000001366246--12-312020Q3false147778000171915000P0YP0Y0001366246us-gaap:RetainedEarningsMember2020-09-300001366246us-gaap:AdditionalPaidInCapitalMember2020-09-300001366246us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300001366246us-gaap:RetainedEarningsMember2020-06-300001366246us-gaap:AdditionalPaidInCapitalMember2020-06-300001366246us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-3000013662462020-06-300001366246us-gaap:RetainedEarningsMember2020-03-310001366246us-gaap:AdditionalPaidInCapitalMember2020-03-310001366246us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-3100013662462020-03-310001366246us-gaap:RetainedEarningsMember2019-12-310001366246us-gaap:AdditionalPaidInCapitalMember2019-12-310001366246us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001366246us-gaap:RetainedEarningsMember2019-09-300001366246us-gaap:AdditionalPaidInCapitalMember2019-09-300001366246us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-09-300001366246us-gaap:RetainedEarningsMember2019-06-300001366246us-gaap:AdditionalPaidInCapitalMember2019-06-300001366246us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-06-3000013662462019-06-300001366246us-gaap:RetainedEarningsMember2019-03-310001366246us-gaap:AdditionalPaidInCapitalMember2019-03-310001366246us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-03-3100013662462019-03-310001366246us-gaap:RetainedEarningsMember2018-12-310001366246us-gaap:AdditionalPaidInCapitalMember2018-12-310001366246us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310001366246us-gaap:CommonStockMember2020-09-300001366246us-gaap:CommonStockMember2020-06-300001366246us-gaap:CommonStockMember2020-03-310001366246us-gaap:CommonStockMember2019-12-310001366246us-gaap:CommonStockMember2019-09-300001366246us-gaap:CommonStockMember2019-06-300001366246us-gaap:CommonStockMember2019-03-310001366246us-gaap:CommonStockMember2018-12-310001366246us-gaap:StockOptionMember2019-12-310001366246us-gaap:PerformanceSharesMember2019-12-310001366246us-gaap:StockOptionMember2020-01-012020-09-300001366246us-gaap:StockOptionMember2020-09-300001366246gluu:EmployeeStockPurchasePlanTwoThousandSevenMember2017-04-012017-04-300001366246us-gaap:EmployeeStockOptionMember2020-07-012020-09-300001366246us-gaap:EmployeeStockOptionMember2020-01-012020-09-300001366246us-gaap:EmployeeStockOptionMember2019-01-012019-09-300001366246srt:MinimumMember2020-01-012020-09-300001366246srt:MaximumMember2020-01-012020-09-300001366246us-gaap:RestrictedStockUnitsRSUMember2019-12-310001366246gluu:PerformanceStockUnitsMember2019-12-310001366246us-gaap:ShareBasedCompensationAwardTrancheOneMember2020-01-012020-09-300001366246us-gaap:SellingAndMarketingExpenseMember2020-07-012020-09-300001366246us-gaap:ResearchAndDevelopmentExpenseMember2020-07-012020-09-300001366246us-gaap:GeneralAndAdministrativeExpenseMember2020-07-012020-09-300001366246gluu:PerformanceStockUnitsMember2020-07-012020-09-300001366246us-gaap:SellingAndMarketingExpenseMember2020-01-012020-09-300001366246us-gaap:ResearchAndDevelopmentExpenseMember2020-01-012020-09-300001366246us-gaap:GeneralAndAdministrativeExpenseMember2020-01-012020-09-300001366246us-gaap:SellingAndMarketingExpenseMember2019-07-012019-09-300001366246us-gaap:ResearchAndDevelopmentExpenseMember2019-07-012019-09-300001366246us-gaap:GeneralAndAdministrativeExpenseMember2019-07-012019-09-300001366246us-gaap:SellingAndMarketingExpenseMember2019-01-012019-09-300001366246us-gaap:ResearchAndDevelopmentExpenseMember2019-01-012019-09-300001366246us-gaap:GeneralAndAdministrativeExpenseMember2019-01-012019-09-300001366246us-gaap:PerformanceSharesMember2020-01-012020-09-300001366246gluu:FollowOnPublicOfferingMember2020-06-300001366246us-gaap:OverAllotmentOptionMember2020-04-012020-06-300001366246us-gaap:EMEAMember2020-07-012020-09-300001366246srt:AsiaPacificMember2020-07-012020-09-300001366246gluu:AmericasExcludingUsaMember2020-07-012020-09-300001366246country:US2020-07-012020-09-300001366246us-gaap:EMEAMember2020-01-012020-09-300001366246srt:AsiaPacificMember2020-01-012020-09-300001366246gluu:AmericasExcludingUsaMember2020-01-012020-09-300001366246country:US2020-01-012020-09-300001366246us-gaap:EMEAMember2019-07-012019-09-300001366246srt:AsiaPacificMember2019-07-012019-09-300001366246gluu:AmericasExcludingUsaMember2019-07-012019-09-300001366246country:US2019-07-012019-09-300001366246us-gaap:EMEAMember2019-01-012019-09-300001366246srt:AsiaPacificMember2019-01-012019-09-300001366246gluu:AmericasExcludingUsaMember2019-01-012019-09-300001366246country:US2019-01-012019-09-300001366246gluu:OtherMemberus-gaap:TransferredAtPointInTimeMember2020-07-012020-09-300001366246gluu:MicroTransactionsMemberus-gaap:TransferredOverTimeMember2020-07-012020-09-300001366246gluu:AdvertisementsAndOffersMemberus-gaap:TransferredAtPointInTimeMember2020-07-012020-09-300001366246gluu:OtherMemberus-gaap:TransferredAtPointInTimeMember2020-01-012020-09-300001366246gluu:MicroTransactionsMemberus-gaap:TransferredOverTimeMember2020-01-012020-09-300001366246gluu:AdvertisementsAndOffersMemberus-gaap:TransferredAtPointInTimeMember2020-01-012020-09-300001366246gluu:OtherMemberus-gaap:TransferredAtPointInTimeMember2019-07-012019-09-300001366246gluu:MicroTransactionsMemberus-gaap:TransferredOverTimeMember2019-07-012019-09-300001366246gluu:AdvertisementsAndOffersMemberus-gaap:TransferredAtPointInTimeMember2019-07-012019-09-300001366246gluu:OtherMemberus-gaap:TransferredAtPointInTimeMember2019-01-012019-09-300001366246gluu:MicroTransactionsMemberus-gaap:TransferredOverTimeMember2019-01-012019-09-300001366246gluu:AdvertisementsAndOffersMemberus-gaap:TransferredAtPointInTimeMember2019-01-012019-09-300001366246gluu:AllCountriesExcludingUnitedStatesOfAmericaMember2020-09-300001366246country:US2020-09-300001366246gluu:AllCountriesExcludingUnitedStatesOfAmericaMember2019-12-310001366246country:US2019-12-310001366246us-gaap:WarrantMember2020-07-012020-09-300001366246us-gaap:WarrantMember2019-07-012019-09-300001366246us-gaap:WarrantMember2019-01-012019-09-300001366246us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310001366246us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-07-012019-09-300001366246us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-04-012019-06-300001366246us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-03-310001366246gluu:CurrentAndLongTermLiabilitiesMembergluu:AgreementsWithVariousLicensorsMember2020-09-300001366246us-gaap:RetainedEarningsMember2020-07-012020-09-300001366246us-gaap:RetainedEarningsMember2020-04-012020-06-300001366246us-gaap:RetainedEarningsMember2020-01-012020-03-310001366246us-gaap:RetainedEarningsMember2019-07-012019-09-300001366246us-gaap:RetainedEarningsMember2019-04-012019-06-300001366246us-gaap:RetainedEarningsMember2019-01-012019-03-310001366246gluu:DigitalStorefrontsMemberus-gaap:IndemnificationGuaranteeMember2020-09-300001366246gluu:DigitalStorefrontsMemberus-gaap:IndemnificationGuaranteeMember2019-12-310001366246srt:MinimumMember2020-09-300001366246srt:MaximumMember2020-09-300001366246srt:MinimumMembergluu:TitlesContentAndTechnologyMember2020-01-012020-09-300001366246srt:MaximumMembergluu:TitlesContentAndTechnologyMember2020-01-012020-09-300001366246us-gaap:TrademarksMember2020-01-012020-09-300001366246gluu:CustomerContractAndRelatedRelationshipsMember2020-01-012020-09-300001366246us-gaap:TrademarksMember2020-09-300001366246gluu:TitlesContentAndTechnologyMember2020-09-300001366246gluu:CustomerContractAndRelatedRelationshipsMember2020-09-300001366246us-gaap:TrademarksMember2019-12-310001366246gluu:TitlesContentAndTechnologyMember2019-12-310001366246gluu:CustomerContractAndRelatedRelationshipsMember2019-12-310001366246srt:MaximumMemberus-gaap:PerformanceSharesMember2020-01-012020-09-300001366246us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-09-300001366246us-gaap:PerformanceSharesMember2020-09-300001366246us-gaap:EmployeeStockOptionMember2020-09-300001366246gluu:EquityIncentivePlanTwoThousandSevenMember2020-04-300001366246gluu:EquityInducementPlanTwoThousandEighteenMember2018-04-3000013662462019-09-3000013662462018-12-310001366246us-gaap:FairValueInputsLevel1Member2020-09-300001366246us-gaap:FairValueInputsLevel1Member2019-12-310001366246us-gaap:RestrictedStockUnitsRSUMember2020-07-012020-09-300001366246us-gaap:PerformanceSharesMember2020-07-012020-09-300001366246us-gaap:EmployeeStockOptionMember2020-07-012020-09-300001366246gluu:PerformanceStockUnitsMember2020-07-012020-09-300001366246us-gaap:WarrantMember2020-01-012020-09-300001366246us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-09-300001366246us-gaap:PerformanceSharesMember2020-01-012020-09-300001366246us-gaap:EmployeeStockOptionMember2020-01-012020-09-300001366246gluu:PerformanceStockUnitsMember2020-01-012020-09-300001366246gluu:EmployeeStockPurchasePlanMember2020-01-012020-09-300001366246us-gaap:WarrantMember2019-07-012019-09-300001366246us-gaap:RestrictedStockUnitsRSUMember2019-07-012019-09-300001366246us-gaap:PerformanceSharesMember2019-07-012019-09-300001366246us-gaap:EmployeeStockOptionMember2019-07-012019-09-300001366246gluu:PerformanceStockUnitsMember2019-07-012019-09-300001366246gluu:EmployeeStockPurchasePlanMember2019-07-012019-09-300001366246us-gaap:WarrantMember2019-01-012019-09-300001366246us-gaap:RestrictedStockUnitsRSUMember2019-01-012019-09-300001366246us-gaap:PerformanceSharesMember2019-01-012019-09-300001366246us-gaap:EmployeeStockOptionMember2019-01-012019-09-300001366246gluu:PerformanceStockUnitsMember2019-01-012019-09-300001366246gluu:EmployeeStockPurchasePlanMember2019-01-012019-09-300001366246us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-3000013662462020-07-012020-09-300001366246us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-3000013662462020-04-012020-06-300001366246us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-3100013662462020-01-012020-03-310001366246us-gaap:AdditionalPaidInCapitalMember2019-07-012019-09-300001366246us-gaap:AdditionalPaidInCapitalMember2019-04-012019-06-3000013662462019-04-012019-06-300001366246us-gaap:AdditionalPaidInCapitalMember2019-01-012019-03-3100013662462019-01-012019-03-310001366246us-gaap:CommonStockMember2020-07-012020-09-300001366246us-gaap:CommonStockMember2020-04-012020-06-300001366246us-gaap:CommonStockMember2020-01-012020-03-310001366246us-gaap:CommonStockMember2019-07-012019-09-300001366246us-gaap:CommonStockMember2019-04-012019-06-300001366246us-gaap:CommonStockMember2019-01-012019-03-310001366246gluu:PerformanceStockUnitsMember2020-01-012020-09-300001366246us-gaap:RestrictedStockUnitsRSUMember2020-09-300001366246gluu:PerformanceStockUnitsMember2020-09-300001366246gluu:FollowOnPublicOfferingMember2020-04-012020-06-300001366246us-gaap:FairValueInputsLevel3Member2020-09-300001366246us-gaap:FairValueInputsLevel3Member2019-12-310001366246us-gaap:WarrantMember2020-09-300001366246us-gaap:WarrantMember2019-12-310001366246us-gaap:WarrantMember2019-01-012019-12-310001366246us-gaap:WarrantMember2020-01-012020-09-3000013662462019-07-012019-09-3000013662462019-01-012019-09-300001366246gluu:GoogleMemberus-gaap:SalesMember2020-07-012020-09-300001366246gluu:AppleMemberus-gaap:SalesMember2020-07-012020-09-300001366246gluu:GoogleMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-09-300001366246gluu:GoogleMemberus-gaap:SalesMember2020-01-012020-09-300001366246gluu:AppleMemberus-gaap:SalesMember2020-01-012020-09-300001366246gluu:GoogleMemberus-gaap:SalesMember2019-07-012019-09-300001366246gluu:AppleMemberus-gaap:SalesMember2019-07-012019-09-300001366246gluu:TapjoyMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-12-310001366246gluu:GoogleMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-12-310001366246gluu:AppleMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-12-310001366246gluu:GoogleMemberus-gaap:SalesMember2019-01-012019-09-300001366246gluu:AppleMemberus-gaap:SalesMember2019-01-012019-09-3000013662462020-09-3000013662462019-12-3100013662462020-11-0200013662462020-01-012020-09-30xbrli:sharesiso4217:USDxbrli:pureiso4217:USDxbrli:sharesgluu:segment

