PR Newswire | Oct 30, 2020 09:29AM EDT

10/30 08:28 CDT

GigaMedia Announces Third-Quarter 2020 Financial Results TAIPEI, Oct. 30, 2020

TAIPEI, Oct. 30, 2020 /PRNewswire/ -- GigaMedia Limited (NASDAQ: GIGM) today announced its third-quarter 2020 unaudited financial results.

Comments from Management

In the third quarter of 2020, GigaMedia reported revenues of $2.03 million, with a gross profit of $1.20 million, an operating loss of $0.36 million and a net loss of $0.25 million. Total revenues increased by 11.1% if compared to last quarter, and gross profit margin improved to 59.0% from 53.6% last quarter.

"It became clear that our efforts accumulated in past quarters are gradually paying off, and our improvement in profitability is gathering pace," said GigaMedia CEO James Huang.

Meanwhile, GigaMedia has entered and executed a convertible note purchase agreement to acquire ownership of $10 million principal amount of convertible promissory note issued by Aeolus Robotics Corporation ("Aeolus"), an R&D company engaged in developing AI-enabled service robots. An announcement for this agreement has been made on August 31, 2020, immediately after the closing of the agreement. The issuance of this convertible note provided Aeolus its much-needed working capital, and through this funding, GigaMedia will explore possibilities of further strategic cooperation with Aeolus.

Third Quarter Overview

* Revenues increased by 11.1% quarter-on-quarter to approximately $2.03 million from $1.83 million last quarter, and by 6.3% if compared to the same period last year. The increase was mainly due to our efforts in revitalizing Tales Runner, a 14-year-old game we have been licensed to operate in Hong Kong, where students have just experienced a prolonged summer vacation. * Consolidated loss from operations for the third quarter of 2020 amounted to $0.36 million, a reduction of loss from a loss of $0.55 million last quarter. * The net asset value was around $4.94 per share.

Unaudited Consolidated Financial Results

GigaMedia Limited is a diversified provider of digital entertainment services. GigaMedia's digital entertainment service business FunTown develops and operates a suite of digital entertainments in Taiwan and Hong Kong, with focus on browser/mobile games and casual games.

Unaudited consolidated results of GigaMedia are summarized in the table below.

For the Third Quarter

GIGAMEDIA3Q20 UNAUDITED CONSOLIDATED FINANCIAL RESULTS

Change Change(unaudited, all figures in US$ thousands, except per share amounts) 3Q20 2Q20 3Q20 3Q19 (%) (%)

Revenues 2,028 1,826 11.06% 2,028 1,908 6.29%

Gross Profit 1,196 978 22.29% 1,196 1,049 14.01%

Loss from Operations (357) (549) NM (357) (544) NM

Net (Loss) income Attributable to GigaMedia (248) (419) NM (248) (242) NM

Earnings (Loss) Per Share Attributable to GigaMedia, (0.02) (0.04) NM (0.02) (0.02) NMDiluted

EBITDA (A) (317) (634) NM (317) (585) NM

Cash, Cash Equivalents and Restricted Cash 46,869 56,783 -17.46% 46,869 58,164 -19.42%

NM= Not Meaningful

^(A) EBITDA (earnings before interest, taxes, depreciation, andamortization) is provided as a supplement to results provided inaccordance with U.S. generally accepted accounting principles ("GAAP"). (See,"Use of Non-GAAP Measures," for moredetails.)

* Consolidated revenues for the third quarter of 2020 were $2.03 million, representing an increase of 11.1% compared to $1.83 million in the prior quarter, and 6.3% year-over-year from $1.91 million the same quarter last year. * Consolidated gross profit increased by 22.3% quarter-on-quarter to $1.20 million from $0.98 million last quarter, or 14.0% year-over-year from $1.05 million in the third quarter last year. * Consolidated loss from operation of the third quarter of 2020 was $0.36 million, a decrease in loss by approximately $0.19 million from a loss of $0.55 million in last quarter. * Consolidated net loss of the third quarter of 2020 was $0.25 million compared to $0.42 million in last quarter. * Cash, cash equivalents and restricted cash as of the end of the third quarter of 2020 accounted for $46.9 million, decreasing by 17.46% from $56.8 million at the end of the second quarter of 2020. The decrease was mainly due to the strategic investment in Aeolus' $10 million convertible note.

