UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT TO
SECTION
13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of Report: August
4, 2015
(Date of earliest event reported)
Glu
Mobile Inc.
(Exact
Name of Registrant as Specified in Its Charter)
Delaware
(State
or Other Jurisdiction of Incorporation)
001-33368
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91-2143667
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(Commission File Number)
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(IRS Employer Identification No.)
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500 Howard Street, Suite 300
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San Francisco, California
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94105
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(415) 800-6100
(Registrant’s Telephone Number, Including Area
Code)
Not Applicable
(Former name or former address, if
changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions (see General Instruction A.2. below):
⃞
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
⃞
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
⃞
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
⃞
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On August 4, 2015, Glu issued a press release announcing its financial
results for the second quarter and six months ended June 30, 2015. A
copy of the press release is attached as Exhibit 99.01 to this report.
In addition, on August 4, 2015, Glu made available on its corporate
website at www.glu.com/investors supplemental slides that were
referenced during the Company’s earnings call to discuss its financial
results for the second quarter and six months ended June 30, 2015. A
copy of such supplemental slides is attached as Exhibit 99.02 to this
report.
The information in this Item 2.02, including Exhibits 99.01 and 99.02 to
this report, shall not be deemed to be “filed” for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, or
otherwise subject to the liabilities of that section or Sections 11 and
12(a)(2) of the Securities Act of 1933, as amended. The information
contained in this Item 2.02 and in the accompanying Exhibits 99.01 and
99.02 shall not be incorporated by reference into any registration
statement or other document filed by Glu with the Securities and
Exchange Commission, whether made before or after the date of this
report, regardless of any general incorporation language in such filing
(or any reference to this Current Report on Form 8-K generally), except
as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
99.01 Press release issued by Glu regarding its financial results
for the second quarter and six months ended June 30, 2015, dated August
4, 2015.
99.02 Supplemental slides made available by Glu on its corporate
website on August 4, 2015.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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Glu Mobile Inc.
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Date:
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August 4, 2015
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By: /s/ Scott J. Leichtner
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Name: Scott J. Leichtner
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Title: Vice President and General Counsel
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EXHIBIT INDEX
Number
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Description
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99.01
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Press release issued by Glu regarding its financial results for
the second quarter and six months ended June 30, 2015, dated
August 4, 2015.
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99.02
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Supplemental slides made available by Glu on its corporate website
on August 4, 2015.
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3
Exhibit 99.01
Glu
Reports Second Quarter 2015 Financial Results
-
Q2
non-GAAP revenue of $57.5 million, up 64% year-over-year and
significantly exceeding guidance
-
Q2 GAAP
revenue of $56.2 million
-
Q2
Adjusted EBITDA of $1.7 million – significantly exceeding guidance
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Signs
exclusive partnerships with Nicki Minaj and Jason Statham
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Total
social following of celebrity titles expected to be live by end of
2016 approaching 650 million*
SAN FRANCISCO--(BUSINESS WIRE)--August 4, 2015--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 second quarter ended June 30, 2015.
“Glu’s strong execution during the second quarter resulted in
better-than-expected revenue and Adjusted EBITDA,” stated Niccolo de
Masi, Chairman and Chief Executive Officer of Glu. “During the quarter,
our results were underpinned by the continued strength of Kim
Kardashian: Hollywood, Racing Rivals, Deer Hunter 2014 and Contract
Killer: Sniper. We were also pleased with the robust performance of Tap
Sports Baseball 2015 and Cooking Dash 2016 out of the gates.”
de Masi continued, “Our signing of Nicki Minaj and Jason Statham adds
arguably the world’s leading rapper, and our first male celebrity to our
portfolio. Minaj’s social following is growing rapidly and has reached
over 100 million* making her one of the 10 most followed women in the
world on social media channels. Statham has over 50 million* social
followers and is as such one of the 10 most followed men in the world on
social media channels. These partnerships take the total social
following of celebrity titles that we expect to be live by the end of
2016 to nearly 650 million*.”
Mr. de Masi closed, “The combination of ongoing traction with our
catalog titles and innovative new title launches positions Glu for
record annual and second half revenue. As laid out during our May 14,
2015 Analyst Day, we are confident of Glu’s ability to drive double
digit year-over-year revenue growth over the next five years.”
Second Quarter 2015 Financial Highlights:
-
Revenue: Total GAAP revenue was $56.2 million in the second
quarter of 2015 compared to $40.9 million in the second quarter of
2014. Total non-GAAP revenue was $57.5 million in the second quarter
of 2015, an increase of 64% compared to $35.0 million in the second
quarter of 2014. Non-GAAP revenue excludes changes in deferred revenue.
-
Gross Margin: GAAP gross margin was 58% in the second quarter
of 2015 compared to 69% in the second quarter of 2014. Non-GAAP gross
margin was 63% in the second quarter of 2015 compared to 69% in the
second quarter of 2014. Non-GAAP gross margin excludes changes in
deferred revenue, change in deferred cost of revenue, amortization of
intangible assets and non-cash warrant expense.
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GAAP Operating Loss: GAAP operating loss was $(6.1) million in
the second quarter of 2015 compared to a loss of $(3.7) million in the
second quarter of 2014.
-
Non-GAAP Operating Income/(Loss): Non-GAAP operating income was
$1.0 million in the second quarter of 2015 compared to a loss of
$(1.5) million during the second quarter of 2014. 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,
change in fair value of the Blammo earnout, transitional costs and
litigation costs.
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Adjusted EBITDA: Adjusted EBITDA was $1.7 million for the
second quarter of 2015, compared to a loss of $(0.9) million during
the second quarter of 2014. Adjusted EBITDA is defined as non-GAAP
operating income/(loss) less depreciation.
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GAAP Net Loss and EPS: GAAP net loss was $(5.5) million for the
second quarter of 2015 compared to a GAAP net loss of $(3.8) million
for the second quarter of 2014. GAAP EPS loss was $(0.05) for the
second quarter of 2015, based on 116.2 million weighted-average shares
outstanding, compared to a GAAP EPS loss of $(0.04) for the second
quarter of 2014, based on 85.5 million weighted-average shares
outstanding.
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Non-GAAP Net Income/(Loss) and EPS: Non-GAAP net income was
$1.8 million for the second quarter of 2015 compared to a loss of
$(1.6) million for the second quarter of 2014. Non-GAAP diluted EPS
was $0.01 for the second quarter of 2015 based on 122.5 million
weighted-average diluted shares outstanding, compared to non-GAAP
diluted EPS loss of $(0.02) for the second quarter of 2014 based on
85.5 million weighted-average shares outstanding.
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Cash and Cash Flows: As of June 30, 2015, Glu had cash and cash
equivalents of $189.7 million, an increase of $124.0 million from the
end of the prior quarter primarily due to the net proceeds we received
during the quarter from the sale of an aggregate of 21.0 million of
our shares of common stock to Red River Investment Limited, a
wholly-owned subsidiary of Tencent Holdings Limited, the world’s
largest gaming company. The company continues to have no debt.
Cash
flows used in operations were $(1.2) million for the second quarter of
2015 compared to $5.0 million cash generated from operations for the
second quarter of 2014.
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:
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In August 2015, we announced an exclusive, multi-year mobile game
partnership with Nicki Minaj.
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In August 2015, we announced an exclusive, multi-year mobile game
partnership with our first male celebrity, Jason Statham.
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In August 2015, we settled our litigation with Hothead Games in which
they have agreed to make payments to Glu, including ongoing payments,
the details of which are confidential.
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In July 2015, we announced the availability of Mission Impossible –
Rogue Nation.
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In June 2015, we completed the second tranche of the strategic
investment from a subsidiary of Tencent Holdings Limited.
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In June 2015, we announced the availability of Cooking Dash 2016 and
Terminator Genisys: Revolution.
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In May 2015, we announced the launch of a television commercial and
YouTube campaign in support of Kim Kardashian: Hollywood.
“We are pleased with our second quarter results, highlighted by our
ability to exceed expectations across all key operating metrics,” stated
Eric R. Ludwig, Chief Operating Officer and Chief Financial Officer.
“The combination of our exciting pipeline of title launches and
significantly strengthened balance sheet, positions the company to
maintain its momentum longer-term.”
Business Outlook as of August 4, 2015:
The following forward-looking statements reflect expectations as of
August 4, 2015. 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.
Third Quarter Expectations – Quarter Ending September 30, 2015:
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Non-GAAP revenue is expected to be between $58.0 million and $60.0
million.
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Non-GAAP gross margin is expected to be approximately 60.5%.
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Non-GAAP operating expenses are expected to be between $36.8 million
and $36.0 million.
-
Adjusted EBITDA, defined as non-GAAP operating income/(loss) excluding
depreciation of approximately $0.7 million, is expected to range from
a loss of $(1.0) million to a profit of $1.0 million.
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Income tax is expected to be an expense of approximately $0.6 million.
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Non-GAAP net income/(loss) is expected to be between $(2.2) million
and ($0.2) million, or between $(0.02) and $0.00 per weighted-average
basic share outstanding, which excludes approximately $3.0 million of
anticipated stock-based compensation expense and $2.4 million for
amortization of intangibles.
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Weighted-average common shares outstanding are expected to be
approximately 127.5 million basic and 134.1 million diluted.
2015 Expectations – Full Year Ending December 31, 2015:
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Non-GAAP revenue is expected to be between $267.0 million and $282.0
million.
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Non-GAAP gross margin is expected to be approximately 61.3%.
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Adjusted EBITDA is expected to range from $22.5 million to $27.5
million.
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Non-GAAP net income is expected to be between $18.7 million and $23.7
million, or between $0.15 and $0.19 per weighted-average diluted share
outstanding, which excludes approximately $12.0 million of anticipated
stock-based compensation expense, $9.7 million for amortization of
intangibles and the proceeds from the settlement of the Hothead Games
litigation, net of costs incurred.
