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SAN DIEGO, Feb 08, 2007 (BUSINESS WIRE) -- DivX, Inc. (NASDAQ:DIVX) today announced results for the quarter and year ended December 31, 2006. DivX reported fourth quarter consolidated revenue of $16.7 million, an increase of 57 percent from the fourth quarter of 2005. Consolidated revenue for the year was $59.3 million, an increase of 80 percent from 2005.
Net income in the fourth quarter of 2006 was $7.4 million, or $0.21 per diluted share, compared to net income of $2.2 million, or $0.03 per diluted share, in the fourth quarter of 2005. Included in fourth quarter 2006 net income is $900,000 of stock-based compensation costs.
Net income for the year was $16.4 million, or $0.61 per diluted share, compared to net income of $2.3 million, or $0.00 per diluted share for 2005. Included in 2006 net income is $2.4 million of stock-based compensation costs.
Jordan Greenhall, CEO of DivX, Inc., said, "2006 was a remarkable year for DivX and the entire digital media market. Consumers began to show their true influence on the future direction of digital media and the technologies that will help make media better. We remain excited about the direction of the business and our goal of providing a common media language that bridges all possible devices and content on an open platform."
John Tanner, CFO of DivX, Inc., added, "In 2006, we continued to demonstrate the healthy growth in revenue and earnings that have differentiated DivX in the past. Additionally, our solid cash flows from operations contributed to a strong balance sheet, which provides us a sturdy base from which to drive our future business strategy."
Guidance
-- For the first quarter of 2007, revenue is anticipated to be in the range of $17.3 to $19.3 million.
Quarterly Conference Call
DivX, Inc. will discuss its quarterly and annual results via teleconference at 1:30 p.m. (PT) today, February 8, 2007. To access the call, please dial (800) 819-9193, or outside the U.S. (913) 981-4911, at least five minutes prior to the start time. A live webcast and replay will also be available at http://investors.divx.com. An audio replay of today's conference call will be available from 4:30 p.m. (PT) on February 8, 2007 until 9:00 p.m. (PT) February 15, 2007 by dialing (719) 457-0820 or (888) 203-1112 with the replay passcode 7335486.
About DivX, Inc.
DivX creates products and services designed to improve the experience of media. Our first product offering was a video compression-decompression software library, or codec, which has been actively sought out and downloaded over 200 million times in the last four years, including over 60 million times during the last twelve months. We have since built on the success of our codec with other consumer software, including the DivX Player application, which is distributed from our website, www.divx.com. We also license our technologies to consumer hardware device manufacturers and certify their products to ensure the interoperable support of DivX-encoded content. In addition to technology licensing to consumer hardware device manufacturers, we currently generate revenue from software licensing, advertising and content distribution.
Unaudited Financial Information
The financial results included in this release are unaudited (other than certain 2005 results) and are subject to change based upon the results of year end audit procedures. The complete audited financial statements of DivX for the fiscal year ended December 31, 2006 will be included in DivX, Inc.'s Annual Report on Form 10-K to be filed with the SEC in March 2007.
Forward-Looking Statements
Statements in this press release that are not strictly historical in nature constitute "forward-looking statements." Such statements include, but are not limited to, statements regarding the future development of digital media, the position of DivX at the forefront of market opportunities, DivX's future business strategy and activities intended to drive profitable rapid revenue growth, and expectations regarding revenue for the first quarter of 2007. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause DivX's actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements. These factors include, but are not limited to, the risk that the market for digital media may not develop as anticipated; the risk that customer use of DivX technology may not grow as anticipated; the risk that anticipated market opportunities may not materialize at expected levels, or at all; the risk that DivX's activities may not result in the growth of profitable revenue; the risk that revenue for the first quarter of 2007 may be lower than expected; risks and uncertainties related to the maintenance and strength of the DivX brand; DivX's ability to penetrate existing and new markets; the effects of competition; DivX's dependence on its licensees and partners; the effect of intellectual property rights claims; and other factors discussed in the "Risk Factors" section of DivX's quarterly report on Form 10-Q filed with the SEC on November 13, 2006. All forward-looking statements are qualified in their entirety by this cautionary statement. DivX is providing this information as of the date of this release and does not undertake any obligation to update any forward-looking statements contained in this release as a result of new information, future events or otherwise.
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DivX, Inc.
Consolidated Condensed Balance Sheets
(in thousands)
December 31,
-------------------
2005 2006
-------- ---------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $25,035 $ 86,310
Restricted cash 270 270
Short-term investments - 62,331
Accounts receivable, net of allowance of $963
and $1,424, respectively 4,194 6,939
Prepaid expenses 676 1,419
Deferred tax assets, current - 937
Other current assets 94 615
-------- ---------
Total current assets 30,269 158,821
Property and equipment, net 2,876 3,488
Deferred tax assets, long term - 1,363
Other assets 19 714
-------- ---------
Total assets $33,164 $164,386
======== =========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 988 $ 2,189
Accrued liabilities 612 1,038
Accrued compensation and benefits 1,262 2,279
Accrued patent royalties 1,156 742
Income taxes payable 34 486
Deferred revenue, current 3,106 4,654
Current portion of capital lease obligations 43 36
Notes payable, current portion 720 378
-------- ---------
Total current liabilities 7,921 11,802
Capital lease, net of current portion 108 73
Notes payable, net of current portion 394 15
Deferred revenue, long term 786 768
Deferred rent 640 461
Liability for unvested portion of early stock
option exercises 288 356
-------- ---------
Total liabilities 10,137 13,475
Commitments and contingencies
Redeemable preferred stock and stockholders' equity 23,027 150,911
-------- ---------
Total liabilities, redeemable preferred
stock and stockholders' equity $33,164 $164,386
======== =========
DivX, Inc.
