Real Networks (NASDAQ: RNWK) reported record 4Q revenue today of $125.6 million, up 50 percent year over year but net income suffered by comparison to last year’s 4Q, which included a major payment from Microsoft. Net income was $39.3 million, or $0.22 per share, compared with $295.6 million, or $1.61 per share in the same quarter last year. On an adjusted basis, Real’s 4Q06 earnings per share would have been $9.9 million. or $0.05 per share, compared with a net loss last year of $6.1 million, or ($0.04) cents per share.
Some highlights:
—Subscriber count: The acquisition of WiderThan, the largest acquisition in the company’s history, last fall boosted paid subscribers to 22.7 million; that includes all premium services including mobile. Most come from WiderThan.
—Music: Paid subscribers rose to 2.55 million from 1.65 million sequentially with revenue of $33.6 million, up 21 percent over the same quarter last year. and up sequentially, showing an increase for every quarter in 2006. Most of that growth came from adding some 800,000 Music-on-Demand subs from WiderThan.
—Games: Revenue of $23.9 million was up 52 percent from 4Q05.
Earnings call:
Glaser on M&A: Chairman and CEO Rob Glaser said unless the market turns “frothy” he expects 2007 to be as busy as 2006 acquisition-wise. Real acquired Zylom and WiderThan in 2006 and already has picked up Brazilian game site Atrativa in 2007. Real closed 2007 with $679 million in cash and has already received its payment from Microsoft this quarter, about $61 million. That’s the last of the Microsoft settlement payments.
On DRM: Glaser stressed that when he talks about DRM-less music, he means purchased—not subscription. The gist: subscription music would remain protected; purchased music would be open.
Earnings release | Webcast (5 p.m. eastern) audio only or with slides  | Financials | Transcript (SeekingAlpha.com)