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Weighted-average common shares outstanding are expected to be
approximately 119.1 million basic and 125.2 million diluted.
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We expect to have cash and short-term investments at December 31, 2015
of at least $200.0 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 # 79332466 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, August 4, 2015, and 8:59 p.m. Pacific
Time, August 11, 2015, by calling (855) 859-2056, or (404) 537-3406,
with conference ID # 79332466.
Disclosure Using Social Media Channels and Calculation of Social
Followers
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.
*Glu calculates the aggregate number of social followers of a particular
celebrity licensor by adding the total followers on Facebook, Twitter,
Instagram, Vevo and Vine for such celebrity. There is fan overlap among
these social channels and among Glu’s various celebrity licensors, and
such aggregate numbers have not been deduplicated.
Nicki Minaj’s social followers as of August 3, 2015 included: 42.3
million on Facebook, 20.0 million on Twitter, 30.4 million on Instagram,
9.1 million on Vevo, and 163.4 thousand on Vine.
Jason Statham’s social followers as of August 3, 2015 included: 51.5
million on Facebook, and 2.5 million on Instagram.
The nearly 650 million total social followers supporting celebrity
titles that Glu expects to be live by the end of 2016 is based on the
combined Facebook, Twitter, Instagram, Vevo, and Vine audiences of Katy
Perry, Kim Kardashian West, Kendall and Kylie Jenner, Britney Spears,
Nicki Minaj and Jason Statham as of August 3, 2015.
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;
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Amortization of intangible assets;
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Non-cash warrant expense;
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Stock-based compensation expense;
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Restructuring charges;
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Change in fair value of Blammo earnout;
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Litigation costs;
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Transitional costs;
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Release of tax liabilities and valuation allowance; and
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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 August 4, 2015” (“Third Quarter
Expectations – Quarter Ending September 30, 2015” and “2015 Expectations
– Full Year Ending December 31, 2015”), and the statements regarding the
ongoing traction with our catalog titles and innovative new title
launches positioning Glu for record second half revenues; our confidence
in our ability to drive year-over-year revenue growth over the next five
years; our partnerships with Nicki Minaj and Jason Statham taking our
total social following of celebrity titles live by the end of 2016 to
nearly 650 million, and the combination of our exciting pipeline of
title launches and significantly strengthened balance sheet positioning
our company to maintain its momentum 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 August 4, 2015"; the risk that Glu does not realize the anticipated
strategic benefits from our partnerships with Nicki Minaj and Jason
Statham; 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 complying with Apple’s requirement that our
games support 64-bit development will negatively impact revenue and
increase expenses; 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 May 11, 2015 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, and TAP
SPORTS BASEBALL, and branded IP games including KIM KARDASHIAN:
HOLLYWOOD, MISSION IMPOSSIBLE: ROGUE NATION, ROBOCOP: THE OFFICIAL GAME,
and TERMINATOR GENISYS: REVOLUTION, 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 major U.S. offices outside Seattle
and in 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, GLU, GLU MOBILE and the 'g' character logo are
trademarks of Glu Mobile Inc. or its subsidiaries.
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Glu Mobile Inc.
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Consolidated Balance Sheets
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(in thousands)
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(unaudited)
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June 30,
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December 31,
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2015
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2014
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ASSETS
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Cash and cash equivalents
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$
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189,650
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$
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70,912
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Accounts receivable, net
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|
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25,078
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32,231
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Prepaid royalties
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17,560
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|
|
864
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Prepaid expenses and other current assets
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16,239
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|
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17,388
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Total current assets
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248,527
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121,395
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Property and equipment, net
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5,629
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6,116
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Restricted cash
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1,990
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1,990
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Other long-term assets
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8,271
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6,674
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Intangible assets, net
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22,498
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27,524
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Goodwill
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87,969
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87,964
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Total assets
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$
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374,884
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$
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251,663
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Accounts payable
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$
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11,476
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$
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11,685
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Accrued liabilities
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2,078
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3,812
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Accrued compensation
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9,970
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10,751
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Accrued royalties
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14,554
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12,440
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Deferred revenue
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31,231
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37,333
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Total current liabilities
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69,309
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76,021
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Other long-term liabilities
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5,018
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3,936
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Total liabilities
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$
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74,327
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$
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79,957
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Common stock
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|
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13
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|
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11
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Additional paid-in capital
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548,981
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415,766
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Accumulated other comprehensive loss
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11
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(8
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)
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Accumulated deficit
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(248,448
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)
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(244,063
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)
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Stockholders' equity
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300,557
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171,706
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Total liabilities and stockholders' equity
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$
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374,884
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|
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$
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251,663
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Glu Mobile Inc.
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Condensed Consolidated Statements of Operations
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(in thousands, except per share data)
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(unaudited)
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|
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|
|
|
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Three Months Ended
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Six Months Ended
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|
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June 30,
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|
June 30,
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|
June 30,
|
|
June 30,
|
|
|
|
2015
|
|
2014
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|
2015
|
|
2014
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|
