- Record revenue of $158.5 million up 48% year over year with net
income of $13.4 million
- Bookings grew 22% year over year to $147.3 million driven by a
13% increase in Growth Games
- Free cash flow of $31.5 million; cash of $318.1 million
supports acquisition strategy
- Raises bookings guidance to a range of $555.3 to $560.3 million
and expects significantly higher bottom-line results for full year
2020
- Introduced Table & Taste, a food and décor based game that
will be the third title launched by the Crowdstar studio
- Core business driven by Crowdstar and Glu Sports brands, along
with new titles and growth initiatives, positions company for
higher growth in 2021
Glu Mobile Inc. (NASDAQ:GLUU), a leading global developer and
publisher of mobile games, today announced financial results for
its third quarter ended September 30, 2020. The company also
provided an outlook for its financial performance in the fourth
quarter and raised its financial guidance for the full year
2020.
This press release features multimedia. View
the full release here:
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“We followed up a very strong second quarter with a
better-than-expected third quarter that saw year-over-year bookings
growth of 22% led by the continued strong performance of our Growth
Games,” said Nick Earl, Chief Executive Officer. “Our focus on
margin expansion led to significantly higher profitability driven
by greater productivity from our marketing spend. We announced the
title and genre of our new Crowdstar game, Table & Taste, which
will serve the culinary category and complement our Crowdstar brand
perfectly with a larger and more diverse addressable user base. We
anticipate a very strong finish to the year driven by our core
brands, Crowdstar and Glu Sports, as well as our growth
initiatives. Looking ahead, our continued expected growth, future
game launches, and strategic initiatives give us confidence as we
enter 2021 with significant, positive momentum.”
Third Quarter 2020 Financial
Highlights:
Three Months Ended in millions, except per share data September 30,
2020 September 30, 2019 Revenue
$158.5
$107.1
Gross margin
63.9%
64.7%
Net income/(loss)
$13.4
($5.1)
Net income/(loss) per share – basic
$0.08
($0.03)
Net income/(loss) per share – diluted
$0.07
($0.03)
Weighted-average common shares outstanding – basic
171.3
146.2
Weighted-average common shares outstanding – diluted
181.6
146.2
Cash generated from operations excluding royalty advances
33.4
$3.3
Cash paid for royalty advances that are included in cash used in
operations
(1.2)
($0.0)
Cash and cash equivalents
$318.1
$102.4
Additional Financial Information
Three Months Ended
Guidance provided for three
months ended September 30, 2020
September 30, 2020
September 30, 2019
Low
High
Bookings
$147.3
$120.4
$130.0
$135.0
Platform commissions, excluding any impact of deferred platform
commissions*
$39.7
$32.1
$35.6
$36.9
Royalties, excluding any impact of deferred royalties*
$9.9
$7.2
$9.0
$9.3
Hosting costs
$1.9
$2.0
$2.1
$2.3
User acquisition and marketing expenses
$34.5
$40.2
$36.9
$37.9
Adjusted other operating expenses*
$36.8
$30.7
$38.9
$39.1
Depreciation
$1.4
$1.0
$1.5
$1.5
* 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.
“Our strong third quarter financial results reflect continued
positive player engagement trends and higher monetization as our
business scales,” said Eric R. Ludwig, COO and CFO. “Our much
stronger than anticipated profitability and solid cash flow
generation was driven by strong bookings growth, more efficient and
productive UA investment, and operating expense reductions. Our
balance sheet remains strong and liquid with $318.1 million in
cash, supporting our acquisition growth strategy. Based on our
significant third quarter outperformance, we are raising our
assumptions on the top and bottom line for the fourth quarter and
the full year 2020.”
