UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT TO
SECTION
13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of report:
October
29, 2014
(Date
of earliest event reported)
Glu Mobile Inc.
(Exact
Name of Registrant as Specified in Its Charter)
Delaware
(State
or Other Jurisdiction of Incorporation)
001-33368
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91-2143667
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(Commission File Number)
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(IRS Employer Identification No.)
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500 Howard Street, Suite 300
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San Francisco, California
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94105
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(415) 800-6100
(Registrant’s Telephone Number, Including Area
Code)
Not Applicable
(Former name or former address, if
changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions (see General Instruction A.2. below):
⃞
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
⃞
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
⃞
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
⃞
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On October 29, 2014, Glu issued a press release announcing its financial
results for the third quarter ended September 30, 2014. A copy of the
press release is attached as Exhibit 99.01 to this report. In addition,
on October 29, 2014, Glu made available on its corporate website at
www.glu.com/investors supplemental slides that were referenced during
the Company’s earnings call to discuss its financial results for the
third quarter ended October 29, 2014. A copy of such supplemental slides
is attached as Exhibit 99.02 to this report.
The information in this Item 2.02, including Exhibits 99.01 and 99.02 to
this report, shall not be deemed to be “filed” for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, or
otherwise subject to the liabilities of that section or Sections 11 and
12(a)(2) of the Securities Act of 1933, as amended. The information
contained in this Item 2.02 and in the accompanying Exhibits 99.01 and
99.02 shall not be incorporated by reference into any registration
statement or other document filed by Glu with the Securities and
Exchange Commission, whether made before or after the date of this
report, regardless of any general incorporation language in such filing
(or any reference to this Current Report on Form 8-K generally), except
as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
99.01
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Press release issued by Glu regarding its financial results for the
third quarter ended September 30, 2014, dated October 29, 2014.
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99.02
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Supplemental slides made available by Glu on its corporate website
on October 29, 2014.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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Glu Mobile Inc.
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Date:
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October 29, 2014
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By: /s/ Scott J. Leichtner
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Name: Scott J. Leichtner
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Title: Vice President and General Counsel
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EXHIBIT INDEX
Number
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Description
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99.01
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Press release issued by Glu regarding its financial results for
the third quarter ended September 30, 2014, dated October 29,
2014.Press release issued by Glu regarding its financial results
for the third quarter ended September 30, 2014, dated October 29,
2014.
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99.02
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Supplemental slides made available by Glu on its corporate website
on October 29, 2014.
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3
Exhibit 99.01
Glu
Reports Record Third Quarter 2014 Financial Results
-
Record
Q3 non-GAAP revenues of $83.6 million, up 270% year-over-year and 138%
quarter-over-quarter
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Record
Q3 GAAP revenues of $64.8 million
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Record
Q3 Adjusted EBITDA of $15.4 million, exceeding guidance
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Record
Q3 Adjusted EBITDA margin of 18.4%
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Full
year 2014 guidance raised
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Extended
the license agreement with Kim Kardashian-West for an additional three
years
SAN FRANCISCO--(BUSINESS WIRE)--October 29, 2014--Glu Mobile Inc.
(NASDAQ:GLUU), a leading global developer and publisher of free-to-play
games for smartphone and tablet devices, today announced financial
results for its third quarter ended September 30, 2014.
“Glu’s third quarter was the strongest in the company’s history as
non-GAAP revenue and Adjusted EBITDA set all time records,” stated
Niccolo de Masi, Chief Executive Officer of Glu. “The record quarter was
driven by the strength of Kim Kardashian: Hollywood, our new releases
Dino Hunter: Deadly Shores and Tap Sports: Baseball, ongoing traction
with Deer Hunter 2014 and Eternity Warriors 3 and the addition of Racing
Rivals to our product portfolio.”
De Masi continued, “We are adding our beat in Q3 to our full year 2014
guidance. With Contract Killer: Sniper still to launch in Q4 we
anticipate 101% revenue growth year-over-year at the midpoint of our
2014 full year guidance. Our diversified portfolio and franchise product
strategy position us well for continued growth in 2015. Longer-term,
with expected robust free cash flow and a strong balance sheet, we are
focused on extending our leadership in the action, casual, racing and
sports genres by consistently leveraging our engines and expertise.”
Third Quarter 2014 Financial Highlights:
-
Revenue: Total GAAP revenue was $64.8 million in the third
quarter of 2014 compared to $21.7 million in the third quarter of
2013. Total non-GAAP revenue was $83.6 million in the third quarter of
2014, an increase of 270% compared to $22.6 million in the third
quarter of 2013. Non-GAAP revenue excludes changes in deferred revenue.
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Gross Margin: GAAP gross margin was 58% in the third quarter of
2014 compared to 59% in the third quarter of 2013. Non-GAAP gross
margin was 60% in the third quarter of 2014 compared to 66% in the
third quarter of 2013. Non-GAAP gross margin excludes changes in
deferred revenue, change in deferred cost of revenues, amortization of
intangible assets and non-cash warrant expense.
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GAAP Operating Income (Loss): GAAP operating loss was
$(106,000) in the third quarter of 2014 compared to a loss of $(7.8)
million in the third quarter of 2013.
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Non-GAAP Operating Income (Loss): Non-GAAP operating income was
$14.8 million in the third quarter of 2014 compared to a loss of
$(4.8) million during the third quarter of 2013. Non-GAAP operating
income/(loss) excludes changes in deferred revenues and deferred cost
of revenues, amortization of intangible assets, non-cash warrant
expense, stock-based compensation expense, restructuring charges,
change in fair value of the Blammo earnout, and transitional costs.
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Adjusted EBITDA: Adjusted EBITDA was $15.4 million for the
third quarter of 2014 compared to a loss of $(4.1) million during the
third quarter of 2013. Adjusted EBITDA margin was 18.4% for the third
quarter of 2014 compared with (18.3%) for the third quarter of 2013.
Adjusted EBITDA is defined as non-GAAP operating income/(loss) less
depreciation. Adjusted EBITDA margin is defined as Adjusted EBITDA
divided by non-GAAP revenue.
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GAAP Net Income (Loss) and EPS: GAAP net income was $10.6
million for the third quarter of 2014 compared to a GAAP net loss of
$(8.0) million for the third quarter of 2013. GAAP EPS was $0.10 for
the third quarter of 2014, based on 105.4 million weighted-average
diluted shares outstanding, compared to GAAP EPS of $(0.11) for the
third quarter of 2013, based on 71.5 million weighted-average basic
shares outstanding.
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Non-GAAP Net Income (Loss) and EPS: Non-GAAP net income was
$17.5 million for the third quarter of 2014 compared to a loss of
$(4.7) million for the third quarter of 2013. Non-GAAP EPS was $0.17
for the third quarter of 2014 based on 105.4 million weighted-average
diluted shares outstanding, compared to non-GAAP EPS of $(0.07) for
the third quarter of 2013 based on 71.5 million weighted-average basic
shares outstanding.
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Cash Flows Generated (Used) in Operations: Cash flows generated
from operations were $2.5 million for the third quarter of 2014
compared to cash flows used in operations of $(5.9) million for the
third quarter of 2013.
A reconciliation of GAAP to non-GAAP results has been provided in the
financial statement tables included in this press release. An
explanation of these measures is also included below under the heading
“Use of Non-GAAP Financial Measures.”
