GigaMedia Announces Fourth-Quarter and Full Year 2023 Financial Results

Rhea-AI Summary

GigaMedia (NASDAQ: GIGM) reported its unaudited financial results for 2023, showing revenues of $4.3 million, a gross profit of $2.4 million, and a net loss of $3.5 million. Despite a 23.2% revenue decrease, the company managed to reduce operating expenditures by 10.7%. The net loss before investment valuation adjustment was narrowed to $1.3 million. In 2024, GigaMedia plans to focus on developing AI-powered tools for game content renovation. The company maintained a solid financial position with $38.8 million in cash, cash equivalents, and restricted cash at the end of 2023.

Positive

• GigaMedia reported a revenue decrease of 23.2% in 2023, reaching $4.3 million.
• The company's gross profit for 2023 was $2.4 million, with an operating loss of $3.2 million and a net loss of $3.5 million.
• Operating expenditures were reduced by approximately 10.7% in 2023.
• GigaMedia recorded a $2.2 million valuation loss on investments, leading to a net loss of $3.5 million.
• Cash, cash equivalents, and restricted cash amounted to $38.8 million at the end of 2023.
• In 2024, GigaMedia plans to develop AI-powered tools to enhance game content in casual games.
• The company aims to commercialize these tools for AI-assisted product creation.
• GigaMedia's net asset value was approximately $3.87 per share as of the end of 2023.

Negative

• Revenues decreased by 23.2% in 2023.
• Net loss increased to $3.5 million in 2023.
• The company recorded a $2.2 million valuation loss on investments.
• GigaMedia's full-year operating loss slightly increased to $3.2 million in 2023.

Insights

Market Research Analyst

The reported financial results from GigaMedia Limited indicate a significant revenue decline of 23.2%, which is a red flag for investors and stakeholders. This decline is attributed to the termination of a non-performing game and scaling back of related workforce and overheads. While the reduction in operating expenditures by 10.7% shows management's commitment to cost control, it may not be sufficient to offset the revenue losses in the short term. The reported net loss of $3.5 million, although narrower before investment valuation adjustments, suggests that the company's core operations might be underperforming. The slight decrease in cash reserves also points to a need for careful financial management going forward.

From a market perspective, the company's pivot towards developing AI-powered tools for content renovation in casual games could be a strategic move to differentiate its offerings. However, the success of such tools as a commercialized solution remains speculative. Investors should monitor the company's ability to leverage these tools to drive future growth and whether this can translate into improved financial performance.

Financial Analyst

Analyzing GigaMedia's balance sheet strength, the company maintains a solid financial position with a cash reserve of $38.8 million, which is reassuring for debt management and operational flexibility. However, the net asset value of $3.87 per share should be weighed against the net loss per share of $0.31 to gauge the true value offered to shareholders. The company's decision to not take on any bank loans is a conservative approach that avoids interest expenses, but this strategy might limit potential for aggressive expansion or investment in new revenue streams.

Investors should also consider the impact of the $2.2 million valuation loss on investments. This non-operational loss can be seen as a one-time event, but it also raises questions about the company's investment strategies and risk management practices. The long-term implications of these investment losses on the company's growth and profitability should be carefully scrutinized.

TAIPEI, March 29, 2024 /PRNewswire/ -- GigaMedia Limited (NASDAQ: GIGM) today announced its unaudited financial results for the fourth quarter and full year of 2023.

Highlights

For 2023, GigaMedia reported revenues of $4.3 million, with a gross profit of $2.4 million, an operating loss of $3.2 million and the net loss of $3.5 million.

The revenues decreased by 23.2% in 2023. During 2023, we terminated a non-performing game while streamlined others, and correspondingly scaled back related workforce, costs and overhead. As a result, we managed to slash operating expenditures down by approximately 10.7%. All in all, the net loss before including investment valuation adjustment was narrowed to $1.3 million, less than half of that in 2022. However, pursuant to requirements of the accounting standards, we recorded a $2.2 million valuation loss on our investments, and the net loss became $3.5 million, $0.7 million higher than 2022.

On the balance sheet side, we maintained a solid financial position with a small cash burn rate in 2023, and our cash, cash equivalents and restricted cash amounted to $38.8 million at the end of 2023, slightly decreased from $39.1 million at the end of 2022.

In 2024, we will be devoted in developing AI-powered tools to enhance efficiency on renovating contents in our casual games. Besides in-house application, we will also explore potentials for the tools to become a commercialized solution of platform for publishing AI-assisted creation of products. We believe achieving sophistication in AI is very crucial in boosting our productivity and accelerate the growth of our business.

Fourth Quarter and Full Year Overview

• Consolidated 4Q revenues decreased by 18.8% quarter-on-quarter mainly due to seasonality, and by 21.1% year-over-year due to certain licensed games declined. Full year revenues decreased by 23.2% to $4.3 million from $5.6 million in 2022. 
• Loss from operations for 4Q was $0.6 million, representing a loss decrease from $0.9 million in the third quarter in 2023, as we managed to reduce the operating costs and expenses. Full year operating loss was $3.2 million, which slightly increased from $3.0 million in 2022.
• The net asset value was approximately $3.87 per share as of the end of 2023.

