RealNetworks, the 26-year-old streaming media pioneer that recently pivoted to developing facial recognition technology, today disclosed that it has received $2.87 million from the federal government’s Paycheck Protection Program.
The loan is the largest of three received by publicly-traded technology companies in the Seattle region. It comes as additional scrutiny is placed on larger companies receiving funding through the nascent economic relief program.
RealNetworks employed 453 employees at the end of 2019, within the 500-employee limit for receiving the loans.
Some publicly-traded companies that received funding under the Coronavirus Aid, Relief and Economic Security Act have said they will return the money.?Earlier this week, US Treasury Secretary Steven Mnuchin said that companies that received loans of $2 million or more would be audited, stressing that the program was designed for small businesses that need the money to weather the COVID-19 crisis.
“It was not a program that was designed for public companies that had liquidity,” Mnuchin told CNBC.
“We follow the rules very rigorously,” RealNetworks CEO Rob Glaser told GeekWire via phone Wednesday afternoon. “We’re very thoughtful about it, and we feel like this is a program that makes sense for us.”
He said the company has furloughed some workers that it now plans to bring back because of the PPP funds, largely those who work on its SAFR facial recognition technology.?Hard-hit casinos and airports were two of the primary markets for that technology.
RealNetworks is now exploring ways to apply its computer vision technology to help support efforts to reopen workplaces while observing social distancing, and the returning employees will help accelerate those plans, he said.
By coincidence, Glaser said he knows Mnuchin, having worked with him on the Yale Daily News in the early 1980s. However, he said they aren’t personal friends, and they haven’t discussed the PPP loan program. Glaser is known for his progressive politics and is a prominent Democratic donor.
“I personally think that the federal government needs to be doing more to help people during this period,” Glaser said. “I’m glad they added money for hospitals. I think helping state and local governments is important. So I don’t think that the PPP program is the be-all-and-end-all. But I think it serves an important purpose and I’m grateful that we qualified for it and we’re participating in it.”
Bellevue-based BSQUARE, a publicly traded Internet of Things technology company, said on April 10 that it received a $1.6 million PPP loan. Publicly traded Microvision, the Redmond-based laser projection technology company, received $1.57 million through the program.
RealNetworks had $16.8 million in cash and equivalents as of the end of 2019, less than half of its $35.6 million at the end of 2018, and down from nearly $100 million in the bank at the end of 2015. The company posted $172 million in revenue in 2019, and a loss of more than $20 million.
The company, which is traded on Nasdaq under the ticker symbol RNWK, is also facing its own issues related to its status as a publicly-traded company. In the same press release announcing the PPP loan, the company indicated that it received notice last week from the the Nasdaq Stock Market that it no longer meets minimum bid requirements to be listed on the exchange.
RealNetworks stock is trading around 80 cents, with a market value of $30 million. Some of the publicly traded companies that have returned the PPP loan so far have significantly larger market valuations, most notably Shake Shack with a market cap of $2.28 billion
Nasdaq recently implemented a grace period through the end of June for those companies failing to meet bid price rules, and RealNetworks has until Dec. 28 to regain compliance.
RealNetworks, which is headquartered across the street from Seattle’s T-Mobile Park, plans to use the funds for payroll and lease payments. The company maintained leases totaling about 100,000 square feet in Seattle, but as of December 2019 it had sublet a significant portion of the space.
The company recently implemented other cost-cutting moves, including the modification of its executive bonus program and the freezing of employee salaries. Glaser also declined to accept a 2019 bonus that would have been payable in 2020.
In February, with cash dwindling, Glaser announced that he was investing $10 million into the company, which he founded as Progressive Networks in 1994 at the dawn of the Internet revolution. “I very much believe in the opportunities in front of us,” Glaser told GeekWire at the time of the investment.
That was before the economic damage from the COVID-19 pandemic, which led to the company applying for the Paycheck Protection Program.
RealNetworks has bobbed and weaved for the past decade, bouncing among businesses from gaming to music to mobile. The company — which also owns a majority stake in the Napster music business — most recently pivoted into facial recognition tech with a computer vision platform dubbed SAFR.
In today’s press release, the company noted that SAFR could help address public health and safety issues tied to the COVID-19 pandemic.
“Our engineers have been hard at work during the pandemic and we are seeing promising early results,” the company wrote. “We expect to be rolling out new SAFR-based products beginning in mid-2020 that will address newly identified needs of the market for public safety as people begin to go back to work in larger numbers.”
RealNetworks’ SAFR technology uses artificial intelligence to “detect and match millions of faces in real time, even under challenging conditions where faces are in motion, at different angles, under poor lighting conditions, or partially obscured,” according to the company. The technology was unveiled in 2018 for K-12 schools.