|
|
|
|
|
|
Revenue
|
|
$
|
56,150
|
|
|
$
|
40,910
|
|
|
$
|
125,620
|
|
|
$
|
85,490
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
Platform commissions, royalties and other
|
|
|
21,320
|
|
|
|
12,432
|
|
|
|
47,630
|
|
|
|
25,634
|
|
|
Amortization of intangible assets
|
|
|
2,434
|
|
|
|
441
|
|
|
|
4,868
|
|
|
|
995
|
|
|
Total cost of revenue
|
|
|
23,754
|
|
|
|
12,873
|
|
|
|
52,498
|
|
|
|
26,629
|
|
|
Gross profit
|
|
|
32,396
|
|
|
|
28,037
|
|
|
|
73,122
|
|
|
|
58,861
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
18,308
|
|
|
|
17,297
|
|
|
|
36,551
|
|
|
|
32,876
|
|
|
Sales and marketing
|
|
|
12,771
|
|
|
|
7,989
|
|
|
|
25,209
|
|
|
|
17,474
|
|
|
General and administrative
|
|
|
7,429
|
|
|
|
6,131
|
|
|
|
14,835
|
|
|
|
11,057
|
|
|
Amortization of intangible assets
|
|
|
32
|
|
|
|
127
|
|
|
|
159
|
|
|
|
254
|
|
|
Restructuring charge
|
|
|
-
|
|
|
|
159
|
|
|
|
-
|
|
|
|
159
|
|
|
Total operating expenses
|
|
|
38,540
|
|
|
|
31,703
|
|
|
|
76,754
|
|
|
|
61,820
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(6,144
|
)
|
|
|
(3,666
|
)
|
|
|
(3,632
|
)
|
|
|
(2,959
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Interest income and other expense, net:
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
12
|
|
|
|
7
|
|
|
|
18
|
|
|
|
13
|
|
|
Other expense
|
|
|
(186
|
)
|
|
|
(31
|
)
|
|
|
(476
|
)
|
|
|
(167
|
)
|
|
Interest income and other expense, net
|
|
|
(174
|
)
|
|
|
(24
|
)
|
|
|
(458
|
)
|
|
|
(154
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(6,318
|
)
|
|
|
(3,690
|
)
|
|
|
(4,090
|
)
|
|
|
(3,113
|
)
|
|
Income tax benefit/(provision)
|
|
|
809
|
|
|
|
(78
|
)
|
|
|
(295
|
)
|
|
|
(522
|
)
|
|
Net loss
|
|
$
|
(5,509
|
)
|
|
$
|
(3,768
|
)
|
|
$
|
(4,385
|
)
|
|
$
|
(3,635
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share - basic and diluted:
|
|
$
|
(0.05
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic and diluted
|
|
|
116,169
|
|
|
|
85,549
|
|
|
|
110,019
|
|
|
|
82,634
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense included in:
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
836
|
|
|
$
|
3,605
|
|
|
$
|
1,596
|
|
|
$
|
5,922
|
|
|
Sales and marketing
|
|
|
282
|
|
|
|
190
|
|
|
|
500
|
|
|
|
291
|
|
|
General and administrative
|
|
|
1,914
|
|
|
|
771
|
|
|
|
3,065
|
|
|
|
1,332
|
|
|
Total stock-based compensation expense
|
|
$
|
3,032
|
|
|
$
|
4,566
|
|
|
$
|
5,161
|
|
|
$
|
7,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
June 30,
|
|
|
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
2015
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP revenue
|
|
$
|
44,580
|
|
|
$
|
40,910
|
|
|
$
|
64,791
|
|
|
$
|
72,865
|
|
|
$
|
69,470
|
|
|
$
|
56,150
|
|
|
Change in deferred revenue
|
|
|
2,377
|
|
|
|
(5,874
|
)
|
|
|
18,762
|
|
|
|
3,363
|
|
|
|
(7,023
|
)
|
|
|
1,329
|
|
|
Non-GAAP revenue
|
|
|
46,957
|
|
|
|
35,036
|
|
|
|
83,553
|
|
|
|
76,228
|
|
|
|
62,447
|
|
|
|
57,479
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross profit
|
|
|
30,824
|
|
|
|
28,037
|
|
|
|
37,720
|
|
|
|
40,806
|
|
|
|
40,726
|
|
|
|
32,396
|
|
|
Change in deferred revenue
|
|
|
2,377
|
|
|
|
(5,874
|
)
|
|
|
18,762
|
|
|
|
3,363
|
|
|
|
(7,023
|
)
|
|
|
1,329
|
|
|
Amortization of intangible assets
|
|
|
554
|
|
|
|
441
|
|
|
|
1,338
|
|
|
|
2,434
|
|
|
|
2,434
|
|
|
|
2,434
|
|
|
Non-cash warrant expense
|
|
|
-
|
|
|
|
-
|
|
|
|
1,126
|
|
|
|
66
|
|
|
|
93
|
|
|
|
135
|
|
|
Change in deferred platform commissions and royalty expense
|
|
|
(1,209
|
)
|
|
|
1,527
|
|
|
|
(9,122
|
)
|
|
|
(108
|
)
|
|
|
2,819
|
|
|
|
(321
|
)
|
|
Non-GAAP gross profit
|
|
|
32,546
|
|
|
|
24,131
|
|
|
|
49,824
|
|
|
|
46,561
|
|
|
|
39,049
|
|
|
|
35,973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating expense
|
|
|
30,117
|
|
|
|
31,703
|
|
|
|
37,826
|
|
|
|
35,676
|
|
|
|
38,214
|
|
|
|
38,540
|
|
|
Stock-based compensation
|
|
|
(2,979
|
)
|
|
|
(4,566
|
)
|
|
|
(1,954
|
)
|
|
|
(2,134
|
)
|
|
|
(2,129
|
)
|
|
|
(3,032
|
)
|
|
Amortization of intangible assets
|
|
|
(127
|
)
|
|
|
(127
|
)
|
|
|
(127
|
)
|
|
|
(127
|
)
|
|
|
(127
|
)
|
|
|
(32
|
)
|
|
Litigation costs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(476
|
)
|
|
Transitional costs
|
|
|
-
|
|
|
|
(682
|
)
|
|
|
(493
|
)
|
|
|
(255
|
)
|
|
|
(72
|
)
|
|
|
-
|
|
|
Change in fair value of Blammo earnout
|
|
|
(304
|
)
|
|
|
(531
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Restructuring charge
|
|
|
-
|
|
|
|
(159
|
)
|
|
|
(209
|
)
|
|
|
(67
|
)
|
|
|
-
|
|
|
|
-
|
|
|
Non-GAAP operating expense
|
|
|
26,707
|
|
|
|
25,638
|
|
|
|
35,043
|
|
|
|
33,093
|
|
|
|
35,886
|
|
|
|
35,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating income/(loss)
|
|
|
707
|
|
|
|
(3,666
|
)
|
|
|
(106
|
)
|
|
|
5,130
|
|
|
|
2,512
|
|
|
|
(6,144
|
)
|
|
Change in deferred revenue
|
|
|
2,377
|
|
|
|
(5,874
|
)
|
|
|
18,762
|
|
|
|
3,363
|
|
|
|
(7,023
|
)
|
|
|
1,329
|
|
|
Non-GAAP cost of revenue adjustment
|
|
|
(655
|
)
|
|
|
1,968
|
|
|
|
(6,658
|
)
|
|
|
2,392
|
|
|
|
5,346
|
|
|
|
2,248
|
|
|
Stock-based compensation
|
|
|
2,979
|
|
|
|
4,566
|
|
|
|
1,954
|
|
|
|
2,134
|
|
|
|
2,129
|
|
|
|
3,032
|
|
|
Amortization of intangible assets
|
|
|
127
|
|
|
|
127
|
|
|
|
127
|
|
|
|
127
|
|
|
|
127
|
|
|
|
32
|
|
|
Transitional costs
|
|
|
-
|
|
|
|
682
|
|
|
|
493
|
|
|
|
255
|
|
|
|
72
|
|
|
|
-
|
|
|
Change in fair value of Blammo earnout
|
|
|
304
|
|
|
|
531
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Litigation costs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
476
|
|
|
Restructuring charge
|
|
|
-
|
|
|
|
159
|
|
|
|
209
|
|
|
|
67
|
|
|
|
-
|
|
|
|
-
|
|
|
Non-GAAP operating income/(loss)
|
|
|
5,839
|
|
|
|
(1,507
|
)
|
|
|
14,781
|
|
|
|
13,468
|
|
|
|
3,163
|
|
|
|
973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income/(loss)
|
|
|
133
|
|
|
|
(3,768
|
)
|
|
|
10,404
|
|
|
|
1,379
|
|
|
|
1,124
|
|
|
|
(5,509
|
)
|
|
Change in deferred revenue
|
|
|
2,377
|
|
|
|
(5,874
|
)
|
|
|
18,762
|
|
|
|
3,363
|
|
|
|
(7,023
|
)
|
|
|
1,329
|
|
|
Non-GAAP cost of revenue adjustment
|
|
|
(655
|
)
|
|
|
1,968
|
|
|
|
(6,658
|
)
|
|
|
2,392
|
|
|
|
5,346
|
|
|
|
2,248
|
|
|
Non-GAAP operating expense adjustment
|
|
|
3,410
|
|
|
|
6,065
|
|
|
|
2,783
|
|
|
|
2,583
|
|
|
|
2,328
|
|
|
|
3,540
|
|
|
Foreign currency exchange loss
|
|
|
136
|
|
|
|
31
|
|
|
|
347
|
|
|
|
981
|
|
|
|
290
|
|
|
|
186
|
|
|
Release of tax liabilities and valuation allowance
|
|
|
-
|
|
|
|
-
|
|
|
|
(8,352
|
)
|
|
|
1,531
|
|
|
|
-
|
|
|
|
-
|
|
|
Non-GAAP net income/(loss)
|
|
$
|
5,401
|
|
|
$
|
(1,578
|
)
|
|
$
|
17,286
|
|
|
$
|
12,229
|
|
|
$
|
2,065
|
|
|
$
|
1,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of net income/(loss) and net income/(loss) per
share:
|
|
|
|
|
|
|
|
|
GAAP net income/(loss) per share - basic
|
|
$
|
0.00
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.11
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
(0.05
|
)
|
|
GAAP net income/(loss) per share - diluted
|
|
$
|
0.00
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.10
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
(0.05
|
)
|
|
Non-GAAP net income/(loss) per share - basic
|
|
$
|
0.07
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.18
|
|
|
$
|
0.12
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
Non-GAAP net income/(loss) per share - diluted
|
|
$
|
0.06
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.16
|
|
|
$
|
0.11
|
|
|
$
|
0.02
|
|
|
$
|
0.01
|
|
|
Shares used in computing Non-GAAP basic net income/(loss) per share
|
|
|
79,719
|
|
|
|
85,549
|
|
|
|
98,628
|
|
|
|
103,406
|
|
|
|
103,869
|
|
|
|
116,169
|
|
|
Shares used in computing Non-GAAP diluted net income/(loss) per share
|
|
|
85,398
|
|
|
|
85,549
|
|
|
|
105,438
|
|
|
|
106,954
|
|
|
|
107,851
|
|
|
|
122,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating expense break-out:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP research and development expense
|
|
$
|
15,579
|
|
|
$
|
17,297
|
|
|
$
|
15,355
|
|
|
$
|
16,053
|
|
|
$
|
18,243
|
|
|
$
|
18,308
|
|
|
Transitional costs
|
|
|
-
|
|
|
|
(20
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Stock-based compensation
|
|
|
(2,317
|
)
|
|
|
(3,605
|
)
|
|
|
(764
|
)
|
|
|
(736
|
)
|
|
|
(760
|
)
|
|
|
(836
|
)
|
|
Non-GAAP research and development expense
|
|
|
13,262
|
|
|
|
13,672
|
|
|
|
14,591
|
|
|
|
15,317
|
|
|
|
17,483
|
|
|
|
17,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP sales and marketing expense
|
|
|
9,485
|
|
|
|
7,989
|
|
|
|
15,327
|
|
|
|
12,275
|
|
|
|
12,438
|
|
|
|
12,771
|
|
|
Stock-based compensation
|
|
|
(101
|
)
|
|
|
(190
|
)
|
|
|
(201
|
)
|
|
|
(209
|
)
|
|
|
(218
|
)
|
|
|
(282
|
)
|
|
Non-GAAP sales and marketing expense
|
|
|
9,384
|
|
|
|
7,799
|
|
|
|
15,126
|
|
|
|
12,066
|
|
|
|
12,220
|
|
|
|
12,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP general & administrative expense
|
|
|
4,926
|
|
|
|
6,131
|
|
|
|
6,808
|
|
|
|
7,154
|
|
|
|
7,406
|
|
|
|
7,429
|
|
|
Transitional costs
|
|
|
-
|
|
|
|
(662
|
)
|
|
|
(493
|
)
|
|
|
(255
|
)
|
|
|
(72
|
)
|
|
|
-
|
|
|
Change in fair value of Blammo earnout
|
|
|
(304
|
)
|
|
|
(531
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Stock-based compensation
|
|
|
(561
|
)
|
|
|
(771
|
)
|
|
|
(989
|
)
|
|
|
(1,189
|
)
|
|
|
(1,151
|
)
|
|
|
(1,914
|
)
|
|
Litigation costs
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(476
|
)
|
|
Non-GAAP general and administrative expense
|
|
$
|
4,061
|
|
|
$
|
4,167
|
|
|
$
|
5,326
|
|
|
$
|
5,710
|
|
|
$
|
6,183
|
|
|
$
|
5,039
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
June 30,
|
|
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
2015
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income/(loss)
|
|
$
|
133
|
|
|
$
|
(3,768
|
)
|
|
$
|
10,404
|
|
|
$
|
1,379
|
|
|
$
|
1,124
|
|
|
$
|
(5,509
|
)
|
|
Change in deferred revenue
|
|
|
2,377
|
|
|
|
(5,874
|
)
|
|
|
18,762
|
|
|
|
3,363
|
|
|
|
(7,023
|
)
|
|
|
1,329
|
|
|
Change in deferred platform commissions and royalty expense
|
|
|
(1,209
|
)
|
|
|
1,527
|
|
|
|
(9,122
|
)
|
|
|
(108
|
)
|
|
|
2,819
|
|
|
|
(321
|
)
|
|
Non-cash warrant expense
|
|
|
-
|
|
|
|
-
|
|
|
|
1,126
|
|
|
|
66
|
|
|
|
93
|
|
|
|
135
|
|
|
Amortization of intangible assets
|
|
|
681
|
|
|
|
568
|
|
|
|
1,465
|
|
|
|
2,561
|
|
|
|
2,561
|
|
|
|
2,466
|
|
|
Depreciation
|
|
|
620
|
|
|
|
607
|
|
|
|
617
|
|
|
|
669
|
|
|
|
706
|
|
|
|
732
|
|
|
Stock-based compensation
|
|
|
2,979
|
|
|
|
4,566
|
|
|
|
1,954
|
|
|
|
2,134
|
|
|
|
2,129
|
|
|
|
3,032
|
|
|
Change in fair value of Blammo earnout
|
|
|
304
|
|
|
|
531
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Transitional costs
|
|
|
-
|
|
|
|
682
|
|
|
|
493
|
|
|
|
255
|
|
|
|
72
|
|
|
|
-
|
|
|
Litigation costs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
476
|
|
|
Restructuring charge
|
|
|
-
|
|
|
|
159
|
|
|
|
209
|
|
|
|
67
|
|
|
|
-
|
|
|
|
-
|
|
|
Foreign currency exchange loss
|
|
|
136
|
|
|
|
31
|
|
|
|
347
|
|
|
|
981
|
|
|
|
290
|
|
|
|
186
|
|
|
Interest and other expense
|
|
|
(6
|
)
|
|
|
(7
|
)
|
|
|
(7
|
)
|
|
|
(3
|
)
|
|
|
(6
|
)
|
|
|
(12
|
)
|
|
Income tax provision/(benefit)
|
|
|
444
|
|
|
|
78
|
|
|
|
(10,850
|
)
|
|
|
2,773
|
|
|
|
1,104
|
|
|
|
(809
|
)
|
|
Total Non-GAAP Adjusted EBITDA
|
|
$
|
6,459
|
|
|
$
|
(900
|
)
|
|
$
|
15,398
|
|
|
$
|
14,137
|
|
|
$
|
3,869
|
|
|
$
|
1,705
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 third and fourth quarters of
2014 and the first half 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.