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 mobile games and casual games.

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

For the Full Year 2023

GIGAMEDIA FY23 UNAUDITED CONSOLIDATED FINANCIAL RESULTS
(unaudited, all figures in US$ thousands, except per share amounts)		FY23				FY22				Change (%)
Revenues			4,292				5,585				-23.2 %
Gross Profit			2,446				3,250				-24.7 %
Loss from Operations			(3,155)				(3,021)			NM
Net Loss Attributable to GigaMedia			(3,463)				(2,752)			NM
Net Loss Per Share Attributable to GigaMedia, Diluted			(0.31)				(0.25)			NM
EBITDA (A)			(5,218)				(3,437)			NM
Cash, Cash Equivalents and Restricted Cash			38,783				39,107				-0.8 %
NM= Not Meaningful

 

(A)       EBITDA (earnings before interest, taxes, depreciation, and amortization) is provided as a supplement to results provided in accordance with U.S. generally accepted accounting principles ("GAAP"). (See, "Use of Non-GAAP Measures," for more details.)

 

• Consolidated revenues for the year ended December 31, 2023 was $4.3 million, decreased from $5.6 million in the prior year. The decrease was mainly as revenues from certain licensed games declined.
• Consolidated loss from operations for 2023 was $3.2 million, compared to a loss of $3.0 million in the last year. The increase of loss was mainly due to the decline of revenues. 
• Consolidated net loss for 2023 was $3.5 million, increased from $2.8 million in the prior year. Loss per share for 2023 was $0.31 per share, compared to $0.25 last year.
• Cash, cash equivalents and restricted cash at the year end of 2023 amounted to $38.8 million.

For the Fourth Quarter

GIGAMEDIA 4Q23 UNAUDITED CONSOLIDATED FINANCIAL RESULTS
(unaudited, all figures in US$ thousands, except per share amounts)		4Q23				3Q23				Change (%)				4Q23				4Q22				Change (%)
Revenues			870				1,071				-18.8 %				870				1,102				-21.1 %
Gross Profit			504				583				-13.6 %				504				626				-19.5 %
Loss from Operations			(645)				(893)			NM					(645)				(675)			NM
Net Income (Loss) Attributable to GigaMedia			(2,082)				(507)			NM					(2,082)				347			NM
Net Income (Loss) Per Share Attributable to GigaMedia, Diluted			(0.19)				(0.05)			NM					(0.19)				0.03			NM
EBITDA (A)			(2,586)				(946)			NM					(2,586)				13			NM
Cash, Cash Equivalents and Restricted Cash			38,783				38,823				-0.1 %				38,783				39,107				-0.8 %
NM= Not Meaningful

 

(A)       EBITDA (earnings before interest, taxes, depreciation, and amortization) is provided as a supplement to results provided in accordance with U.S. generally accepted accounting principles ("GAAP"). (See, "Use of Non-GAAP Measures," for more details.)

Fourth-Quarter Financial Results

• Consolidated revenues for the fourth quarter of 2023 decreased by 18.8% quarter-on-quarter from $1.1 million to $0.9 million mainly due to seasonality, and decreased by 21.1% year-over-year mainly as revenues from licensed games declined.
• Consolidated loss from operations of the fourth quarter of 2023 was $0.6 million, compare to a loss of $0.9 million in the last quarter.
• Consolidated net loss of the fourth quarter of 2023 was $2.6 million, increased from a net loss of $0.9 million in the last quarter, mainly due to a valuation loss of $2.2 million in investments.
• Cash, cash equivalents and restricted cash at the end of the fourth quarter of 2023 amounted to $38.8 million, almost the same if compared to the prior quarter.

Financial Position

GigaMedia maintained its solid financial position. Cash, cash equivalents and restricted cash amounted to $38.8 million, or approximately $3.51 per share, along with zero bank loan. Our shareholders' equity was approximately $42.8 million of as of December 31, 2023.

Business Outlook

The following forward-looking statements reflect GigaMedia's expectations as of March 29, 2024. Given potential changes in economic conditions and consumer spending, the evolving nature of digital entertainments, and various other risk factors, including those discussed in the Company's 2022 Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission as referenced below, actual results may differ materially.

Since late 2023, we have being taking measures to re-examine mechanisms in our legacy casual games and to reconstruct players' ecosystem. While the effect would take some time to exhibit, we believe that will lead to a healthier gross margin in the long-run for our own offerings.

Meanwhile, our business strategies always include expanding through mergers and acquisitions. "We will continue reviewing strategic opportunities that would enable us to accelerate our growth and enhance shareholders' value," stated CEO James Huang.

Use of Non-GAAP Measures

To supplement GigaMedia's consolidated financial statements presented in accordance with U.S. 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

Unaudited results

All quarterly and certain annual 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 fourth quarter and full year 2023 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 digital entertainment products or services that are appealing to users, our ability to retain existing users and attract new users, and our ability to launch digital entertainment products and services 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 2023 and its other filings with the United States Securities and Exchange Commission.

