Positive Engagement and Monetization Trends Continue
Raises Second Quarter and Full Year 2020 Financial Guidance
Expects Increased Bookings Guidance to Drive Better Than Anticipated Flow Through to the Bottom Line
SAN FRANCISCO–(BUSINESS WIRE)–Glu Mobile Inc. (NASDAQ: GLUU), a leading developer and publisher of mobile games, today provided an update on its operating and expected financial performance for the second quarter ended June 30, 2020.
Nick Earl, Chief Executive Officer, said, “Since our recent first quarter report and earnings conference call, we’ve seen significant momentum in the business and broad-based growth across our live game portfolio driven by successful live operations execution and continued positive industry trends. Our three Growth Games, along with Diner DASH Adventures, Kim Kardashian: Hollywood and Disney Sorcerer’s Arena, are performing above our expectations, with several setting new records for daily bookings along the way. These positive trends are driving increased scale and better than anticipated flow through to the bottom line. This gives us confidence in raising our expected financial outlook for the current quarter and full year.”
The company now expects to report bookings in the range of $162.5 million to $167.5 million in the second quarter of 2020, an increase over the prior guidance range of $150.0 million to $155.0 million. This updated quarterly bookings guidance represents 62% year-over-year growth at the midpoint of the range. As planned, the company decreased its user acquisition investment in May, driving strong bottom line flow through. The cost per install (CPI) environment remains favorable, and although CPIs are higher than in April, they remain below historical averages.
For the full year 2020, the company has increased its bookings outlook to $502.5 million to $512.5 million from its prior guidance of $490.0 million to $500.0 million reflecting the guidance increase for the second quarter. The bookings guidance includes contributions from current live games and excludes any unlaunched titles.
The company’s key titles have outperformed in the second quarter to date, specifically:
- Design Home and Covet Fashion are both on pace for record quarters driven by continued strength in live operations
- Tap Sports Baseball 2020 has experienced increased year-over-year bookings growth of 27% from April 1st to May 25th, an acceleration from the 23% year-over-year growth reported on the May 7th earnings call
- Diner DASH Adventures and Kim Kardashian: Hollywood have seen their strong first quarter momentum continue
- Disney Sorcerer’s Arena has outperformed across major KPI’s and is showing the foundational signs of a Growth Game
Eric Ludwig, Chief Operating Officer and Chief Financial Officer, stated, “We believe our increased bookings expectations for the second quarter paired with strong marginal flow-through positions us extremely well to execute against our long-term strategic growth plan. Our updated outlook puts us on pace to be over $42 million above our prior record quarterly bookings at the low-end of the range. Other than the revised guidance we announced today, all other assumptions regarding live game performance and user acquisition investment for the second half of 2020 that were made on our May 7th first quarter earnings conference call remain in place. We continue to take a conservative view on the back half of the year in light of macroeconomic uncertainty.”
The company is providing this business update in advance of Glu management participating in the following upcoming investor presentations and meetings:
- One-on-one meetings and a fireside chat at the Cowen 2020 Technology, Media & Telecom Virtual Conference on Friday, May 29, 2020 at 10:10 a.m. Pacific time (1:10 p.m. Eastern time).
- One-on-one meetings at the Piper Sandler 40th Annual Virtual Consumer Marketplace Conference on Thursday, June 4, 2020.
- One-on-one meetings and a fireside chat at the Baird 2020 Virtual Global Consumer, Technology & Services Conference on Thursday, June 4, 2020 at 9:15 a.m. Pacific time (12:15 p.m. Eastern time).
A live webcast, as well as a replay, of the fireside chats at the Cowen 2020 Technology, Media & Telecom Virtual Conference, as well as the Baird 2020 Virtual Global Consumer, Technology & Services Conference will be available on the company’s investor relations website at www.glu.com/investors.
Additionally, the company expects to issue its actual second quarter financial results for the period ending June 30, 2020 in early August.
