Glu Reports First Quarter 2017 Financial Results

Glu Mobile Inc. (GLUU 2,74 +0,12 +4,58%), a leading global developer and publisher of free-to-play mobile games, today announced financial results for its first quarter ended March 31, 2017. In addition, the company provided its initial outlook for its financial performance in the second quarter and an updated outlook for the full year 2017.

  • Revenue grows 4% year over year to $56.8 million
  • Bookings of $69.0 million exceed guidance mid-point by 28%
  • MLB Tap Sports Baseball 2017 peaks at #14 top grossing game on U.S. App Store for iPhone
  • Company raises 2017 full year bookings guidance to a range of $280.0 to $290.0 million

Nick Earl, Chief Executive Officer, stated, “Glu is off to a terrific start in 2017. Our better than expected bookings performance in the first quarter was driven by the continued strength of Design Home and the impact from optimization efforts made in our growth and evergreen titles. This strong first quarter financial performance gives us the confidence to significantly raise our bookings outlook for the year. We are focused on becoming a more stable and profitable growth company over time while continuing to make smart investments in titles
that we believe have the potential to become blockbuster hits.”

First Quarter 2017 Financial Highlights:

Three Months Ended
March 31,
$ in thousands, except per share data20172016
Revenue$56,788$54,528
Bookings$69,037$53,998
Gross margin56%58%
Net loss($22,764)($8,550)
Net loss per share – basic and diluted($0.17)($0.07)
Weighted-average common shares outstanding – basic and diluted134,336129,171
Cash and cash equivalents$73,150$159,283
Cash used in operations($29,015)($11,790)
Cash paid for royalty advances that are included in cash used in
operations
($14,152)($9,801)

 

Eric R. Ludwig, Chief Operating Officer and Chief Financial Officer, said, “The strategic investments we’ve made in our growth and evergreen titles generated improved bookings in the first quarter leading to improved bottom line results. In the second quarter, we intend to
significantly increase our strategic investment in user acquisition for Design Home to leverage the game’s momentum and seek to maximize its bookings potential over the remainder of the year and into 2018. The increase in our full year bookings guidance demonstrates our confidence in our strategy to invest in live operations for our growth and
evergreen games combined with the anticipated performance of our upcoming titles.”

Recent Developments and Strategic Initiatives:

  • Launched MLB Tap Sports Baseball 2017: In March 2017, Glu announced a partnership with MLB, the Major League Baseball Players Association, the Major League Baseball Players Alumni Association and Chicago Cubs third baseman Kris Bryant, and launched
    the latest title in its successful Tap Sports Baseball franchise, which has delivered consistent year over year growth. The title was also the #1 free game in the U.S. App Store for iPhone for six days.
  • Announced Hiring of New Creative Leader, Mike Olsen: In January 2017, the company announced that Mike Olsen had joined the company as Senior Vice President of Studios. Mr. Olsen has extensive background in creative game design, studio management and live game operations. He most recently led Electronics Arts’ Capital Games studio. This hire
    was in line with our strategy of hiring proven creative leaders and empowering them to build blue ocean growth titles in highly creative environments.
  • Re-Imagined Covet Fashion: In January 2017, the company’s mobile styling platform, Covet Fashion, revealed a re-imagined look and feel featuring virtual models that embrace all forms of beauty – inclusive of new sizes, shapes, heights, skin colors and facial features.

Financial Outlook as of May 3, 2017:

Glu is providing its financial outlook for the second quarter of 2017 and updating guidance for the full year 2017 as follows:

Second Quarter 2017 Guidance:

In millionsLowHigh
Bookings$71.0$73.0
Platform commissions, excluding any impact of deferred platform
commissions
$17.9$18.3
Royalties, excluding any impact of deferred royalties$5.6$5.8
Hosting and other costs$1.7$1.7
Adjusted operating expenses$58.7$59.1
Depreciation$0.9$0.9
Income tax$0.2$0.2
Stock-based compensation$3.6$3.6
Transitional costs$1.3$1.3
Restructuring costs$0.3$0.3
Amortization of intangible assets$3.2$3.2
Weighted-average common shares outstanding – basic and diluted135.2135.2

Full Year 2017 Guidance:

In millionsLowHigh
Bookings$280.0$290.0
Platform commissions, excluding any impact of deferred platform
commissions
$70.7$73.2
Royalties, excluding any impact of deferred royalties$22.5$23.3
Hosting and other costs$7.2$7.5
Adjusted operating expenses$203.4$207.8
Depreciation$3.8$3.8
Income tax$0.5$0.5
Stock-based compensation$14.8$14.8
Transitional costs$2.9$2.9
Restructuring costs$4.0$4.0
Amortization of intangible assets$10.3$10.3
Weighted-average common shares outstanding – basic and diluted135.5135.5
Cash and short-term investmentsAt least $60.0At least $60.0

 

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.