- Fourth quarter revenue up 19% year over
year to $95.6 million; full year 2018 revenue up 28% to $366.6
million
- Fourth quarter bookings grow 18% year
over year to $98.2 million; full year 2018 bookings reach record
$384.6 million, up 20% year over year
- Company raises 2019 full year bookings
guidance to a range of $435.0 million to $445.0 million, including
partial year contributions from titles in beta: Diner DASH Town and
WWE: Universe
- Disney/Pixar title entering beta late
Q1; no contribution currently included in updated 2019
guidance
- Announces next generation version of
our successful Deer Hunter franchise
Glu Mobile Inc. (NASDAQ: GLUU), a leading global developer and
publisher of free-to-play mobile games, today announced financial
results for its fourth quarter and full year ended December 31,
2018. The company also provided an outlook for its financial
performance in the first quarter and increased its financial
guidance for the full year 2019.
This press release features multimedia. View
the full release here:
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Nick Earl, Chief Executive Officer, stated, “Our strong fourth
quarter performance capped off a great year for Glu and our
shareholders. Bookings for the full year grew 20% on the strength
of our core business driven by the successful execution of our
Growth Games strategy. The top line growth we delivered drove
increased profitability on an adjusted EBITDA basis each quarter
throughout 2018 on a year over year basis, reflecting the scale in
our operating model.
Mr. Earl added, “We enter 2019 with a profitable and expanding
core business and a strong pipeline of original IP games that we
plan to launch this year and beyond. We are excited to announce
that one of the games in development is the next generation of our
highly successful Deer Hunter franchise. This new game will combine
a proven game mechanic with a deeper meta layer that we expect our
fans will love. We believe we are well positioned to build on the
strong momentum from 2018 into this year and beyond.”
Fourth Quarter
2018 Financial Highlights:
Three Months Ended in millions, except per share data
December 31, 2018 December 31, 2017 Revenue $95.6
$80.2 Gross margin 63.3% 29.5% Net loss ($1.3) ($39.6) Net loss per
share – basic and diluted ($0.01) ($0.29) Weighted-average common
shares outstanding – basic and diluted 143.5 137.7 Cash generated
from operations excluding royalty advances $19.2 $8.5 Cash paid for
royalty advances that are included in cash generated from
operations ($0.4) ($3.4) Cash and cash equivalents $97.8 $63.8
Additional Financial Information
Three Months Ended
Guidance provided for three months endedDecember
31, 2018
December 31, 2018 December 31, 2017 Low High Bookings
$98.2 $83.2 $94.3 $96.3 Platform commissions,
excluding any impact of deferred platform commissions * $25.5 $21.5
$24.8 $25.2 Royalties, excluding any impact of deferred royalties*
$6.9 $31.7 $5.8 $6.0 Hosting costs $1.6 $2.3 $1.7 $1.8 User
acquisition and marketing expenses $23.4 $21.8 $22.5 $22.6 Adjusted
other operating expenses* $29.8 $29.7 $31.0 $31.2 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.
Full Year 2018
Financial Highlights:
Twelve Months Ended in millions, except per share
data December 31, 2018 December 31, 2017 Revenue
$366.6 $286.8 Gross margin 62.3% 50.8% Net loss ($13.2) ($97.6) Net
loss per share – basic and diluted ($0.09) ($0.72) Weighted-average
common shares outstanding – basic and diluted 141.4 135.7 Cash
generated from operations excluding royalty advances $37.9 ($3.7)
Cash paid for royalty advances that are included in cash generated
from operations ($5.7) ($24.4) Cash and cash equivalents $97.8
$63.8
Additional Financial Information
Twelve Months Ended December 31, 2018 December 31, 2017
Bookings $384.6 $320.4 Platform commissions, excluding any
impact of deferred platform commissions * $100.8 $82.7 Royalties,
excluding any impact of deferred royalties* $26.9 $49.8 Hosting
costs $6.7 $7.6 User acquisition and marketing expenses $95.1 $88.8
Adjusted other operating expenses* $117.3 $123.0 Depreciation $3.9
$3.2
* 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.
