[May 03, 2016] |
|
Glu Reports First Quarter 2016 Financial Results
Glu Mobile Inc. (NASDAQ:GLUU), a leading global developer and publisher
of free-to-play games for smartphone and tablet devices, today announced
financial results for its first quarter ended March 31, 2016.
"Our first quarter guidance outperformance was primarily due to the
strong Kendall and Kylie launch as well as the ongoing success of Kim
Kardashian: Hollywood and Cooking Dash," stated Niccolo de
Masi, Chairman and Chief Executive Officer of Glu. "We are delighted
with the traction of our Tap Sports Baseball 2016 title which is
currently the top grossing baseball game on the U.S. App Store for
iPhone and has positioned us to grow revenues from this franchise for
the third year in a row."
De Masi continues, "During the quarter, our new studio leadership team
implemented a number of operational improvements which we expect to
enhance our product delivery as well as to reduce the run-rate revenue
required for Glu to breakeven. The combination of the new studio label
system, along with a strong line-up of new titles, including Britney
Spears: American Dream and Gordon Ramsay: Dash, positions Glu
for growth during the second half of 2016 and beyond."
First Quarter 2016 Financial Highlights:
-
Revenue: Total GAAP revenue was $54.5 million in the first
quarter of 2016 compared to $69.5 million in the first quarter of
2015. Total non-GAAP revenue was $54.0 million in the first quarter of
2016, compared to $62.4 million in the first quarter of 2015. Non-GAAP
revenue excludes changes in deferred revenue and litigation settlement
proceeds.
-
Gross Margin: GAAP gross margin was 58% in the first quarter of
2016 compared to 59% in the first quarter of 2015. Non-GAAP gross
margin was 61% in the first quarter of 2016 compared to 63% in the
first quarter of 2015. Non-GAAP gross margin excludes changes in
deferred revenue and litigation settlement proceeds, change in
deferred cost of revenue, amortization of intangible assets and
non-cash warrant expense.
-
GAAP Operating Income/(Loss): GAAP operating loss was $(9.2)
million in the first quarter of 2016 compared to income of $2.5
million in the first quarter of 2015.
-
Non-GAAP Operating Income/(Loss): Non-GAAP operating loss was
$(4.4) million in the first quarter of 2016 compared to income of $3.2
million during the first quarter of 2015. Non-GAAP operating
income/(loss) excludes changes in deferred revenue and deferred cost
of revenue, amortization of intangible assets, non-cash warrant
expense, stock-based compensation expense, restructuring charges,
transitional costs and litigation costs and settlement proceeds.
-
Adjusted EBITDA: Adjusted EBITDA was a $(3.8) million loss for
the first quarter of 2016 compared to a $3.9 million profit during the
first quarter of 2015. Adjusted EBITDA is defined as non-GAAP
operating income/(loss) excluding depreciation.
-
GAAP Net Income/(Loss) and EPS: GAAP net loss was $(8.6)
million for the first quarter of 2016 compared to net income of $1.1
million for the first quarter of 2015. GAAP EPS loss was $(0.07) for
the first quarter of 2016, based on 129.2 million weighted-average
basic and diluted shares outstanding, compared to a GAAP diluted EPS
of $0.01 for the first quarter of 2015, based on 107.9 million
weighted-average diluted shares outstanding.
-
Non-GAAP Net Income/(Loss) and EPS: Non-GAAP net loss was
$(4.2) million for the first quarter of 2016 compared to income of
$2.1 million for the first quarter of 2015. Non-GAAP EPS loss was
$(0.03) for the first quarter of 2016 based on 129.2 million
weighted-average basic and diluted shares outstanding, compared to
non-GAAP diluted EPS of $0.02 for the first quarter of 2015 based on
107.9 million weighted-average diluted shares outstanding.
-
Cash and Cash Flows: As of March 31, 2016, Glu had cash and
cash equivalents of $159.3 million and no debt. Cash flows used
from operations were $(11.8) million for the first quarter of 2016
compared to $(5.1) million used for the first quarter of 2015.
A reconciliation of GAAP to non-GAAP results has been provided in the
financial statement tables included in this press release. An
explanation of these measures is also included below under the heading
"Use of Non-GAAP Financial Measures."
