- Revenue increased to $99.3 million from
$81.1 million year-over-year
- Record bookings increased 17.5%
year-over-year and 1% sequentially to $100.7 million
- Company raises 2018 full year bookings
guidance to a range of $380.7 million to $382.7 million
- Design Home peaks at #5 top grossing
game on U.S. App Store for iPhone
Glu Mobile Inc. (NASDAQ:GLUU), a leading global developer and
publisher of free-to-play mobile games, today announced financial
results for its third quarter ended September 30, 2018. The company
also provided an outlook for its financial performance in the third
quarter and increased its financial guidance for the full year
2018.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20181106005870/en/
(Photo: Business Wire)
Third Quarter 2018 Financial
Highlights:
Three Months Ended in millions, except per
share data September 30, 2018 September 30, 2017
Revenue $99.3 $81.1 Gross margin 61.2% 60.9% Net loss
($0.3) ($11.7) Net loss per share – basic and diluted ($0.00)
($0.09) Weighted-average common shares outstanding – basic and
diluted 142.4 135.7 Cash generated from operations excluding
royalty advances $17.7 $3.0 Cash paid for royalty advances that are
included in cash generated from operations ($0.1) ($3.9) Cash and
cash equivalents $80.8 $62.9 Additional Financial
Information
Three Months Ended
Guidance provided for three months
ended September 30, 2018
September 30, 2018 September 30, 2017 Low High
Bookings $100.7 $85.7 $94.0 $96.0 Platform
commissions, excluding any impact of deferred platform commissions
* $26.1 $22.2 $23.9 $24.3 Royalties, excluding any impact of
deferred royalties* $7.1 $6.3 $6.9 $7.0 Hosting and other costs
$1.6 $1.8 $1.8 $1.8 User acquisition and marketing expenses $24.2
$25.7 $22.9 $23.2 Adjusted other operating expenses* $30.0 $30.7
$30.0 $30.2 Depreciation $1.0 $0.8 $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.
Nick Earl, Chief Executive Officer, stated, “Glu continued the
strong momentum established in the first half of the year as
bookings reached a record level in the third quarter with another
quarter of increased profitability on an adjusted EBITDA basis.
These better than expected results were driven by continued
strength in our Growth games and the improvements in our live
operations and merchandising."
“As we head into the end of the year, we believe we have made
significant strides in fostering creativity, simplifying operations
and focusing on profitable growth and free cash flow. Looking
further ahead, we believe the best approach to increasing
shareholder value is to continue to focus our resources on our live
operations while stacking bookings on top of our strong foundation
with new potential Growth titles,” said Nick Earl.
Eric R. Ludwig, Chief Operating Officer and Chief Financial
Officer, said, “Our strong top line marks our seventh consecutive
quarter of reporting improved year over year bookings growth. This
accomplishment reflects our decision to pivot away from celebrity
titles and focus our resources on Growth games that can grow
bookings year over year while generating sustainable profitability
and free cash flow. These improved financial results and our
increased outlook for the full year put us on track for a record
2018 in terms of bookings, adjusted EBITDA profitability and free
cash flow. We believe we remain on track to reach our long-term
financial goals and are excited about our future."
Financial Outlook as of November 6,
2018:
Glu is providing its financial outlook for the fourth quarter of
2018 and updating guidance for the full year 2018 as follows:
Fourth Quarter 2018 Guidance:
In millions Low High Bookings $94.3 $96.3
Platform commissions, excluding any impact of deferred platform
commissions $24.8 $25.2 Royalties, excluding any impact of deferred
royalties $5.8 $6.0 Hosting costs $1.7 $1.8 User acquisition and
marketing expenses $22.5 $22.6 Adjusted other operating expenses
$31.0 $31.2 Depreciation $1.0 $1.0 Supplemental information:
Income tax $0.1 $0.1 Stock-based compensation $7.0 $7.0
Amortization of intangible assets $1.4 $1.4 Weighted-average common
shares outstanding – basic 143.8 143.8 Weighted-average common
shares outstanding – diluted 156.9 156.9
Full Year 2018 Guidance:
In millions Low High Bookings $380.7 $382.7
Platform commissions, excluding any impact of deferred platform
commissions $100.1 $100.5 Royalties, excluding any impact of
deferred royalties $25.8 $26.0 Hosting costs $6.8 $6.9 User
acquisition and marketing expenses $94.2 $94.3 Adjusted other
operating expenses $118.5 $118.7 Depreciation $3.9 $3.9
Supplemental information: Income tax $0.6 $0.6 Stock-based
compensation $24.5 $24.5 Transitional costs $1.6 $1.6 Restructuring
costs $0.3 $0.3 Amortization of intangible assets $8.6 $8.6
Weighted-average common shares outstanding – basic 141.5 141.5
Weighted-average common shares outstanding – diluted 151.2 151.2
Cash and cash equivalents balance
At least $90.0
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 # 5897009 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, November 6, 2018, and 8:59 p.m. Pacific
Time, November 13, 2018, by calling (855) 859-2056, or (404)
537-3406, with conference ID # 5897009.