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from                      to                     

Commission File Number 001-33368

Glu Mobile Inc.

(Exact name of the Registrant as Specified in its Charter)

Delaware

91-2143667

(State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer
Identification No.)

875 Howard Street, Suite 100

San Francisco, California 94103

(Address of Principal Executive Offices, including Zip Code)

(415) 800-6100

(Registrant’s Telephone number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, par value $0.0001 per share

GLUU

Nasdaq Global Select Market

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).     Yes      No  

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

 

  

Accelerated Filer

 

Non-accelerated Filer

 

  

  

Smaller Reporting Company

 

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

Shares of Glu Mobile Inc. common stock outstanding as of November 2, 2020: 171,998,037

GLU MOBILE INC.

FORM 10-Q

Quarterly Period Ended September 30, 2020

TABLE OF CONTENTS

Page

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (Unaudited)

3

Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019

3

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2020 and September 30, 2019

4

Condensed Consolidated Statements of Comprehensive Income/(Loss) for the Three and Nine Months Ended September 30, 2020 and September 30, 2019

5

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2020 and September 30, 2019

6

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and September 30, 2019

7

Notes to Unaudited Condensed Consolidated Financial Statements

8

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

21

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

35

ITEM 4. CONTROLS AND PROCEDURES

36

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

37

ITEM 1A. RISK FACTORS

37

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

65

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

65

ITEM 4. MINE SAFETY DISCLOSURES

65

ITEM 5. OTHER INFORMATION

65

ITEM 6. EXHIBITS

65

SIGNATURES

68

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GLU MOBILE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except per share data)

September 30, 

December 31, 

 

2020

   

2019

 

ASSETS

 

Current assets:

Cash and cash equivalents

$

318,099

$

127,053

Accounts receivable, net

 

53,592

 

29,304

Prepaid royalties

14,516

15,347

Deferred royalties

7,937

5,067

Deferred platform commission fees

40,248

29,239

Prepaid expenses and other assets

 

10,835

 

8,629

Total current assets

 

445,227

 

214,639

Property and equipment, net

 

16,854

 

17,643

Operating lease right of use assets

32,512

35,170

Long-term prepaid royalties

20,658

26,879

Other long-term assets

 

2,939

 

2,733

Intangible assets, net

 

2,096

 

4,758

Goodwill

 

116,227

 

116,227

Total assets

$

636,513

$

418,049

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued liabilities

$

15,609

$

17,535

Accrued compensation

 

18,072

 

11,260

Accrued royalties

 

16,070

 

20,802

Short-term operating lease liabilities

4,677

3,528

Deferred revenue

 

134,311

 

97,629

Total current liabilities

 

188,739

 

150,754

Long-term accrued royalties

20,559

26,842

Long-term operating lease liabilities

35,740

37,351

Other long-term liabilities

 

1,104

 

15

Total liabilities

 

246,142

 

214,962

Commitments and contingencies (Note 8)

Stockholders’ equity:

Preferred stock, $0.0001 par value; 5,000 shares authorized at September 30, 2020 and December 31, 2019; no shares issued and outstanding at September 30, 2020 and December 31, 2019

 

 

Common stock, $0.0001 par value; 250,000 shares authorized at September 30, 2020 and December 31, 2019; 171,915 and 147,778 shares issued and outstanding at September 30, 2020 and December 31, 2019

 

17

 

15

Additional paid-in capital

 

825,460

 

634,721

Accumulated other comprehensive loss

 

(60)

 

(37)

Accumulated deficit

 

(435,046)

 

(431,612)

Total stockholders’ equity

 

390,371

 

203,087

Total liabilities and stockholders’ equity

$

636,513

$

418,049

The accompanying Notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

3

GLU MOBILE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

2020

   

2019

   

2020

   

2019

   

Revenue

$

158,531

$

107,077

   

$

399,121

$

298,502

   

Cost of revenue:

Platform commissions, royalties and other

 

56,390

 

36,758

 

140,091

 

102,834

Amortization of intangible assets

 

888

 

1,040

 

2,663

 

3,348

Total cost of revenue

 

57,278

 

37,798

 

142,754

 

106,182

Gross profit

 

101,253

 

69,279

 

256,367

 

192,320

Operating expenses:

Research and development

 

30,778

 

22,968

 

88,729

 

69,250

Sales and marketing

 

42,222

 

46,140

 

150,168

 

109,285

General and administrative

 

7,870

 

5,879

 

21,803

 

17,465

Total operating expenses

 

80,870

 

74,987

 

260,700

 

196,000

Income/(loss) from operations

 

20,383

 

(5,708)

 

(4,333)

 

(3,680)

Interest and other income, net

 

413

 

271

 

782

 

1,591

Income/(loss) before income taxes

 

20,796

 

(5,437)

 

(3,551)

 

(2,089)

Income tax benefit/(provision)

 

(7,391)

 

348

 

117

 

170

Net income/(loss)

$

13,405

$

(5,089)

$

(3,434)

$

(1,919)

Net income/(loss) per common share - basic

$

0.08

$

(0.03)

$

(0.02)

$

(0.01)

Net income/(loss) per common share - diluted

$

0.07

$

(0.03)

$

(0.02)

$

(0.01)

Weighted average common shares outstanding:

Basic

171,252

146,210

159,201

145,381

Diluted

181,590

146,210

159,201

145,381

The accompanying Notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

4

GLU MOBILE INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(Unaudited)

(in thousands)

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

2020

   

2019

   

2020

   

2019

   

Net income/(loss)

$

13,405

$

(5,089)

$

(3,434)

$

(1,919)

Other comprehensive income/(loss):

Foreign currency translation adjustments

 

 

22

 

(23)

 

7

Other comprehensive income/(loss)

 

 

22

 

(23)

 

7

Comprehensive income/(loss)

$

13,405

$

(5,067)

$

(3,457)

$

(1,912)

The accompanying Notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

5

GLU MOBILE INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(in thousands)

Accumulated

Other

Additional

Compre-

Total

Common Stock

Paid-In

hensive

Accumulated

Stockholders'

   

   

Shares

   

Amount

   

Capital

   

Loss

   

Deficit

   

Equity

Balances at December 31, 2019

147,778

$

15

$

634,721

$

(37)

$

(431,612)