Recent Developments and Strategic Initiatives:
-
In April, we implemented a restructuring plan designed to align our
operations with evolving business needs and reduce fixed operating
costs.
-
In March, we announced the availability of Tap Sports Baseball 2016.
-
In February, we announced the availability of Kendall and Kylie.
"We were pleased with our first quarter execution as we exceeded
expectations across all key metrics," stated Eric R. Ludwig, Chief
Operating Officer and Chief Financial Officer. "The combination of Glu's
strong balance sheet, robust line up of new titles and reduced fixed
cost structure positions the company to enhance stockholder value
longer-term."
Business Outlook as of May 3, 2016:
The following forward-looking statements reflect expectations as of May
3, 2016. Results may be materially different and are affected by many
factors, such as: consumer demand for mobile entertainment and
specifically Glu's products; consumer demand for smartphones, tablets
and next-generation platforms; our ability to improve the monetization
of our titles and continue to successfully launch and update new games;
development delays on Glu's products; continued uncertainty in the
global economic environment; competition in the industry; storefront
featuring; changes in foreign exchange rates; Glu's effective tax rate
and other factors detailed in this release and in Glu's SEC filings.
Second Quarter Expectations - Quarter Ending June 30, 2016:
-
Non-GAAP revenue is expected to be between $46.0 million and $49.0
million.
-
Non-GAAP gross margin is expected to be approximately 61.2%.
-
Non-GAAP operating expenses are expected to be between $35.7 million
and $36.1 million.
-
Adjusted EBITDA, defined as non-GAAP operating income/(loss) excluding
depreciation of approximately $0.6 million, is expected to range from
a loss of $(5.5) million to $(7.0) million.
-
Income tax is expected to be an expense of approximately $0.6 million.
-
Non-GAAP net loss is expected to be between $(6.7) million and $(8.2)
million, or between $(0.05) and $(0.06) per weighted-average basic
share outstanding, which excludes approximately $3.2 million of
anticipated stock-based compensation expense, approximately $2.0
million of restructuring charges, $2.3 million for amortization of
intangibles and any change in fair value of strategic investments.
-
Weighted-average common shares outstanding are expected to be
approximately 131.1 million basic and 131.5 million diluted.
2016 Expectations - Full Year Ending December 31, 2016:
-
Non-GAAP revenue is expected to be between $215.0 million and $235.0
million.
-
Non-GAAP gross margin is expected to be approximately 58.7%.
-
Adjusted EBITDA is expected to range from a loss of $(12.0) million to
$(18.0) million.
-
Non-GAAP net loss is expected to be between a loss of $(14.9) million
and $(20.9) million, or between $(0.11) and $(0.16) per
weighted-average basic share outstanding, which excludes approximately
$14.0 million of anticipated stock-based compensation expense,
approximately $2.6 million of restructuring charges, $10.1 million for
amortization of intangibles and any change in fair value of strategic
investments.
-
Weighted-average common shares outstanding are expected to be
approximately 131.8 million basic and 132.8 million diluted.
-
We expect to have cash and short-term investments at December 31, 2016
of at least $135.0 million with no debt.
Quarterly Conference Call
Glu will discuss its quarterly results via teleconference today at 1:30
p.m. Pacific Time (4:30 p.m. Eastern Time). Please dial (866) 582-8907,
or if outside the U.S., (760) 298-5046, with conference ID # 88381392 to
access the conference call at least five minutes prior to the 1:30 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 4:30 p.m. Pacific Time, May 3,
2016, and 8:59 p.m. Pacific Time, May 10, 2016, by calling (855)
859-2056, or (404) 537-3406, with conference ID # 88381392.