Financial Outlook as of November 5,
2020: Glu is providing its financial outlook for the
fourth quarter of 2020 and updating guidance for the full year 2020
as follows:
Fourth Quarter 2020 Guidance:
in millions Low High Bookings
$119.5
$124.5
Platform commissions, excluding any impact of deferred platform
commissions
$32.3
$36.6
Royalties, excluding any impact of deferred royalties
$7.6
$8.0
Hosting costs
$1.7
$1.8
User acquisition and marketing expenses
$19.0
$19.0
Adjusted other operating expenses
$38.4
$38.6
Depreciation
$1.5
$1.5
Supplemental information:
Income tax
$1.5
$1.5
Stock-based compensation
$8.8
$8.8
Amortization of intangible assets
$0.6
$0.6
Weighted-average common shares outstanding – basic
172.5
172.5
Weighted-average common shares outstanding – diluted
185.2
185.2
Full Year 2020 Guidance:
in millions Low High Bookings
$555.3
$560.3
Platform commissions, excluding any impact of deferred platform
commissions
$150.1
$154.4
Royalties, excluding any impact of deferred royalties
$37.9
$38.3
Hosting costs
$7.6
$7.7
User acquisition and marketing expenses
$146.1
$146.1
Adjusted other operating expenses
$148.0
$148.2
Depreciation
$5.6
$5.6
Supplemental information:
Income tax
$1.4
$1.4
Stock-based compensation
$31.8
$31.8
Amortization of intangible assets
$3.3
$3.3
Weighted-average common shares outstanding – basic
162.5
162.5
Weighted-average common shares outstanding – diluted
173.2
173.2
Cash and cash equivalent balance
At least $365.0
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 #7448906 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 5, 2020, and
8:59 p.m. Pacific Time, November 12, 2020, by calling (855)
859-2056, or (404) 537-3406, with conference ID #7448906.
Disclosure Using Social Media Channels Glu currently announces
material information to its investors using SEC filings, press
releases, public conference calls and webcasts. Glu uses these
channels as well as social media channels to announce information
about the company, games, employees and other issues. Given SEC
guidance regarding the use of social media channels to announce
material information to investors, Glu is notifying investors, the
media, its players and others interested in the company that in the
future, it might choose to communicate material information via
social media channels or, it is possible that information it
discloses through social media channels may be deemed to be
material. Therefore, Glu encourages investors, the media, players
and others interested in Glu to review the information posted on
the company forum (http://ggnbb.glu.com/forum.php) and the company
Facebook site (https://www.facebook.com/glumobile) and the company
twitter account (https://twitter.com/glumobile). Investors, the
media, players or other interested parties can subscribe to the
company blog and twitter feed at the addresses listed above. Any
updates to the list of social media channels Glu will use to
announce material information will be posted on the Investor
Relations page of the company's website at
www.glu.com/investors.
Use of Non-GAAP Financial Measures To supplement Glu's
unaudited condensed consolidated financial data presented in
accordance with GAAP, Glu uses certain non-GAAP measures of
financial performance. The presentation of these non-GAAP financial
measures is not intended to be considered in isolation from, as a
substitute for, or superior to, the financial information prepared
and presented in accordance with GAAP, and may be different from
non-GAAP financial measures used by other companies. In addition,
these non-GAAP measures have limitations in that they do not
reflect all of the amounts associated with Glu's results of
operations as determined in accordance with GAAP. The non-GAAP
financial measures used by Glu include historical and estimated
bookings, platform commissions, excluding any impact of deferred
platform commissions, royalties, excluding any impact of deferred
royalties, and adjusted operating expenses. These non-GAAP
financial measures exclude the following items from Glu's unaudited
consolidated statements of operations:
- Change in deferred platform commissions;
- Change in deferred royalties;
- Amortization of intangible assets;
- Stock-based compensation expense;
- Transitional costs;
- Litigation costs; and
- Restructuring 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 5, 2020” (“Fourth
Quarter 2020 Guidance,” “Full Year 2020 Guidance”), and the
statements that we expect significantly higher bottom-line results
for full year 2020; that Table & Taste will be the third title
launched by the Crowdstar studio and offers a strong growth
opportunity with a larger and more diverse addressable user base;
that the core business driven by the Crowdstar and Glu Sports
brands, along with new titles and growth initiatives, positions the
company for higher growth in 2021; that we anticipate a very strong
finish to the year driven by our core brands, Crowdstar and Glu
Sports, as well as our growth initiatives; that our continued
expected growth, future game launches, and strategic initiatives
give us confidence as we enter 2021 with significant, positive
momentum; and that our strong and liquid balance sheet supports our
acquisition growth strategy.