Included in the stock compensation expense was the contingent
consideration that was subsequently issued to the Blammo employees who
were former shareholders of Blammo, which was recorded as research and
development expense over the term of the earn-out periods, since these
employees were primarily employed in product development. Glu
re-measured the fair value of the contingent consideration each
reporting period and only recorded a compensation expense for the
portion of the earn-out target which was achieved. When evaluating the
performance of its consolidated results, Glu does not consider
stock-based compensation charges. Likewise, 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 second, third and fourth quarters of 2014 and recorded cash
restructuring charges due to the termination of certain employees in its
China, Europe and 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.
Change in Fair Value of Blammo Earnout. As part of the
acquisition of Blammo, Glu committed to issue additional consideration
in the form of Glu’s common stock to the former, non-employee Blammo
shareholders if certain revenue targets were achieved. Glu recorded the
estimated contingent consideration liability at acquisition and adjusted
the fair value of the liability each reporting period. 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 including the final amounts paid for contingent
consideration) without taking into consideration any expenses recognized
post-acquisition related to the change in fair value of the contingent
consideration. Because the final purchase price paid for an acquisition
necessarily reflects the accounting value assigned to both the
consideration, including the contingent consideration, paid and to the
intangible assets (including goodwill) acquired, when analyzing the
operating performance of an acquisition in subsequent periods, the
Company’s management excludes the GAAP impact of any adjustments to the
fair value of these acquisition-related balances to its financial
results. Glu believes that the fair value adjustments affect
comparability from period to period and that investors benefit from a
supplemental non-GAAP financial measure that excludes these charges.
Litigation 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 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.
Release of tax liabilities and valuation allowance. In the third
and fourth quarters of 2014 Glu adjusted a portion of its deferred tax
asset valuation allowance as a result of the deferred tax liabilities
recorded in connection with the Cie Games acquisition. Glu believes that
these non-recurring, one-time tax adjustments do not reflect its ongoing
operations and that investors benefit from a supplemental non-GAAP
financial measure that excludes these adjustments.
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 began, with
the quarter ended December 31, 2008, to present non-GAAP net loss and
net loss per share excluding 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 losses recognized
during 2014 and 2015 were as follows (in thousands):
|
|
|
|
March 31, 2014
|
|
|
$
|
(136
|
)
|
June 30, 2014
|
|
|
|
(31
|
)
|
September 30, 2014
|
|
|
|
(347
|
)
|
December 31, 2014
|
|
|
|
(981
|
)
|
FY 2014
|
|
|
$
|
(1,495
|
)
|
|
|
|
|
|
|
|
|
March 31, 2015
|
|
|
$
|
(290
|
)
|
June 30, 2015
|
|
|
|
(186
|
)
|
FY 2015
|
|
|
$
|
(476
|
)
|
CONTACT:
ICR, Inc.
Seth Potter, 646-277-1230
ir@glu.com
Exhibit 99.02
Page 1 Glu Mobile Q2 2015
Earnings © Glu Mobile Inc. – Proprietary Glu Mobile Inc. Q2 2015
Earnings Call August 4, 2015 Page 1 Glu Mobile Q2 2015 Earnings © Glu
Mobile Inc. –
Page 2 Proprietary Safe
Harbor Statement This presentation contains "forward-looking" statements
including: Glu expects to have 825 employees, 700 of which will be in
R&D, by the end of 2015; the expected next title releases for each of
our core franchises; that we are minimally exposed to increases in
advertising rates; that we only enter new genres where we can be the top
two; our long-term focus is on being the best in the world in a given
genre; that by 2020 there are expected to be approximately 4 billion
smartphones; the estimated size of the global games market, overall and
by segment, for 2015; the expected launch dates for our upcoming
celebrity titles; strong social features in a game will lead to long
tail revenues; Glu’s expected approach to integrating social features in
its games; Glu has multiple growth opportunities through wearables, the
quad screen future, mobile ad spending and international expansion; that
we have a growing and engaged installed base; our Q3-2015 and full year
2015 guidance; that greater product diversification is expected in our
overall 2015 revenues; the expected contribution margin flow through of
our gross revenue; our five year goals of annual revenue growth of 20%
to 30%, $1 billion of non-GAAP revenue by 2020 and all quarters from
Q3-2014 onward being Adjusted EBITDA profitable; our long-term margin
targets. 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: 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-toplay games for
smartphones and tablets; the risk that we do not maintain our good
relationships with Apple and Google; the risk that Glu does not realize
the anticipated strategic benefits from its celebrity partnerships; the
risk that our development expenses are greater than we anticipate or
that we experience product delays; the risk that our recently and newly
launched games are less popular than anticipated; 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 social, free-to-play gaming, is smaller than anticipated;
risks related to the restatement of certain of our historical financial
statements and other risks detailed under the caption "Risk Factors" in
our Form 10-Q filed with the Securities and Exchange Commission on May
11, 2015 and our other SEC filings. You can locate these reports through
our website at http://www.glu.com/investors. These "forward-looking"
statements are based on estimates and information available to us on
August 4, 2015 and 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. Glu
Mobile Q2 2015 Earnings © Glu Mobile Inc. – Proprietary
Page 3 Use of Non-GAAP
Financial Measures Glu uses in this presentation 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 non- GAAP revenue, non-GAAP smartphone revenue, non-GAAP cost of
revenue, non-GAAP gross profit, non-GAAP gross margin, non-GAAP
operating expenses, non-GAAP operating margin, non-GAAP net
income/(loss), non-GAAP net income/(loss) per share, Adjusted EBITDA and
Adjusted EBITDA margin. 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; • Change in
fair value of Blammo earnout; • Transitional costs; • Litigation costs;
• Release of tax liabilities and valuation allowance; and • Foreign
currency exchange gains and losses primarily related to the revaluation
of assets and liabilities. In addition, Glu has included in this
presentation “Adjusted EBITDA” figures which are used to evaluate Glu’s
operating performance and is defined as non- GAAP operating
income/(loss) excluding depreciation. Adjusted EBITDA margin is defined
as Adjusted EBITDA divided by non-GAAP revenue. 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. For a reconciliation
of these non-GAAP financial measures to their most directly comparable
GAAP financial measures, please refer to the tables at the end of this
presentation. Glu Mobile Q2 2015 Earnings © Glu Mobile Inc. – Proprietary
Page 4 Executive Summary -
Glu Mobile Q2 2015 Earnings © Glu Mobile Inc. – Proprietary
Page 5 Glu Mobile Q2 2015
Earnings © Glu Mobile Inc. – Proprietary
Seasoned Management Team
Chris Akhavan Pres. of Publishing 10 Quarters Eric R. Ludwig COO & CFO
43 Quarters Niccolo de Masi Chairman & CEO 23 Quarters Page 6 © Glu
Mobile Glu Mobile Q2 2015 Earnings Inc. – Proprietary Diversified Studio
Infrastructure •
Page 7 825 employees, 700
in R&D expected by end of 2015 • Game teams in diverse locations: San
Francisco, CA Bellevue, WA, Long Beach, CA Portland, OR Toronto,
Canada Moscow, Russia Beijing, China Hyderabad, India Glu Mobile Q2
2015 Earnings © Glu Mobile Inc. – Proprietary
Page 8 37.9% 4-Year
Topline CAGR $66.9 $82.7 $108.9 $113.4 $241.8 2010 2011 2012 2013 2014
Non-GAAP revenue has been restated or revised, as appropriate, to
reflect gross accounting for digital storefronts for 2010, 2011, 2012
and Q113 and prospectively, as outlined in the Company’s 8/6/2013 Form
8-K and press release Non-GAAP Revenue ($m) Glu Mobile Q2 2015 Earnings
© Glu Mobile Inc. – Proprietary
Page 9 *Computed based on
the respective year’s total non-GAAP smartphone revenue from games
internally developed by Glu, except that Racing Rivals is included in
revenue for 2014, divided by the # of internally developed games
launched by Glu in that year, including Racing Rivals for 2014. Certain
games that were launched in one year, may contribute significantly to
revenue in a subsequent year, such as Deer Hunter 2014, which was
launched in 2013, but also contributes to the “batting average” for
2014. Non-GAAP revenue has been restated or revised, as appropriate, to
reflect gross accounting for digital storefronts for 2010, 2011, 2012
and Q113 and prospectively, as outlined in the Company’s 8/6/2013 Form
8-K and press release $2.6 $2.7 $4.5 $8.7 $18.1 2010 2011 2012 2013
2014 Non-GAAP Revenue per Title Launch ($m) ‘Batting Average’
Improving* Glu Mobile Q2 2015 Earnings © Glu Mobile Inc. – Proprietary
Page 10 Consistent &
Improving ‘Hit Ratio’ *Based on top grossing ranking for all games on
the US App Store for iPhone through December 31, 2014; Racing Rivals has
been considered a 2014 launch in the above analysis 0 5 10 15 20 25 0%
20% 40% 60% 80% 100% 2012 2013 2014 % of new Glu launches reaching Top
25 grossing games % of new Glu launches reaching Top 50 grossing games %
of new Glu launches reaching Top 100 grossing games Total # of Glu game
launches Glu Mobile Q2 2015 Earnings © Glu Mobile Inc. – Proprietary
Page 11 0 10 20 30 40 50 60
70 80 Tons of Guns Gang Lords Small City Gun Bros 2 Zombies Ate My
Friends Samurai vs Zombies Defense 2 Heroes of Destiny Stardom Hollywood
Frontline Commando: D-Day Deer Hunter 2014 Hercules Knights of Puzzlelot
Defenders & Dragons Amazing Battle Creatures Motocross Meltdown Diner
Dash Tap Sports Baseball 2014 Frontline Commando 2 Robocop Dino Hunter
Contract Killer: Sniper Racing Rivals Kim Kardashian Hollywood Improving
Batting Average & Consistency • 2014 Average: $11.2M • 2013 Average:
$6.3M First 6 Months Non-GAAP Revenue ($m) Glu Mobile Q2 2015 Earnings
© Glu Mobile Inc. – Proprietary
Page 12 Leader in 6 Key
Gamer Demographics Franchise Releases Next Next CK Next FLC Next Dash
ARPG Time Management Racing Narrative RPG FPS Sports Acquired Organic
Combination Glu Mobile Q2 2015 Earnings © Glu Mobile Inc. – Proprietary
Page 13 Game* Total months
in US top 30 grossing games** 1. Game of War – Fire Age 23 months 2.
