JAMDAT Mobile Inc. (NASDAQ: JMDT), a global wireless entertainment
publisher, today reported financial results for the three months
ended June 30, 2005. Second quarter 2005 revenues were $19.3
million, a 27% sequential increase over the $15.1 million reported
in the first quarter of 2005, and a 128% increase over the $8.4
million reported in the second quarter of 2004. GAAP net income for
the second quarter of 2005 was $2.6 million, or $0.11 per diluted
share, compared to approximately $0.4 million in the prior year
period. GAAP net income included a $2.6 million non-cash acquired
in process research and development ("IPR&D") expense related
to the Blue Lava acquisition and a $1.7 million income tax benefit
resulting from the release of a valuation allowance against certain
deferred tax assets. Excluding the IPR&D expense and the tax
benefit, net income would have been $3.4 million or $0.14 per
diluted share as compared to prior GAAP guidance of $0.12 per
diluted share. Adjusted net income, which excludes amortization of
stock compensation, other acquired intangibles and IPR&D
expense, was $7.2 million for the second quarter of 2005, or $0.30
per diluted share, compared to $1.3 million in the prior year
period. Excluding the tax benefit, adjusted net income would have
been $5.4 million or $0.23 per diluted share as compared to prior
guidance of $0.18 per diluted share. "We are very pleased with our
strong second quarter results, and in particular, with the
completion of our integration of Blue Lava and the Tetris property
into our product slate," said Chief Executive Officer, Mitch Lasky.
Cash, cash equivalents and short-term investments at June 30, 2005,
totaled $21.3 million, accounts receivable totaled $17.9 million
and bank debt totaled $15.0 million. During the first half of 2005,
JAMDAT generated approximately $10.5 million in cash from
operations, compared to approximately $1.9 million of cash used in
operations during the prior year period. "We believe that our cash
balance, available cash under our credit facility and ability to
generate cash from operations are sufficient for our current
operational needs," said Chief Financial Officer, Michael
Marchetti. Second Quarter Highlights and Recent Developments -- In
April 2005, JAMDAT acquired Blue Lava Wireless and a 15 year,
exclusive license to the wireless rights for Tetris. JAMDAT
immediately received the rights to publish Tetris in North America,
Latin America and India. The European wireless rights to publish
Tetris reverted to JAMDAT on June 8, 2005 and the Korean wireless
rights to publish Tetris reverted to JAMDAT on August 8, 2005.
JAMDAT will acquire the Tetris wireless rights for China, Japan,
Australia and New Zealand as the current licensee's rights expire
later this year. -- JAMDAT Mobile signed a multiyear license
agreement with id Software for exclusive wireless distribution
rights to DOOM RPG for mobile phones. -- JAMDAT acquired exclusive
wireless distribution rights to SOCOM: U.S. Navy SEALs through a
multiyear license agreement with Sony Computer Entertainment
America. -- JAMDAT Mobile launched Tony Hawk's Pro Skater: 3D, a 3D
version of the popular skateboarding game, on V CAST from Verizon
Wireless. Third Quarter and Full Year 2005 Outlook JAMDAT today
also provided guidance for the three months ending September 30,
2005, and reaffirmed its previous guidance for the full year ending
December 31, 2005. Third Quarter 2005 Outlook For the three months
ending September 30, 2005, JAMDAT expects revenue in the range of
$20 to $21 million, GAAP net income in the range of $0.04 to $0.06
per diluted share and adjusted net income in the range of $0.13 to
$0.15 per diluted share. Net income per share calculations for the
three months ending September 30, 2005 are based on an estimated
26.1 million weighted average shares outstanding. The reconciling
items between GAAP net income and adjusted net income for the
period are amortization of acquired intangible assets of
approximately $2.0 million and employee stock based compensation of
approximately $0.3 million. Full Year 2005 Outlook For the full
year ending December 31, 2005, JAMDAT reaffirmed its guidance for
revenue of approximately $80 million. JAMDAT expects GAAP earnings
per diluted share of approximately $0.42, and adjusted net income
of approximately $0.83 per diluted share. The full year earnings
per share include a $0.07 per share tax benefit realized in Q2.