Consolidated Condensed Statement of Income
(in thousands, except per share data)
Three months Twelve months
ended ended
December 31, December 31,
----------------- -----------------
2005 2006 2005 2006
-------- -------- -------- --------
(unaudited) (unaudited)
Net revenues:
Technology licensing $ 9,288 $13,433 $26,919 $47,324
Media and other distribution and
services 1,296 3,224 6,128 12,001
-------- -------- -------- --------
Total net revenues 10,584 16,657 33,047 59,325
Cost of revenue:
Cost of technology licensing 712 757 2,767 2,995
Cost of media and other
distribution services (1) 227 316 889 993
-------- -------- -------- --------
Total cost of revenue 939 1,073 3,656 3,988
-------- -------- -------- --------
Gross margin 9,645 15,584 29,391 55,337
Operating expenses:
Selling, general and
administrative (1) 4,597 7,597 15,988 25,971
Product development (1) 2,520 4,321 10,269 15,353
-------- -------- -------- --------
Total operating expenses 7,117 11,918 26,257 41,324
-------- -------- -------- --------
Income from operations 2,528 3,666 3,134 14,013
Interest income 207 1,911 338 3,060
Interest expense and other (25) (14) (115) (71)
-------- -------- -------- --------
Income before income taxes 2,710 5,563 3,357 17,002
Income tax provision (benefit) 502 (1,832) 1,062 562
-------- -------- -------- --------
Net income $ 2,208 $ 7,395 $ 2,295 $16,440
======== ======== ======== ========
Basic net income per share $ 0.03 $ 0.22 $ - $ 0.70
======== ======== ======== ========
Diluted net income per share $ 0.03 $ 0.21 $ - $ 0.61
======== ======== ======== ========
Shares used to compute basic net
income per share 7,976 32,967 7,323 15,231
======== ======== ======== ========
Shares used to compute diluted net
income per share 10,698 35,419 7,323 17,653
======== ======== ======== ========
----------------------------------------------------------------------
(1) Includes stock-based
compensation as follows:
Cost of revenues $ 1 $ 1 $ 1 $ 4
Selling, general and
administrative 78 512 261 1,528
Product development 38 387 141 822
-------- -------- -------- --------
Total stock-based compensation $ 117 $ 900 $ 403 $ 2,354
======== ======== ======== ========
DivX, Inc.
Calculation of Earnings Per Share
(in thousands, except per share data)
Three months ended Twelve months ended
December 31, December 31,
------------------- -------------------
2005 2006 2005 2006
--------- --------- --------- ---------
(unaudited) (unaudited)
Numerator:
Net income $ 2,208 $ 7,395 $ 2,295 $ 16,440
Income allocable to preferred
stockholders (1,939) - (2,295) (5,704)
--------- --------- --------- ---------
Net income allocable to
common stockholders $ 269 $ 7,395 $ - $ 10,736
========= ========= ========= =========
Denominator:
Weighted- average common
shares outstanding (basic) 7,976 32,967 7,323 15,231
--------- --------- --------- ---------
Weighted-average common shares
outstanding (diluted) 10,698 35,419 7,323 17,653
========= ========= ========= =========
Basic net income per share $ 0.03 $ 0.22 $ - $ 0.70
========= ========= ========= =========
Diluted net income per share $ 0.03 $ 0.21 $ - $ 0.61
========= ========= ========= =========
DivX, Inc.
Consolidated Condensed Statement of Cash Flows
(in thousands)
Three months ended Twelve months ended
December 31, December 31,
------------------- -------------------
2005 2006 2005 2006
-------- --------- -------- ---------
(unaudited) (unaudited)
Net cash provided by operating
activities 1,088 4,354 2,190 16,775
Net cash used in investing
activities (223) (62,522) (885) (64,206)
Net cash provided by financing
activities 16,686 (1,915) 16,796 108,706
-------- --------- -------- ---------
Net increase in cash and cash
equivalents 17,551 (60,083) 18,101 61,275
Cash and cash equivalents at
beginning of period 7,484 146,393 6,934 25,035
-------- --------- -------- ---------
Cash and cash equivalents at
end of periods $25,035 $ 86,310 $25,035 $ 86,310
======== ========= ======== =========
SOURCE: DivX, Inc.
DivX, Inc. Corporate Communications: Jennifer Culter, 858-882-0890 jculter@divxcorp.com or The Blueshirt Group Investor Relations: Todd Friedman, 415-217-7722 todd@blueshirtgroup.com Stacie Bosinoff, 415-217-7722 stacie@blueshirtgroup.com
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