InterVideo Reports Strong Fourth Quarter and Fiscal Year 2004 Results; Company Posts Record Revenue for the Fourth Quarter

Business Wire, Feb 17, 2005

FREMONT, Calif. -- InterVideo, Inc. (Nasdaq:IVII), a leading provider of DVD software, today reported financial results for the fourth quarter and fiscal year ended December 31, 2004.

For the fourth quarter of 2004, InterVideo reported revenue of $20.4 million, an increase of 26% over $16.2 million reported in the fourth quarter of 2003, and an increase of 10% over $18.5 million reported in the third quarter of 2004. Net income for the fourth quarter of 2004 was $3.8 million, or $0.25 per diluted share, as compared to net income of $2.3 million, or $0.15 per diluted share, reported in the fourth quarter of 2003, and net income of $1.3 million, or $0.09 per diluted share, reported in the third quarter of 2004. Net income for the fourth quarter of 2004 included a benefit of $780,000, or $0.05 per diluted share from a deferred tax asset. For the fourth quarter of 2004, the effective tax rate was 10% compared to 21% in the fourth quarter of 2003 and 49% in the third quarter of 2004.

Revenue from products other than WinDVD, including WinDVD Creator, WinDVD Cinema, and InstantON was 33% of total revenue in the fourth quarter of 2004, as compared to 19% of total revenue in the fourth quarter of 2003 and 34% of total revenue in the third quarter of 2004. Revenue from WinDVD represented 67% of total revenue in the fourth quarter of 2004, as compared to 81% of total revenue in the fourth quarter of 2003 and 66% of total revenue in the third quarter of 2004.

Gross margins for the fourth quarter of 2004 increased to 56% from 55% in the prior quarter. The company closed the quarter with $74.6 million in cash, cash equivalents and short-term investments.

For the fiscal year ended December 31, 2004, revenue was $74.5 million, an increase of 30% over $57.1 million reported during the prior year. Net income for 2004 was $8.8 million, or $0.58 per diluted share based on 15.3 million diluted shares as compared to net income of $7.8 million, or $0.57 per diluted share based on 13.7 million diluted shares for the same period in 2003.

"Record revenue for the fourth quarter capped a year of significant achievement for InterVideo," commented President and CEO, Steve Ro. "During the year we continued to expand our product offerings and demonstrated our technology leadership with strong market acceptance of new products such as InstantON. While sales of our core product WinDVD remained solid, sales of our other products, including WinDVD Creator and WinDVD Cinema, experienced strong increases for the year and a significant increase as a portion of total revenue for the year.

"As we move into 2005, we are encouraged by the interest level we are experiencing in our technology and are excited about the opportunities to broaden our relationships with our OEM partners. We look to continue our success in driving new product innovations for the convergence of the consumer electronic and PC markets," concluded Mr. Ro.

Business Outlook

The following statements are based on current expectations and information available to us as of February 17, 2005; we do not undertake a duty to update them. Our ability to project future results is inherently uncertain. These statements are "forward-looking" and actual results may differ materially as a result of risks outlined below.

InterVideo estimates its revenue for the first quarter of 2005 to be in the range of $19.5 to $20.5 million and earnings per share in the range of $0.11-$0.13, assuming an estimated tax rate of 40%. For the full year of 2005, InterVideo estimates its revenue to be in the range of $85 to $95 million and earnings per share in the range of $0.59-$0.65.

Conference Call Details

The InterVideo Fourth Quarter and Fiscal Year 2004 teleconference and webcast is scheduled to begin at 4:30 p.m. Eastern Time, on Thursday, February 17, 2005. To access the live Webcast, please visit http://www.investor.intervideo.com or the main page of the investor relations section of InterVideo's website at least 30 minutes prior to the scheduled time to download any necessary audio or plug-in software. This press release and the Webcast will also be posted to the website at that location. A replay of the call will be available to investors through February 24, 2005, by dialing (800) 405-2236 and entering the passcode 11021954. Callers outside the US and Canada may access the replay by dialing (303) 590-3000 and entering the passcode 11021954.

About InterVideo, Inc.

InterVideo is a leading provider of DVD software. InterVideo has developed a technology platform from which it has created a broad suite of integrated multimedia software products that allow users to capture, edit, author, burn, distribute, and play digital video. InterVideo's software is bundled with products sold by the majority of the leading PC OEMs. The company is headquartered in Fremont, CA with regional offices in Europe, Taiwan, China and Japan. For more information, contact InterVideo at 510/651-0888 or visit the company's Web site at www.intervideo.com.