Recent Developments and Strategic Initiatives:
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More than 12 months post global launch, Deer Hunter 2014 remains a top
100 grossing app in the U.S. App Store for iPhone.
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In October, we announced the launch of the first free-to-play Diner
Dash game.
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In October, we launched Kim Kardashian: Hollywood 2.0 with
availability on Facebook and in September, we extended the term of the
license agreement with Kim Kardashian-West for an additional three
years.
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In September, we launched Racing Rivals 2.0 with availability on
Facebook.
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In August, we launched Tap Sports: Baseball, in which Glu has
partnered with the Major League Baseball Players Association to
include the names and numbers of real-world baseball stars.
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In August, we completed the acquisition of Cie Games - creators of
Racing Rivals and Car Town.
“Our record results highlight the leverage in Glu’s operating model
evidenced by the record revenue and Adjusted EBITDA margin during the
third quarter,” stated Eric R. Ludwig, Glu’s Chief Financial Officer and
Chief Operating Officer. “We are pleased with the continued consumer
interest in our games, consistently having four to five titles within
the top 100 grossing chart position on the U.S. App Store for iPhone
since the closing of our Cie Games acquisition. The combination of our
robust pipeline of titles, global scale and strong balance sheet
positions Glu to maintain its momentum for the remainder of the year and
into 2015.”
Business Outlook as of October 29, 2014:
The following forward-looking statements reflect expectations as of
October 29, 2014. Results may be materially different and are affected
by many factors, such as: consumer demand for mobile entertainment and
specifically Glu’s products; consumer demand for smartphones, tablets
and next-generation platforms; our ability to improve the monetization
of our titles and continue to successfully launch and update new games;
development delays on Glu's products; continued uncertainty in the
global economic environment; competition in the industry; storefront
featuring; changes in foreign exchange rates; Glu's effective tax rate
and other factors detailed in this release and in Glu's SEC filings.
Fourth Quarter Expectations – Quarter Ending December 31, 2014:
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Non-GAAP revenues are expected to be between $60.0 million and $65.0
million.
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Non-GAAP gross margin is expected to be approximately 58%.
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Non-GAAP operating expenses are expected to be between $32.0 million
and $32.9 million.
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Adjusted EBITDA, defined as non-GAAP operating income (loss) excluding
depreciation of approximately $600,000, is expected to range from $3.5
million to $5.5 million.
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Income tax is expected to be an expense of approximately $2.2 million.
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Non-GAAP net income is expected to be between $0.8 million and $2.8
million or between $0.01 and $0.03 per weighted-average diluted share
outstanding, which excludes approximately $2.0 million of anticipated
stock-based compensation expense, $2.6 million for amortization of
intangibles and $400,000 of transitional costs related to the Cie
Games integration.
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Weighted-average common shares outstanding are expected to be
approximately 103.7 million basic and 108.1 million diluted.
2014 Expectations – Full Year Ending December 31, 2014:
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Non-GAAP revenues are expected to be between $225.5 million and $230.5
million.
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Non-GAAP gross margin is expected to be approximately 63%.
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Adjusted EBITDA is expected to range from $24.5 million to $26.5
million.
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Non-GAAP net income is expected to be between $22.1 million and $24.1
million or between $0.23 and $0.25 per weighted-average diluted share
outstanding, which excludes approximately $11.5 million of anticipated
stock-based compensation expense, $5.3 million for amortization of
intangibles, $835,000 of Blammo earnout mark to market charges,
$368,000 of restructuring charges and $1.6 million of transitional
costs related to the PlayFirst and Cie Games acquisitions.
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Weighted-average common shares outstanding are expected to be
approximately 91.9 million basic and 97.2 million diluted.
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We expect to have cash and short-term investments at December 31, 2014
of at least $70.0 million with no debt.
Quarterly Conference Call
Glu will discuss its quarterly results via teleconference today at 1:30
p.m. Pacific Time (4:30 p.m. Eastern Time). Please dial (866) 582-8907,
or if outside the U.S., (760) 298-5046, with conference ID # 13866690
to access the conference call at least five minutes prior to the 1:30
p.m. Pacific Time start time. A live webcast and replay of the call will
also be available on the investor relations portion of the company's
website at www.glu.com/investors. An audio replay will be
available between 4:30 p.m. Pacific Time, October 29, 2014, and 8:59
p.m. Pacific Time, November 5, 2014, by calling (855) 859-2056, or (404)
537-3406, with conference ID # 13866690.
Disclosure Using Social Media Channels
Glu currently announces material information to its investors using SEC
filings, press releases, public conference calls and webcasts. Glu uses
these channels as well as social media channels to announce information
about the company, games, employees and other issues. Given SEC guidance
regarding the use of social media channels to announce material
information to investors, Glu is notifying investors, the media, its
players and others interested in the company that in the future, it
might choose to communicate material information via social media
channels or, it is possible that information it discloses through social
media channels may be deemed to be material. Therefore, Glu encourages
investors, the media, players and others interested in Glu to review the
information posted on the company forum (http://ggnbb.glu.com/forum.php)
and the company Facebook site (https://www.facebook.com/glumobile),
the company twitter account (https://twitter.com/glumobile) and
Mr. de Masi’s twitter account (https://twitter.com/niccolodemasi). Investors,
the media, players or other interested parties can subscribe to the
company blog and twitter feed and Mr. de Masi’s twitter feed at the
addresses listed above. Any updates to the list of social media channels
Glu will use to announce material information will be posted on the
Investor Relations page of the company's website at www.glu.com/investors.
Use of Non-GAAP Financial Measures
To supplement Glu's unaudited condensed consolidated financial data
presented in accordance with GAAP, Glu uses certain non-GAAP measures of
financial performance. The presentation of these non-GAAP financial
measures is not intended to be considered in isolation from, as a
substitute for, or superior to, the financial information prepared and
presented in accordance with GAAP, and may be different from non-GAAP
financial measures used by other companies. In addition, these non-GAAP
measures have limitations in that they do not reflect all of the amounts
associated with Glu's results of operations as determined in accordance
with GAAP. The non-GAAP financial measures used by Glu include
historical and estimated non-GAAP revenues, non-GAAP smartphone
revenues, non-GAAP cost of revenues, non-GAAP operating expenses,
non-GAAP gross profit, non-GAAP gross margins, non-GAAP operating
income/(loss), non-GAAP net loss and non-GAAP basic and diluted net loss
per share. These non-GAAP financial measures exclude the following items
from Glu's unaudited consolidated statements of operations:
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Change in deferred revenues and deferred cost of revenues;
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Amortization of intangible assets;
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Non-cash warrant expense;
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Stock-based compensation expense;
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Restructuring charges;
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Change in fair value of Blammo earnout;
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Transitional costs;
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Release of tax liabilities and valuation allowance; and
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Foreign currency exchange gains and losses primarily related to the
revaluation of assets and liabilities.
In addition, Glu has included in this release “Adjusted EBITDA” figures
which are used to evaluate Glu’s operating performance. Adjusted EBITDA
is defined as non-GAAP operating income/(loss) excluding depreciation.
Adjusted EBITDA margin is defined as Adjusted EBITDA divided by non-GAAP
revenue.
Glu may consider whether significant non-recurring items that arise in
the future should also be excluded in calculating the non-GAAP financial
measures it uses.
