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SAN DIEGO, Oct 30, 2006 (BUSINESS WIRE) -- DivX, Inc. (NASDAQ:DIVX) today announced results for the third quarter ended September 30, 2006.
In the third quarter of 2006, consolidated revenue was $15.4 million, an increase of 83 percent from the third quarter of 2005. Net income in the third quarter of 2006 was $3.1 million, or $0.10 per diluted share, compared to net income of $763,000, or $0.02 per diluted share, in the third quarter of 2005. Stock-based compensation charges for the third quarter totaled $526,000 compared to $58,000 for the same quarter a year ago.
Revenue for the nine-month period ended September 30, 2006 was $42.7 million, or 90 percent more than the comparable 2005 period. Net income for the nine months ended September 30, 2006 was $9.0 million, or $0.28 per diluted share, as compared to net income of $87,000, or $0.00 per diluted share, for the nine months ended September 30, 2005. Stock-based compensation charges for the first nine months of 2006 totaled $1,455,000 compared to $286,000 for the same period a year ago.
"We are very pleased to enter the public markets with a strong third quarter," said Jordan Greenhall, CEO and co-founder of DivX, Inc. "DivX continues to change the way that people experience media. Our success is shown by our expansion into new devices, partnerships and geographies, while our existing partners continue to grow their use of DivX technology. With more than 180 million downloads and over 50 million DivX Certified devices shipped worldwide, we believe that we are at the forefront of an exciting market opportunity."
"We closed the quarter with a strong financial foundation from which to execute our strategy. While our quarterly delivery of revenue and income was solid, we were particularly pleased by the generation of over $3.5 million in cash from operations in the quarter. Including the proceeds from our IPO, we closed the quarter with approximately $147 million in cash and equivalents," said John Tanner, CFO of DivX, Inc. "We intend to use these most recent improvements in our already strong financial position to continue to drive profitable, rapid revenue growth by investing in new technologies and emerging market opportunities, in addition to building out our product distribution capabilities."
On September 21, 2006, the registration statement relating to the initial public offering of DivX common stock was declared effective. The registration statement covered 9,100,000 shares of common stock at $16.00 per share, raising proceeds to the Company, before expenses, of approximately $111 million. As part of the offering, 7,461,538 shares were offered by DivX and 1,638,462 shares were offered by certain stockholders. In addition, concurrent with the DivX initial public offering, the underwriters exercised their over-allotment option in full, purchasing an additional 1,365,000 shares of common stock from certain selling stockholders at $16 per share.
Quarterly Conference Call
DivX, Inc. will discuss its quarterly results via teleconference at 2:30 p.m. (PT) today, October 30, 2006. To access the call, please dial (800) 811-8845, or outside the U.S. (913) 981-4905, 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 5:30 p.m. (PT) on October 30, 2006 until 9:00 p.m. (PT) November 6, 2006 by dialing (719) 457-0820 or (888) 203-1112 with the replay passcode 6234541.
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 180 million times in the last four years, including over 50 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, http://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.
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 growth in customers' use of DivX technology, the Company's position at the forefront of market opportunities, and activities intended to drive profitable rapid revenue growth. 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 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 the Company's activities may not result in the growth of profitable revenue, 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 final prospectus filed with the SEC on September 22, 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
December 31, September 30,
2005 2006
---------------------------
(in thousands) (unaudited)
----------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $25,035 $146,393
Restricted cash 270 270
Accounts receivable (net of allowance) 4,194 5,477
Prepaid expenses 676 705
Other current assets 94 80
------------ --------------
Total current assets 30,269 152,925
Property and equipment, net 2,876 3,400
Other assets 19 861
------------ --------------
Total assets $33,164 $157,186
============ ==============
Liabilities, redeemable convertible
preferred stock and stockholders equity
Current liabilities:
Accounts payable $988 $2,350
Accrued liabilities 612 2,060
Accrued compensation and related
benefits 1,262 2,778
Accrued patent royalties 1,156 613
Income taxes payable 34 667
Deferred revenue, current 3,106 3,720
Current portion of capital lease
obligations 43 35
Current portion of long-term debt 720 496
------------ --------------
Total current liabilities 7,921 12,719
Capital lease, net of current portion 108 82
Notes payable, net of current portion 394 75
Deferred revenue, long term 786 708
Deferred rent 640 508
Liability for unvested portion of early
stock exercises 288 425
------------ --------------
Total liabilities 10,137 14,517
Redeemable Series D preferred stock 16,842
Total stockholders' equity 6,185 142,669
------------ --------------
$33,164 $157,186
============ ==============
DivX, Inc.