Clash of Clans 33 months 3. Candy Crush Saga 31 months 4. Candy Crush
Soda Saga 8 months 5. Boom Beach 15 months 6. DoubleDown Casino 28
months 7. Big Fish Casino 33 months 8. Slotomania 33 months 9. MARVEL
Contest of Champions 7 months 10. Jurassic World: The Game 0 months 11.
Fallout Shelter 0 month 12. Kim Kardashian: Hollywood 13 months 13. 8
Ball Pool 6 months 14. Farm Heroes Saga 18 months 15. Summoners War 6
months Game* Total months in US top 30 grossing games** 16. Hay Day 33
months 17. Minecraft: Pocket Edition 32 months 18. SimCity BuildIt 6
months 19. Gummy Drop 4 months 20. Cookie Jam 12 months 21. The
Simpsons: Tapped Out 30 months 22. Hearthstone: Heroes of Warcraft 2
months 23. The Sims: FreePlay 22 months 24. Family Guy: The Quest for
Stuff 11 months 25. Racing Rivals 10 months 26. Wizard of Oz Free Slots
3 months 27. MyVEGAS Slots 18 months 28. GSN Casino 22 months 29.
Criminal Case 2 months 30. Tap Sports Baseball 2015 0 months Building
Annuities *Based on top grossing ranking for all games on the US App
Store for iPhone taken on June 27, 2015, AppAnnie.com **Based on total
number of full calendar months between October 2012 – June 2015 the
respective game ranked as a top 30 grossing iPhone game based on
aggregate revenue estimates for each game on a monthly basis in the
United States, App Annie Intelligence © Glu Mobile Glu Mobile Q2 2015
Earnings Inc. – Proprietary
Page 14 Robocop $6.5M 31%
21% 9% 8% 4% 3% 3% 2% 2% 2% 15% Kim Kardashian: Hollywood $74.3M Deer
Hunter 2014 $52.0M Eternity Warriors 3 $20.9M Racing Rivals $18.3M Dino
Hunter: Deadly Shores $10.0M Frontline Commando: D-Day $6.6M Contract
Killer: Sniper $6.2M Frontline Commando 2 $5.8M Other catalog $36.9M
Contract Killer 2 $4.4M 2014: Non-GAAP Revenue Delivery from a Broad
Portfolio Glu Mobile Q2 2015 Earnings © Glu Mobile Inc. – Proprietary
Page 14 Robocop $6.5M 31%
21% 9% 8% 4% 3% 3% 2% 2% 2% 15% Kim Kardashian: Hollywood $74.3M Deer
Hunter 2014 $52.0M Eternity Warriors 3 $20.9M Racing Rivals $18.3M Dino
Hunter: Deadly Shores $10.0M Frontline Commando: D-Day $6.6M Contract
Killer: Sniper $6.2M Frontline Commando 2 $5.8M Other catalog $36.9M
Contract Killer 2 $4.4M 2014: Non-GAAP Revenue Delivery from a Broad
Portfolio Glu Mobile Q2 2015 Earnings © Glu Mobile Inc. – Proprietary
Page 15 • Revenue
Diversity: Ad Revenues Hedge Against CPI Increases Industry leading %
revenue contribution from Ads • Minimally exposed to increases in CPI $-
$2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 Q114 Q214 Q314 Q414
Q115 Q215 Ad Revenue (in Thousands) Variable Marketing Expense (in
thousands) 14.7% 19.5% 14.9% 15.5% 14.8% 15.5% 17.8% 15.6% 15.3% 12.6%
15.5% 17.6% 0% 5% 10% 15% 20% 25% Q114 Q214 Q314 Q414 Q115 Q215 Ad
Revenue as % of Total Revenue Variable Marketing as % of Total Revenue
Glu Mobile Q2 2015 Earnings © Glu Mobile Inc. – Proprietary
Page 17 Glu Mobile Q2 2015
Earnings © Glu Mobile Inc. – Proprietary
Page 16 Systematic
inculcation of team-talent-studio-product alignment • Specialization of
talent on each game engine – expertise, experience, passion, tech &
tools • Only enter new genres where can be top two – either in the
category or are the category • Long term focus on being the best in the
world in given genre ‘Moneyball’ Studio Strategy Glu Mobile Q2 2015
Earnings © Glu Mobile Inc. – Proprietary
Page 17 Glu Mobile Q2 2015
Earnings © Glu Mobile Inc. – Proprietary
Page 18 Glu Mobile Q2 2015
Earnings © Glu Mobile Inc. – Proprietary
Page 19 Glu Mobile Q2 2015
Earnings © Glu Mobile Inc. – Proprietary 2 YEARS OF RACING FOR PINK
SLIPS TOTAL YEARS SPENT PLAYING 32,467 41. MILLION TOTAL NUMBER OF CARS
WON IN PINK SLIP RACES MOST POULAR CARS AROUND THE WORLD 56 MILLION
TOTAL DOWNLOADS TURKEY OR CHICKEN SHIFT ACE IMPATIENCE IS A VIRTURE
Page 20 Growth Landscape
Glu Mobile Q2 2015 Earnings © Glu Mobile Inc. – Proprietary
Page 21 Smartphone Adoption
Continues Apace Source: The Economist: Week of Feb 28-Mar 6, 2015 Total
Smartphone Connections 2009: ~0.6B 2014: ~2.3B ~4x Growth in installed
base By 2020 expect ~4B smartphones Glu Mobile Q2 2015 Earnings © Glu
Mobile Inc. – Proprietary
Page 22 Mobile is the
Largest Game Market Source: Super Data Research: May 20, 2015 Glu Mobile
Q2 2015 Earnings © Glu Mobile Inc. – Proprietary
Page 23 Social Power
CELEBRITY APPS REACH* EXPECTED LAUNCH Kim Kardashian West 102m June 22,
2014 Jason Statham 54m Q415 Katy Perry 1 89m Q415/Q116 Kylie & Kendall
Jenner 108m Q415/Q116 Britney Spears 91m H1 2016 Nicki Minaj 102m Mid
2016 *Aggregate # of followers across Facebook + Twitter + Instagram +
Vevo + Vine + Tumblr followers as of August 3, 2015. There is some
overlap of these social audiences between channels and celebrities. Glu
Mobile Q2 2015 • 118m viewers – all time record half time viewing • Katy
Perry herself – 189m total social followers 646m* total social followers
inked • Long term partnerships Earnings © Glu Mobile Inc. – Proprietary
Page 24 * • 5-year
exclusive mobile gaming partnership • Dynamic and interactive promotion
& engagement ‘5-Year Super Bowl Commercial’ *Aggregate # of followers
across Facebook + Twitter + Instagram + Vevo + Vine + Tumblr followers
as of August 3, 2015. There is some overlap of these social audiences
between channels and celebrities. Glu Mobile Q2 2015 Earnings © Glu
Mobile Inc. – Proprietary Typical mobile game
Page 25 Strong Social =
Long Tail Revenues Peak at launch, then declining curve VS. Flat to
increasing curve, peak revenue 16 months post launch Glu Mobile Q2 2015
Earnings © Glu Mobile Inc. – Proprietary Social Requires Same Approach
as Monetization 2013 2014 2015 2016 2017 • Deeper Monetization •
Business-minded product leadership • Studio specialization •
Genre-appropriate social • User participation • Weigh social-feature
impact 100% 0% Proportion of our portfolio One full product + thought
cycle Proportion of our portfolio One full product + thought cycle 100%
0% Deeply Social No ‘golden hammer’
Page 26 Glu Mobile Q2 2015
Earnings © Glu Mobile Inc. – Proprietary
Page 27 Glu Analytics
Capabilities: • Capable of processing 70 million events per second •
Ingesting 2 billion events per day • Aggregating 75 million KPI metrics
per day • 2 trillion event capacity, easily scalable Usage of Analytics:
• Optimization of user acquisition, retention, paying user conversion &
LTV • Continually refining game performance through testing and analysis
Glu & Big Data Analytics Glu Mobile Q2 2015 Earnings © Glu Mobile Inc. –
Proprietary
Page 28 Multiple Long-Term
Growth Opportunities $ $ $ Glu Mobile Q2 2015 Earnings © Glu Mobile Inc.