Glu believes that these non-GAAP financial measures, when taken together
with the corresponding GAAP financial measures, provide meaningful
supplemental information regarding Glu's performance by excluding
certain items that may not be indicative of Glu's core business,
operating results or future outlook. Glu's management uses, and believes
that investors benefit from referring to, these non-GAAP financial
measures in assessing Glu's operating results, as well as when planning,
forecasting and analyzing future periods. These non-GAAP financial
measures also facilitate comparisons of Glu's performance to prior
periods.
Cautions Regarding Forward-Looking Statements
This news release contains forward-looking statements, including those
regarding our “Business Outlook as of October 29, 2014” (“Fourth Quarter
Expectations – Quarter Ending December 31, 2014” and “2014 Expectations
– Full Year Ending December 31, 2014”), and the statements that we
anticipate 101% revenue growth year-over-year at the midpoint of our
2014 full year guidance; our diversified portfolio and franchise product
strategy position us well for continued growth in 2015; longer-term,
with expected robust free cash flow and a strong balance sheet, we are
focused on extending our leadership in the action, casual, racing and
sports genres by consistently leveraging our engines and expertise; and
the combination of our robust pipeline of titles, global scale and
strong balance sheet positions Glu to maintain its momentum for the
remainder of the year and into 2015. These forward-looking statements
are subject to material risks and uncertainties that could cause actual
results to differ materially from those in the forward-looking
statements. Investors should consider important risk factors, which
include: the risks identified under "Business Outlook as of October 29,
2014"; the risk that consumer demand for smartphones, tablets and
next-generation platforms does not grow as significantly as we
anticipate or that we will be unable to capitalize on any such growth;
the risk that we do not realize a sufficient return on our investment
with respect to our efforts to develop free-to-play games for
smartphones, tablets and next-generation platforms, the risk that we
will not be able to maintain our good relationships with Apple and
Google; the risk that our development expenses for games for
smartphones, tablets and next-generation platforms are greater than we
anticipate; the risk that our recently and newly launched games are less
popular than anticipated or decline in popularity and monetization rate
more quickly than we anticipate; the risk that our newly released games
will be of a quality less than desired by reviewers and consumers; the
risk that the mobile games market, particularly with respect to
free-to-play gaming, is smaller than anticipated; and other risks
detailed under the caption "Risk Factors" in our Form 10-Q filed with
the Securities and Exchange Commission on August 11, 2014 and our other
SEC filings. You can locate these reports through our website at http://www.glu.com/investors.
We are under no obligation, and expressly disclaim any obligation, to
update or alter our forward-looking statements whether as a result of
new information, future events or otherwise.
About Glu Mobile
Glu Mobile Inc. (NASDAQ:GLUU) is a leading global developer and
publisher of free-to-play games for smartphone and tablet devices. Glu
is focused on creating compelling original IP games such as CONTRACT
KILLER, DEER HUNTER, DINER DASH, DINO HUNTER: DEADLY SHORES, ETERNITY
WARRIORS, and FRONTLINE COMMANDO, and branded IP games
including KIM KARDASHIAN: HOLLYWOOD, RACING RIVALS, ROBOCOP: THE
OFFICIAL GAME, and HERCULES: THE OFFICIAL GAME, on a wide
range of platforms including the Apple App Store, Google Play, Amazon
App Store, Facebook, Mac App Store and Windows Phone. Glu’s unique
technology platform enables its titles to be accessible to a broad
audience of consumers globally. Founded in 2001, Glu is headquartered in
San Francisco with major offices outside Seattle and Long Beach, and
international locations in Canada, China, India, Japan, Korea, and
Russia. Consumers can find high-quality entertainment wherever they see
the ‘g’ character logo or at www.glu.com. For live
updates, please follow Glu via Twitter at www.twitter.com/glumobile
or become a Glu fan at www.facebook.com/glumobile.
CONTRACT KILLER, DEER HUNTER, DINER DASH, DINO HUNTER: DEADLY SHORES,
ETERNITY WARRIORS, FRONTLINE COMMANDO, RACING RIVALS, TAP SPORTS:
BASEBALL, GLU, GLU MOBILE and the 'g' character logo are trademarks
of Glu Mobile Inc. or its subsidiaries.
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Glu Mobile Inc.
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Consolidated Balance Sheets
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(in thousands)
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(unaudited)
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September 30,
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December 31,
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2014
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2013
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ASSETS
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Cash and cash equivalents
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$
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54,268
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$
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28,496
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Accounts receivable, net
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34,566
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18,305
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Prepaid expenses and other current assets
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16,826
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7,663
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Total current assets
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105,660
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54,464
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Property and equipment, net
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4,853
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5,096
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Restricted cash
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1,990
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1,730
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Other long-term assets
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6,199
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637
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Intangible assets, net
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30,084
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5,599
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Goodwill
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89,494
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19,485
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Total assets
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$
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238,280
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$
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87,011
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Accounts payable
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$
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8,475
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$
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10,657
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Accrued liabilities
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4,400
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1,971
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Accrued compensation
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8,217
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5,378
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Accrued royalties
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11,510
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1,727
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Deferred revenues
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34,178
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18,224
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Total current liabilities
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66,780
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37,957
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Other long-term liabilities
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2,596
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2,357
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Total liabilities
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69,376
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40,314
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Common stock
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11
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8
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Additional paid-in capital
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413,898
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298,593
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Accumulated other comprehensive income
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229
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307
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Accumulated deficit
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(245,234
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)
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(252,211
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)
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Stockholders' equity
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168,904
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46,697
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Total liabilities and stockholders' equity
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$
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238,280
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$
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87,011
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Glu Mobile Inc.