These forward-looking statements are subject to material risks
and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. Investors
should consider important risk factors, which include: the risk
that consumer demand for smartphones, tablets and next-generation
platforms does not grow as significantly as we anticipate or that
we will be unable to capitalize on any such growth; the risk that
we do not realize a sufficient return on our investment with
respect to our efforts to develop free-to-play games for
smartphones, tablets and next-generation platforms, the risk that
we will be unable build successful Growth Games that provide
predictable bookings and year over year growth; the risk that we
will not be able to maintain our good relationships with Apple and
Google; the risk that our development expenses for games for
smartphones, tablets and next-generation platforms are greater than
we anticipate; the risk that our recently and newly launched games
are less popular than anticipated or decline in popularity and
monetization rate more quickly than we anticipate; the risk that
our newly released games will be of a quality less than desired by
reviewers and consumers; the risk that the mobile games market,
particularly with respect to free-to-play gaming, is smaller than
anticipated; the risk that we may lose a key intellectual property
license; the risk that we are unable to recruit and retain
qualified personnel for developing and maintaining the games in our
product pipeline resulting in reduced monetization of a game,
product launch delays or games being eliminated from our pipeline
altogether; the risks related to the COVID-19 pandemic; and other
risks detailed under the caption "Risk Factors" in our Form 10-Q
filed with the Securities and Exchange Commission on August 7, 2020
and our other SEC filings. You can locate these reports through our
website at http://www.glu.com/investors. We are under no
obligation, and expressly disclaim any obligation, to update or
alter our forward-looking statements whether as a result of new
information, future events or otherwise.
About Glu Mobile Glu Mobile (NASDAQ:GLUU) is a leading
developer and publisher of mobile games. Founded in 2001, Glu is
headquartered in San Francisco with additional locations in Foster
City, Orlando, Toronto and Hyderabad. With a history spanning over
a decade, Glu’s culture is rooted in taking smart risks and
fostering creativity to deliver world-class interactive experiences
for our players. Glu’s diverse portfolio features top-grossing and
award-winning original and licensed IP titles including, Covet
Fashion, Deer Hunter, Design Home, Diner DASH Adventures, Disney
Sorcerer’s Arena, Kim Kardashian: Hollywood and MLB Tap Sports
Baseball available worldwide on various platforms including the App
Store and Google Play. For more information, visit www.glu.com or
follow Glu on Twitter, Facebook and Instagram.
Covet Fashion, Deer Hunter, Design Home, Diner DASH, Table &
Taste, Tap Sports, Glu and Glu Mobile 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 30, September 30, 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/(expense), 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) 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
Weighted average common shares outstanding - diluted
181,590
146,210
159,201
145,381
Glu Mobile Inc. Condensed Consolidated Balance Sheets
(in thousands) (unaudited) September 30,
December 31,
2020
2019
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 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
Common stock
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
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,
2019
2019
2019
2020
2020
2020
GAAP platform commissions
$
24,799
$
28,122
$
30,092
$
28,727
$
35,032
$
43,040
Change in deferred platform commissions
1,860
3,972
(1,345
)
(232
)
14,613
(3,371
)
Platform Commissions, excluding any impact of deferred platform
commissions
$
26,659
$
32,094
$
28,747
$
28,495
$
49,645
$
39,669
GAAP royalties (including impairment of royalties and
minimum guarantees)
$
6,245
$
6,643
$
6,285
$
6,381
$
9,617
$
11,467
Change in deferred royalties
1,071
592
(410
)
1
4,420
(1,551
)
Royalties, excluding any impact of deferred royalties
$
7,316
$
7,235
$
5,875
$
6,382
$
14,037
$
9,916
GAAP other operating expenses (GAAP operating expenses
excluding user acquisition and marketing expenses)
$
29,652
$
34,791
$
37,904
$
43,307
$
43,921
$
46,330
Stock-based compensation
(2,035
)
(4,080
)
(4,461
)
(6,382
)
(8,106
)
(8,523
)
Transitional costs
(5
)
(5
)
(1
)
(4
)
-
-
Litigation costs
416
-
-
-
-
-
Restructuring costs
-
-
-
-
-
(1,015
)
Adjusted other operating expenses
$
28,028
$
30,706
$
33,442
$
36,921
$
35,815
$
36,792
In addition to the reasons stated above, which are generally
applicable to each of the items Glu excludes from its non-GAAP
financial measures, Glu believes it is appropriate to exclude
certain items for the following reasons:
Change in Deferred Platform Commissions and Deferred Royalties.