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),
the company twitter account (https://twitter.com/glumobile)
and Mr. de Masi's twitter account (https://twitter.com/niccolodemasi). Investors,
the media, players or other interested parties can subscribe to the
company blog and twitter feed and Mr. de Masi's 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 non-GAAP revenue, non-GAAP smartphone revenue,
non-GAAP cost of revenue, non-GAAP operating expenses, non-GAAP gross
profit, non-GAAP gross margin, non-GAAP operating income/(loss),
non-GAAP net income/(loss) and non-GAAP basic and diluted net
income/(loss) per share. These non-GAAP financial measures exclude the
following items from Glu's unaudited consolidated statements of
operations:
-
Change in deferred revenue and deferred cost of revenue;
-
Amortization of intangible assets;
-
Non-cash warrant expense;
-
Stock-based compensation expense;
-
Restructuring charges;
-
Litigation settlement proceeds and costs;
-
Transitional costs;
-
Change in fair value of strategic investments; and
-
Foreign currency exchange gains and losses primarily related to the
revaluation of assets and liabilities.
In addition, Glu has included in this release "Adjusted EBITDA" figures
which are used to evaluate Glu's operating performance. Adjusted EBITDA
is defined as non-GAAP operating income/(loss) excluding depreciation.
Adjusted EBITDA margin is defined as Adjusted EBITDA divided by non-GAAP
revenue.
Glu may consider whether significant non-recurring 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 "Business Outlook as of May 3, 2016" ("Second Quarter
Expectations - Quarter Ending June 30, 2016" and "2016 Expectations -
Full Year Ending December 31, 2016"), and the statements regarding that
Tap Sports Baseball 2016 is poised to be the top grossing baseball game
on U.S. App Store for iPhone for third year in a row and has positioned
us to grow revenues from this franchise for the third year in a row; we
expect the operational improvements implemented by our new studio
leadership team to enhance our product delivery as well as to reduce the
run-rate revenue required for Glu to breakeven; the combination of the
new studio label system, along with a strong line-up of new titles,
including Britney Spears: American Dream and Gordon Ramsay: Dash,
positions Glu for growth during the second half of 2016 and beyond; and
the combination of Glu's strong balance sheet, robust line up of new
titles and reduced fixed cost structure positions the company to enhance
stockholder value longer-term. 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 risks identified under "Business Outlook as of May 3,
2016"; the risk that Glu does not realize the anticipated strategic
benefits from our celebrity partnerships; the risk that the number of
social followers of our celebrity partners does not correlate to strong
performance for our celebrity titles; 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 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 March
4, 2016 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 global developer and publisher of
free-to-play games for smartphone and tablet devices. Glu is focused on
creating compelling original IP games such as CONTRACT KILLER,
COOKING DASH, DEER HUNTER, DINER DASH, DINO HUNTER: DEADLY SHORES,
ETERNITY WARRIORS, FRONTLINE COMMANDO, RACING RIVALS, TAP SPORTS
BASEBALL, and TAP SPORTS FOOTBALL, and branded IP games
including KENDALL & KYLIE, KIM KARDASHIAN: HOLLYWOOD, MISSION
IMPOSSIBLE: ROGUE NATION, and SNIPER X WITH JASON STATHAM on
the App Store, Google Play, Amazon Appstore, Facebook, Mac App Store,
and Windows Phone. Glu's unique technology platform enables its titles
to be accessible to a broad audience of consumers globally. Founded in
2001, Glu is headquartered in San Francisco with U.S. offices outside
Seattle, San Mateo, Portland, and Long Beach, and international
locations in Canada, China, India, Japan, Korea, and Russia. Consumers
can find high-quality entertainment wherever they see the 'g' character
logo or at www.glu.com.
For live updates, please follow Glu via Twitter at www.twitter.com/glumobile
or become a Glu fan at www.facebook.com/glumobile.
CONTRACT KILLER, COOKING DASH, DEER HUNTER, DINER DASH, DINO HUNTER:
DEADLY SHORES, ETERNITY WARRIORS, FRONTLINE COMMANDO, RACING RIVALS, TAP
SPORTS BASEBALL, TAP SPORTS FOOTBALL, SNIPER X, GLU, GLU MOBILE, and
the 'g' character logo are trademarks of Glu Mobile Inc.
|
|
|
|
|
Glu Mobile Inc.
