- First quarter revenue up 18% year over
year to $95.9 million
- First quarter bookings grow 7% year
over year to $92.6 million
- Company raises 2019 full year bookings
guidance to a range of $445 million to $455 million
- Positive early results from worldwide
rollout of Design Home meta features
- WWE Universe, Diner DASH Adventures and
Disney Sorcerer’s Area all scheduled to globally launch in the May
to August time frame
Glu Mobile Inc. (NASDAQ: GLUU), a leading global developer and
publisher of free-to-play mobile games, today announced financial
results for its first quarter ended March 31, 2019. The company
also provided an outlook for its financial performance in the
second quarter and increased its financial guidance for the full
year 2019.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20190506005699/en/
Nick Earl, Chief Executive Officer, stated, “Glu had a strong
start to the year with solid bookings growth and EBITDA
profitability led by our three Growth Games. We are also excited to
bring three creative and entertaining games to the market in the
near term. WWE Universe, Diner DASH Adventures and Disney
Sorcerer’s Arena are on track to launch in the May to August time
frame. Looking ahead, we continue to bolster our pipeline with
three original IP launches slated for 2020. The increase in our
bookings guidance for 2019 reflects our confidence in our
business.”
First Quarter
2019 Financial Highlights:
Three Months Ended
in millions, except per share data
March 31, 2019
March 31, 2018 Revenue $95.9 $81.4 Gross margin 64.0%
62.3%
Net income/(loss)
$0.7 ($7.2)
Net income/(loss) per share – basic and
diluted
$0.00 ($0.05) Weighted-average common shares outstanding – basic
144.4 139.1 Weighted-average common shares outstanding – diluted
159.4 139.1 Cash used in operations excluding royalty advances
($2.4) ($12.4) Cash paid for royalty advances that are included in
cash used in operations ($0.5) ($4.1) Cash and cash equivalents
$92.7 $48.3 Additional Financial Information
Three Months Ended
Guidance provided for three months
endedMarch 31, 2019
March 31, 2019 March 31, 2018 Low High Bookings $92.6 $86.3 $88.0
$90.0 Platform commissions, excluding any impact of deferred
platform commissions * $24.0 $23.2 $23.1 $23.6 Royalties, excluding
any impact of deferred royalties* $6.0 $5.5 $4.4 $4.5 Hosting costs
$1.5 $1.8 $1.5 $1.5 User acquisition and marketing expenses $23.0
$22.2 $21.4 $21.7 Adjusted other operating expenses* $30.5 $28.0
$31.6 $31.7 Depreciation $1.1 $1.0 $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.
Eric R. Ludwig, Chief Operating Officer and Chief Financial
Officer, said, “This is an exciting time for Glu and the mobile
gaming industry at large. Over the next four months we are planning
to launch the first three titles under our new development process.
Our financial performance from our live Growth Games continues to
be solid and our bookings will continue to benefit as we stack our
new games on top of our Core Business throughout the year. We are
pleased about our performance in Q1, what’s to come in 2019 and
believe that we remain on track to reach our financial goals.”
Financial Outlook as of May 6,
2019:
Glu is providing its financial outlook for the second quarter of
2019 and updating guidance for the full year 2019 as follows:
Second Quarter 2019 Guidance:
in millions Low High Bookings $100.0 $102.0 Platform
commissions, excluding any impact of deferred platform commissions
$25.8 $26.3 Royalties, excluding any impact of deferred royalties
$6.5 $6.6 Hosting costs $1.4 $1.4 User acquisition and marketing
expenses $27.5 $27.8 Adjusted other operating expenses $32.8 $32.9
Depreciation $1.0 $1.0
Supplemental information:
Income tax ($0.2) ($0.2) Stock-based compensation $6.2 $6.2
Amortization of intangible assets $1.1 $1.1 Weighted-average common
shares outstanding – basic 145.7 145.7 Weighted-average common
shares outstanding – diluted 161.9 161.9
Full Year 2019 Guidance:
in millions Low High Bookings $445.0 $455.0 Platform
commissions, excluding any impact of deferred platform commissions
$115.6 $118.2 Royalties, excluding any impact of deferred royalties
$29.8 $30.5 Hosting costs $6.7 $6.8 User acquisition and marketing
expenses $115.3 $117.0 Adjusted other operating expenses $126.7
$129.6 Depreciation $4.1 $4.1 Supplemental information:
Income tax $0.4 $0.4 Stock-based compensation $26.8 $26.8
Amortization of intangible assets 4.4 4.4 Weighted-average common
shares outstanding – basic 146.2 146.2 Weighted-average common
shares outstanding – diluted 162.6 162.6 Cash and cash equivalent
balance At least $145.0M
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 # 2099286 to access the conference call at least five
minutes prior to the 2:00 p.m. Pacific Time start time. A live
webcast and replay of the call will also be available on the
investor relations portion of the company's website at
www.glu.com/investors. An audio replay will be available between
5:00 p.m. Pacific Time, May 6, 2019, and 8:59 p.m. Pacific Time,
May 13, 2019, by calling (855) 859-2056, or (404) 537-3406, with
conference ID # 2099286.
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
(https://communities.glu.com/home) 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 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 May 6, 2019” (“Second
Quarter 2019 Guidance” and “Full Year 2019 Guidance”), and the
statements that we expect our three new titles launching this year
to be globally released in the May to August time frame; we
continue to bolster our pipeline with three original IP launches
slated for 2020; our financial performance from our live Growth
Games continues to be solid and our bookings will continue to
benefit as we stack our new games on top of our Core Business
throughout the year; and that we believe that we remain on track to
reach our 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 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-K filed with the
Securities and Exchange Commission on February 28, 2019 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, DINER
DASH, TAP SPORTS, GLU, GLU MOBILE, and the 'g' character logo are
trademarks of Glu Mobile Inc.