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Condensed Consolidated Statements of Operations
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(in thousands, except per share data)
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(unaudited)
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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September 30,
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September 30,
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2014
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2013
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2014
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2013
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Revenues
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$
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64,791
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$
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21,722
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$
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150,281
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$
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70,772
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Cost of revenues:
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Platform commissions, royalties and other
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25,733
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7,871
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51,367
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23,003
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Amortization of intangible assets
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1,338
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1,082
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2,333
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3,234
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Total cost of revenues
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27,071
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8,953
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53,700
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26,237
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Gross profit
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37,720
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12,769
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|
96,581
|
|
|
|
44,535
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
15,355
|
|
|
|
11,405
|
|
|
|
48,231
|
|
|
|
34,259
|
|
|
Sales and marketing
|
|
|
15,327
|
|
|
|
5,361
|
|
|
|
32,801
|
|
|
|
15,512
|
|
|
General and administrative
|
|
|
6,808
|
|
|
|
3,617
|
|
|
|
17,865
|
|
|
|
11,388
|
|
|
Amortization of intangible assets
|
|
|
127
|
|
|
|
229
|
|
|
|
381
|
|
|
|
1,219
|
|
|
Restructuring charge
|
|
|
209
|
|
|
|
-
|
|
|
|
368
|
|
|
|
1,448
|
|
|
Total operating expenses
|
|
|
37,826
|
|
|
|
20,612
|
|
|
|
99,646
|
|
|
|
63,826
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(106
|
)
|
|
|
(7,843
|
)
|
|
|
(3,065
|
)
|
|
|
(19,291
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income/(expense), net:
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
7
|
|
|
|
4
|
|
|
|
20
|
|
|
|
11
|
|
|
Other income/(expense), net
|
|
|
(347
|
)
|
|
|
(159
|
)
|
|
|
(514
|
)
|
|
|
129
|
|
|
Interest and other income/(expense), net
|
|
|
(340
|
)
|
|
|
(155
|
)
|
|
|
(494
|
)
|
|
|
140
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(446
|
)
|
|
|
(7,998
|
)
|
|
|
(3,559
|
)
|
|
|
(19,151
|
)
|
|
Income tax benefit
|
|
|
11,058
|
|
|
|
30
|
|
|
|
10,536
|
|
|
|
2,765
|
|
|
Net income/(loss)
|
|
$
|
10,612
|
|
|
$
|
(7,968
|
)
|
|
$
|
6,977
|
|
|
$
|
(16,386
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net income /(loss) per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.11
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.08
|
|
|
$
|
(0.24
|
)
|
|
Diluted
|
|
$
|
0.10
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.07
|
|
|
$
|
(0.24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
98,628
|
|
|
|
71,529
|
|
|
|
87,965
|
|
|
|
69,246
|
|
|
Diluted
|
|
|
105,438
|
|
|
|
71,529
|
|
|
|
93,578
|
|
|
|
69,246
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense included in:
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
764
|
|
|
$
|
268
|
|
|
$
|
6,686
|
|
|
$
|
1,099
|
|
|
Sales and marketing
|
|
|
201
|
|
|
|
40
|
|
|
|
492
|
|
|
|
200
|
|
|
General and administrative
|
|
|
989
|
|
|
|
412
|
|
|
|
2,321
|
|
|
|
1,402
|
|
|
Total stock-based compensation expense
|
|
$
|
1,954
|
|
|
$
|
720
|
|
|
$
|
9,499
|
|
|
$
|
2,701
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Glu Mobile Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP to Non-GAAP Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
|
|
2013
|
|
|
2013
|
|
|
2013
|
|
|
2013
|
|
|
2014
|
|
|
2014
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP revenues
|
|
24,605
|
|
|
24,445
|
|
|
21,722
|
|
|
34,841
|
|
|
44,580
|
|
|
40,910
|
|
|
64,791
|
|
|
Change in deferred revenues
|
|
111
|
|
|
(1,251
|
)
|
|
886
|
|
|
8,005
|
|
|
2,377
|
|
|
(5,874
|
)
|
|
18,762
|
|
|
Non-GAAP Revenues
|
|
24,716
|
|
|
23,194
|
|
|
22,608
|
|
|
42,846
|
|
|
46,957
|
|
|
35,036
|
|
|
83,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross profit
|
|
16,069
|
|
|
15,697
|
|
|
12,769
|
|
|
24,034
|
|
|
30,824
|
|
|
28,037
|
|
|
37,720
|
|
|
Change in deferred revenues
|
|
111
|
|
|
(1,251
|
)
|
|
886
|
|
|
8,005
|
|
|
2,377
|
|
|
(5,874
|
)
|
|
18,762
|
|
|
Amortization of intangible assets
|
|
1,074
|
|
|
1,078
|
|
|
1,082
|
|
|
1,004
|
|
|
554
|
|
|
441
|
|
|
1,338
|
|
|
Non-cash warrant expense
|
|
-
|
|
|
-
|
|
|
427
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,126
|
|
|
Change in deferred platform commissions and royalty expense
|
|
(138
|
)
|
|
419
|
|
|
(245
|
)
|
|
(1,753
|
)
|
|
(1,209
|
)
|
|
1,527
|
|
|
(9,122
|
)
|
|
Non-GAAP gross profit
|
|
17,116
|
|
|
15,943
|
|
|
14,919
|
|
|
31,290
|
|
|
32,546
|
|
|
24,131
|
|
|
49,824
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating expense
|
|
21,563
|
|
|
21,651
|
|
|
20,612
|
|
|
27,505
|
|
|
30,117
|
|
|
31,703
|
|
|
37,826
|
|
|
Stock-based compensation
|
|
(1,245
|
)
|
|
(736
|
)
|
|
(720
|
)
|
|
(1,584
|
)
|
|
(2,979
|
)
|
|
(4,566
|
)
|
|
(1,954
|
)
|
|
Amortization of intangible assets
|
|
(495
|
)
|
|
(495
|
)
|
|
(229
|
)
|
|
(117
|
)
|
|
(127
|
)
|
|
(127
|
)
|
|
(127
|
)
|
|
Transitional costs
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(682
|
)
|
|
(493
|
)
|
|
Change in fair value of Blammo earnout
|
|
(29
|
)
|
|
47
|
|
|
31
|
|
|
(56
|
)
|
|
(304
|
)
|
|
(531
|
)
|
|
-
|
|
|
Restructuring charge
|
|
(511
|
)
|
|
(937
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(159
|
)
|
|
(209
|
)
|
|
Non-GAAP operating expense
|
|
19,283
|
|
|
19,530
|
|
|
19,694
|
|
|
25,748
|
|
|
26,707
|
|
|
25,638
|
|
|
35,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating income/(loss)
|
|
(5,494
|
)
|
|
(5,954
|
)
|
|
(7,843
|
)
|
|
(3,471
|
)
|
|
707
|
|
|
(3,666
|
)
|
|
(106
|
)
|
|
Change in deferred revenues
|
|
111
|
|
|
(1,251
|
)
|
|
886
|
|
|
8,005
|
|
|
2,377
|
|
|
(5,874
|
)
|
|
18,762
|
|
|
Non-GAAP cost of revenues adjustment
|
|
936
|
|
|
1,497
|
|
|
1,264
|
|
|
(749
|
)
|
|
(655
|
)
|
|
1,968
|
|
|
(6,658
|
)
|
|
Stock-based compensation
|
|
1,245
|
|
|
736
|
|
|
720
|
|
|
1,584
|
|
|
2,979
|
|
|
4,566
|
|
|
1,954
|
|
|
Amortization of intangible assets
|
|
495
|
|
|
495
|
|
|
229
|
|
|
117
|
|
|
127
|
|