|
|
|
|
|
Consolidated Balance Sheets
|
|
|
|
|
(in thousands)
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
2016
|
|
2015
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
159,283
|
|
|
$
|
180,542
|
|
Accounts receivable, net
|
|
|
16,745
|
|
|
|
17,956
|
|
Prepaid royalties
|
|
|
30,412
|
|
|
|
23,715
|
|
Prepaid expenses and other current assets
|
|
|
15,205
|
|
|
|
14,841
|
|
Total current assets
|
|
|
221,645
|
|
|
|
237,054
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
5,282
|
|
|
|
5,447
|
|
Restricted cash
|
|
|
1,498
|
|
|
|
1,498
|
|
Long-term prepaid royalties
|
|
|
46,017
|
|
|
|
46,944
|
|
Other long-term assets
|
|
|
9,317
|
|
|
|
1,386
|
|
Intangible assets, net
|
|
|
20,442
|
|
|
|
22,767
|
|
Goodwill
|
|
|
87,899
|
|
|
|
87,890
|
|
Total assets
|
|
$
|
392,100
|
|
|
$
|
402,986
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
Accounts payable
|
|
$
|
9,055
|
|
|
$
|
9,386
|
|
Accrued liabilities
|
|
|
1,752
|
|
|
|
1,996
|
|
Accrued compensation
|
|
|
4,504
|
|
|
|
7,100
|
|
Accrued royalties and license fees
|
|
|
14,140
|
|
|
|
21,032
|
|
Deferred revenue
|
|
|
30,750
|
|
|
|
31,112
|
|
Total current liabilities
|
|
|
60,201
|
|
|
|
70,626
|
|
Long-term accrued royalties
|
|
|
28,193
|
|
|
|
24,347
|
|
Other long-term liabilities
|
|
|
1,397
|
|
|
|
1,585
|
|
Total liabilities
|
|
|
89,791
|
|
|
|
96,558
|
|
|
|
|
|
|
Common stock
|
|
|
13
|
|
|
|
13
|
|
Additional paid-in capital
|
|
|
562,373
|
|
|
|
557,748
|
|
Accumulated other comprehensive loss
|
|
|
(279
|
)
|
|
|
(85
|
)
|
Accumulated deficit
|
|
|
(259,798
|
)
|
|
|
(251,248
|
)
|
Stockholders' equity
|
|
|
302,309
|
|
|
|
306,428
|
|
Total liabilities and stockholders' equity
|
|
$
|
392,100
|
|
|
$
|
402,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Glu Mobile Inc.
|
|
|
|
|
Condensed Consolidated Statements of Operations
|
|
|
|
|
(in thousands, except per share data)
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
March 31,
|
|
|
2016
|
|
2015
|
|
|
|
|
|
Revenue
|
|
$
|
54,528
|
|
|
$
|
69,470
|
|
|
|
|
|
|
Cost of revenue:
|
|
|
|
|
Platform commissions, royalties and other
|
|
|
20,363
|
|
|
|
26,310
|
|
Amortization of intangible assets
|
|
|
2,324
|
|
|
|
2,434
|
|
Total cost of revenue
|
|
|
22,687
|
|
|
|
28,744
|
|
Gross profit
|
|
|
31,841
|
|
|
|
40,726
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
Research and development
|
|
|
20,312
|
|
|
|
18,243
|
|
Sales and marketing
|
|
|
12,624
|
|
|
|
12,438
|
|
General and administrative
|
|
|
7,984
|
|
|
|
7,406
|
|
Amortization of intangible assets
|
|
|
-
|
|
|
|
127
|
|
Restructuring charge
|
|
|
106
|
|
|
|
-
|
|
Total operating expenses
|
|
|
41,026
|
|
|
|
38,214
|
|
|
|
|
|
|
Income/(loss) from operations
|
|
|
(9,185
|
)
|
|
|
2,512
|
|
|
|
|
|
|
Interest and other income/(expense), net:
|
|
|
|
|
Interest income
|
|
|
21
|
|
|
|
6
|
|
Other income/(expense)
|
|
|
448
|
|
|
|
(290
|
)
|
Interest and other income/(expense), net
|
|
|
469
|
|
|
|
(284
|
)
|
|
|
|
|
|
Income/(loss) before income taxes
|
|
|
(8,716
|
)
|
|
|
2,228
|
|
Income tax benefit/(provision)
|
|
|
166
|
|
|
|
(1,104
|
)
|
Net income/(loss)
|
|
$
|
(8,550
|
)
|
|
$
|
1,124
|
|
|
|
|
|
|
Net income/(loss) per share:
|
|
|
|
|
Basic
|
|
$
|
(0.07
|
)
|
|
$
|
0.01
|
|
Diluted
|
|
$
|
(0.07
|
)
|
|
$
|
0.01
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
Basic
|
|
|
129,171
|
|
|
|
103,869
|
|
Diluted
|
|
|
129,171
|
|
|
|
107,851
|
|
|
|
|
|
|
Stock-based compensation expense included in:
|
|
|
|
|
Research and development
|
|
$
|
1,194
|
|
|
$
|
760
|
|
Sales and marketing
|
|
|
292
|
|
|
|
218
|
|
General and administrative
|
|
|
2,059
|
|
|
|
1,151
|
|
Total stock-based compensation expense
|
|
$
|
3,545
|
|
|
$
|
2,129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Glu Mobile Inc.