– Proprietary
Page 30 Financial
Investment Highlights • Strong top line growth • Diversified portfolio
of franchises • Cost-effective customer acquisition • Long tail games
provide significant visibility • Growing & engaged installed
base Glu Mobile Q2 2015 Earnings © Glu Mobile Inc. – Proprietary
Page 31 Q215 Financial
Summary Q215 Non-GAAP Guidance (in millions, except EPS) Actuals Low
High Revenue $ 57.5 $ 50.0 $ 52.0 Gross Profit 36.0 30.8 32.0 Gross
Margin 62.6% 61.5% 61.5% Operating Expenses 35.0 36.4 35.7 Depreciation
0.7 0.7 0.7 Adjusted EBITDA $ 1.7 $ (5.0) $ (3.0) Basic: Earnings/(Loss)
per Share $ 0.02 ($0.05) $ (0.03) Basic Shares 116.2 116.5 116.5
Diluted: Earnings per Share $ 0.01 ($0.05) $ (0.03) Diluted Shares 122.5
122.1 122.1 Glu Mobile Q2 2015 Earnings © Glu Mobile Inc. – Proprietary
Page 32 Q215 Non-GAAP
Results ($ in millions) Q215 Q115 Q/Q Q214 Y/Y Total Revenue $ 57.5 $
62.4 (8%) $ 35.0 64% Gross Profit 36.0 39.0 (8%) 24.1 49% Gross Margin
62.6% 62.5% 5 bp 68.9% (631) bp Operating Expense 35.0 35.9 (2%) 25.6
37% Operating Income/(Loss) 1.0 3.2 (69%) (1.5) (165%) Adjusted EBITDA $
1.7 $ 3.9 (56%) $ (0.9) (289%) Glu Mobile Q2 2015 Earnings © Glu Mobile
Inc. – Proprietary
Page 33 Non-GAAP Revenue
and Adjusted EBITDA $24.7 $23.2 $22.6 $42.8 $47.0 $35.0 $83.6 $76.2
$62.4 $57.5 $- $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 $90.0
Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 (In millions) Non-GAAP
Revenue ($1.4) ($2.9) ($4.1) $6.2 $6.5 ($0.9) $15.4 $14.1 $3.9 $1.7
$(10.0) $(5.0) $- $5.0 $10.0 $15.0 $20.0 Q113 Q213 Q313 Q413 Q114 Q214
Q314 Q414 Q115 Q215 (In millions) Adjusted EBITDA Non-GAAP revenue has
been restated to reflect gross accounting for digital storefronts Q113
and prospectively, as outlined in the Company’s 8/6/2013 Form 8-K and
press release. Glu Mobile Q2 2015 Earnings © Glu Mobile Inc. –
Proprietary
Page 34 % of Non-GAAP
Revenue Non-GAAP revenue has been restated to reflect gross accounting
for digital storefronts Q113 and prospectively, as outlined in the
Company’s 8/6/2013 Form 8-K and press release. 14% 15% 14% 8% 9% 12% 6%
8% 10% 9% 20% 22% 24% 25% 20% 22% 18% 16% 20% 22% 44% 48% 49% 27% 28%
39% 17% 20% 28% 30% 23% 24% 24% 23% 25% 23% 26% 25% 26% 25% 4% 3% 5% 1%
2% 4% 13% 11% 10% 10% 3% 4% 5% 3% 3% 4% 2% 2% 2% 3% 0% 20% 40% 60% 80%
100% 120% 140% Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Hosting
and other costs Royalties Platform commissions R&D Opex S&M Opex G&A
Opex Glu Mobile Q2 2015 Earnings © Glu Mobile Inc. – Proprietary
Page 35 Non-GAAP Revenue by
Geography 17.2 14.7 13.0 11.6 10.5 9.6 19.6 5.6 5.5 7.1 7.0 7.8 6.6 7.3
6.4 5.9 6.3 6.0 6.1 5.6 8.0 - 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0
45.0 50.0 Q212 Q312 Q412 Q113 Q213 Q313 Q413 NA APAC ROW (In millions)
Q2 2015 24.1 20.0 56.9 50.7 44.5 41.8 12.6 6.8 9.7 9.8 8.5 7.6 10.3 8.2
16.9 15.7 9.4 $47.0 8.1 $35.0 $83.6 $76.2 $62.4 $57.5 $- $10.0 $20.0
$30.0 $40.0 $50.0 $60.0 $70.0 $80.0 $90.0 Q114 Q214 Q314 Q414 Q115 Q215
NA APAC ROW 73% 13% 14% Glu Mobile Q2 2015 Earnings © Glu Mobile Inc. –
Proprietary 59% 59% 60% 61% 59% 56% 67% 62% 27% 60% 61% 29% 29% 35% 38%
38% 31% 36% 38% 38% 14% 12% 11% 4% 3% 6% 2% 2% 2% 1% $24.7 $23.2 $22.6
$42.8 $47.0 $35.0 $83.6 $76.2 $62.4 $57.5 $0.0 $10.0 $20.0 $30.0 $40.0
$50.0 $60.0 $70.0 $80.0 $90.0 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414
Q115 Q215 (In millions) Non-GAAP Revenue by Platform iOS Android All
Other 73% 78% 77% 76% 83% 76% 85% 85% 85% 82% 11% 10% 12% 20% 15% 20%
15% 15% 15% 18% 16% 12% 11% 4% 2% 4% $0.0 $10.0 $20.0 $30.0 $40.0 $50.0
$60.0 $70.0 $80.0 $90.0 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115
Q215 (In millions) Non-GAAP Revenue by Category In-App Purchases Ads
Premium/All Other
Page 36 Non-GAAP Revenue
Mix Non-GAAP revenue has been restated to reflect gross accounting for
digital storefronts for Q113 and prospectively, as outlined in the
Company’s 8/6/2013 Form 8-K and press release. The presentation of
platform and category mix contribution in prior presentations was
reported as a percentage of non-GAAP smartphone revenue. All prior
percentages in the above graphs have been updated to reflect each
category’s respective percentage of total non-GAAP revenue. The
‘Premium/All Other’ revenue include featurephone
revenue. Glu Mobile Q2
2015 Earnings © Glu Mobile Inc. – Proprietary
Page 37 Non-GAAP Revenue
by Vintage $57.5M Total Non-GAAP Revenue in Q215 Deer Hunter 2014 $6.5M
Racing Rivals $9.3M Dino Hunter: Deadly Shores $1.4M Tap Sports Baseball
2014 $0.5M Contract Killer: Sniper $5.3M Diner Dash $1.5M Blood and
Glory Immortals $0.8M Tap Sports Baseball 2015 $5.2M Frontline Commando
WW2 $1.4M Cooking Dash 2016 $0.8M Terminator Genisys: Revolution $0.4M
Frontline Commando 2 $0.9M RoboCop $0.3M Kim Kardashian: Hollywood
$18.0M Q214, 18,008 , 31% Q314, 11,221 , 20% Q313, 6,691 , 12% Q414,
6,850 , 12% Other, 4,789 , 8% Q114, 1,249 , 2% Q115, 838 , 1% Q215,
7,834 , 14% Glu Mobile Q2 2015 Earnings © Glu Mobile Inc. – Proprietary
Page 38 Strong Balance
Sheet ($ in millions) Q215 Q115 Q214 Cash and cash equivalents $ 189.7 $
65.7 $ 71.5 Accounts receivable, net 25.1 24.5 16.0 Prepaid expenses,
royalties and other current assets 33.8 27.3 6.5 Other assets 15.9 19.3
6.7 Intangible assets & goodwill 110.5 112.9 38.9 Total Assets $ 374.9 $
249.7 $ 139.5 Accounts payable and accrued liabilities 13.6 15.1 11.7
Accrued expenses, royalties and other liabilities 29.5 28.0 12.0
Deferred revenue 31.2 30.7 14.7 Common stock/Paid in capital 549.0 419.2
356.4 Accumulated deficit & other comprehensive income (248.4) (243.3)
(255.3) Total Liabilities and Stockholders' Equity $ 374.9 $ 249.7 $
139.5 Glu Mobile Q2 2015 Earnings © Glu Mobile Inc. – Proprietary
Page 39 Strong Consumer
Interest 52.2 40.8 49.9 79.6 105.6 60.2 107.7 89.4 72.6 87.6 0.0 20.0
40.0 60.0 80.0 100.0 120.0 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115
Q215 (in Millions) Installs 436.0 476.8 526.7 606.3 711.9 772.1 879.8
969.2 1,041.8 1,129.5 0.0 200.0 400.0 600.0 800.0 1,000.0 1,200.0 Q113
Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 (in Millions) Cumulative
Installs Glu Mobile Q2 2015 Earnings © Glu Mobile Inc. – Proprietary
Page 40 MAU and DAU Trends
Aggregate DAU and MAU for each period presented represents the aggregate
metric for the last month of the period. An individual who plays two
different games in the same month is counted as two active users for
that month when we aggregate DAU and MAU across games. In addition, an
individual who plays the same game on two different devices during the
same month (e.g., an iPhone and an iPad) is also counted as two active
users for each such month when we average or aggregate DAU and MAU over
time. Our methodology for calculating DAU and MAU may differ from the
methodology used by other companies to calculate similar metrics. 3.9
2.9 4.3 6.4 7.0 5.3 7.2 7.2 6.0 6.1 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0
Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 (in Millions) DAU 40.1
29.4 45.2 56.3 64.5 51.9 60.3 62.6 54.6 59.6 0.0 10.0 20.0 30.0 40.0
50.0 60.0 70.0 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 (in
Millions) MAU © Glu Mobile Glu Mobile Q2 2015 Earnings Inc. –
Proprietary
Page 41 Guidance © Glu
Mobile Glu Mobile Q2 2015 Earnings Inc. – Proprietary 2015 Guidance • ©
Glu Mobile Glu Mobile Q2 2015 Earnings Inc. – Proprietary 12 Launches in