Eric R. Ludwig, Chief Operating Officer and Chief Financial
Officer, said, “Fourth quarter bookings growth of 18% on a year
over year basis was better than expected driven by continued strong
performance from our Growth Games. Our strong top line performance
enabled us to generate $28.9 million of free cash flow for the full
year 2018. The execution of our Growth Games strategy in 2018
allowed us to deliver stackable bookings and strong adjusted EBITDA
profitability. We have revised our annual guidance for 2019 upward
to reflect the anticipated bookings contributions from the two
games that are currently in beta and excludes contribution from our
Disney/Pixar title that will enter beta in late Q1.”
Financial Outlook as of February 4,
2019:
Glu is providing its financial outlook for the first quarter of
2019 and updating guidance for the full year 2019 as follows:
First Quarter 2019 Guidance:
in millions Low High
Bookings $88.0 $90.0 Platform commissions, excluding any impact of
deferred platform commissions $23.1 $23.6 Royalties, excluding any
impact of deferred royalties $4.4 $4.5 Hosting costs $1.5 $1.5 User
acquisition and marketing expenses $21.4 $21.7 Adjusted other
operating expenses $31.6 $31.7 Depreciation $1.0 $1.0
Supplemental information: Income tax $0.2 $0.2 Stock-based
compensation $6.9 $6.9 Amortization of intangible assets $1.3 $1.3
Weighted-average common shares outstanding – basic 145.4 145.4
Weighted-average common shares outstanding – diluted 159.0 159.0
Full Year 2019 Guidance
in millions Low High Bookings $435.0 $445.0 Platform
commissions, excluding any impact of deferred platform commissions
$113.0 $116.0 Royalties, excluding any impact of deferred royalties
$27.0 $28.0 Hosting costs $6.5 $7.0 User acquisition and marketing
expenses $102.0 $103.0 Adjusted other operating expenses $137.5
$138.0 Depreciation $4.0 $4.0 Supplemental information:
Income tax $0.4 $0.4 Stock-based compensation $27.7 $27.7
Amortization of intangible assets 4.4 4.4 Weighted-average common
shares outstanding – basic 148.5 148.5 Weighted-average common
shares outstanding – diluted 162.6 162.6 Cash and cash equivalent
balance At least $150.0M
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 # 6480013 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, February 4, 2019, and 8:59 p.m. Pacific
Time, February 11, 2019, by calling (855) 859-2056, or (404)
537-3406, with conference ID # 6480013.
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 February 4, 2019”
(“First Quarter 2019 Guidance” and “Full Year 2019 Guidance”), and
the statements that we expect our Disney/Pixar title to enter beta
by late Q1; we have a strong pipeline of original IP games that we
plan to launch this year and beyond; we plan to release a next
generation version of our Deer Hunter franchise; and that we
believe we are well positioned to build on the strong momentum from
2018 into this year and beyond. 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; and other risks detailed
under the caption "Risk Factors" in our Form 10-Q filed with the
Securities and Exchange Commission on November 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
additional locations in San Mateo, 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
Twelve Months Ended December December
December December 2018 2017 2018
2017 Revenue $ 95,640 $
80,212 $ 366,561 $ 286,827
Cost of revenue: Platform commissions, royalties and
other 32,508 28,980 128,445 103,499 Impairment of prepaid royalties
and minimum guarantees 612 26,067 711 27,323 Impairment and
amortization of intangible assets 2,017 1,535
9,119 10,331
Total cost of
revenue 35,137 56,582
138,275 141,153 Gross
profit 60,503 23,630
228,286 145,674
Operating expenses: Research and development 25,553 21,395
94,934 92,420 Sales and marketing 28,435 26,341 113,860 104,356
General and administrative 8,074 8,552 31,667 34,425 Restructuring
charge - (21 ) 240 6,019
Total operating expenses 62,062
56,267 240,701
237,220 Loss from operations
(1,559 ) (32,637 ) (12,415
) (91,546 ) Interest and other
income / (expense), net 286 (6,510 )
(235 ) (6,850 ) Loss before
income taxes (1,273 ) (39,147 )
(12,650 ) (98,396 ) Income tax
benefit/(provision) (49 ) (420 ) (549 )
826
Net loss $ (1,322 ) $
(39,567 ) $ (13,199 ) $
(97,570 ) Net loss per common share - basic
and diluted $ (0.01 ) $
(0.29 ) $ (0.09 ) $
(0.72 ) Weighted average common shares
outstanding - basic and diluted 143,527 137,697
141,402 135,715 Glu Mobile Inc.
