RealNetworks Makes Analysts Look Bad

Seth Jayson, The Motley Fool
Updated

RealNetworks (NAS: RNWK) reported earnings on Aug. 8. Here are the numbers you need to know.

The 10-second takeaway
 For the quarter ended June 30 (Q2), RealNetworks missed estimates on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue contracted significantly and GAAP earnings per share improved. The profit was a surprise, as analysts had predicted a loss.


Gross margins shrank, operating margins shrank, net margins improved.

Revenue details
 RealNetworks reported revenue of $65.5 million. The one analyst polled by S&P Capital IQ expected sales of $67.2 million on the same basis. GAAP reported sales were 22% lower than the prior-year quarter's $83.8 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
 EPS came in at $2.32. The one earnings estimate compiled by S&P Capital IQ anticipated -$0.25 per share. GAAP EPS were $2.32 for Q2 compared to -$0.20 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
 For the quarter, gross margin was 60.4%, 300 basis points worse than the prior-year quarter. Operating margin was -18.7%, 1,340 basis points worse than the prior-year quarter. Net margin was 123.6%, 13,180 basis points better than the prior-year quarter.

Looking ahead
 Next quarter's average estimate for revenue is $59.7 million. On the bottom line, the average EPS estimate is -$0.30.

Next year's average estimate for revenue is $254.4 million. The average EPS estimate is $1.39.

Investor sentiment
 The stock has a one-star rating (out of five) at Motley Fool CAPS, with 176 members out of 230 rating the stock outperform, and 54 members rating it underperform. Among 54 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 34 give RealNetworks a green thumbs-up, and 20 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on RealNetworks is hold, with an average price target of $11.00.

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The article RealNetworks Makes Analysts Look Bad originally appeared on Fool.com.

Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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