2015
Page 42 2015 Guidance
Maintaining the midpoint of our full year 2015 revenue guidance range •
No Kim Kardashian: Hollywood or Deer Hunter 2014 sized hits assumed out
of the gates • Second half of 2015 to be driven by our new title
launches and continued catalog strength © Glu Mobile Glu Mobile Q2 2015
Earnings Inc. – Proprietary
Page 43 12 Launches in 2015
Q115 Q215 Q315 Q415 Next Celeb
Page 44 Strong Contribution
Margin Flow Through % of Gross Revenues Original IP Low High Gross
Revenue 100.0% 100.0% 100.0% Platform Fees 25.6% 25.6% 25.6% Royalties
0.0% 6.9% 24.0% Gross Margin 74.4% 67.5% 50.4% User Acquisition 15.0%
15.0% 15.0% Contribution Margin of Incremental $1.00 of Gross Revenue
59.4% 52.5% 35.4% Branded IP Royalty © Glu Mobile Glu Mobile Q2 2015
Earnings Inc. – Proprietary
Page 45 2015 Full Year
Guidance Guidance ($ in millions) Q115 Q215 Q315 Q415 2015 Total Revenue
(Low) $62.4 $57.5 $58.0 $89.1 $267.0 Total Revenue (High) $62.4 $57.5
$60.0 $102.1 $282.0 Adjusted EBITDA (Low) $3.9 $1.7 ($1.0) $17.9 $22.5
Adjusted EBITDA (High) $3.9 $1.7 $1.0 $20.9 $27.5 © Glu Mobile Glu
Mobile Q2 2015 Earnings Inc. – Proprietary
Page 46 Q315 Guidance ($ in
millions, except EPS) Q215 Act Q315 Guidance Q315 Guidance Low High
Total Revenue $57.5 $58.0 $60.0 Gross Margin 62.6% 60.5% 60.5% Operating
Expense 35.0 36.8 36.0 Operating Income/(Loss) 1.0 (1.7) 0.3
Depreciation Addback 0.7 0.7 0.7 Adjusted EBITDA $1.7 ($1.0) $1.0 Net
Income/(Loss) 1.8 (2.2) (0.2) Basic Shares (millions) 116.2 127.5 127.5
Diluted Shares (millions) 122.5 134.1 134.1 Net Income/(Loss) Per Basic
Share $0.02 ($0.02) ($0.00) Net Income/(Loss) Per Diluted Share $0.01
($0.02) ($0.00) © Glu Mobile Glu Mobile Q2 2015 Earnings Inc. –
Proprietary
Page 47 Full Year Guidance
($ in millions, except EPS) 2014 Act Low High Total Revenue $241.8
$267.0 $282.0 Gross Margin 63.3% 61.3% 61.3% Operating Expense 120.5
144.1 148.3 Operating Income/(Loss) 32.6 19.6 24.6 Depreciation Addback
2.5 2.9 2.9 Adjusted EBITDA $35.1 $22.5 $27.5 Net Income/(Loss) 33.3
18.7 23.7 Basic Shares (millions) 91.8 119.1 119.1 Diluted Shares
(millions) 96.9 125.2 125.2 Net Income/(Loss) Per Basic Share $0.36
$0.16 $0.20 Net Income/(Loss) Per Diluted Share $0.34 $0.15 $0.19 Cash
and ST Investments Balance $70.9 $200.0
Page 48 Long-Term Model ©
Glu Mobile Glu Mobile Q2 2015 Earnings Inc. – Proprietary •
Page 49 Annual Revenue
Growth of 20% to 30% • $1 Billion of Non-GAAP Revenue in 2020 • All
Quarters From Q314 Onwards Adjusted EBITDA Profitable Long Term
Operating Model: Five Year Goals Glu’s goals with respect to revenue
growth and EBITDA profitability illustrate potential outcomes if our
business strategies are successful. These goals should not be treated as
forecasts, projections or financial guidance. We cannot assure you that
we will achieve any particular growth rate and our revenue and EBITDA
may not grow at all. Our performance is subject to many material risks
and uncertainties that could cause our actual performance to fall short
of these goals, including the risks discussed in our Quarterly Report on
Form 10-Q filed with the SEC on May 11, 2015 and our other SEC filings.
© Glu Mobile Glu Mobile Q2 2015 Earnings Inc. – Proprietary
Page 50 Long Term Margin
Targets 50 % of Non-GAAP Revenue LTM Low High Revenue 100.0% 100.0%
100.0% Platform Fees 25.4% 24.8% 24.0% Royalties 11.1% 15.7% 14.0%
Hosting 2.2% 1.8% 1.8% Gross Margin 61.3% 57.7% 60.2% R&D 23.2% 15.9%
14.2% S&M 3.4% 3.0% 2.5% S&M: User Acquisition 15.1% 15.0% 15.0% G&A
8.0% 4.8% 4.5% Subtotal: Opex 49.7% 38.7% 36.2%
Depreciation/Amortization 1.0% 1.0% 1.0% Adjusted EBITDA Margin 12.6%
20.0% 25.0% Long Term Target © Glu Mobile Glu Mobile Q2 2015 Earnings
Inc. – Proprietary
Page 51 Key Statistics
Stock Price $5.87 52 Week High $7.03 52 Week Low $3.27 Shares
Outstanding 130.7 Avg. Daily Volume (last 90 days) 3,136,351 Market
Capitalization $766.3 Debt $0 Cash $189.7 Enterprise Value $576.6 Shares
Outstanding is as of July 31st, 2015 Cash balance is as of June 30th,
2015 Average Daily Volume is calculated using the last 90 calendar days
Market Statistics (as of July 31, 2015) (in millions except per share
and volume data) © Glu Mobile Glu Mobile Q2 2015 Earnings Inc. –
Proprietary
Page 52 Investment
Highlights • Benefitting from strong secular global mobile growth •
Tencent investment provides strengthened balance sheet • Diversified
portfolio of franchises • Strong 2015 title roadmap • Financials
benefitting from significant investments © Glu Mobile Glu Mobile Q2
2015 Earnings Inc. – Proprietary
Page 53 Non-GAAP
Reconciliations Glu Mobile Q2 2015 Earnings © Glu Mobile Inc. –
Proprietary
Page 54 Q215 GAAP to
Non-GAAP Reconciliation Condensed Consolidated Statements of Operations
GAAP to Non-GAAP Reconciliation (in thousands, except per share data)
(unaudited) GAAP Results Change in deferred revenue Change in deferred
platform commissions and royalty expense Amortization of intangible
assets Stock-based compensation Litigation costs Non-cash warrant
expense Foreign currency exchange loss Non-GAAP Results Revenue $ 56,150
$ 1,329 $ - $ - $ - $ - $ - $ - $ 57,479 Cost of revenue: Platform
commissions, royalties and other 21,320 - 321 - - - (135) - 21,506
Amortization of intangible assets 2,434 - - (2,434) - - - - - Total cost
of revenue 23,754 - 321 (2,434) - - (135) - 21,506 Gross profit 32,396
1,329 (321) 2,434 - - 135 - 35,973 Operating expenses: Research and
development 18,308 - - - (836) - - - 17,472 Sales and marketing 12,771 -
- - (282) - - - 12,489 General and administrative 7,429 - - - (1,914)
(476) - - 5,039 Amortization of intangible assets 32 - - (32) - - - - -
Total operating expenses 38,540 - - (32) (3,032) (476) - - 35,000
Income/(loss) from operations (6,144) 1,329 (321) 2,466 3,032 476 135 -
973 Interest and other income/(expense), net: (174) - - - - - - 186 12
Income/(loss) before income taxes (6,318) 1,329 (321) 2,466 3,032 476
135 186 985 Income tax provision 809 - - - - - - - 809 Net income/(loss)
$ (5,509) $ 1,329 $ (321) $ 2,466 $ 3,032 $ 476 $ 135 $ 186 $ 1,794 Net
loss per share - basic and diluted $ (0.05) Earnings per share Basic $
0.02 Diluted $ 0.01 Number of shares used in computation - basic and
diluted $ 116,169 Number of shares used in computation 116,169 Basic
122,538 Diluted Three Months Ended June 30, 2015 Glu Mobile Q2 2015
Earnings © Glu Mobile Inc. – Proprietary
Page 55 Q214 GAAP to
Non-GAAP Reconciliation Condensed Consolidated Statements of Operations
GAAP to Non-GAAP Reconciliation (in thousands, except per share data)
(unaudited) GAAP Results Change in deferred revenue Change in deferred
platform commissions and royalty expense Amortization of intangible
assets Stock-based compensation Transitional costs Restructuring charge
Change in fair value of Blammo earnout Foreign currency exchange loss
Non-GAAP Results Revenue $ 40,910 $ (5,874) $ - $ - $ - $ - $ - $ - $ -
$ 35,036 Cost of revenue: Platform commissions, royalties and other
12,432 - (1,527) - - - - - - 10,905 Amortization of intangible assets
441 - - (441) - - - - - - Total cost of revenue 12,873 - (1,527) (441) -
- - - - 10,905 Gross profit 28,037 (5,874) 1,527 441 - - - - - 24,131
Operating expenses: Research and development 17,297 - - - (3,605) (20) -
- - 13,672 Sales and marketing 7,989 - - - (190) - - - - 7,799 General
and administrative 6,131 - - - (771) (662) - (531) - 4,167 Amortization