Consolidated Balance Sheets (in thousands)
(unaudited) December 31 December 31,
2018 2017 ASSETS Cash and cash
equivalents $ 97,834 $ 63,764 Accounts receivable, net 27,325
34,673 Prepaid royalties 8,520 2,994 Deferred royalties 4,410 4,364
Deferred platform commission fees 25,862 20,446 Restricted Cash 110
602 Prepaid expenses and other current assets 6,940
10,733
Total current assets 171,001 137,576
Property and equipment, net 13,888 14,630 Long-term prepaid
royalties 1,667 9,302 Other long-term assets 2,505 3,299 Intangible
assets, net 9,145 18,264 Goodwill 116,227
116,227
Total assets $ 314,433 $ 299,298
LIABILITIES AND STOCKHOLDERS' EQUITY Accounts
payable $ 10,480 $ 21,203 Accrued liabilities 1,384 1,154 Accrued
compensation 17,896 20,603 Accrued royalties 14,139 11,782 Accrued
restructuring 294 759 Deferred revenue 85,736
77,403
Total current liabilities 129,929 132,904
Long-term accrued royalties 1,649 7,300 Other long-term liabilities
5,542 5,234
Total liabilities
137,120 145,438 Common stock 14
14 Additional paid-in capital 617,781 589,962 Accumulated other
comprehensive income (loss) 1 (6 ) Accumulated deficit
(440,483 ) (436,110 )
Total stockholders' equity
177,313 153,860
Total liabilities
and stockholders' equity $ 314,433 $ 299,298
Glu Mobile Inc.
GAAP to Adjusted Results Reconciliation (in
thousands) (unaudited)
Three Months Ended
September 30, December 31, March 31, June
30, September 30, December 31, 2017
2017 2018 2018 2018 2018 GAAP
platform commissions $ 21,063 $
20,787 $ 21,729 $ 23,250
$ 25,650 $ 24,756 Change in deferred
platform commissions 1,107 707
1,477 2,768 413
760
Platform Commissions, excluding any impact of
deferred platform commissions $ 22,170
$ 21,494 $ 23,206
$ 26,018 $ 26,063
$ 25,516 GAAP royalties
(including impairment of royalties and minimum guarantees)
$ 6,473 $ 31,311 $ 5,506
$ 6,631 $ 7,141 $ 6,784
Change in deferred royalties (153 ) 355
15 767 (70 ) 122
Royalties, excluding any impact of deferred royalties
$ 6,320 $ 31,666 $
5,521 $ 7,398 $
7,071 $ 6,906
GAAP other operating expenses (GAAP operating expenses excluding
user acquisition and marketing expenses) $ 36,138
$ 34,516 $ 35,263 $
34,929 $ 36,797 $ 38,695
Stock-based compensation (3,575 ) (4,424 ) (6,308 ) (5,343 ) (5,879
) (7,062 ) Transitional costs (506 ) (336 ) (919 ) (13 ) - (598 )
Restructuring charge (1,402 ) 21 (80 ) - (160 ) - Litigation Costs
- - - -
(717 ) (1,217 )
Adjusted other
operating expenses $ 30,655 $
29,777 $ 27,956 $
29,573 $ 30,041
$ 29,818
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,
termination of certain game related contracts 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/20190204005750/en/
Investor Relations:Bob Jones / Taylor
KrafchikEllipsisIR@glu.com646-776-0886
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