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;
- Non-cash warrant benefit/(expense)
- Impairment and amortization of
intangible assets;
- Stock-based compensation expense;
- Restructuring charges;
- 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 November 6, 2018”
(“Fourth Quarter 2018 Guidance” and “Full Year 2018 Guidance”), and
the statements that we believe we have made significant strides in
fostering creativity, simplifying operations and focusing on
profitable growth and free cash flow; we believe the best approach
to increasing shareholder value is to continue to focus our
resources on our live operations while stacking bookings on top of
our strong foundation with new potential Growth titles; these
improved financial results and our increased outlook for the full
year put us on track for a record 2018 in terms of bookings,
adjusted EBITDA profitability and free cash flow; and we believe we
remain on track to reach our long-term financial goals. 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 titles 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; and other risks detailed under the caption "Risk
Factors" in our Form 10-Q filed with the Securities and Exchange
Commission on August 8, 2018 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 Bay
Area studios in Burlingame and San Mateo, and international
locations in 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, Cooking
DASH, Covet Fashion, Deer Hunter, Design Home, MLB Tap Sports
Baseball and Kim Kardashian: Hollywood 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.
COOKING DASH, COVET FASHION, DEER HUNTER, DESIGN HOME, 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 Nine Months Ended September
September September September
2018 2017 2018
2017 Revenue $
99,285 $ 81,148 $ 270,921
$ 206,615 Cost of revenue: Platform
commissions, royalties and other 34,384 28,898 95,937 74,519
Impairment of prepaid royalties and minimum guarantees - 464 99
1,256 Impairment and amortization of intangible assets 4,167
2,363 7,102 8,796
Total cost of revenue 38,551
31,725 103,138
84,571 Gross profit 60,734
49,423 167,783
122,044 Operating expenses:
Research and development 23,839 22,004 69,381 71,025 Sales and
marketing 28,874 29,776 85,425 78,015 General and administrative
8,095 8,698 23,593 25,873 Restructuring charge 160
1,402 240 6,040
Total
operating expenses 60,968
61,880 178,639
180,953 Loss from operations
(234 ) (12,457 ) (10,856
) (58,909 ) Interest and other
income / (expense), net 96 (271 )
(521 ) (340 ) Loss before
income taxes (138 ) (12,728 )
(11,377 ) (59,249 ) Income tax
benefit/(provision) (118 ) 1,057 (500 )
1,246
Net loss $ (256 )
$ (11,671 ) $ (11,877 )
$ (58,003 ) Net loss per common
share - basic and diluted $ (0.00 )
$ (0.09 ) $ (0.08 )
$ (0.43 ) Weighted average common
shares outstanding - basic and diluted 142,378
135,726 140,685 135,047 Glu Mobile
Inc. Consolidated Balance Sheets (in
thousands) (unaudited) September 30, December
31, 2018 2017
ASSETS Cash and cash equivalents $ 80,781 $ 63,764 Accounts
receivable, net 38,008 34,673 Prepaid royalties 7,020 2,994
Deferred royalties 4,288 4,364 Deferred platform commission fees
25,103 20,446 Restricted Cash 110 602 Prepaid expenses and other
current assets 8,128 10,733
Total
current assets 163,438 137,576 Property and equipment,
net 12,788 14,630 Long-term prepaid royalties 3,822 9,302 Other
long-term assets 2,598 3,299 Intangible assets, net 11,162 18,264
Goodwill 116,227 116,227
Total
assets $ 310,035 $ 299,298
LIABILITIES
AND STOCKHOLDERS' EQUITY Accounts payable $ 16,951 $ 21,203
Accrued liabilities 1,703 1,154 Accrued compensation 13,189 20,603
Accrued royalties 13,651 11,782 Accrued restructuring 548 759
Deferred revenue 83,202 77,403
Total
current liabilities 129,244 132,904 Long-term accrued royalties
3,597 7,300 Other long-term liabilities 5,289
5,234
Total liabilities 138,130
145,438 Common stock 14 14 Additional paid-in capital
611,053 589,962 Accumulated other comprehensive income (loss) (1 )
(6 ) Accumulated deficit (439,161 ) (436,110 )
Total stockholders' equity 171,905
153,860
Total liabilities and stockholders' equity $
310,035 $ 299,298
Glu Mobile Inc.
