- Revenue up 12% year over year to $107.3 million
- Bookings grew 15% year over year to $106.5 million
- Record quarterly bookings from Design Home
- Highest first quarter bookings in the Tap Sports Baseball
franchise’s history
- Successfully launched Disney Sorcerer’s Arena and Tap Sports
Baseball 2020
- Extended Kim Kardashian: Hollywood license through 2023
- Company raises 2020 full year bookings guidance to a range of
$490 million to $500 million
Glu Mobile Inc. (NASDAQ: GLUU), a leading global developer and
publisher of free-to-play mobile games, today announced financial
results for its first quarter ended March 31, 2020. The company
also provided an outlook for its financial performance in the
second quarter and raised its financial guidance for the full year
2020.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20200507006089/en/
(Graphic: Business Wire)
Nick Earl, Chief Executive Officer, stated, “As we go through
these unprecedented times, the mobile gaming industry is providing
interactive social entertainment in the shelter-in-place
environment. We have been successfully operating our business with
no disruptions during the COVID-19 pandemic, and in March, we
launched Tap Sports Baseball 2020, the latest version of our very
successful baseball franchise, and Disney Sorcerer’s Arena, which
is off to a great start. We also saw improved performances from
Diner DASH Adventures and Kim Kardashian: Hollywood in the quarter,
which when added to the strong early results we have seen in Disney
Sorcerer’s Arena, and combined with our three proven Growth Games,
puts us in a great position to significantly stack bookings and
scale our business. While the second half of the year brings an
unusually high level of uncertainty, we believe we are well
positioned to deliver on our improved outlook for the full year
2020.”
First Quarter 2020 Financial
Highlights:
Three Months Ended
in millions, except per share data
March 31, 2020
March 31, 2019
Revenue
$107.3
$95.9
Gross margin
64.7%
64.0%
Net income/(loss)
($8.3)
$0.7
Net income/(loss) per share – basic and diluted
($0.06)
$0.00
Weighted-average common shares outstanding – basic
149.6
144.4
Weighted-average common shares outstanding – diluted
149.6
159.4
Cash used in operations excluding royalty advances
($7.2)
($1.9)
Cash paid for royalty advances that are included in cash used in
operations
($9.7)
($0.5)
Cash and cash equivalents
$114.7
$93.2
Additional Financial Information
Three Months Ended
Guidance provided for three
months ended March 31, 2020
March 31, 2020
March 31, 2019
Low
High
Bookings
$106.5
$92.6
$93.0
$95.0
Platform commissions, excluding any impact of deferred platform
commissions *
$28.5
$24.0
$24.7
$25.3
Royalties, excluding any impact of deferred royalties*
$6.4
$6.0
$5.0
$5.1
Hosting costs
$1.9
$1.5
$1.8
$1.8
User acquisition and marketing expenses
$35.6
$23.0
$30.5
$31.3
Adjusted other operating expenses*
$36.9
$30.5
$33.8
$34.0
Depreciation
$1.3
$1.1
$1.0
$1.0
* Platform commissions, excluding any impact of deferred platform
commissions, Royalties, excluding any impact of deferred royalties,
and Adjusted other operating expenses are non-GAAP financial
measures. These non-GAAP financial items should be considered in
addition to, but not as a substitute for, the information provided
in accordance with GAAP. Reconciliations for these non-GAAP
financial items to the most directly comparable financial items
based on GAAP are provided in GAAP to Adjusted results
reconciliation table.
“We significantly increased our planned user acquisition
investment in the first quarter, while exceeding our bookings and
bottom-line guidance,” said Eric R. Ludwig, Chief Operating Officer
and Chief Financial Officer. “The combination of higher user
engagement and a more favorable customer acquisition environment
has accelerated our Growth Game strategy, driving significantly
higher momentum across our business. Our liquid and debt free
balance sheet with $115 million in cash at the end of the first
quarter provides financial flexibility and supports our growth
plans. As we enter the second half of 2020, our plan is to continue
to carefully balance our investment spend with bottom line flow
through. We are confident that this approach will position Glu for
favorable near-term results and sustainable longer-term growth with
increased profitability.”