|
|
GAAP to Non-GAAP Reconciliation
|
|
(in thousands, except per share data)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
March 31,
|
|
|
|
2015
|
|
2015
|
|
2015
|
|
2015
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP revenue
|
|
$
|
69,470
|
|
|
$
|
56,150
|
|
|
$
|
63,250
|
|
|
$
|
61,030
|
|
|
$
|
54,528
|
|
|
Change in deferred revenue and litigation settlement proceeds
|
|
|
(7,023
|
)
|
|
|
1,329
|
|
|
|
1,174
|
|
|
|
(3,135
|
)
|
|
|
(530
|
)
|
|
Non-GAAP revenue
|
|
|
62,447
|
|
|
|
57,479
|
|
|
|
64,424
|
|
|
|
57,895
|
|
|
|
53,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross profit
|
|
|
40,726
|
|
|
|
32,396
|
|
|
|
33,445
|
|
|
|
35,596
|
|
|
|
31,841
|
|
|
Change in deferred revenue and litigation settlement proceeds
|
|
|
(7,023
|
)
|
|
|
1,329
|
|
|
|
1,174
|
|
|
|
(3,135
|
)
|
|
|
(530
|
)
|
|
Amortization of intangible assets
|
|
|
2,434
|
|
|
|
2,434
|
|
|
|
2,360
|
|
|
|
2,325
|
|
|
|
2,324
|
|
|
Non-cash warrant benefit /(expense)
|
|
|
93
|
|
|
|
135
|
|
|
|
1,896
|
|
|
|
(116
|
)
|
|
|
9
|
|
|
Change in deferred platform commissions and royalty expense
|
|
|
2,819
|
|
|
|
(321
|
)
|
|
|
(780
|
)
|
|
|
1,497
|
|
|
|
(676
|
)
|
|
Non-GAAP gross profit
|
|
|
39,049
|
|
|
|
35,973
|
|
|
|
38,095
|
|
|
|
36,167
|
|
|
|
32,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating expense
|
|
|
38,214
|
|
|
|
38,540
|
|
|
|
33,056
|
|
|
|
38,654
|
|
|
|
41,026
|
|
|
Stock-based compensation
|
|
|
(2,129
|
)
|
|
|
(3,032
|
)
|
|
|
(3,056
|
)
|
|
|
(3,469
|
)
|
|
|
(3,545
|
)
|
|
Amortization of intangible assets
|
|
|
(127
|
)
|
|
|
(32
|
)
|
|
|
(31
|
)
|
|
|
(11
|
)
|
|
|
-
|
|
|
Litigation costs and settlement proceeds
|
|
|
-
|
|
|
|
(476
|
)
|
|
|
390
|
|
|
|
-
|
|
|
|
-
|
|
|
Transitional costs
|
|
|
(72
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Restructuring charge
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,075
|
)
|
|
|
(106
|
)
|
|
Non-GAAP operating expense
|
|
|
35,886
|
|
|
|
35,000
|
|
|
|
30,359
|
|
|
|
34,099
|
|
|
|
37,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating income/(loss)
|
|
|
2,512
|
|
|
|
(6,144
|
)
|
|
|
389
|
|
|
|
(3,058
|
)
|
|
|
(9,185
|
)
|
|
Change in deferred revenue and litigation settlement proceeds
|
|
|
(7,023
|
)
|
|
|
1,329
|
|
|
|
1,174
|
|
|
|
(3,135
|
)
|
|
|
(530
|
)
|
|
Non-GAAP cost of revenue adjustment
|
|
|
5,346
|
|
|
|
2,248
|
|
|
|
3,476
|
|
|
|
3,706
|
|
|
|
1,657
|
|
|
Stock-based compensation
|
|
|
2,129
|
|
|
|
3,032
|
|
|
|
3,056
|
|
|
|
3,469
|
|
|
|
3,545
|
|
|
Amortization of intangible assets
|
|
|
127
|
|
|
|
32
|
|
|
|
31
|
|
|
|
11
|
|
|
|
-
|
|
|
Transitional costs
|
|
|
72
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Litigation costs and settlement proceeds
|
|
|
-
|
|
|
|
476
|
|
|
|
(390
|
)
|
|
|
-
|
|
|
|
-
|
|
|
Restructuring charge