$

203,087

Net loss

-

-

-

-

(8,273)

(8,273)

Stock-based compensation expense

-

-

6,238

-

-

6,238

Issuance of common stock upon exercise of stock options

2,921

-

9,526

-

-

9,526

Issuance of common stock upon exercise of warrants

115

-

-

-

-

-

Taxes paid related to net share settlement of equity awards

320

-

(1,720)

-

-

(1,720)

Issuance of common stock pursuant to Employee Stock Purchase Plan

450

-

1,705

-

-

1,705

Other comprehensive loss

-

-

-

(23)

-

(23)

Balances at March 31, 2020

151,584

$

15

$

650,470

$

(60)

$

(439,885)

$

210,540

Net loss

-

-

-

(8,566)

(8,566)

Stock-based compensation expense

-

-

7,620

-

-

7,620

Issuance of common stock upon exercise of stock options

1,464

-

5,347

-

-

5,347

Taxes paid related to net share settlement of equity awards

411

-

(1,740)

-

-

(1,740)

Issuance of common stock upon follow-on public offering, net of issuance costs

17,250

2

151,771

-

-

151,773

Balances at June 30, 2020

170,709

$

17

$

813,468

$

(60)

$

(448,451)

$

364,974

Net income

-

-

-

13,405

13,405

Stock-based compensation expense

-

-

8,517

-

-

8,517

Issuance of common stock upon exercise of stock options

728

-

2,058

-

-

2,058

Taxes paid related to net share settlement of equity awards

144

-

(723)

-

-

(723)

Issuance of common stock pursuant to Employee Stock Purchase Plan

334

-

2,140

-

-

2,140

Balances at September 30, 2020

171,915

$

17

$

825,460

$

(60)

$

(435,046)

$

390,371

Accumulated

Other

Additional

Compre-

Total

Common Stock

Paid-In

hensive

Accumulated

Stockholders'

   

   

Shares

   

Amount

   

Capital

   

Income/(Loss)

   

Deficit

   

Equity

Balances at December 31, 2018

143,870

$

14

$

617,781

$

1

$

(440,483)

$

177,313

Net income

-

-

-

-

663

663

Stock-based compensation expense

-

-

6,807

-

-

6,807

Issuance of common stock upon exercise of stock options

468

-

1,313

-

-

1,313

Taxes paid related to net share settlement of equity awards

560

1

(3,957)

-

-

(3,956)

Issuance of common stock pursuant to Employee Stock Purchase Plan

278

-

1,665

-

-

1,665

Other comprehensive income

-

-

-

15

-

15

Balances at March 31, 2019

145,176

$

15

$

623,609

$

16

$

(439,820)

$

183,820

Net income

-

-

-

-

2,507

2,507

Stock-based compensation expense

-

-

2,035

-

-

2,035

Issuance of common stock upon exercise of stock options

209

-

469

-

-

469

Taxes paid related to net share settlement of equity awards

399

-

(2,461)

-

-

(2,461)

Other comprehensive loss

-

-

-

(30)

-

(30)

Balances at June 30, 2019

145,784

$

15

$

623,652

$

(14)

$

(437,313)

$

186,340

Net income

-

-

-

-

(5,089)

(5,089)

Stock-based compensation expense

-

-

4,080

-

-

4,080

Issuance of common stock upon exercise of stock options

194

-

450

-

-

450

Taxes paid related to net share settlement of equity awards

311

-

(1,220)

-

-

(1,220)

Issuance of common stock pursuant to Employee Stock Purchase Plan

450

-

1,747

-

-

1,747

Other comprehensive loss

-

-

-

22

-

22

Balances at September 30, 2019

146,739

$

15

$

628,709

$

8

$

(442,402)

$

186,330

The accompanying Notes are an integral part of these Unaudited Condensed Consolidated Financial Statements

6

GLU MOBILE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

Nine Months Ended September 30, 

   

2020

   

2019

Cash flows from operating activities:

Net loss

$

(3,434)

$

(1,919)

Adjustments to reconcile net loss to net cash used in operating activities:

Stock-based compensation

 

23,011

 

12,922

Depreciation

 

4,090

 

3,153

Non-cash lease expense

3,054

2,335

Amortization of intangible assets

 

2,663

 

3,348

Other non-cash adjustments

39

671

Changes in operating assets and liabilities:

Accounts receivable

 

(24,091)

 

(17,528)

Prepaid royalties

(4,103)

184

Deferred royalties

(2,870)

(1,067)

Deferred platform commission fees

(11,009)

(4,723)

Prepaid expenses and other assets

 

(2,510)

 

(1,168)

Accounts payable and other accrued liabilities

 

577

 

9,387

Accrued compensation

 

6,812

 

(10,219)

Accrued royalties

 

(24)

 

714

Deferred revenue

 

36,682

 

16,380

Other long-term liabilities

 

1,089

 

(23)

Operating lease liabilities

(760)

(2,202)

Net cash provided by operating activities

 

29,216

 

10,245

Cash flows from investing activities:

Purchase of property and equipment

 

(6,445)

 