Financial Position

GigaMedia maintained its solid financial position, with cash, cash equivalents and restricted cash accounted for $46.9 million as of September 30, 2020, or $4.24 per share.

Business Outlook

The following forward-looking statements reflect GigaMedia's expectations as ofOctober 30, 2020. Given potential changes in economic conditions and consumer spending, the evolving nature of online games, and various other risk factors, including those discussed in theCompany's 2019Annual Reporton Form20-F filedwith the U.S. Securities and Exchange Commissionasreferenced below, actual results may differ materially.

"Up to now, we have laid a solid groundwork for FunTown M, our own mobile platform for casual games," said GigaMedia CEO James Huang, "and from here we will actively pursue a steady expansion of customer base, as well as an organic growth in revenues and profitability."

"Meanwhile, we will also continue exploring prudently possibilities of expanding our business through strategic investments, including the one we have already made in Aeolus. We believe they would present opportunities to strengthen our business and maximize shareholders' value," stated CEO James Huang.

Use of Non-GAAP Measures

To supplement GigaMedia's consolidated financial statements presented in accordance with US GAAP, the Company uses the following measure defined as non-GAAP by the SEC: EBITDA. Management believes that EBITDA (earnings before interest, taxes, depreciation, and amortization) is a useful supplemental measure of performance because it excludes certain non-cash items such as depreciation and amortization and that EBITDA is a measure of performance used by some investors, equity analysts and others to make informed investment decisions. EBITDA is not a recognized earnings measure under GAAP and does not have a standardized meaning. Non-GAAP measures such as EBITDA should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, other financial measures prepared in accordance with GAAP. A limitation of using EBITDA is that it does not include all items that impact the company's net income for the period. Reconciliations to the GAAP equivalents of the non-GAAP financial measures are provided on the attached unaudited financial statements.

About the Numbers in This Release

Quarterly results

All quarterly results referred to in the text, tables and attachments to this release are unaudited. The financial statements from which the financial results reported in this press release are derived have been prepared in accordance with U.S. GAAP, unless otherwise noted as "non-GAAP," and are presented in U.S. dollars.

Q&A

For Q&A regarding the third quarter 2020 performance upon the release, investors may send the questions via email to IR@gigamedia.com.tw, and the responses will be replied individually.

About GigaMedia

Headquartered in Taipei, Taiwan, GigaMedia Limited (Singapore registration number: 199905474H) is a diversified provider of digital entertainment services in Taiwan and Hong Kong. GigaMedia's digital entertainment service business is an innovative leader in Asia with growing capabilities of development, distribution and operation of digital entertainments, as well as platform services for games with a focus on mobile games and casual games. More information on GigaMedia can be obtained from www.gigamedia.com.tw.

The statements included above and elsewhere in this press release that are not historical in nature are "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding expected financial performance (as described without limitation in the "Business Outlook" section and in quotations from management in this press release) and GigaMedia's strategic and operational plans. These statements are based on management's current expectations and are subject to risks and uncertainties and changes in circumstances. There are important factors that could cause actual results to differ materially from those anticipated in the forward looking statements, including but not limited to, our ability to license, develop or acquire additional online games that are appealing to users, our ability to retain existing online game players and attract new players, and our ability to launch online games in a timely manner and pursuant to our anticipated schedule. Further information on risks or other factors that could cause results to differ is detailed in GigaMedia's Annual Report on Form 20-F filed in April 2020 and its other filings with the United States Securities and Exchange Commission.