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,075
|
|
|
|
106
|
|
|
Non-GAAP operating income/(loss)
|
|
|
3,163
|
|
|
|
973
|
|
|
|
7,736
|
|
|
|
2,068
|
|
|
|
(4,407
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income/(loss)
|
|
|
1,124
|
|
|
|
(5,509
|
)
|
|
|
158
|
|
|
|
(2,958
|
)
|
|
|
(8,550
|
)
|
|
Change in deferred revenue and litigation settlement proceeds
|
|
|
(7,023
|
)
|
|
|
1,329
|
|
|
|
1,174
|
|
|
|
(3,135
|
)
|
|
|
(530
|
)
|
|
Non-GAAP cost of revenue adjustment
|
|
|
5,346
|
|
|
|
2,248
|
|
|
|
3,476
|
|
|
|
3,706
|
|
|
|
1,657
|
|
|
Non-GAAP operating expense adjustment
|
|
|
2,328
|
|
|
|
3,540
|
|
|
|
2,697
|
|
|
|
4,555
|
|
|
|
3,651
|
|
|
Change in fair value of strategic investments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(300
|
)
|
|
Foreign currency exchange (gain)/loss
|
|
|
290
|
|
|
|
186
|
|
|
|
167
|
|
|
|
149
|
|
|
|
(148
|
)
|
|
Non-GAAP net income/(loss)
|
|
$
|
2,065
|
|
|
$
|
1,794
|
|
|
$
|
7,672
|
|
|
$
|
2,317
|
|
|
$
|
(4,220
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of net income/(loss) and net income/(loss) per
share:
|
|
|
|
|
|
|
|
|
|
|
GAAP net income/(loss) per share - basic
|
|
$
|
0.01
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.00
|
|
|
$
|
(0.02
|
)
|
|
$
|
(0.07
|
)
|
|
GAAP net income/(loss) per share - diluted
|
|
$
|
0.01
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.00
|
|
|
$
|
(0.02
|
)
|
|
$
|
(0.07
|
)
|
|
Non-GAAP net income/(loss) per share - basic
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.06
|
|
|
$
|
0.02
|
|
|
$
|
(0.03
|
)
|
|
Non-GAAP net income/(loss) per share - diluted
|
|
$
|
0.02
|
|
|
$
|
0.01
|
|
|
$
|
0.06
|
|
|
$
|
0.02
|
|
|
$
|
(0.03
|
)
|
|
Shares used in computing Non-GAAP basic net income/(loss) per share
|
|
|
103,869
|
|
|
|
116,169
|
|
|
|
127,287
|
|
|
|
127,775
|
|
|
|
129,171
|
|
|
Shares used in computing Non-GAAP diluted net income/(loss) per share
|
|
|
107,851
|
|
|
|
122,538
|
|
|
|
131,486
|
|
|
|
129,381
|
|
|
|
129,171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating expense break-out:
|
|
|
|
|
|
|
|
|
|
|
GAAP research and development expense
|
|
$
|
18,243
|
|
|
$
|
18,308
|
|
|
$
|
16,304
|
|
|
$
|
20,001
|
|
|
$
|
20,312
|
|
|
Stock-based compensation
|
|
|
(760
|
)
|
|
|
(836
|
)
|
|
|
(868
|
)
|
|
|
(1,099
|
)
|
|
|
(1,194
|
)
|
|
Non-GAAP research and development expense
|
|
|
17,483
|
|
|
|
17,472
|
|
|
|
15,436
|
|
|
|
18,902
|
|
|
|
19,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP sales and marketing expense
|
|
|
12,438
|
|
|
|
12,771
|
|
|
|
12,302
|
|
|
|
10,729
|
|
|
|
12,624
|
|
|
Stock-based compensation
|
|
|
(218
|
)
|
|
|
(282
|
)
|
|
|
(277
|
)
|
|
|
(305
|
)
|
|
|
(292
|
)
|
|
Non-GAAP sales and marketing expense
|
|
|
12,220
|
|
|
|
12,489
|
|
|
|
12,025
|
|
|
|
10,424
|
|
|
|
12,332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP general & administrative expense
