DivX, Inc. Reports Second Quarter 2007 Financial Results

DivX, Inc. Reports Second Quarter 2007 Financial Results

DivX, Inc. (NASDAQ:DIVX) today announced results for the second quarter ended June 30, 2007.

Revenue for the second quarter was $18.3 million, an increase of 39 percent compared to revenue of $13.2 million reported in the second quarter of last year. GAAP net income in the second quarter of 2007 was $1.0 million, or $0.03 per diluted share and includes (1) non-cash share-based compensation of approximately $2.1 million, ($1.2 million, or $0.03, per diluted share, net of related taxes), and (2) operating costs directly attributable to Stage6 of approximately $2.4 million ($1.4 million, or $0.04 per diluted share, net of related taxes). Excluding the effect of these two items, DivX generated non-GAAP net income of $3.6 million, or $0.10 per diluted share.

On July 24, DivX announced plans to increase focus on its high margin, fast-growing technology licensing business by seeking to separate Stage6. As such, to provide clarity and more information on the financial results, this quarter, in addition to excluding non-cash share-based compensation, the Company is excluding operating costs directly attributable to Stage6 from the non-GAAP net income and EPS calculations in the reconciliation included in this release.

Kevin Hell, Acting Chief Executive Officer of DivX, Inc., said, “We believe our second quarter results demonstrate both the top-line growth and earnings potential of our core licensing business. With our industry leading position in digital media and increasing momentum with consumer electronics brands in all regions worldwide, we continue to strengthen our competitive position and drive significant consumer uptake. Our plan to separate Stage6 from DivX, Inc. will allow us to narrow our focus and move forward aggressively on three key areas: expanding our core licensing business in DVD players and emerging device categories; building a platform for the connected home through DivX Connected; and extending our content licensing partnerships to enable the next generation of high quality digital media.”

Dan Halvorson, Executive Vice President and Chief Financial Officer of DivX, Inc., commented, “The core DivX business model generates high gross margins and strong operating results. Coupled with a strong balance sheet, I believe we are well-positioned to execute on our core growth strategy and to maximize the value of Stage6 as we determine the best strategy for that asset. We look forward to keeping investors apprised of our progress.”

Quarterly Conference Call

DivX, Inc. will discuss its quarterly and annual results via teleconference at 1:30 p.m. PDT today, August 9, 2007. To access the call, please dial (800) 811-8845, or outside the U.S. (913) 981-4905, at least five minutes prior to the start time. A live webcast and replay will also be available at http://investors.divx.com. An audio replay of today’s conference call will be available from 4:30 p.m. PDT on August 9, 2007 until 9:00 p.m. PDT August 16, 2007 by dialing (719) 457-0820 or (888) 203-1112 with the replay pass code 3422055.

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 240 million times since January 2003, including over 80 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.