|
127
|
|
|
127
|
|
|
Transitional costs
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
682
|
|
|
493
|
|
|
Change in fair value of Blammo earnout
|
|
29
|
|
|
(47
|
)
|
|
(31
|
)
|
|
56
|
|
|
304
|
|
|
531
|
|
|
-
|
|
|
Restructuring charge
|
|
511
|
|
|
937
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
159
|
|
|
209
|
|
|
Non-GAAP operating income/(loss)
|
|
(2,167
|
)
|
|
(3,587
|
)
|
|
(4,775
|
)
|
|
5,542
|
|
|
5,839
|
|
|
(1,507
|
)
|
|
14,781
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income/(loss)
|
|
(5,497
|
)
|
|
(2,921
|
)
|
|
(7,968
|
)
|
|
(3,523
|
)
|
|
133
|
|
|
(3,768
|
)
|
|
10,612
|
|
|
Change in deferred revenues
|
|
111
|
|
|
(1,251
|
)
|
|
886
|
|
|
8,005
|
|
|
2,377
|
|
|
(5,874
|
)
|
|
18,762
|
|
|
Non-GAAP cost of revenues adjustment
|
|
936
|
|
|
1,497
|
|
|
1,264
|
|
|
(749
|
)
|
|
(655
|
)
|
|
1,968
|
|
|
(6,658
|
)
|
|
Non-GAAP operating expense adjustment
|
|
2,280
|
|
|
2,121
|
|
|
918
|
|
|
1,757
|
|
|
3,410
|
|
|
6,065
|
|
|
2,783
|
|
|
Foreign currency exchange loss/(gain)
|
|
(129
|
)
|
|
(137
|
)
|
|
159
|
|
|
130
|
|
|
136
|
|
|
31
|
|
|
347
|
|
|
Release of tax liabilities and valuation allowance
|
|
-
|
|
|
(3,148
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(8,352
|
)
|
|
Non-GAAP net income/(loss)
|
|
$ (2,299
|
)
|
|
$ (3,839
|
)
|
|
$ (4,741
|
)
|
|
$ 5,620
|
|
|
$ 5,401
|
|
|
$ (1,578
|
)
|
|
$ 17,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of net income/(loss) and net income/(loss) per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income/(loss) per share - basic
|
|
$ (0.08
|
)
|
|
$ (0.04
|
)
|
|
$ (0.11
|
)
|
|
$ (0.05
|
)
|
|
$ 0.00
|
|
|
$ (0.04
|
)
|
|
$ 0.11
|
|
|
GAAP net income/(loss) per share - diluted
|
|
$ (0.08
|
)
|
|
$ (0.04
|
)
|
|
$ (0.11
|
)
|
|
$ (0.05
|
)
|
|
$ 0.00
|
|
|
$ (0.04
|
)
|
|
$ 0.10
|
|
|
Non-GAAP net income/(loss) per share - basic
|
|
$ (0.03
|
)
|
|
$ (0.05
|
)
|
|
$ (0.07
|
)
|
|
$ 0.07
|
|
|
$ 0.07
|
|
|
$ (0.02
|
)
|
|
$ 0.18
|
|
|
Non-GAAP net income/(loss) per share - diluted
|
|
$ (0.03
|
)
|
|
$ (0.05
|
)
|
|
$ (0.07
|
)
|
|
$ 0.07
|
|
|
$ 0.06
|
|
|
$ (0.02
|
)
|
|
$ 0.17
|
|
|
Shares used in computing Non-GAAP basic net income/(loss) per share
|
|
66,397
|
|
|
69,812
|
|
|
71,529
|
|
|
78,071
|
|
|
79,719
|
|
|
85,549
|
|
|
98,628
|
|
|
Shares used in computing Non-GAAP diluted net income/(loss) per share
|
|
66,397
|
|
|
69,812
|
|
|
71,529
|
|
|
81,433
|
|
|
85,398
|
|
|
85,549
|
|
|
105,438
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating expense break-out:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP research and development expense
|
|
$ 11,630
|
|
|
$ 11,224
|
|
|
$ 11,405
|
|
|
$ 12,618
|
|
|
$ 15,579
|
|
|
$ 17,297
|
|
|
$ 15,355
|
|
|
Transitional costs
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(20
|
)
|
|
-
|
|
|
Stock-based compensation
|
|
(668
|
)
|
|
(163
|
)
|
|
(268
|
)
|
|
(849
|
)
|
|
(2,317
|
)
|
|
(3,605
|
)
|
|
(764
|
)
|
|
Non-GAAP research and development expense
|
|
10,962
|
|
|
11,061
|
|
|
11,137
|
|
|
11,769
|
|
|
13,262
|
|
|
13,672
|
|
|
14,591
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP sales and marketing expense
|
|
5,008
|
|
|
5,143
|
|
|
5,361
|
|
|
10,608
|
|
|
9,485
|
|
|
7,989
|
|
|
15,327
|
|
|
Stock-based compensation
|
|
(67
|
)
|
|
(93
|
)
|
|
(40
|
)
|
|
(103
|
)
|
|
(101
|
)
|
|
(190
|
)
|
|
(201
|
)
|
|
Non-GAAP sales and marketing expense
|
|
4,941
|
|
|
5,050
|
|
|
5,321
|
|
|
10,505
|
|
|
9,384
|
|
|
7,799
|
|
|
15,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP general & administrative expense
|
|
3,919
|
|
|
3,852
|
|
|
3,617
|
|
|
4,162
|
|
|
4,926
|
|
|
6,131
|
|
|
6,808
|
|
|
Transitional costs
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(662
|
)
|
|
(493
|
)
|
|
Change in fair value of Blammo earnout
|
|
(29
|
)
|
|
47
|
|
|
31
|
|
|
(56
|
)
|
|
(304
|
)
|
|
(531
|
)
|
|
-
|
|
|
Stock-based compensation
|
|
(510
|
)
|
|
(480
|
)
|
|
(412
|
)
|
|
(632
|
)
|
|
(561
|
)
|
|
(771
|
)
|
|
(989
|
)
|
|
Non-GAAP general and administrative expense
|
|
$ 3,380
|
|
|
$ 3,419
|
|
|
$ 3,236
|
|
|
$ 3,474
|
|
|
$ 4,061
|
|
|
$ 4,167
|
|
|
$ 5,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Glu Mobile Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
|
|
2013
|
|
2013
|
|
2013
|
|
2013
|
|
2014
|
|
2014
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income/(loss)
|
|
$
|
(5,497
|
)
|
|
$
|
(2,921
|
)
|
|
$
|
(7,968
|
)
|
|
$
|
(3,523
|
)
|
|
$
|
133
|
|
|
$
|
(3,768
|
)
|
|
$
|
10,612
|
|
|
Change in deferred revenues
|
|
|
111
|
|
|
|
(1,251
|
)
|
|
|
886
|
|
|
|
8,005
|
|
|
|
2,377
|
|
|
|
(5,874
|
)
|
|
|
18,762
|
|
|
Change in deferred platform commissions and royalty expense
|
|
|
(138
|
)
|
|
|
419
|
|
|
|
(245
|
)
|
|
|
(1,753
|
)
|
|
|
(1,209
|
)
|
|
|
1,527
|
|
|
|
(9,122
|
)
|
|
Non-cash warrant expense
|
|
|
-
|
|
|
|
-
|
|
|
|
427
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,126
|
|
|
Amortization of intangible assets
|
|
|
1,569
|
|
|
|
1,573
|
|
|
|
1,311
|
|
|
|
1,121
|
|
|
|
681
|
|
|
|
568
|
|
|
|
1,465
|
|
|
Depreciation
|
|
|
731
|
|
|
|
661
|
|
|
|
633
|
|
|
|
682
|
|
|
|
620
|
|
|
|
607
|
|
|
|
617
|
|
|
Stock-based compensation
|
|
|
1,245
|
|
|
|
736
|
|
|
|
720
|
|
|
|
1,584
|
|
|
|
2,979
|
|
|
|
4,566
|
|
|
|
1,954
|
|
|
Change in fair value of Blammo earnout
|
|
|
29
|
|
|
|
(47
|
)
|
|
|
(31
|
)
|
|
|
56
|
|
|
|
304
|
|
|
|
531
|
|
|
|
-
|
|
|
Transitional costs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
682
|
|
|
|
493
|
|
|
Restructuring charge
|
|
|
511
|
|
|
|
937
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
159
|
|
|
|
209
|
|
|
Foreign currency exchange loss/(gain)
|
|
|
(129
|
)
|
|
|
(137
|
)
|
|
|
159
|
|
|
|
130
|
|
|
|
136
|
|
|
|
31
|
|
|
|
347
|
|
|
Interest and other income
|
|
|
(3
|
)
|
|
|
(26
|
)
|
|
|
(4
|
)
|
|
|
-
|
|
|
|
(6
|
)
|
|
|
(7
|
)
|
|
|
(7
|
)
|
|
Income tax provision/(benefit)
|
|
|
135
|
|
|
|
(2,870
|
)
|
|
|
(30
|
)
|
|
|
(78
|
)
|
|
|
444
|
|
|
|
78
|
|
|
|
(11,058
|
)
|
|
Total Non-GAAP Adjusted EBITDA
|
|
$
|
(1,436
|
)
|
|
$
|
(2,926
|
)
|
|
$
|
(4,142
|
)
|
|
$
|
6,224
|
|
|
$
|
6,459
|
|
|
$
|
(900
|
)
|
|
$
|
15,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In addition to the reasons stated above, which are generally applicable
to each of the items Glu excludes from its non-GAAP financial measures,
Glu believes it is appropriate to exclude certain items for the
following reasons:
Change in Deferred Revenues and Deferred Cost of Revenues. At the
date we sell certain premium games and micro-transactions, Glu has an
obligation to provide additional services and incremental unspecified
digital content in the future without an additional fee. In these cases,
we recognize the revenues and any associated cost of revenues, including
platform commissions and royalties, on a straight-line basis over the
estimated life of the paying user. Internally, Glu’s management excludes
the impact of the changes in deferred revenue and deferred cost of
revenues related to its premium and free-to-play games in its non-GAAP
financial measures when evaluating the company’s operating performance,
when planning, forecasting and analyzing future periods, and when
assessing the performance of its management team. Glu believes that
excluding the impact of the changes in deferred revenues and deferred
cost of revenues from its operating results is important to facilitate
comparisons to prior periods during which Glu did not delay the
recognition of significant amounts of revenue related to its games and
to understand Glu’s operations.