(Tables to follow)

GIGAMEDIA LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended Nine months ended

9/30/2020 6/30/2020 9/30/2019 9/30/2020 9/30/2019

unaudited unaudited unaudited unaudited unaudited

USD USD USD USD USD

Operatingrevenues

Digitalentertainment 2,028,138 1,825,547 1,908,261 5,457,589 5,141,077servicerevenues

Other revenues - - - - -

2,028,138 1,825,547 1,908,261 5,457,589 5,141,077

Operatingcosts

Cost ofDigitalentertainment 831,732 847,906 859,511 2,356,831 2,584,861servicerevenues

Cost of other - - - - -revenues

831,732 847,906 859,511 2,356,831 2,584,861

Gross profit 1,196,406 977,641 1,048,750 3,100,758 2,556,216

Operatingexpenses

Productdevelopmentand 341,023 332,745 326,419 1,002,584 972,057engineeringexpenses

Selling andmarketing 374,462 367,529 461,653 1,152,466 1,568,194expenses

General andadministrative 836,107 825,998 800,015 2,486,547 2,610,650expenses

Other 2,157 (42) 4,723 5,099 21,103

1,553,749 1,526,230 1,592,810 4,646,696 5,172,004

Loss from (357,343) (548,589) (544,060) (1,545,938) (2,615,788)operations

Non-operatingincome(expense)

Interest 71,014 212,881 364,539 539,613 1,160,788income

Foreignexchange 39,214 (82,357) (62,487) 55,744 17,033(loss) gain -net

Other - net (1,132) (1,404) 119 (2,834) 50,448

109,096 129,120 302,171 592,523 1,228,269

Loss before (248,247) (419,469) (241,889) (953,415) (1,387,519)income taxes

Income taxbenefit - - - - -(expense)

Net lossattributableto (248,247) (419,469) (241,889) (953,415) (1,387,519)shareholdersof GigaMedia

Loss per shareattributableto GigaMedia

Basic (0.02) (0.04) (0.02) (0.09) (0.13)

Diluted (0.02) (0.04) (0.02) (0.09) (0.13)

Weightedaverage sharesoutstanding:

Basic 11,052,235 11,052,235 11,052,235 11,052,235 11,052,235

Diluted 11,052,235 11,052,235 11,052,235 11,052,235 11,052,235

GIGAMEDIA LIMITED

CONSOLIDATED BALANCE SHEETS

9/30/2020 6/30/2020 9/30/2019

unaudited unaudited unaudited

USD USD USD

Assets

Current assets

Cash and cash equivalents 46,333,621 56,247,678 57,635,576

Marketable securities - current - - -

Accounts receivable - net 322,000 349,450 591,302

Prepaid expenses 155,357 228,794 142,819

Restricted cash 535,605 535,153 528,387

Other receivables 36,450 203,671 457,168

Other current assets 165,411 142,230 165,295

Total current assets 47,548,444 57,706,976 59,520,547

Marketable securities - noncurrent 10,000,000 - -

Property, plant & equipment - net 22,580 7,740 101,998

Intangible assets - net 16,186 17,111 78,828

Prepaid licensing and royalty fees 142,860 184,365 468,722

Other assets 312,013 290,687 918,556

Total assets 58,042,083 58,206,879 61,088,651

Liabilities and equity

Short-term borrowings - - -

Accounts payable 74,138 69,147 140,676

Accrued compensation 403,753 278,622 371,212

Accrued expenses 1,397,399 1,321,262 1,470,179

Unearned revenue 1,041,862 1,058,940 1,504,176

Other current liabilities 545,974 627,162 241,789

Total current liabilities 3,463,126 3,355,133 3,728,032

Other liabilities 3,379 3,653 662,530

Total liabilities 3,466,505 3,358,786 4,390,562

GigaMedia's shareholders' equity 54,575,578 54,848,093 56,698,089

Total liabilities and equity 58,042,083 58,206,879 61,088,651

GIGAMEDIA LIMITED

RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS

Three months ended Nine months ended

9/30/2020 6/30/2020 9/30/2019 9/30/2020 9/30/2019

unaudited unaudited unaudited unaudited unaudited

USD USD USD USD USD

Reconciliationof Net Income(Loss) toEBITDA

Net income(loss) (248,247) (419,469) (241,889) (953,415) (1,387,519)attributableto GigaMedia

Depreciation 752 535 9,919 1,641 50,076

Amortization 1,224 (2,257) 11,126 3,624 36,854

Interest (71,014) (212,881) (364,539) (539,613) (1,160,788)income

Interest - - - - -expense

Income tax(benefit) - - - - -expense

EBITDA (317,285) (634,072) (585,383) (1,487,763) (2,461,377)

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SOURCE GigaMedia