current liabilities | 0 | 1,271 |
Total current liabilities of discontinued operations | $ 5,373 | $ 17,107 |
Subsequent Event (Details)
Subsequent Event (Details) € in Millions | Apr. 16, 2018EUR (€) |
Subsequent Event | |
Subsequent Event [Line Items] | |
Net purchase price | € 3.6 |