San Diego- February 8, 2007- DivX, Inc. (NASDAQ: DIVX) today announced results for the quarter and year ended December 31, 2006. DivX reported fourth quarter consolidated revenue of $16.7 million, an increase of 57 percent from the fourth quarter of 2005. Consolidated revenue for the year was $59.3 million, an increase of 80 percent from 2005.Net income in the fourth quarter of 2006 was $7.4 million, or $0.21 per diluted share, compared to net income of $2.2 million, or $0.03 per diluted share, in the fourth quarter of 2005. Included in fourth quarter 2006 net income is $900,000 of stock-based compensation costs.
Net income for the year was $16.4 million, or $0.61 per diluted share, compared to net income of $2.3 million, or $0.00 per diluted share for 2005. Included in 2006 net income is $2.4 million of stock-based compensation costs.
Jordan Greenhall, CEO of DivX, Inc., said, “2006 was a remarkable year for DivX and the entire digital media market. Consumers began to show their true influence on the future direction of digital media and the technologies that will help make media better. We remain excited about the direction of the business and our goal of providing a common media language that bridges all possible devices and content on an open platform.”
John Tanner, CFO of DivX, Inc., added, “In 2006, we continued to demonstrate the healthy growth in revenue and earnings that have differentiated DivX in the past. Additionally, our solid cash flows from operations contributed to a strong balance sheet, which provides us a sturdy base from which to drive our future business strategy.”
Guidance – For the first quarter of 2007, revenue is anticipated to be in the range of $17.3 to $19.3 million.
Quarterly Conference Call
DivX, Inc. will discuss its quarterly and annual results via teleconference at 1:30 p.m. (PT) today, February 8, 2007. To access the call, please dial (800) 819-9193, or outside the U.S. (913) 981-4911, at least five minutes prior to the start time. A live webcast and replay will also be available at https://investors.divx.com. An audio replay of today’s conference call will be available from 4:30 p.m. (PT) on February 8, 2007 until 9:00 p.m. (PT) February 15, 2007 by dialing (719) 457-0820 or (888) 203-1112 with the replay passcode 7335486.
About DivX, Inc.
DivX creates products and services designed to improve the experience of media. Our first product offering was a video compression-decompression software library, or codec, which has been actively sought out and downloaded over 200 million times in the last four years, including over 60 million times during the last twelve months. We have since built on the success of our codec with other consumer software, including the DivX Player application, which is distributed from our website, www.divx.com. We also license our technologies to consumer hardware device manufacturers and certify their products to ensure the interoperable support of DivX-encoded content. In addition to technology licensing to consumer hardware device manufacturers, we currently generate revenue from software licensing, advertising and content distribution.
Unaudited Financial Information
The financial results included in this release are unaudited (other than certain 2005 results) and are subject to change based upon the results of year end audit procedures. The complete audited financial statements of DivX for the fiscal year ended December 31, 2006 will be included in DivX, Inc.’s Annual Report on Form 10-K to be filed with the SEC in March 2007.
Forward-Looking Statements
Statements in this press release that are not strictly historical in nature constitute “forward-looking statements.” Such statements include, but are not limited to, statements regarding the future development of digital media, the position of DivX at the forefront of market opportunities, DivX’s future business strategy and activities intended to drive profitable rapid revenue growth, and expectations regarding revenue for the first quarter of 2007. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause DivX’s actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements. These factors include, but are not limited to, the risk that the market for digital media may not develop as anticipated; the risk that customer use of DivX technology may not grow as anticipated; the risk that anticipated market opportunities may not materialize at expected levels, or at all; the risk that DivX’s activities may not result in the growth of profitable revenue; the risk that revenue for the first quarter of 2007 may be lower than expected; risks and uncertainties related to the maintenance and strength of the DivX brand; DivX’s ability to penetrate existing and new markets; the effects of competition; DivX’s dependence on its licensees and partners; the effect of intellectual property rights claims; and other factors discussed in the “Risk Factors” section of DivX’s quarterly report on Form 10-Q filed with the SEC on November 13, 2006. All forward-looking statements are qualified in their entirety by this cautionary statement. DivX is providing this information as of the date of this release and does not undertake any obligation to update any forward-looking statements contained in this release as a result of new information, future events or otherwise.
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