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For the second quarter of 2005, Real reported record quarterly revenue of $82.7 million, up 26 percent from $65.5 million in the second quarter of 2004. The company reported GAAP net income of $4.7 million, or $0.03 per share, compared to a net loss of ($4.6) million, or ($0.03) per share, in the second quarter of 2004. The results for the second quarter of 2005 include a gain of approximately $7.6 million associated with the divestiture of its investment in MusicNet which was offset by approximately $6.5 million of incremental marketing expenses associated with the launch of our new Rhapsody music products during the quarter. Excluding antitrust litigation expenses of approximately $4.7 million, or $0.03 per share, during the second quarter of 2005, net income for the second quarter was $9.4 million, or $0.05 per share.

EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) was $6.4 million compared to a loss of ($1.5) million in last year's second quarter. Absent antitrust litigation expenses, EBITDA was $11.0 million for the second quarter of 2005, up from $1.3 million in the comparable period during 2004.

"With increased profitability, record revenue and a base of more than 2 million paid subscribers, we continue to make solid progress," said Rob Glaser, chairman and CEO of RealNetworks. "We're especially pleased with our launch of Rhapsody 25, a compelling and legitimate free music alternative to illegal P2P sites, and our industry-leading base of 1.15 million premium music subscription customers."

Real also today announced that its Board of Directors has authorized the repurchase of up to $75 million of the Company's outstanding common stock. Any repurchases may be made in the open market or through private transactions, in accordance with Securities and Exchange Commission requirements. The timing and amounts of repurchases will depend upon market conditions and other factors. To facilitate its repurchase plan, Real has entered into a Rule 10(b)5-1 plan designed to facilitate the repurchase of a portion of the authorized repurchase amount.
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