of intangible assets 127 - - (127) - - - - - - Restructuring charge 159
- - - - - (159) - - - Total operating expenses 31,703 - - (127) (4,566)
(682) (159) (531) - 25,638 Loss from operations (3,666) (5,874) 1,527
568 4,566 682 159 531 - (1,507) Interest and other income/(expense),
net: (24) - - - - - - - 31 7 Loss before income taxes (3,690) (5,874)
1,527 568 4,566 682 159 531 31 (1,500) Income tax benefit (78) - - - - -
- - - (78) Net loss $ (3,768) $ (5,874) $ 1,527 $ 568 $ 4,566 $ 682 $
159 $ 531 $ 31 $ (1,578) Net loss per share - basic and diluted $ (0.04)
$ (0.02) Number of shares used in computation - basic and diluted 85,549
85,549 Three Months Ended June 30, 2014 Glu Mobile Q2 2015 Earnings ©
Glu Mobile Inc. – Proprietary
Page 56 YTD 2015 GAAP to
Non-GAAP Reconciliation Condensed Consolidated Statements of Operations
GAAP to Non-GAAP Reconciliation (in thousands, except per share data)
(unaudited) GAAP Results Change in deferred revenue Change in deferred
platform commissions and royalty expense Amortization of intangible
assets Stock-based compensation Transitional costs Non-cash warrant
expense Litigation costs Foreign currency exchange loss Non-GAAP Results
Revenue $ 125,620 $ (5,694) $ - $ - $ - $ - $ - $ - $ - $ 119,926 Cost
of revenue: Platform commissions, royalties and other 47,630 - (2,499) -
- - (228) - - 44,903 Amortization of intangible assets 4,868 - - (4,868)
- - - - - - Total cost of revenue 52,498 - (2,499) (4,868) - - (228) - -
44,903 Gross profit 73,122 (5,694) 2,499 4,868 - - 228 - - 75,022
Operating expenses: Research and development 36,551 - - - (1,595) - - -
- 34,956 Sales and marketing 25,209 - - - (500) - - - - 24,709 General
and administrative 14,835 - - - (3,066) (72) - (476) - 11,221
Amortization of intangible assets 159 - - (159) - - - - - - Total
operating expenses 76,754 - - (159) (5,161) (72) - (476) - 70,886
Income/(loss) from operations (3,632) (5,694) 2,499 5,027 5,161 # 72 228
476 - 4,136 Interest and other income/(expense), net: (458) - - - - - -
- 476 18 Income (loss) before income taxes (4,090) (5,694) 2,499 5,027
5,161 72 228 476 476 4,154 Income tax (295) - - - - - - - - (295) Net
income/(loss) $ (4,385) $ (5,694) $ 2,499 $ 5,027 $ 5,161 $ 72 $ 228 $
476 $ 476 $ 3,859 Net loss per share - basic and diluted $ (0.04)
Earnings per share Basic $ 0.04 Diluted $ 0.03 Number of shares used in
computation - basic and diluted 110,019 Number of shares used in
computation Basic 110,019 Diluted 115,195 Six Months Ended June 30,
2015 Glu Mobile Q2 2015 Earnings © Glu Mobile Inc. – Proprietary
Page 57 YTD 2014 GAAP to
Non-GAAP Reconciliation Condensed Consolidated Statements of Operations
GAAP to Non-GAAP Reconciliation (in thousands, except per share data)
(unaudited) GAAP Results Change in deferred revenue Change in deferred
platform commissions and royalty expense Amortization of intangible
assets Stock-based compensation Transitional costs Restructuring charge
Change in fair value of Blammo earnout Foreign currency exchange loss
Non-GAAP Results Revenue $ 85,490 $ (3,497) $ - $ - $ - $ - $ - $ - $ -
$ 81,993 Cost of revenue: Platform commissions, royalties and other 2
5,634 - (318) - - - - - - 25,316 Amortization of intangible assets 995 -
- (995) - - - - - - Total cost of revenue 2 6,629 - (318) (995) - - - -
- 25,316 Gross profit 5 8,861 (3,497) 318 995 - - - - - 56,677 Operating
expenses: Research and development 3 2,876 - - - (5,922) (20) - - -
26,934 Sales and marketing 1 7,474 - - - (291) - - - - 17,183 General
and administrative 1 1,057 - - - (1,332) (662) - (835) - 8,228
Amortization of intangible assets 254 - - (254) - - - - - -
Restructuring charge 159 - - - - - (159) - - - Total operating expenses
6 1,820 - - (254) (7,545) (682) (159) (835) - 52,345 Income/(loss) from
operations (2,959) (3,497) 318 1,249 7,545 682 159 835 - 4,332 Interest
and other income/(expense), net: (154) - - - - - - - 167 13
Income/(loss) before income taxes (3,113) (3,497) 318 1,249 7,545 682
159 835 167 4,345 Income tax provision (522) - - - - - - - - (522) Net
income/(loss) $ ( 3,635) $ (3,497) $ 318 $ 1,249 $ 7,545 $ 682 $ 159 $
835 $ 167 $ 3,823 Net loss per share - basic and diluted $ (0.04)
Earnings per share Basic $ 0.05 Diluted $ 0.04 Number of shares used in
computation - basic and diluted $ 82,634 Number of shares used in
computation Basic 8 2,634 Diluted 8 7,647
Page 58 Non-GAAP EBITDA
Reconciliation Glu Mobile Inc. Non-GAAP Adjusted EBITDA (in thousands)
(unaudited) March 31, June 30, September 30, December 31, March 31, June
30, 2014 2014 2014 2014 2015 2015 GAAP net income/(loss) $ 133 $ (3,768)
$ 10,404 $ 1,379 $ 1,124 $ (5,509) Change in deferred revenue 2,377
(5,874) 18,762 3,363 (7,023) 1,329 Change in deferred platform
commissions and royalty expense (1,209) 1,527 (9,122) (108) 2,819 (321)
Non-cash warrant expense - - 1,126 66 93 135 Amortization of intangible
assets 681 568 1,465 2,561 2,561 2,466 Depreciation 620 607 617 669 706
732 Stock-based compensation 2,979 4,566 1,954 2,134 2,129 3,032 Change
in fair value of Blammo earnout 304 531 - - - - Transitional costs - 682
493 255 72 - Litigation costs - - - - - 476 Restructuring charge - 159
209 67 - - Foreign currency exchange loss 136 31 347 981 290 186
Interest income and other expense (6) (7) (7) (3) (6) (12) Income tax
provision/(benefit) 444 78 (10,850) 2,773 1,104 (809) Total Non-GAAP
Adjusted EBITDA $ 6,459 $ (900) $ 15,398 $ 14,137 $ 3,869 $ 1,705 For
the Three Months Ended Glu Mobile Q2 2015 Earnings © Glu Mobile Inc. –
Proprietary
Page 59 Key Operating
Metrics *DAU & MAU reflects the DAU & MAU figures for the last month of
the quarter **FTE only, excludes contractors, temporary employees and
consultants ***Q314 in-app purchase billable transactions and average
revenue per billable transaction has been restated to include the impact
of Cie Games activity after its acquisition on August 20, 2014 Actual
Actual Actual Actual Actual Actual (All Revenue Figures are Non-GAAP)
Q114 Q214 Q314 Q414 Q115 Q215 Total Revenue (in thousands) $46,957
$35,036 $83,553 $76,228 $62,447 $57,479 Total Revenue Growth Q/Q 10%
(25%) 138% (9%) (18%) (8%) Total Revenue Growth Y/Y 90% 51% 270% 78% 33%
64% Original IP % of Total Revenue 91% 93% 37% 41% 43% 41% Platform
Commissions (in thousands) $11,886 $8,155 $21,382 $19,391 $16,043
$14,162 Royalties (in thousands) 1,121 1,348 10,711 8,441 6,127 5,871
Hosting and other COGS (in thousands) 1,405 1,402 1,636 1,835 1,228
1,473 Total Cost of Revenue (in thousands) $14,411 $10,905 $33,729
$29,667 $23,398 $21,506 Non-GAAP Operating Expenses (in thousands) $
26,707 $ 25,638 $ 35,043 $ 33,093 $ 35,886 $ 35,000 Variable Marketing
Expense (in thousands) 7,271 5,456 12,800 9,641 9,693 10,103 Variable
Marketing as % of Total Revenue 15% 16% 15% 13% 16% 18% Adjusted EBITDA
(in thousands) 6,459 (900) 15,398 14,137 3,869 1,705 Headcount** (at
quarter-end) 547 562 630 653 695 732 Daily Active Users (DAU)* (in
millions) 7.0 5.3 7.2 7.2 6.0 6.1 Monthly Active Users (MAU)* (in
millions) 64.5 51.9 60.3 62.6 54.6 59.6 Installs (in millions) 105.6
60.2 107.7 89.4 72.6 87.6 Cumulative Installs (in millions) 711.9 772.1
879.8 969.2 1,041.8 1,129.5 In-App Purchase Billable Transactions (in
thousands)*** 3,286 2,257 7,778 7,477 5,896 5,723 Average Revenue per
Billable Transaction*** $11.79 $11.84 $9.14 $8.62 $9.02 $8.24
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