RealNetworks Announces Second Quarter Results

Reports Record Revenue of $136.2 million

   SEATTLE, -- RealNetworks(R), Inc. (Nasdaq: RNWK), the leading creator of digital media services and software,
today announced results for the second quarter ended June 30, 2007.
   Quarterly Highlights:
    --   Record revenue of $136.2 million
    --   Net income of $1.3 million or $0.01 per diluted share
    --   Adjusted net income of $8.9 million or $0.05 per diluted share
   "We are pleased to again deliver record revenue and solid financial
performance this quarter," said Rob Glaser, chairman and CEO of
RealNetworks. "We also released a new version of our flagship RealPlayer
product to widespread acclaim. The new RealPlayer makes it easy for
consumers to download and record video from thousands of Web sites."
   For the second quarter of 2007, revenue grew 52% to $136.2 million
compared to $89.4 million for the second quarter of 2006. For the second
quarter of 2007, revenue in the Consumer Products and Services segment was
as follows: Music revenue was $36.8 million, a 22% increase over the second
quarter of 2006; Games revenue was $24.9 million, a 17% increase over the
second quarter of 2006; and Media Software and Services revenue was $25.4
million, a 3% decrease from the second quarter of 2006. In the Technology
Products and Solutions segment, revenue was $49.1 million, a 310% increase
over the second quarter of 2006, due to the acquisition of WiderThan.
Foreign currency exchange rate fluctuations positively impacted 2007 second
quarter revenue by approximately $1.2 million compared to the second
quarter of 2006.
   Net income for the second quarter of 2007 was $1.3 million or $0.01 per
diluted share, compared to $38.9 million or $0.22 per diluted share in the
second quarter of 2006. The second quarter of 2006 results included
payments related to Real's antitrust settlement and commercial agreements
with Microsoft. The final payment was received under these agreements
during the first quarter of 2007. Further information regarding these
payments can be found in Real's SEC filings. Adjusted net income, described
below in Real's description of non-GAAP measures, was $8.9 million or $0.05
per diluted share for the second quarter of 2007, compared to $5.1 million
or $0.03 per diluted share in the second quarter of 2006. Adjusted EBITDA
for the second quarter of 2007 was $12.7 million compared to $2.2 million
in the second quarter of 2006. A reconciliation of GAAP net income to
adjusted net income and adjusted EBITDA is provided in the financial tables
that accompany this release.
   Gross margin was 64% in the second quarter of 2007 compared to 70% in
the second quarter of 2006. Operating expenses for the second quarter of
2007 were $92.1 million, compared to $13.1 million in the second quarter of
2006. Operating expenses in the second quarter of 2006 included benefits
related to payments under Real's antitrust settlement and commercial
agreements with Microsoft. Adjusted operating expenses in the second
quarter of 2007 were $82.7 million compared to $64.4 million in the second
quarter of 2006. A reconciliation of GAAP operating expenses to adjusted
operating expenses is provided in the financial tables that accompany this
release. For the second quarter of 2007, Real's effective tax rate was 62%,
due in part to foreign tax impacts of acquisitions made during the quarter.
   As of June 30, 2007, Real had approximately $614 million in
unrestricted cash, cash equivalents and short-term investments which
include the proceeds from $100 million of convertible debt.
   Under Real's current stock repurchase program, approximately 3.5
million shares were repurchased for $29.4 million during the second quarter
of 2007. As of June 30, 2007, approximately $70.6 million remained
available under the existing stock repurchase program.