JAMDAT currently does not expect its earnings in the second half of
2005 to be materially impacted by taxes. Net income per share
calculations for the full year 2005 are based on an estimated 24.6
million weighted average shares outstanding. The reconciling items
between GAAP net income and adjusted net income for the period are
amortization of acquired intangible assets and acquired in-process
research and development of approximately $8.9 million and employee
stock based compensation of approximately $1.3 million. Investor
Conference Call JAMDAT's quarterly earnings conference call is
scheduled to begin later today (Thursday, August 11, 2005) at 1:45
p.m., Pacific Daylight Time (USA). The conference call will be
broadcast live over the Internet. Investors may listen to the live
webcast at www.jamdat.com. For those who are not available for the
live broadcast, the call will be archived on JAMDAT's investor
website. Non-GAAP Measures To supplement JAMDAT's consolidated
financial statements presented in accordance with generally
accepted accounting principles, or GAAP, JAMDAT uses non-GAAP
measures of certain components of financial performance, including
net income, gross profit and earnings per share, which are adjusted
from results based on GAAP to exclude certain expenses. These
non-GAAP results provide useful information to both management and
investors by excluding certain expenses that may not be indicative
of core operating results. These measures should be considered in
addition to results prepared in accordance with generally accepted
accounting principles, but should not be considered a substitute
for, or superior to, GAAP results. The non-GAAP measures included
in this press release have been reconciled to the nearest GAAP
measure. These non-GAAP measures exclude the following items from
the Company's statement of operations: -- Amortization of acquired
intangibles -- Acquired in-process research and development --
Employee stock-based compensation About JAMDAT Mobile Inc. JAMDAT
Mobile Inc. is a global publisher of wireless entertainment
applications, including games, ring tones, images and other
content. JAMDAT's application portfolio is based on original and
licensed intellectual properties and includes JAMDAT Bowling,
Tetris(R), Downtown Texas Hold 'Em, Lemonade Tycoon(R), Bejeweled,
The Lord of the Rings(R), Tony Hawk's(R) Underground and
Scrabble(R). JAMDAT distributes its applications through wireless
carriers around the world. For more information, please visit
www.jamdat.com. Safe Harbor Statement This press release may
include forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, including
statements related to anticipated revenues, expenses, earnings,
operating cash flows, the outlook for JAMDAT's markets and the
demand for its products. Factors that could cause JAMDAT's actual
results to differ materially from these forward-looking statements
include its ability to market and sell products in diverse market
segments, its reliance on a limited number of products and
third-party vendors and distributors, its ability to expand studio
operations, increases in fulfillment costs, disruptions to
information technology systems, unpredictable events and
circumstances relating to international suppliers, increased
competition, government regulatory action and general economic
conditions. Please refer to JAMDAT's reports and filings with the
Securities and Exchange Commission for a further discussion of
these risks and uncertainties. Readers are cautioned not to place
undue reliance on forward-looking statements, which speak only as
of the date they are made. JAMDAT undertakes no obligation to
update publicly any forward-looking statements to reflect new
information, events or circumstances after the date they were made
or to reflect the occurrence of unanticipated events. (C) 2005
JAMDAT Mobile Inc. JAMDAT, JAMDAT Mobile and the bubbles logo are
trademarks of JAMDAT Mobile Inc. All other trademarks are the
property of their respective owners and are used with permission.
-0- *T JAMDAT Mobile Inc. Condensed Consolidated Balance Sheets (in
thousands) As of As of December 31, June 30, 2004 2005
-------------- ----------- Assets (Unaudited) Current assets: Cash
and cash equivalents $31,395 $21,254 Restricted cash 11 11
Short-term investments 33,523 - Accounts receivable, net of
allowance for doubtful accounts of $75 and $311 (unaudited),
respectively 12,927 17,865 Prepaid expenses and other current
assets 1,849 2,746 Prepaid royalties 2,114 2,550 Deferred tax asset
- 2,600 -------------- ----------- Total current assets 81,819
47,026 Property and equipment, net 1,998 2,150 Goodwill 4,081
27,355 Intangible assets, net 226 98,470 Non-current deferred tax
asset - 863 Other non-current assets 2,490 2,067 --------------
----------- Total assets $90,614 $177,931 --------------
----------- Liabilities and Stockholders' Equity Current
liabilities: Accounts payable $1,185 $1,502 Accrued expenses and
other liabilities 2,929 7,354 Deferred revenue 97 114 Current
portion of notes payable 64 16,923 -------------- ----------- Total
current liabilities 4,275 25,893 Other non-current liabilities - 51
Notes payable, net of current portion 2 11,000 --------------
----------- Total liabilities 4,277 36,944 --------------
----------- Commitments and contingencies Total stockholders'
equity 86,337 140,987 -------------- ----------- Total liabilities
and stockholders' equity $90,614 $177,931 --------------
----------- JAMDAT Mobile Inc. Condensed Consolidated Statements of