 

(Tables to follow)

GIGAMEDIA LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of US dollars, except for earnings per share amounts)
		Three months ended												Twelve months ended
		31/12/2023				30/9/2023				31/12/2022				31/12/2023				31/12/2022
		unaudited				unaudited				unaudited				unaudited				audited
Operating revenues
Digital entertainment service revenues			870				1,071				1,102				4,292				5,585
			870				1,071				1,102				4,292				5,585
Operating costs
Cost of Digital entertainment service revenues			366				488				476				1,846				2,335
			366				488				476				1,846				2,335
Gross profit			504				583				626				2,446				3,250
Operating expenses
Product development and engineering expenses			179				183				163				729				1,110
Selling and marketing expenses			344				441				407				1,623				1,644
General and administrative expenses and others			626				846				731				3,242				3,515
Other			—				6				—				7				2
			1,149				1,476				1,301				5,601				6,271
Loss from operations			(645)				(893)				(675)				(3,155)				(3,021)
Non-operating income (expense)
Interest income			518				453				344				1,811				718
Foreign exchange gain (loss) - net			339				(236)				414				(34)				(941)
Gain on disposal of investments			(1)				77				—				76				—
Changes in the fair value of investment in equity securities recognized at fair value			(2,293)				86				227				(2,174)				409
Other - net			—				6				37				13				83
			(1,437)				386				1,022				(308)				269
Income (loss) before income taxes			(2,082)				(507)				347				(3,463)				(2,752)
Income tax expense			—				—				—				—				—
Net (loss) income attributable to shareholders of GigaMedia			(2,082)				(507)				347				(3,463)				(2,752)
Earnings (loss) per share attributable to GigaMedia
Basic:			(0.19)				(0.05)				0.03				(0.31)				(0.25)
Diluted:			(0.19)				(0.05)				0.03				(0.31)				(0.25)
Weighted average shares outstanding:
Basic			11,052				11,052				11,052				11,052				11,052
Diluted			11,052				11,052				11,052				11,052				11,052

 

GIGAMEDIA LIMITED
CONSOLIDATED BALANCE SHEETS
(in thousands of US dollars)
		31/12/2023				30/9/2023				31/12/2022
		unaudited				unaudited				audited
Assets
Current assets
Cash and cash equivalents			38,470				38,510				38,794
Marketable securities - current			—				—				7,950
Accounts receivable - net			227				253				199
Prepaid expenses			394				123				60
Restricted cash			313				313				313
Other receivables			2				364				374
Other current assets			141				145				136
Total current assets			39,547				39,708				47,826
Marketable securities - noncurrent			5,036				9,433				2,371
Property, plant & equipment - net			111				116				103
Intangible assets - net			13				10				19
Prepaid licensing and royalty fees			24				65				177
Other assets			1,365				1,348				1,640
Total assets			46,096				50,680				52,136
Liabilities and equity
Accounts payable			44				29				53
Accrued compensation			396				321				187
Accrued expenses			1,126				1,005				964
Unearned revenue			573				812				817
Other current liabilities			665				721				616
Total current liabilities			2,804				2,888				2,637
Other liabilities			495				562				893
Total liabilities			3,299				3,450				3,530
Total equity			42,797				47,230				48,606
Total liabilities and equity			46,096				50,680				52,136

 

GIGAMEDIA LIMITED
RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS
(in thousands of US dollars)
		Three months ended												Twelve months ended
		31/12/2023				30/9/2023				31/12/2022				31/12/2023				31/12/2022
		unaudited				unaudited				unaudited				unaudited				unaudited
Reconciliation of Net Income (Loss) to EBITDA
Net income (loss) attributable to GigaMedia			(2,082)				(507)				347				(3,463)				(2,752)
Depreciation			11				11				7				44				24
Amortization			3				3				3				12				9
Interest income			(518)				(453)				(344)				(1,811)				(718)
Interest expense			—				—				—				—				—
Income tax expense			—				—				—				—				—
EBITDA			(2,586)				(946)				13				(5,218)				(3,437)

 

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SOURCE GigaMedia

FAQ

What were GigaMedia's revenues for 2023?

GigaMedia reported revenues of $4.3 million for 2023.

What was GigaMedia's net loss in 2023?

GigaMedia reported a net loss of $3.5 million in 2023.

What is GigaMedia's ticker symbol?

GigaMedia's ticker symbol is GIGM.

What is GigaMedia's plan for 2024?

In 2024, GigaMedia plans to develop AI-powered tools for game content renovation and explore commercializing them for AI-assisted product creation.

What was GigaMedia's cash position at the end of 2023?

GigaMedia had $38.8 million in cash, cash equivalents, and restricted cash at the end of 2023.

What was GigaMedia's net asset value per share as of the end of 2023?

GigaMedia's net asset value was approximately $3.87 per share as of the end of 2023.