Glu Mobile Inc. Condensed Consolidated
Statements of Operations (in thousands, except per share
data) (unaudited) Three Months
Ended March 31, March 31, 2019 2018
Revenue $ 95,885 $ 81,443
Cost of revenue: Platform commissions, royalties and
other 32,813 29,167 Impairment of prepaid royalties and minimum
guarantees 457 99 Impairment and amortization of intangible assets
1,252 1,467
Total cost of
revenue 34,522 30,733
Gross profit 61,363
50,710 Operating expenses: Research and
development 26,546 22,710 Sales and marketing 28,105 26,810 General
and administrative 6,635 7,890 Restructuring charge -
80
Total operating expenses
61,286 57,490
Income/(loss) from operations 77 (6,780
) Interest and other income / (expense), net
764 (251 ) Income/(loss) before
income taxes 841 (7,031 ) Income tax
benefit/(provision) (178 ) (175 )
Net
income/(loss) $ 663 $ (7,206
) Net income/(loss) per common share - basic
$ 0.00 $ (0.05 ) Net
income/(loss) per common share - diluted $ 0.00
$ (0.05 ) Weighted average common
shares outstanding - basic 144,445 139,108
Weighted average common shares outstanding - diluted
159,423 139,108 Glu Mobile
Inc. Consolidated Balance Sheets (in thousands)
(unaudited) March 31, December 31,
2019 2018 ASSETS Cash and cash
equivalents $ 92,673 $ 97,834 Accounts receivable, net 34,684
27,325 Prepaid royalties 9,284 8,520 Deferred royalties 3,813 4,410
Deferred platform commission fees 24,753 25,862 Restricted cash 110
110 Prepaid expenses and other current assets 5,463
6,940
Total current assets 170,780 171,001
Property and equipment, net 13,427 13,888 Operating lease
right of use assets 28,401 - Long-term prepaid royalties 18,044
1,667 Other long-term assets 3,644 2,505 Intangible assets, net
7,893 9,145 Goodwill 116,227 116,227
Total assets $ 358,416 $ 314,433
LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $
16,895 $ 10,480 Accrued liabilities 1,042 1,384 Accrued
compensation 7,593 17,896 Accrued royalties 14,316 14,139 Accrued
restructuring - 294 Short-term operating lease liabilities 3,997 -
Deferred revenue 82,440 85,736
Total
current liabilities 126,283 129,929 Long-term accrued royalties
18,021 1,649 Long-term operating lease liabilities 29,932 - Other
long-term liabilities 360 5,542
Total liabilities 174,596 137,120
Common stock 15 14 Additional paid-in capital 623,609
617,781 Accumulated other comprehensive income 16 1 Accumulated
deficit (439,820 ) (440,483 )
Total stockholders'
equity 183,820 177,313
Total
liabilities and stockholders' equity $ 358,416 $ 314,433
Glu
Mobile Inc. GAAP to Adjusted Results Reconciliation
(in thousands)
(unaudited)
Three Months Ended
December 31, March 31, June 30, September
30, December 31, March 31, 2017
2018 2018 2018 2018 2019 GAAP
platform commissions $ 20,787 $
21,729 $ 23,250 $ 25,650
$ 24,756 $ 25,148 Change in deferred
platform commissions 707 1,477
2,768 413 760 (1,109 )
Platform Commissions, excluding any impact of deferred platform
commissions $ 21,494 $
23,206 $ 26,018 $
26,063 $ 25,516 $
24,039 GAAP royalties (including impairment
of royalties and minimum guarantees) $ 31,311
$ 5,506 $ 6,631 $ 7,141
$ 6,784 $ 6,605 Change in deferred
royalties 355 15 767
(70 ) 122 (596 )
Royalties,
excluding any impact of deferred royalties $
31,666 $ 5,521 $
7,398 $ 7,071 $
6,906 $ 6,009 GAAP
other operating expenses (GAAP operating expenses excluding user
acquisition and marketing expenses) $ 34,516
$ 35,263 $ 34,929 $
36,797 $ 38,695 $ 38,314
Stock-based compensation (4,424 ) (6,308 ) (5,343 ) (5,879 ) (7,062
) (6,807 ) Transitional costs (336 ) (919 ) (13 ) - (598 )
(998
) Restructuring charge 21 (80 ) - (160 ) - - Litigation Costs
- - - (717 )
(1,217 )
(28
)
Adjusted other operating expenses $ 29,777
$ 27,956 $ 29,573
$ 30,041 $ 29,818
$ 30,481
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 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
termination of certain game related contracts. Glu recorded these
transitional costs as operating expenses when they were incurred.
Glu believes that these transitional costs affect comparability
from period to period and that investors benefit from a
supplemental non-GAAP financial measure that excludes these
expenses.
Litigation costs. Glu incurred legal costs related to the
complaint filed by the former Chief Executive Officer of Crowdstar
in the Superior Court of the State of California for the County of
Santa Clara against Glu, Time Warner Inc., Intel Capital
Corporation, Middlefield Ventures Inc., Rachel Lam, 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/20190506005699/en/
Investor Relations Contact:Bob Jones / Taylor
KrafchikEllipsisIR@glu.com646-776-0886
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