Operations (in thousands, except per share data) Three Months Ended
June Six Months Ended June 30, 30, -----------------------
---------------------- 2004 2005 2004 2005 ----------- -----------
---------- ----------- (Unaudited) (Unaudited) Revenues $8,446
$19,259 $15,479 $34,391 Cost of Revenues 1,395 5,101 2,360 8,557
----------- ----------- ---------- ----------- Gross profit 7,051
14,158 13,119 25,834 ----------- ----------- ---------- -----------
Operating Expenses: Research and development 2,699 4,781 5,054
8,943 Selling and marketing 1,416 2,004 2,312 3,690 General and
administrative 1,739 3,328 3,054 5,995 Acquired in- process
research and development - 2,640 - 2,890 Stock-based compensation
787 322 1,498 679 ----------- ----------- ---------- -----------
Total operating expenses 6,641 13,075 11,918 22,197 -----------
----------- ---------- ----------- Income from operations 410 1,083
1,201 3,637 Interest and other income (expense), net 13 (278) (40)
(25) ----------- ----------- ---------- ----------- Income before
income tax benefit 423 805 1,161 3,612 ----------- -----------
---------- ----------- Income tax benefit - 1,746 - 1,668
----------- ----------- ---------- ----------- Net income $423
$2,551 $1,161 $5,280 =========== =========== ========== ===========
Net income per common share: Basic $0.12 $0.11 $0.35 $0.25
=========== =========== ========== =========== Diluted $0.09 $0.11
(1) $0.25 $0.24 (1) =========== =========== ========== ===========
Weighted average shares used in computing net income per common
share: Basic 3,425,750 22,691,254 3,334,844 21,328,871 ===========
=========== ========== =========== Diluted 4,937,528 24,880,879
4,651,786 22,994,295 =========== =========== ========== ===========
*T Non-GAAP Results (in thousands, except per share data) The
following table shows the Company's non-GAAP results reconciled to
the Generally Accepted Accounting Principles ("GAAP") Condensed
Consolidated Statements of Operations. The Company's non-GAAP
results do not include amortization of acquired intangibles and
employee stock-based compensation and charges for acquired
in-process research and development. -0- *T Three Months Ended June
Six Months Ended June 30, 30, -------------------------
------------------------- 2004 2005 2004 2005 ----------
----------- ---------- ----------- Net income $423 $2,551 $1,161
$5,280 Amortization of acquired intangibles 67 1,681 134 1,998
Acquired in-process research and development - 2,640 - 2,890
Stock-based compensation 787 322 1,498 679 ---------- -----------
---------- ----------- Adjusted net income $1,277 $7,194 $2,793
$10,847 ========== =========== ========== =========== Adjusted net
income per diluted share $0.26 $0.30 (1) $0.60 $0.48 (1) ==========
=========== ========== =========== Weighted average shares used in
computing adjusted net income per common share: 4,937,528
24,880,879 4,651,786 22,994,295 Gross profit $7,051 $14,158 $13,119
$25,834 Amortization of acquired intangibles 67 1,681 134 1,998
---------- ----------- ---------- ----------- Adjusted gross profit
$7,118 $15,839 $13,253 $27,832 ========== =========== ==========
=========== (1) Imputed interest expense of $155 related to a
promissory note payable by the Company in cash or shares of common
stock was added back to net income in calculating the numerator for
the diluted earnings per share calculation for the three and six
months ended June 30, 2005 in accordance with GAAP. JAMDAT Mobile
Inc. Condensed Consolidated Statements of Cash Flows (in thousands)
Six Months Ended June 30, -------------------- 2004 2005
----------- -------- (Unaudited) Cash flows from operating
activities: Net income $1,161 $5,280 Adjustments to reconcile net
income to net cash provided by (used in) operating activities:
Depreciation and amortization 426 2,480 Acquired in-process
research and development - 2,890 Stock-based compensation and
warrant amortization 1,498 679 Non-cash interest (income) expense,
net (23) 155 Net tax benefit from release of valuation allowance -
(3,463) Provision for bad debts, net - 242 Changes in operating
assets and liabilities, net of effect of acquisitions: Accounts
receivable (3,425) 1,245 Prepaid expenses and other assets (739)
(781) Prepaid royalties (690) (108) Accounts payable and accrued
expenses 330 1,724 Deferred revenue (476) 14 Other non-current
liabilities - 180 ----------- -------- Net cash provided by (used
in) operating activities (1,938) 10,537 ----------- -------- Cash
flows from investing activities: Purchases of property and
equipment (962) (538) Purchases of short-term investments -
(18,102) Sales of short-term investments - 51,625 Restricted cash
819 - Business acquisitions and investments - (68,716) -----------
-------- Net cash used in investing activities (143) (35,731)
----------- -------- Cash flows from financing activities:
Borrowing under term loan and credit facility - 15,000 Bank
facilities repayments (395) (58) Proceeds from issuance of
restricted common stock 27 58 Proceeds from issuance of common
stock upon exercise of warrants 270 - Payment of note payable
(1,837) - ----------- -------- Net cash provided by (used in)
financing activities (1,935) 15,000 ----------- -------- Effect of
exchange rate changes on cash 48 53 Net decrease in cash and cash
equivalents (3,968) (10,141) Cash and cash equivalents, beginning
of period 11,133 31,395 ----------- -------- Cash and cash
equivalents, end of period $7,165 $21,254 ----------- -------- *T
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