At the date we sell certain premium games and micro-transactions,
Glu has an obligation to provide additional services and
incremental unspecified digital content in the future without an
additional fee. In these cases, we recognize any associated cost of
revenue, including platform commissions and royalties, on a
straight-line basis over the estimated life of the paying user.
Internally, Glu’s management excludes the impact of the changes in
deferred platform commissions and deferred royalties related to its
premium and free-to-play games in its non-GAAP financial measures
when evaluating the company’s operating performance, when planning,
forecasting and analyzing future periods, and when assessing the
performance of its management team. Glu believes that excluding the
impact of the changes in deferred platform commissions and deferred
royalties from its operating results is important to facilitate
comparisons to prior periods and to understand Glu’s
operations.
Amortization of Intangible Assets. When analyzing the operating
performance of an acquired entity or intangible asset, Glu's
management focuses on the total return provided by the investment
(i.e., operating profit generated from the acquired entity as
compared to the purchase price paid) without taking into
consideration any allocations made for accounting purposes. Because
the purchase price for an acquisition necessarily reflects the
accounting value assigned to intangible assets (including acquired
in-process technology and goodwill), when analyzing the operating
performance of an acquisition in subsequent periods, Glu's
management excludes the GAAP impact of acquired intangible assets
to its financial results. Glu believes that such an approach is
useful in understanding the long-term return provided by an
acquisition, and that investors benefit from a supplemental
non-GAAP financial measure that excludes the accounting expense
associated with acquired intangible assets.
Stock-Based Compensation Expense. Glu applies the fair value
provisions of Accounting Standard Codification Topic 718,
Compensation-Stock Compensation (“ASC 718”). ASC 718 requires the
recognition of compensation expense, using a fair-value based
method, for costs related to all share-based payments. Glu's
management team excludes stock-based compensation expense from its
short and long-term operating plans. In contrast, Glu's management
team is held accountable for cash-based compensation and such
amounts are included in its operating plans. Further, when
considering the impact of equity award grants, Glu places a greater
emphasis on overall stockholder dilution rather than the accounting
charges associated with such grants. Glu believes it is useful to
provide a non-GAAP financial measure that excludes stock-based
compensation in order to better understand the long-term
performance of its business.
Transitional Costs. GAAP requires expenses to be recognized for
various types of events associated with a business acquisition such
as legal, accounting and other deal related expenses. Transitional
costs also include divestiture related expenses and termination of
certain game related contracts. Glu believes that these
transitional costs affect comparability from period to period and
that investors benefit from a supplemental non-GAAP financial
measure that excludes these expenses.
Litigation Costs. Glu incurred legal costs related to the
complaint filed by the former Chief Executive Officer of Crowdstar
in the Superior Court of the State of California for the County of
Santa Clara against Glu, Time Warner Inc., Intel Capital
Corporation, Middlefield Ventures Inc., Rachel Lam, and Jose Blanc.
Glu believes that these legal costs have no direct correlation to
the operation of its ongoing core business and affect comparability
from period to period and, as a result, that investors benefit from
a supplemental non-GAAP financial measure that excludes these
expenses.
Restructuring Costs. Glu undertook restructuring activities in
the third quarter of 2020 and recorded restructuring charges due to
the termination of certain employees in its Canada and U.S.
offices. Glu recorded the severance costs as an operating expense
when it communicated the benefit arrangement to the employees and
no significant future services, other than a minimum retention
period, were required of the employees to earn the termination
benefits. 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201105006108/en/
Investor Relations: Bob Jones / Taylor Krafchik Ellipsis
IR@glu.com 646-776-0886
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