|
|
|
7,406
|
|
|
|
7,429
|
|
|
|
4,419
|
|
|
|
6,838
|
|
|
|
7,984
|
|
|
Transitional costs
|
|
|
(72
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Stock-based compensation
|
|
|
(1,151
|
)
|
|
|
(1,914
|
)
|
|
|
(1,911
|
)
|
|
|
(2,065
|
)
|
|
|
(2,059
|
)
|
|
Litigation costs
|
|
|
-
|
|
|
|
(476
|
)
|
|
|
390
|
|
|
|
-
|
|
|
|
-
|
|
|
Non-GAAP general and administrative expense
|
|
$
|
6,183
|
|
|
$
|
5,039
|
|
|
$
|
2,898
|
|
|
$
|
4,773
|
|
|
$
|
5,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Glu Mobile Inc.
|
|
Non-GAAP Adjusted EBITDA
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
For the Three Months Ended
|
|
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
March 31,
|
|
|
|
2015
|
|
2015
|
|
2015
|
|
2015
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income/(loss)
|
|
$
|
1,124
|
|
|
$
|
(5,509
|
)
|
|
$
|
158
|
|
|
$
|
(2,958
|
)
|
|
$
|
(8,550
|
)
|
|
Change in deferred revenue and litigation settlement proceeds
|
|
|
(7,023
|
)
|
|
|
1,329
|
|
|
|
1,174
|
|
|
|
(3,135
|
)
|
|
|
(530
|
)
|
|
Change in deferred platform commissions and royalty expense
|
|
|
2,819
|
|
|
|
(321
|
)
|
|
|
(780
|
)
|
|
|
1,497
|
|
|
|
(676
|
)
|
|
Non-cash warrant expense
|
|
|
93
|
|
|
|
135
|
|
|
|
1,896
|
|
|
|
(116
|
)
|
|
|
9
|
|
|
Amortization of intangible assets
|
|
|
2,561
|
|
|
|
2,466
|
|
|
|
2,391
|
|
|
|
2,336
|
|
|
|
2,324
|
|
|
Depreciation
|
|
|
706
|
|
|
|
732
|
|
|
|
718
|
|
|
|
706
|
|
|
|
656
|
|
|
Stock-based compensation
|
|
|
2,129
|
|
|
|
3,032
|
|
|
|
3,056
|
|
|
|
3,469
|
|
|
|
3,545
|
|
|
Transitional costs
|
|
|
72
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Litigation costs and settlement proceeds
|
|
|
-
|
|
|
|
476
|
|
|
|
(390
|
)
|
|
|
-
|
|
|
|
-
|
|
|
Restructuring charge
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,075
|
|
|
|
106
|
|
|
Foreign currency exchange (gain)/loss
|
|
|
290
|
|
|
|
186
|
|
|
|
167
|
|
|
|
149
|
|
|
|
(148
|
)
|
|
Change in fair value of strategic investments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(300
|
)
|
|
Interest and other expense
|
|
|
(6
|
)
|
|
|
(12
|
)
|
|
|
(15
|
)
|
|
|
(15
|
)
|
|
|
(21
|
)
|
|
Income tax provision/(benefit)
|
|
|
1,104
|
|
|
|
(809
|
)
|
|
|
79
|
|
|
|
(234
|
)
|
|
|
(166
|
)
|
|
Total Non-GAAP Adjusted EBITDA
|
|
$
|
3,869
|
|
|
$
|
1,705
|
|
|
$
|
8,454
|
|
|
$
|
2,774
|
|
|
$
|
(3,751
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Revenue and Deferred Cost of Revenue. 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 the revenue and 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 revenue and deferred cost of
revenue 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 revenue and deferred
cost of revenue 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, 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.