(3,445)

Other investing activities

(155)

Net cash used in investing activities

 

(6,445)

 

(3,600)

Cash flows from financing activities:

Proceeds from exercise of stock options and purchases under the ESPP

20,776

5,644

Proceeds from follow-on public offering, net of issuance costs

151,773

Taxes paid related to net share settlement of equity awards

 

(4,183)

 

(7,637)

Net cash provided by/(used in) financing activities

 

168,366

 

(1,993)

Effect of exchange rate changes on cash

 

(91)

 

(151)

Net increase in cash, cash equivalents and restricted cash

 

191,046

 

4,501

Cash, cash equivalents and restricted cash at beginning of period

127,053

97,944

Cash, cash equivalents at end of period

$

318,099

$

102,445

The accompanying Notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

7

GLU MOBILE INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar and share amounts in thousands, except per share data)

Note 1 — The Company, Basis of Presentation and Summary of Significant Accounting Policies

Glu Mobile Inc. (the “Company” or “Glu”) was incorporated in the state of Nevada in May 2001 and reincorporated in the state of Delaware in March 2007. The Company develops, publishes, and markets a portfolio of games designed for users of smartphones and tablet devices who download and make purchases within its games through direct-to-consumer digital storefronts, such as the Apple App Store, Google Play Store and others (“Digital Storefronts”). The Company creates games based on its own original brands, as well as third-party licensed brands, properties and other content.

Principles of Consolidation and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles in the United States (“GAAP”) for complete financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 28, 2020. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, which the Company believes are necessary for a fair statement of the Company’s financial position as of September 30, 2020 and its condensed consolidated results of operations for the three and nine months ended September 30, 2020 and 2019, respectively. These unaudited condensed consolidated financial statements are not necessarily indicative of the results to be expected for the entire year. The condensed consolidated balance sheet presented as of December 31, 2019 has been derived from the audited consolidated financial statements as of that date, and the condensed consolidated balance sheet presented as of September 30, 2020 has been derived from the unaudited condensed consolidated financial statements as of that date. Certain prior year balances have been reclassified to conform to the current year presentation. Such reclassifications did not materially affect revenue, operating income/(loss), net income/(loss), cash flows, total assets, total liabilities or stockholders’ equity.

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make judgments, assumptions and estimates that affect the amounts reported in its unaudited condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Estimates and assumptions reflected in the unaudited condensed consolidated financial statements include, but are not limited to, estimation of the average playing period of paying users associated with durable virtual items, the allowance for doubtful accounts, useful lives of property and equipment and intangible assets, valuation and realizability of deferred tax assets and uncertain tax positions, fair value of stock awards issued, fair value of warrants issued, accounting for business combinations, evaluating goodwill, long-lived assets for impairment, and realization of prepaid royalties and fair value of investments. Actual results may differ from these estimates due to risks and uncertainties, and these differences may be material, including uncertainty in the current economic environment due to the novel strain of coronavirus, SARS-CoV-2 (“COVID-19”) pandemic. Management will continue to actively monitor the impact of the COVID-19 pandemic on the Company’s assumptions and estimates.

8

Concentration of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents and accounts receivable.

The Company derives its accounts receivable from revenue earned from customers located worldwide. The Company performs ongoing credit evaluations of its customers’ financial condition and, generally, requires no collateral from its customers. The Company bases its allowance for doubtful accounts on management’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company writes off accounts receivable balances against the allowance when it determines that the amount will not be recovered.

The following table summarizes the revenue from customers in excess of 10% of the Company’s revenue:

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2020

   

2019

   

2020

   

2019

 

Apple

 

56.7

%  

54.9

%  

56.5

%  

53.5

%

Google

 

33.8

%  

33.2

%  

32.9

%  

34.0

%

At September 30, 2020, Apple Inc. (“Apple”), Google Inc. (“Google”), and Tapjoy Inc. (“Tapjoy”) accounted for 64.9%, 19.2%, and 10.7%, respectively, of total accounts receivable. At December 31, 2019, Apple, Google, and Tapjoy accounted for 47.2%, 28.5%, and 17.8%, respectively, of total accounts receivable. No other customer or Digital Storefront represented more than 10% of the Company’s total accounts receivable as of these dates.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost and replaces the existing incurred loss impairment model with an expected loss methodology, which will result in earlier recognition of credit losses. The ASU requires a cumulative-effect adjustment to retained earnings transition approach and is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The adoption of this standard did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This new accounting standard update simplifies the measurement of goodwill by eliminating the Step 2 impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The new guidance requires an entity to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, limited to the amount of goodwill. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.  The new guidance becomes effective for goodwill impairment tests in fiscal years beginning after December 15, 2019. The adoption of this standard did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. This guidance adds, modifies and removes several disclosure requirements relative to the three levels of inputs used to measure fair value in accordance with Topic 820, Fair Value Measurement. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The adoption of this standard did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

9

In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The adoption of this standard did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The new guidance removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. It also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. This guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

Note 2 — Net Income/(Loss) Per Share

The Company computes basic net income/(loss) per share by dividing its net income/(loss) for the period by the weighted average number of common shares outstanding during the period.