Amortization of Intangible Assets. When analyzing the operating
performance of an acquired entity, Glu's management focuses on the total
return provided by the investment (i.e., operating profit generated from
the acquired entity as compared to the purchase price paid) without
taking into consideration any allocations made for accounting purposes.
Because the purchase price for an acquisition necessarily reflects the
accounting value assigned to intangible assets (including acquired
in-process technology and goodwill), when analyzing the operating
performance of an acquisition in subsequent periods, Glu's management
excludes the GAAP impact of acquired intangible assets to its financial
results. Glu believes that such an approach is useful in understanding
the long-term return provided by an acquisition and that investors
benefit from a supplemental non-GAAP financial measure that excludes the
accounting expense associated with acquired intangible assets.
Non-cash Warrant Expense. In the third quarters of 2013 and 2014,
Glu recorded a non-cash charge related to the vesting of warrants to
purchase shares of common stock issued to a brand holder as part of a
third party licensing, development and publishing arrangement. These
charges were computed using the Black-Scholes valuation model and were
recorded in cost of revenues. When evaluating the performance of its
consolidated results, Glu does not consider non-cash warrant expense as
it places a greater emphasis on overall stockholder dilution rather than
the accounting charges associated with the vesting of any warrants. As
the non-cash warrant expense impacts comparability from period to period
Glu believes that investors benefit from a supplemental non-GAAP
financial measure that excludes these charges.
Stock-Based Compensation Expense. Glu adopted ASC 718,
"Compensation – Stock Compensation" beginning in its fiscal year ended
December 31, 2006. Included in the stock compensation expense is the
contingent consideration potentially issuable to the Blammo employees
who were former shareholders of Blammo, which is recorded as research
and development expense over the term of the earn-out periods, since
these employees are primarily employed in product development. Glu
re-measures the fair value of the contingent consideration each
reporting period and only records a compensation expense for the portion
of the earn-out target which is likely to be achieved. In addition, Glu
is exposed to potential continued fluctuations in the fair market value
of the contingent consideration in each reporting period, since
re-measurement is impacted by changes in Glu’s share price and the
assumptions used by Glu. When evaluating the performance of its
consolidated results, Glu does not consider stock-based compensation
charges. Likewise, Glu's management team excludes stock-based
compensation expense from its short and long-term operating plans. In
contrast, Glu's management team is held accountable for cash-based
compensation and such amounts are included in its operating plans.
Further, when considering the impact of equity award grants, Glu places
a greater emphasis on overall stockholder dilution rather than the
accounting charges associated with such grants. Glu believes it is
useful to provide a non-GAAP financial measure that excludes stock-based
compensation in order to better understand the long-term performance of
its business.
Restructuring Charges. Glu undertook restructuring activities in
the first and second quarters of 2013 and the second and third quarters
of 2014 and recorded (1) non-cash restructuring charges due to vacating
a portion of its offices in Washington, vacating its Brazil office and
writing-off the cumulative translation adjustment upon substantial
liquidation of its Brazilian entity; and (2) cash restructuring charges
due to the termination of certain employees in its Brazil, China, Europe
and U.S. offices. Glu recorded the severance costs as an operating
expense when it communicated the benefit arrangement to the employee and
no significant future services, other than a minimum retention period,
were required of the employee to earn the termination benefits. Glu
believes that these restructuring charges do not reflect its ongoing
operations and that investors benefit from a supplemental non-GAAP
financial measure that excludes these charges.
Change in Fair Value of Blammo Earnout. As part of the
acquisition of Blammo, Glu committed to issue additional consideration
in the form of Glu’s common stock to the former, non-employee Blammo
shareholders if certain revenue targets are achieved. Glu recorded the
estimated contingent consideration liability at acquisition and will
adjust the fair value of the liability each reporting period. When
analyzing the operating performance of an acquired entity, Glu’s
management focuses on the total return provided by the investment (i.e.,
operating profit generated from the acquired entity as compared to the
purchase price paid including the final amounts paid for contingent
consideration) without taking into consideration any expenses recognized
post-acquisition related to the change in fair value of the contingent
consideration. Because the final purchase price paid for an acquisition
necessarily reflects the accounting value assigned to both the
consideration, including the contingent consideration, paid and to the
intangible assets (including goodwill) acquired, when analyzing the
operating performance of an acquisition in subsequent periods, the
Company’s management excludes the GAAP impact of any adjustments to the
fair value of these acquisition-related balances to its financial
results. Glu believes that the fair value adjustments affect
comparability from period to period and that investors benefit from a
supplemental non-GAAP financial measure that excludes these charges.
Transitional Costs. GAAP requires expenses to be recognized for
various types of events associated with a business acquisition such as
legal, accounting and other deal related expenses. Glu has incurred
various costs related to the acquisition and integration of PlayFirst
and Cie Games into Glu’s operations. Glu recorded these non-recurring
acquisition and transitional costs as operating expenses when they were
incurred. Glu believes that these acquisition and transitional costs
affect comparability from period to period and that investors benefit
from a supplemental non-GAAP financial measure that excludes these
expenses.
Release of tax liabilities and valuation allowance. In the second
quarter of 2013, Glu recorded a non-cash income tax benefit related to
the release of certain foreign income tax liabilities upon the
expiration of the statute of limitations. Additionally, in the third
quarter of 2014 Glu released a portion of its deferred tax asset
valuation allowance as a result of the deferred tax liabilities recorded
in connection with the Cie Games acquisition. Glu believes that these
non-recurring, one-time tax benefits do not reflect its ongoing
operations and that investors benefit from a supplemental non-GAAP
financial measure that excludes these benefits.