Financial Outlook as of May 7,
2020:
Glu is providing its financial outlook for the second quarter of
2020 and updating guidance for the full year 2020 as follows:
Second Quarter 2020 Guidance:
in millions
Low
High
Bookings
$150.0
$155.0
Platform commissions, excluding any impact of deferred platform
commissions
$40.7
$41.0
Royalties, excluding any impact of deferred royalties
$10.5
$10.9
Hosting costs
$2.3
$2.3
User acquisition and marketing expenses
$56.4
$56.5
Adjusted other operating expenses
$37.6
$37.8
Depreciation
$1.5
$1.5
Supplemental information:
Income tax
($2.9)
($2.9)
Stock-based compensation
$6.7
$6.7
Amortization of intangible assets
$0.9
$0.9
Weighted-average common shares outstanding – basic
153.1
153.1
Weighted-average common shares outstanding – diluted
163.5
163.5
Full Year 2020 Guidance:
in millions
Low
High
Bookings
$490.0
$500.0
Platform commissions, excluding any impact of deferred platform
commissions
$131.8
$134.5
Royalties, excluding any impact of deferred royalties
$31.9
$32.5
Hosting costs
$7.4
$7.5
User acquisition and marketing expenses
$129.2
$130.8
Adjusted other operating expenses
$151.5
$152.5
Depreciation
$5.8
$5.8
Supplemental information:
Income tax
$0.4
$0.4
Stock-based compensation
$28.0
$28.0
Amortization of intangible assets
$3.3
$3.3
Weighted-average common shares outstanding – basic
154.5
154.5
Weighted-average common shares outstanding – diluted
165.8
165.8
Cash and cash equivalent balance
At least $155.0
Glu does not provide guidance on a GAAP basis primarily due to
the fact that Glu is unable to predict, with reasonable accuracy,
future changes in its deferred revenue and corresponding cost of
revenue. The amount of Glu’s deferred revenue and cost of revenue
for any given period is difficult to predict due to differing
estimated useful lives of paying users across games, variability of
monthly revenue, platform commissions and royalties by game and
unpredictability of revenue from new game releases. Future changes
in deferred revenue and deferred cost of revenue are uncertain and
could be material to Glu’s results computed in accordance with
GAAP. Accordingly, Glu is unable to provide a reconciliation of the
non-GAAP financial measure guidance to the corresponding GAAP
measure without unreasonable effort.
Quarterly Conference Call
Information:
Glu will discuss its quarterly results via teleconference today
at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). Please dial
(866) 582-8907 (domestic), or (760) 298-5046 (international), with
conference ID # 7591323 to access the conference call at least five
minutes prior to the 2:00 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
5:00 p.m. Pacific Time, May 7, 2020, and 8:59 p.m. Pacific Time,
May 14, 2020, by calling (855) 859-2056, or (404) 537-3406, with
conference ID # 7591323.
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) and the company twitter
account (https://twitter.com/glumobile). Investors, the media,
players or other interested parties can subscribe to the company
blog and 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 bookings, platform commissions, excluding any impact of
deferred platform commissions, royalties, excluding any impact of
deferred royalties, and adjusted operating expenses. These non-GAAP
financial measures exclude the following items from Glu's unaudited
consolidated statements of operations:
- Change in deferred platform commissions;
- Change in deferred royalties;
- Amortization of intangible assets;
- Stock-based compensation expense;
- Transitional costs; and
- Litigation costs
Bookings do not reflect the deferral of certain game revenue
that Glu recognizes over the estimated useful lives of paying users
of Glu’s games and excludes changes in deferred revenue.