Non-cash Warrant Expense. In the first quarter of 2016 and the
full year of 2015, Glu recorded a non-cash charge related to the vesting
of warrants to purchase shares of common stock issued to brand holders
as part of third party licensing, development and publishing
arrangements. These charges were computed using the Black-Scholes
valuation model and were recorded in cost of revenue. When evaluating
the performance of its consolidated results, Glu does not consider
non-cash warrant expense as it places a greater emphasis on overall
stockholder dilution rather than the accounting charges associated with
the vesting of 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.
Stock-Based Compensation Expense. The Company applies the fair
value provisions of ASC 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 quarter of 2016 and the fourth quarter of 2015 and recorded
cash restructuring charges due to the termination of certain employees
in its China 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. 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.
Litigation Settlement Proceeds and Costs. These proceeds and
expenses consist primarily of one-time settlement payments received
from, and legal fees incurred in connection with, intellectual property
infringement matters. The Company has treated the settlement proceeds as
a multiple element arrangement and has allocated a significant portion
of the proceeds to revenue as deemed royalty revenue for the settlement
of past infringement. The residual proceeds have been allocated to
contra general and administrative expenses and offset legal fees
incurred. The Company excludes these proceeds and costs from its
non-GAAP measures as these proceeds and costs are isolated,
unpredictable and not expected to recur regularly, and the Company
believes that these non-recurring proceeds and costs have no direct
correlation to the operation of the Company's ongoing core 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. Glu has incurred
various costs related to the acquisition and integration of PlayFirst
and Cie Games into Glu's operations. Glu recorded these non-recurring
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.
Change in Fair Value of Strategic Investments. From time
to time, the Company makes strategic investments. The Company's
management excludes the impact of any losses and gains on such
investments when evaluating the Company's operating performance, when
planning, forecasting and analyzing future periods, and when assessing
the performance of its management team. In addition, the Company
believes that excluding the impact of such losses and gains on these
investments from its operating results is important to facilitate
comparisons to prior periods.
Foreign Currency Exchange Gains and Losses. Foreign currency
exchange gains and losses represent the net gain or loss that Glu has
recorded for the impact of currency exchange rate movements on cash and
other assets and liabilities denominated in foreign currencies related
to the revaluation of assets and liabilities. Accordingly, foreign
currency exchange gains and losses are generally unpredictable and can
cause Glu's reported results to vary significantly. Due to the unusual
magnitude of these gains and losses, and the fact that Glu has not
engaged in hedging or taken other actions to reduce the likelihood of
incurring a sizeable net gain or loss in future periods, Glu excludes
foreign exchange gains and losses for comparability purposes. Glu
believes that these gains and losses do not reflect its ongoing
operations and that investors benefit from a supplemental non-GAAP
financial measure that excludes these items, enabling investors to
compare Glu's core operating results in different periods without this
variability. Foreign exchange gains/(losses) recognized during 2015 and
the first quarter of 2016 were as follows (in thousands):
|
|
|
March 31, 2015
|
|
$
|
(290
|
)
|
June 30, 2015
|
|
|
(186
|
)
|
September 30, 2015
|
|
|
(167
|
)
|
December 31, 2015
|
|
|
(149
|
)
|
FY 2015
|
|
$
|
(792
|
)
|
|
|
|
March 31, 2016
|
|
$
|
148
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160503007007/en/
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