Foreign currency exchange gains and losses. Foreign currency
exchange gains and losses represent the net gain or loss that Glu has
recorded for the impact of currency exchange rate movements on cash and
other assets and liabilities denominated in foreign currencies related
to the revaluation of assets and liabilities. Accordingly, foreign
currency exchange gains and losses are generally unpredictable and can
cause Glu’s reported results to vary significantly. Due to the unusual
magnitude of these gains and losses, and the fact that Glu has not
engaged in hedging or taken other actions to reduce the likelihood of
incurring a sizeable net gain or loss in future periods, Glu began, with
the quarter ended December 31, 2008, to present non-GAAP net loss and
net loss per share excluding foreign exchange gains and losses for
comparability purposes. Glu believes that these gains and losses do not
reflect its ongoing operations and that investors benefit from a
supplemental non-GAAP financial measure that excludes these items,
enabling investors to compare Glu’s core operating results in different
periods without this variability. Foreign exchange gains/(losses)
recognized during 2013 and the first nine months of 2014 were as follows
(in thousands):
|
|
|
March 31, 2013
|
|
$
|
129
|
|
June 30, 2013
|
|
|
137
|
|
September 30, 2013
|
|
|
(159
|
)
|
December 31, 2013
|
|
|
(130
|
)
|
FY 2013
|
|
$
|
(23
|
)
|
|
|
|
|
|
|
March 31, 2014
|
|
$
|
(136
|
)
|
June 30, 2014
|
|
|
(31
|
)
|
September 30, 2014
|
|
|
(347
|
)
|
FY 2014
|
|
$
|
(514
|
)
|
CONTACT:
Investor Relations:
ICR, Inc.
Seth Potter,
646-277-1230
ir@glu.com
Exhibit 99.02
Non-GAAP
Revenue Mix Page 27 Non-GAAP revenues have been restated to reflect
gross accounting for digital storefronts for Q113 and prospectively, as
outlined in the Company’s 8/6/2013 Form 8-K and press release. The
presentation of platform and category mix contribution in prior
presentations was reported as a percentage of non-GAAP smartphone
revenues. All prior percentages in the above graphs have been updated to
reflect each category’s respective percentage of total non-GAAP
revenues. The ‘Premium/All Other’ revenues include featurephone revenues.
Strong
Balance Sheet Page 31
Slide: 1 Title: Glu Mobile
Q314 Earnings Call October 29, 2014 Page 1 Slide: 2 Title: Safe Harbor
Statement This presentation contains "forward-looking" statements
including: Glu is benefitting from strong mobile secular trends in the
installed base for smartphones and tablets and the popularity of games
among all apps; our expected strong Q4-2014 and 2015 title slate; that
Glu has an expanding global presence, particularly in APAC; the expected
next title releases for each of our franchises; Glu’s expected Q4-2014
and H1-2015 title lineup and the expected launch dates for these titles;
Glu has multiple growth opportunities through international expansion,
wearables, the quad screen future and mobile ad spending; that we have a
growing and engaged installed base; and our Q4-2014 and full year 2014
guidance. These forward-looking statements are subject to material
risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. Investors
should consider important risk factors, which include: consumer demand
for smartphones, tablets and next-generation platforms does not grow as
significantly as we anticipate or that we will be unable to capitalize
on any such growth; the risk that we do not realize a sufficient return
on our investment with respect to our efforts to develop free-to-play
games for smartphones and tablets, the risk that we do not maintain our
good relationships with Apple and Google; the risk that our development
expenses for games for smartphones are greater than we anticipate; the
risk that our recently and newly launched games are less popular than
anticipated; the risk that our newly released games will be of a quality
less than desired by reviewers and consumers; the risk that the mobile
games market, particularly with respect to social, free-to-play gaming,
is smaller than anticipated; risks related to the restatement of certain
of our historical financial statements and other risks detailed under
the caption "Risk Factors" in our Form 10-Q filed with the Securities
and Exchange Commission on August 11, 2014 and our other SEC filings.
You can locate these reports through our website at
http://www.glu.com/investors.These "forward-looking" statements are
based on estimates and information available to us on October 29, 2014
and we are under no obligation, and expressly disclaim any obligation,
to update or alter our forward-looking statements whether as a result of
new information, future events or otherwise. Page 2 Slide: 3 Title: Use
of Non-GAAP Financial Measures Page 3 Glu uses in this presentation
certain non-GAAP measures of financial performance. The presentation of
these non-GAAP financial measures is not intended to be considered in
isolation from, as a substitute for, or superior to, the financial
information prepared and presented in accordance with GAAP, and may be
different from non-GAAP financial measures used by other companies. In
addition, these non-GAAP measures have limitations in that they do not
reflect all of the amounts associated with Glu's results of operations
as determined in accordance with GAAP. The non-GAAP financial measures
used by Glu include non-GAAP revenues, non-GAAP smartphone revenues,
non-GAAP freemium revenues, non-GAAP cost of revenues, non-GAAP gross
profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP
operating margin, non-GAAP net income/(loss), non-GAAP net income/(loss)
per share, Adjusted EBITDA and Adjusted EBITDA margin. These non-GAAP
financial measures exclude the following items from Glu's unaudited
consolidated statements of operations: Change in deferred revenues and
deferred cost of revenues;Amortization of intangible assets; Non-cash
warrant expense;Stock-based compensation expense; Restructuring charges;
Change in fair value of Blammo earnout; Transitional costs; Release of
tax liabilities and valuation allowance; andForeign currency exchange
gains and losses primarily related to the revaluation of assets and
liabilities. In addition, Glu has included in this presentation
“Adjusted EBITDA” figures which are used to evaluate Glu’s operating
performance and is defined as non-GAAP operating income/(loss) excluding
depreciation. Adjusted EBITDA margin is defined as Adjusted EBITDA
divided by non-GAAP revenue.Glu believes that these non-GAAP financial
measures, when taken together with the corresponding GAAP financial
measures, provide meaningful supplemental information regarding Glu's
performance by excluding certain items that may not be indicative of
Glu's core business, operating results or future outlook. Glu's
management uses, and believes that investors benefit from referring to,
these non-GAAP financial measures in assessing Glu's operating results,
as well as when planning, forecasting and analyzing future periods.
These non-GAAP financial measures also facilitate comparisons of Glu's
performance to prior periods. For a reconciliation of these non-GAAP
financial measures to their most directly comparable GAAP financial
measures, please refer to the tables at the end of this presentation.