Consolidated Condensed Statement of Income
Three months ended Nine months ended
September 30, September 30,
2005 2006 2005 2006
------------------ -----------------
(in thousands except per share (unaudited) (unaudited)
data)
----------------------------------------------------------------------
Net revenues:
Technology licensing $7,023 $12,446 $17,631 $33,891
Media and other distribution
and services 1,369 2,949 4,832 8,777
------------------ -----------------
Total net revenues 8,392 15,395 22,463 42,668
Total cost of revenues(1) 929 968 2,717 2,916
------------------ -----------------
Gross profit 7,463 14,427 19,746 39,752
Operating expenses:
Selling, general and
administrative(1) 3,937 6,673 11,391 18,374
Product development(1) 2,579 4,106 7,749 11,033
------------------ -----------------
Total operating expenses 6,516 10,779 19,140 29,407
Income from operations 947 3,648 606 10,345
Interest income 51 489 130 1,149
Interest expense and other (34) (16) (89) (58)
------------------ -----------------
Income before income taxes 964 4,121 647 11,436
Income tax provision (202) (1,021) (560) (2,394)
------------------ -----------------
Net Income $762 $3,100 $87 $9,042
------------------ -----------------
Diluted net income per share $0.02 $0.10 $- $0.28
(1) Includes stock based
compensation as follows:
Cost of revenues $- $1 $- $3
Selling, general and
administrative 47 357 183 1,017
Product development 11 168 103 435
------------------ -----------------
Total stock-based compensation $58 $526 $286 $1,455
DivX, Inc.
Consolidated Statement of Cash Flows
Three months ended Nine months ended
September 30, September 30,
2005 2006 2005 2006
------------------ -----------------
(unaudited) (unaudited)
------------------ -----------------
(in thousands)
Operating activities
Net income (loss) $762 $3,100 $87 $9,042
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation and
amortization 302 446 770 1,130
Stock-based compensation 58 526 286 1,454
Changes in operating assets
& liabilities:
Accounts receivable, net 597 (1,221) (383) (1,282)
Prepaids and other
assets (83) (588) 562 (559)
Accounts payable (192) (281) (962) 102
Accrued liabilities (455) 496 (215) (18)
Accrued compensation and
related benefits 219 416 584 1,516
Deferred rent (80) (45) (116) (132)
Deferred revenue, net (55) 256 491 536
Income taxes payable - 410 - 633
------------------ -----------------
Net cash provided by operating
activities 1,073 3,515 1,104 12,422
Investing Activities
Purchase of property and
equipment (224) (633) (661) (1,333)
Cash paid in Corporate Green
acquisition (351)
------------------ -----------------
Net cash used in investing
activities (224) (633) (661) (1,684)
Financing Activities
Net Proceeds from issuance of
preferred stock - - (3) -
Net proceeds from issuance of
common stock 93 111,264 711 111,812
Costs paid for initial public
offering - (242) - (667)
Tax Benefit from NQ option
exercise - 60 - 60
Repurchase of unvested stock (92) (4) (94) (7)
Payments on capital lease
obligations (73) (8) (252) (34)
Proceeds from notes payable 256 - 890 -
Payments on notes payable (194) (177) (1,145) (544)
------------------ -----------------
Net cash provided by (used in)
financing activities (10) 110,893 107 110,620
------------------ -----------------
Net increase (decrease) in cash
and cash equivalents 839 113,775 550 121,358
Cash & cash equivalents at
beginning of the period 6,645 32,618 6,934 25,035
------------------ -----------------
Cash & cash equivalents at end
of the period $7,484 $146,393 $7,484 $146,393
------------------ -----------------
Supplemental information
Income taxes paid $202 $- $560 $1,150
Interest Paid $34 $- $90 $41
SOURCE: DivX, Inc.
DivX, Inc. Tom Huntington, 858.882.0672 thuntington@divxcorp.com or The Blueshirt Group (Investor Relations) Todd Friedman or Stacie Bosinoff, 415.217.7722 todd@blueshirtgroup.com stacie@blueshirtgroup.com
Copyright Business Wire 2006
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