Diluted net income per share for the three months ended September 30, 2020 is computed by dividing the net income attributable to common stockholders by the weighted-average number of common shares outstanding during the period, including potentially dilutive common stock instruments. Diluted net loss per share for the nine months ended September 30, 2020 and the three months and nine months ended September 30, 2019 has been computed by dividing the net loss by the weighted-average number of common shares outstanding during each period, without consideration for common share equivalents as their effect would have been antidilutive.

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

2020

   

2019

2020

   

2019

   

Net income/(loss)

$

13,405

$

(5,089)

$

(3,434)

$

(1,919)

Shares used to compute net income/(loss) per share:

Weighted average shares used to compute basic net income/(loss) per share

171,252

146,210

159,201

145,381

Dilutive potential common shares

10,338

Weighted average shares used to compute diluted net income/(loss) per share

 

181,590

 

146,210

 

159,201

 

145,381

Basic net income/(loss) per share

$

0.08

$

(0.03)

$

(0.02)

$

(0.01)

Diluted net income/(loss) per share

$

0.07

$

(0.03)

$

(0.02)

$

(0.01)

10

The following equity awards outstanding at the end of each period presented have been excluded from the computation of diluted net income/(loss) per share of common stock for the periods presented because including them would have had an anti-dilutive effect: 

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

2020

    

2019

2020

2019

    

Warrants to purchase common stock

1,600

1,100

1,600

Options to purchase common stock

693

17,059

11,999

17,059

Restricted stock units ("RSUs")

129

2,469

5,754

2,469

Performance stock options ("PSOs")

1,458

6,583

4,103

6,583

Performance stock units ("PSUs")

3,705

2,972

3,705

2,972

Employee stock purchase plan ("ESPP")

450

411

450

Total

5,985

31,133

27,072

31,133

 

Note 3 — Revenue from Contracts with Customers

Disaggregation of Revenue

The following table summarizes revenue from contracts with customers for the three and nine months ended September 30, 2020 and September 30, 2019:

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

2020

2019

2020

2019

In-App Purchases (over-time revenue recognition)

$

143,597

$

93,898

$

356,443

$

260,101

Advertisements and offers (point-in-time revenue recognition)

 

14,919

 

13,168

42,622

 

38,362

Other (point-in-time revenue recognition)

15

11

56

39

Total revenue

$

158,531

$

107,077

$

399,121

$

298,502

The Company operates in a single reportable segment. In the table above, revenue is disaggregated by type of revenue stream, indicating whether it is recognized over-time or at a point-in-time.

Contract Balances

The following table provides information about receivables and contract liabilities from contracts with customers:

September 30, 2020

December 31, 2019

Receivables, which are included in accounts receivable, net

$

53,592

$

29,304

Contract liabilities, which are included in deferred revenue

 

134,311

 

97,629

The Company receives payments from customers based on billing terms established in the Company’s contracts. Contract assets relate to the Company’s right to consideration for its completed performance under the contract before the customer pays consideration or before payment is due. At September 30, 2020 and December 31, 2019, there were no contract assets recorded in the Company’s condensed consolidated balance sheets. Accounts receivable are recorded when the right to consideration becomes unconditional.

Deferred revenue relates to payments received in advance of performance under the contract.  Deferred revenue is recognized as revenue as the Company performs under the contract. The Company had $97,629 in deferred revenue as of December 31, 2019, of which $1,258 and $97,629 was recognized as revenue in the three and nine months ended September 30, 2020, respectively. The Company had $85,736 in deferred revenue as of December 31, 2018, of which $1,124 and $85,736 was recognized as revenue in the three and nine months ended September 30, 2019, respectively.

11

Note 4 — Fair Value Measurements

Fair Value Measurements

The Company accounts for fair value in accordance with Accounting Standard Codification 820, Fair Value Measurements and Disclosures (“ASC 820”). Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The Company uses a three-tier hierarchy, which prioritizes the inputs used in measuring fair value as follows:

 

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s financial assets as of September 30, 2020 are presented below at fair value and were classified within the fair value hierarchy as follows:

    

Level 1

    

Level 2

    

Level 3

    

September 30, 2020

 

Financial Assets

Cash and cash equivalents

$

318,099

$

$

$

318,099

Other investments

1,565

1,565

Total financial assets

$

318,099

$

$

1,565

$

319,664

The Company’s financial assets as of December 31, 2019 are presented below at fair value and were classified within the fair value hierarchy as follows:

    

Level 1

    

Level 2

    

Level 3

    

December 31, 2019

Financial Assets

Cash and cash equivalents

$

127,053

$

$

$

127,053

Other investments

1,565

1,565

Total financial assets

$

127,053

$

$

1,565

$

128,618

The Company’s cash and cash equivalents, which were held in operating bank and money market accounts, are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. The carrying value of accounts receivable and payables approximates fair value due to the short time to expected payment or receipt of cash. The carrying value of other investments approximates fair value, and there are no unrealized gains or losses, as there have been no events or changes in circumstances that would have had a significant effect on the fair value of these investments at September 30, 2020 and December 31, 2019.