Slide: 4 Title: Executive Summary Page 4 Slide: 5 Title: Great IP +
Advanced Monetization Engine + Compelling Gameplay Page 5 Slide:
6 Strong Q3 Revenue and Adjusted EBITDA Results2014 Guidance = Our
Strongest Year in HistoryBenefitting from Strong Secular Global Mobile
GrowthSeasoned Management TeamDiversified Portfolio of Franchises Strong
Q4 & 2015 Title Roadmap Investment Highlights Page 6 Slide: 7 Title:
Upward Step Change Q3 2014 results strongest in Glu’s history:Q314
non-GAAP revenue of $83.6M; 270% growth year over yearAdjusted EBITDA
margin of 18.4%2014 guidance strongest in Glu’s history:2014 non-GAAP
revenue guidance – 99% to 103% growth year over year11% Adjusted EBITDA
margin at the high-end of guidance Page 7 Slide: 8 Page 8 Strategy
Analytics 2014.Flurry Analytics 2012.(3) App Annie Intelligence –
Top 100 grossing apps, December 2013. Title: Strong Mobile Secular
Trends (Gp:) Smartphone & Tablet Installed Base (m)(1) (Gp:) Games are
the #1 Category (Mobile Devices)(2&3) Smartphone Tablet % of Time
Spent Worldwide Top Grossing AppsUnited
States Smartphones Tablets iPhone iPad Games Other Slide: 9 Title:
Glu: Global Leader In Mobile Gaming Page 9 Pure-play mobile gaming
companyDeeply aligned with mobile ecosystem (iOS & Android)Expanding
global presence, particularly APAC13 year history, 7 on NASDAQ630+
employees in major sites: San Francisco, CABellevue, WA,Long Beach,
CAToronto, CanadaMoscow, RussiaBeijing, China Hyderabad, India Slide: 10
Title: Seasoned Management Team Page 10 Pres. of Pub.Chris Akhavan6
Quarters CFO & COOEric R. Ludwig39 Quarters CEONiccolo de Masi19
Quarters Slide: 11 Other Placeholder: Key focus areas coming together
last four quarters:Monetize more deeplyOptimize more predictablyMarket
more efficientlyBetter processes & talent Diversified portfolio Title:
Step Change in Performance Page 11 Non-GAAP revenues have been
restated to reflect gross accounting for digital storefronts for 2012
and Q113 and prospectively, as outlined in the Company’s 8/6/2013 Form
8-K and press release. Slide: 12 Strong Consumer Interest Page 12 (In
millions) Installs (In millions) Cumulative Installs Slide: 13 Title:
Leader in 4 genres with 8 game engines Page
13 Core Casual Racing Sports Slide: 14 Title: Robust Q414 and 1H15
Lineup Page 14 Other Placeholder: Contract Killer: Sniper - Expected to
launch in November 2014Latest installment in CK franchise; PVP and
PVEBlood & Glory: Immortals - Expected to launch in January 2015Western
focused RPG based on Eternity Warriors game engineFrontline Commando:
World War II - Expected to launch in Q2 2015Sequel title to large FPS
franchise Slide: 15 Other Placeholder: Closed the acquisition of Cie
Games on August 20, 2014Cie Games developed the current leading mobile
racing gameAggregate consideration of $80.3m, comprised of $50.8m* of
Glu common stock and $29.5m of cash, net of Cie Games’ transaction
expensesCie Games was Adjusted EBITDA accretive in its first quarter of
consolidation into GluCie Games has been fully integrated into Glu’s
publishing and G&A teams Title: Cie Games Acquisition * Based on
issuance of 9,998,886 shares of GLUU common stock using GLUU closing
price on August 20, 2014 Page 15 Slide: 16 Page 16 Slide: 17 Title:
Glu Mobile: Multi Genre Leader Page 17 * These titles are published
by Supercell, which is an affiliate of GungHo * * * Slide: 18 Page
18 Slide: 19 Title: Placeholder Slide Page 19 Slide: 20 Multiple
Long-Term Growth Opportunities Page 20 International Expansion Mobile
Ad Spending as eCPMs Converge Quad Screen Wearables Opportunity /
Revenue / Value Time $ $ $ Slide: 21 Title: Financial Overview Page
21 Slide: 22 Growing & Engaged Installed BaseDiversified Portfolio of
FranchisesCost-Effective Customer AcquisitionLong Tail Games Provide
Significant VisibilityStrong Top Line Growth Financial Investment
Highlights Page 22 Slide: 23 Q314 Financial Summary Page
23 Presented in millions of USD, with the exception of per share data
and diluted share count. Slide: 24 MAU and DAU Trends Page
24 Aggregate DAU and MAU for each period presented represents the
aggregate metric for the last month of the period. An individual who
plays two different games in the same month is counted as two active
users for that month when we aggregate DAU and MAU across games. In
addition, an individual who plays the same game on two different devices
during the same month (e.g., an iPhone and an iPad) is also counted as
two active users for each such month when we average or aggregate DAU
and MAU over time. Our methodology for calculating DAU and MAU may
differ from the methodology used by other companies to calculate similar
metrics. (In millions) DAUs (In millions) MAUs Slide: 25 Actual
Non-GAAP Revenue and Adjusted EBITDA Page 25 Non-GAAP revenues have
been restated to reflect gross accounting for digital storefronts Q113
and prospectively, as outlined in the Company’s 8/6/2013 Form 8-K and
press release. (In millions) Non-GAAP Revenue (In millions) Adjusted
EBITDA Slide: 26 GAAP Revenue by Geography ($m) Page 26 Non-GAAP
revenues have been restated to reflect gross accounting for digital
storefronts for Q113 and prospectively, as outlined in the Company’s
8/6/2013 Form 8-K and press release. Q3 2014 Slide: 27 Title: Non-GAAP
Revenue Mix Page 27 Non-GAAP revenues have been restated to reflect
gross accounting for digital storefronts for Q113 and prospectively, as
outlined in the Company’s 8/6/2013 Form 8-K and press release. The
presentation of platform and category mix contribution in prior
presentations was reported as a percentage of non-GAAP smartphone
revenues. All prior percentages in the above graphs have been updated to
reflect each category’s respective percentage of total non-GAAP
revenues. The ‘Premium/All Other’ revenues include featurephone
revenues. Slide: 28 Title: Non-GAAP Revenue by Title Kim Kardashian:
Hollywood $43.4MPlayFirst Legacy* $1.3M $83.6M Total Non-GAAP
Revenues in Q314 Deer Hunter 2014 $9.9M Dino Hunter: Deadly Shores
$7.2MRacing Rivals** $5.8MTap Sports: Baseball
$1.7MAmazing Battle Creatures $0.4M Eternity Warriors 3
$3.6M Page 28 Frontline Commando: D-Day $1.3MStardom
Hollywood $1.1M Frontline Commando 2
$1.0MRobocop $0.9M *Comprised of legacy games already live
prior to acquisition of PlayFirst by Glu on May 14, 2014**Reflects
Racing Rivals revenues after the closing of the Cie Games acquisition on
August 20, 2014 Slide: 29 Page 29 Organic Revenue Growth * Presented
in millions of USD, except percentages Slide: 30 Title: Q314 Non-GAAP
Results Page 30 Slide: 31 Title: Strong Balance Sheet Page 31 Slide:
32 Title: Guidance Page 32 Slide: 33 2014 Full Year Guidance Page
33 *Some totals may not add due to rounding Slide: 34 2014 Full Year
Guidance Page 34 Non-GAAP revenues have been restated to reflect gross
accounting for digital storefronts for Q113 and prospectively, as
outlined in the Company’s 8/6/2013 Form 8-K and press release. Slide:
35 Q414 Guidance Page 35 Slide: 36 2014 Full Year Guidance Page 36
Slide: 37 Title: Key Statistics Page 37 Average Daily Volume is
calculated using the last 90 calendar days, per Bloomberg.Shares
Outstanding and Cash balance are as of 09/30/2014. Slide:
38 Benefitting from Strong Secular Global Mobile GrowthLeader in Mobile
GamingDiversified Portfolio of FranchisesStrong 2014 & 2015 Title
SlateFinancials Benefitting from Significant Investments Investment
Highlights Page 38 Slide: 39 Title: Non-GAAP Reconciliations Page 39
Slide: 40 Page 40 Q314 GAAP to Non-GAAP Reconciliation Slide: 41
Title: Q313 GAAP to Non-GAAP Reconciliation Page 41 Slide: 42 Page
42 YTD 2014 GAAP to Non-GAAP Reconciliation Slide: 43 Title: YTD 2013
GAAP to Non-GAAP Reconciliation Page 43 Slide: 44 Title: GAAP to
Non-GAAP Reconciliation Page 44 Slide: 45 Title: Key Operating
Metrics Page 45
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