RealNetworks executives were whistling a happy tune this week as they reported first-quarter financial results, which showed revenue up nearly 50% to $129.5 million from $86.6 million in the first three quarters of 2006. Much of the increase came from the acquisition late last year of WiderThan, whose technology enables mobile phone companies to offer music downloads to subscribers. Revenue in the technology products and solutions segment that includes WiderThan was $44.4 million in the first quarter, up 276% from $11.8 million a year ago.
WiderThan also helped RealNetworks, No. 92 in the Internet Retailer Top 500 Guide, boost the number of subscribers to its music services to 2.67 million compared with 1.57 million a year ago. In the fourth quarter of 2006, the first period that included WiderThan, RealNetworks reported 2.55 million subscribers to its music services, which include Rhapsody, a leading competitor to Apple’s iTunes for downloading music to personal computers.
Other highlights of the first quarter included a 28% increase to $23.9 million in revenue from the sale of computer games, and music revenue of $34.1 million, up 18% over the year-ago quarter.
“2007 is off to an excellent start,” says CEO Rob Glaser. “Our first quarter results reflect good progress on several fronts, including successfully integrating WiderThan into Real, continued games innovation, and strengthening our music subscription business and the Rhapsody.com web experience.”
The company reported net income for the quarter of $40 million compared with $24.9 million a year ago. The first-quarter results include the final payment by Microsoft Corp. of a $301 million legal settlement from 2005. Adjusted net income, which excludes the Microsoft settlement, was $10.4 million compared with $3.9 million in the first quarter of 2006.
The company projects full-year revenue of $547 million to $563 million. Full-year 2006 revenue was $395.3 million.
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