Note 5 — Balance Sheet Components

Accounts Receivable, net

    

September 30, 

    

December 31, 

    

   

2020

   

2019

   

Accounts receivable

$

53,592

$

29,304

Less: Allowance for doubtful accounts

 

 

Accounts receivable, net

$

53,592

$

29,304

12

Accounts receivable includes amounts billed and unbilled as of the respective balance sheet dates, but net of platform commissions paid to the Digital Storefronts. The Company had no bad debts during the three and nine months ended September 30, 2020 and 2019.

Note 6 — Goodwill and Intangible Assets

Intangible Assets

The Company’s intangible assets were acquired primarily in various acquisitions as well as in connection with the purchase of certain trademarks, brand assets and licensed content. The carrying amounts and accumulated amortization expense of the acquired intangible assets at September 30, 2020 and December 31, 2019 were as follows:

September 30, 2020

December 31, 2019

 

    

Estimated

    

Gross

    

Accumulated

    

Net

    

Gross

    

Accumulated

    

Net

 

Useful

Carrying

Amortization

Carrying

Carrying

Amortization

Carrying

 

Life

Value

Expense

Value

Value

Expense

Value

 

Intangible assets amortized to cost of revenue:

Titles, content and technology

 

3 - 5 yrs

$

21,117

$

(19,021)

$

2,096

$

21,117

$

(16,359)

$

4,758

Customer contracts and related relationships

 

5 yrs

 

700

(700)

 

700

(700)

Trademarks

 

7 yrs

 

5,000

(5,000)

 

5,000

(5,000)

$

26,817

$

(24,721)

$

2,096

$

26,817

$

(22,059)

$

4,758

Acquisition-related intangibles included in the above table are finite-lived and are being amortized on a straight-line basis over their estimated useful lives, which approximate the pattern in which the economic benefits of the intangible assets are realized. The Company has included amortization of acquired intangible assets directly attributable to revenue-generating activities in cost of revenue.

During the three months ended September 30, 2020 and 2019, the Company recorded amortization expense in cost of revenue of $888 and $1,040, respectively. During the nine months ended September 30, 2020 and 2019, the Company recorded amortization expense in cost of revenue of $2,663 and $3,348, respectively.

As of September 30, 2020, total expected future amortization related to intangible assets was as follows:

    

Amortization

to Be Included in

Cost of

Year Ending December 31,

   

Revenue

2020 (remaining 3 months)

$

596

2021

 

1,500

Total intangible assets

$

2,096

Goodwill

The Company had $116,227 in goodwill as of September 30, 2020 and December 31, 2019, respectively. There were no indicators of impairment as of September 30, 2020.

Note 7 – Leases

The Company currently leases real estate space under non-cancelable operating lease agreements for its corporate headquarters in San Francisco, California and its operations in Toronto, Canada, Hyderabad, India, Foster City, California, Burlingame, California and Orlando, Florida. These operating leases have remaining lease terms ranging from 2 months to 7.17 years, some of which include the option to extend the lease, with the longest extension option being 6 years.

The Company does not include any of its renewal options when calculating its lease liability as the Company is not reasonably certain whether it will exercise these renewal options at this time. Rent expense for the three months

13

ended September 30, 2020 and 2019 was $1,719 and $1,599, respectively. Rent expense for the nine months ended September 30, 2020 and 2019 was $4,602 and $3,603, respectively.

The future minimum lease payments to be paid under noncancelable leases in effect at September 30, 2020, are as follows:

Operating

Year Ending December 31,

   

Leases

2020 (remaining 3 months)

 

1,839

2021

 

7,113

2022

7,018

2023

6,980

2024 and thereafter

27,667

Total lease payments

$

50,617

Less: imputed interest

(10,200)

Total

$

40,417

Supplemental information related to the Company’s leases for the nine months ended September 30, 2020 is as follows:

h

   

September 30, 2020

Weighted average remaining lease term

6.84

yrs

Weighted average discount rate

6.7

%

Nine Months Ended

   

September 30, 2020

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash outflow from operating leases

$

2,911

Nine Months Ended

   

September 30, 2020

Right of use assets obtained in exchange for new lease obligations:

Operating leases

$

407

Note 8 — Commitments and Contingencies

Minimum Guaranteed Royalties and Developer Commitments

The Company has entered into license and publishing agreements with various celebrities, athletes, sports and entertainment organizations, and other well-known brands and properties to develop and publish games for mobile devices. Pursuant to some of these agreements, the Company is required to make minimum guaranteed royalty payments regardless of revenue generated by the applicable game, which may not be dependent on any deliverables. The significant majority of these minimum guaranteed royalty payments are recoupable against future royalty obligations that would otherwise become payable, or in certain circumstances, where not recoupable, are capitalized and amortized over the lesser of (1) the estimated life of the title incorporating licensed content or (2) the term of the license agreement.

14

At September 30, 2020, future unpaid minimum guaranteed royalty commitments were as follows:

Future