GAAP to Adjusted
Results Reconciliation (in thousands) (unaudited)
Three Months Ended June 30, September 30,
December 31, March 31, June 30, September
30, 2017 2017
2017 2018 2018
2018 GAAP platform commissions
$ 17,595 $ 21,063 $
20,787 $ 21,729 $ 23,250
$ 25,650 Change in deferred platform commissions
3,583 1,107 707
1,477 2,768 413
Platform Commissions, excluding any impact of deferred platform
commissions $ 21,178 $
22,170 $ 21,494 $
23,206 $ 26,018 $
26,063 GAAP royalties (including impairment
of royalties and minimum guarantees) $ 5,468
$ 6,473 $ 31,311 $ 5,506
$ 6,631 $ 7,141 Change in deferred
royalties 1,032 (153 ) 355
15 767 (70 )
Royalties, excluding any impact of deferred royalties
$ 6,500 $ 6,320 $
31,666 $ 5,521 $
7,398 $ 7,071
GAAP other operating expenses (GAAP operating expenses excluding
user acquisition and marketing expenses) $ 37,341
$ 36,138 $ 34,516 $
35,263 $ 34,929 $ 36,797
Stock-based compensation (3,523 ) (3,575 ) (4,424 ) (6,308 ) (5,343
) (5,879 ) Transitional costs (1,924 ) (506 ) (336 ) (919 ) (13 ) -
Restructuring charge (926 ) (1,402 ) 21 (80 ) - (160 ) Litigation
Costs - - - -
- (717 )
Adjusted other
operating expenses $ 30,968 $
30,655 $ 29,777 $
27,956 $ 29,573 $
30,041
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.
Non-cash Warrant (benefit)/expense. Glu recorded non-cash
charges related to the warrants to purchase shares of common stock
issued to certain brand holders as part of third party licensing,
development and publishing arrangements. These charges were
recorded in cost of revenue. When evaluating the performance of its
consolidated results, Glu does not consider non-cash warrant
charges as it places a greater emphasis on overall stockholder
dilution rather than the accounting charges associated with 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.
Impairment and 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.
Restructuring Charges. Glu undertook restructuring activities in
the first, second and third quarters of 2017 and recorded cash
restructuring charges due to the termination of certain employees
in Asia and certain 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. Additionally, Glu
recorded restructuring charges upon exiting portions of certain
facilities in Asia and the U.S. in 2017 and the first quarter of
2018. 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.
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 incurred
various costs related to the divestiture of its Moscow studio and
the acquisition and integration of Crowdstar and Dairy Free Games
into Glu’s operations. Glu recorded these 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.
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, Jose Blanc and
additional yet-to-be-named defendants. 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/20181106005870/en/
Investor Relations:Bob Jones / Taylor
KrafchikEllipsisIR@glu.com646-776-0886
Glu Mobile (NASDAQ:GLUU)
Historical Stock Chart
From Mar 2024 to Apr 2024
Glu Mobile (NASDAQ:GLUU)
Historical Stock Chart
From Apr 2023 to Apr 2024