Glu may consider whether significant 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 “Financial Outlook as of May 7, 2020” (“Second
Quarter 2020 Guidance,” “Full Year 2020 Guidance”), and the
statements regarding that we are in a great position to
significantly stack bookings and scale our business, that we
believe we are well positioned to deliver on our improved outlook
for the full year 2020, that the combination of higher user
engagement and a more favorable customer acquisition environment
has accelerated our Growth Game strategy, driving significantly
higher momentum across our business, that our liquid and debt free
balance sheet with $115 million in cash at the end of the first
quarter provides financial flexibility and supports our growth
plans, that as we enter the second half of 2020, our plan is to
continue to carefully balance our investment spend with bottom line
flow through, and that we are confident that this approach will
position Glu for favorable near-term results and, sustainable
longer-term growth with increased profitability.
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 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 be unable build successful Growth Games that provide
predictable bookings and year over year growth; 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; the risk that we may lose a key intellectual property
license; the risk that we are unable to recruit and retain
qualified personnel for developing and maintaining the games in our
product pipeline resulting in reduced monetization of a game,
product launch delays or games being eliminated from our pipeline
altogether; the risks related to the COVID-19 pandemic; and other
risks detailed under the caption "Risk Factors" in our Form 10-K
filed with the Securities and Exchange Commission on February 28,
2020 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 (NASDAQ: GLUU) is a leading creator of mobile games.
Founded in 2001, Glu is headquartered in San Francisco with
additional locations in Foster City, Toronto and Hyderabad. With a
history spanning over a decade, Glu’s culture is rooted in taking
smart risks and fostering creativity to deliver world-class
interactive experiences for our players. Glu’s diverse portfolio
features top-grossing and award-winning original and licensed IP
titles including, Covet Fashion, Deer Hunter, Design Home, Diner
DASH Adventures, Disney Sorcerer’s Arena, Kim Kardashian: Hollywood
and MLB Tap Sports Baseball available worldwide on various
platforms including the App Store and Google Play. For more
information, visit www.glu.com or follow Glu on Twitter, Facebook
and Instagram.
COVET FASHION, DEER HUNTER, DESIGN HOME, DINER DASH, TAP SPORTS,
GLU, GLU MOBILE, and the 'g' character logo are trademarks of Glu
Mobile Inc.
Glu Mobile Inc. Condensed Consolidated Statements
of Operations (in thousands, except per share data)
(unaudited) Three Months Ended March 31,
March 31,
2020
2019
Revenue
$
107,274
$
95,885
Cost of revenue: Platform commissions, royalties and
other
36,974
33,270
Amortization of intangible assets
888
1,252
Total cost of revenue
37,862
34,522
Gross profit
69,412
61,363
Operating expenses: Research and development
29,531
26,546
Sales and marketing
42,743
28,105
General and administrative
6,667
6,635
Total operating expenses
78,941
61,286
Income/(loss) from operations
(9,529
)
77
Interest and other income/(expense), net:
(65
)
764
Income/(loss) before income taxes
(9,594
)
841
Income tax benefit/(provision)
1,321
(178
)
Net income/(loss)
$
(8,273
)
$
663
Net income/(loss) loss per common share - basic
$
(0.06
)
$
0.00
Net income/(loss) per common share - diluted
$
(0.06
)
$
0.00
Weighted average common shares outstanding - basic
149,629
144,445
Weighted average common shares outstanding - diluted
149,629
159,423
Glu Mobile Inc. Condensed Consolidated Balance
Sheets (in thousands) (unaudited) March
31, December 31,
2020
2019
ASSETS Cash and cash equivalents
$
114,708
$
127,053
Accounts receivable, net
42,495
29,304
Prepaid royalties
15,517
15,347
Deferred royalties
5,068
5,067
Deferred platform commission fees
29,007
29,239
Prepaid expenses and other assets
8,822
8,629
Total current assets
215,617
214,639
Property and equipment, net
18,667
17,643
Operating lease right of use assets
34,497
35,170
Long-term prepaid royalties
26,502
26,879
Other long-term assets
2,570
2,733
Intangible assets, net
3,871
4,758
Goodwill
116,227
116,227
Total assets
$
417,951
$
418,049
LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable
and accrued liabilities
$
22,709
17,535
Accrued compensation
9,431
11,260
Accrued royalties
11,724
20,802
Short-term operating lease liabilities
3,487
3,528
Deferred revenue
96,826
97,629
Total current liabilities
144,177
150,754
Long-term accrued royalties
26,502
26,842
Long-term operating lease liabilities
36,716
37,351
Other long-term liabilities
16
15
Total liabilities
207,411
214,962
Common stock
15
15
Additional paid-in capital
650,470
634,721
Accumulated other comprehensive loss
(60
)
(37
)
Accumulated deficit
(439,885
)
(431,612
)
Total stockholders' equity
210,540
203,087
Total liabilities and stockholders' equity
$
417,951
$
418,049
Glu Mobile Inc. GAAP to Adjusted Results
Reconciliation (in thousands) (unaudited)
Three Months Ended December 31, March 31,
June 30, September 30, December 31, March
31,
2018
2019
2019
2019
2019
2020
GAAP platform commissions
$
24,756
$
25,148
$
24,799
$
28,122
$
30,092
$
28,727
Change in deferred platform commissions
760
(1,109
)
1,860
3,972
(1,345
)
(232
)
Platform Commissions, excluding any impact of deferred platform
commissions
$
25,516
$
24,039
$
26,659
$
32,094
$
28,747
$
28,495
GAAP royalties (including impairment of royalties and
minimum guarantees)
$
6,784
$
6,605
$
6,245
$
6,643
$
6,285
$
6,381
Change in deferred royalties
122
(596
)
1,071
592
(410
)
1
Royalties, excluding any impact of deferred royalties
$
6,906
$
6,009
$
7,316
$
7,235
$
5,875
$
6,382
GAAP other operating expenses (GAAP operating expenses
excluding user acquisition and marketing expenses)
$
38,695
$
38,314
$
29,652
$
34,791
$
37,904
$
43,307
Stock-based compensation
(7,062
)
(6,807
)
(2,035
)
(4,080
)
(4,461
)
(6,382
)
Transitional costs
(598
)
(998
)
(5
)
(5
)
(1
)
(4
)
Litigation Costs
(1,217
)
(28
)
416
-
-
-
Adjusted other operating expenses
$
29,818
$
30,481
$
28,028
$
30,706
$
33,442
$
36,921
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 Platform Commissions and Deferred Royalties.
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 any associated cost of
revenue, 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 platform commissions and deferred royalties 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 platform commissions and deferred
royalties from its operating results is important to facilitate
comparisons to prior periods and to understand Glu’s
operations.
Amortization of Intangible Assets. When analyzing the operating
performance of an acquired entity or intangible asset, 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.
Stock-Based Compensation Expense. Glu applies the fair value
provisions of Accounting Standard Codification Topic 718,
Compensation-Stock Compensation (“ASC 718”). ASC 718 requires the
recognition of compensation expense, using a fair-value based
method, for costs related to all share-based payments. 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.
Transitional Costs. GAAP requires expenses to be recognized for
various types of events associated with business acquisitions such
as legal, accounting and other deal related expenses. Transitional
costs also include divestiture related expenses and termination of
certain game related contracts. Glu believes that these
transitional costs affect comparability from period to period and
that investors benefit from a supplemental non-GAAP financial
measure that excludes these expenses.
Litigation Costs. Glu incurred legal costs related to the
complaint filed by the former Chief Executive Officer of Crowdstar
in the Superior Court of the State of California for the County of
Santa Clara against Glu, Time Warner Inc., Intel Capital
Corporation, Middlefield Ventures Inc., Rachel Lam, and Jose Blanc.
Glu believes that these legal costs have no direct correlation to
the operation of its ongoing core business and affect comparability
from period to period and, as a result, that investors benefit from
a supplemental non-GAAP financial measure that excludes these
expenses.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200507006089/en/
Investor Relations Contact: Bob Jones / Taylor Krafchik
Ellipsis IR@glu.com 646-776-0886
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