Updated Second Quarter 2020 Guidance:
| in millions |
Low |
High |
| Bookings |
$162.5 |
$167.5 |
| Platform commissions, excluding any impact of deferred platform commissions |
$44.2 |
$45.6 |
| Royalties, excluding any impact of deferred royalties |
$12.4 |
$12.7 |
| Hosting costs |
$2.3 |
$2.3 |
| User acquisition and marketing expenses |
$56.1 |
$56.1 |
| Adjusted other operating expenses |
$37.0 |
$37.3 |
| Depreciation |
$1.5 |
$1.5 |
|
|
|
|
| Supplemental information: |
|
|
| Income tax |
$0.7 |
$0.7 |
| Stock-based compensation |
$6.7 |
$6.7 |
| Amortization of intangible assets |
$0.9 |
$0.9 |
| Weighted-average common shares outstanding – basic |
153.1 |
153.1 |
| Weighted-average common shares outstanding – diluted |
163.5 |
163.5 |
Updated Full Year 2020 Guidance:
| in millions |
Low |
High |
| Bookings |
$502.5 |
$512.5 |
| Platform commissions, excluding any impact of deferred platform commissions |
$135.7 |
$138.4 |
| Royalties, excluding any impact of deferred royalties |
$33.7 |
$34.3 |
| Hosting costs |
$7.4 |
$7.5 |
| User acquisition and marketing expenses |
$127.5 |
$130.1 |
| Adjusted other operating expenses |
$152.0 |
$153.0 |
| Depreciation |
$5.8 |
$5.8 |
|
|
|
|
| Supplemental information: |
|
|
| Income tax |
$0.4 |
$0.4 |
| Stock-based compensation |
$28.0 |
$28.0 |
| Amortization of intangible assets |
$3.3 |
$3.3 |
| Weighted-average common shares outstanding – basic |
154.5 |
154.5 |
| Weighted-average common shares outstanding – diluted |
165.8 |
165.8 |
| Cash and cash equivalent balance |
At least $160.0 |
|
Disclosure Using Social Media Channels
Glu currently announces material information to its investors using SEC filings, press releases, public conference calls and webcasts. Glu uses these channels as well as social media channels to announce information about the company, games, employees and other issues. Given SEC guidance regarding the use of social media channels to announce material information to investors, Glu is notifying investors, the media, its players and others interested in the company that in the future, it might choose to communicate material information via social media channels or, it is possible that information it discloses through social media channels may be deemed to be material. Therefore, Glu encourages investors, the media, players and others interested in Glu to review the information posted on the company forum (http://ggnbb.glu.com/forum.php) and the company Facebook site (https://www.facebook.com/glumobile) and the company twitter account (https://twitter.com/glumobile). Investors, the media, players or other interested parties can subscribe to the company blog and twitter feed at the addresses listed above. Any updates to the list of social media channels Glu will use to announce material information will be posted on the Investor Relations page of the company’s website at www.glu.com/investors.
Use of Non-GAAP Financial Measures
To supplement Glu’s unaudited condensed consolidated financial data presented in accordance with GAAP, Glu uses certain non-GAAP measures of financial performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Glu’s results of operations as determined in accordance with GAAP. The non-GAAP financial measures used by Glu include historical and estimated bookings, platform commissions, excluding any impact of deferred platform commissions, royalties, excluding any impact of deferred royalties, and adjusted operating expenses. These non-GAAP financial measures exclude the following items from Glu’s unaudited consolidated statements of operations:
- Change in deferred platform commissions;
- Change in deferred royalties;
- Amortization of intangible assets;
- Stock-based compensation expense;
- Transitional costs; and
- Litigation costs
Bookings do not reflect the deferral of certain game revenue that Glu recognizes over the estimated useful lives of paying users of Glu’s games and excludes changes in deferred revenue.
Glu may consider whether significant items that arise in the future should also be excluded in calculating the non-GAAP financial measures it uses.
Glu believes that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding Glu’s performance by excluding certain items that may not be indicative of Glu’s core business, operating results or future outlook. Glu’s management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing Glu’s operating results, as well as when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate comparisons of Glu’s performance to prior periods.
Glu does not provide guidance on a GAAP basis primarily due to the fact that Glu is unable to predict, with reasonable accuracy, future changes in its deferred revenue and corresponding cost of revenue. The amount of Glu’s deferred revenue and cost of revenue for any given period is difficult to predict due to differing estimated useful lives of paying users across games, variability of monthly revenue, platform commissions and royalties by game and unpredictability of revenue from new game releases. Future changes in deferred revenue and deferred cost of revenue are uncertain and could be material to Glu’s results computed in accordance with GAAP. Accordingly, Glu is unable to provide a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measure without unreasonable effort, and as a result, Glu is unable to assess the probable significant of the unavailable information, which could materially impact the amount of the future directly comparable GAAP measures.
Cautions Regarding Forward-Looking Statements
This news release contains forward-looking statements, including the information under the headings “Updated Second Quarter 2020 Guidance” and “Updated Full Year 2020 Guidance,” and the statements regarding that we’ve seen significant momentum in the business and broad-based growth across our live game portfolio driven by successful live operations execution and continued positive industry trends, that the positive trends in our business are driving increased scale and better than anticipated flow through to the bottom line and gives us confidence in raising our expected financial outlook for the current quarter and full year, that we believe our increased bookings expectations for the second quarter paired with strong marginal flow-through positions us extremely well to execute against our long-term strategic growth plan, that the updated outlook puts us on pace to be over $42 million above our prior record quarterly bookings at the low-end of the range and that we continue to take a conservative view on the back half of the year in light of macroeconomic uncertainty.
These forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Investors should consider important risk factors, which include: the risk that consumer demand for smartphones, tablets and next-generation platforms does not grow as significantly as we anticipate or that we will be unable to capitalize on any such growth; the risk that we do not realize a sufficient return on our investment with respect to our efforts to develop free-to-play games for smartphones, tablets and next-generation platforms, the risk that we will be unable build successful Growth Games that provide predictable bookings and year over year growth; the risk that we will not be able to maintain our good relationships with Apple and Google; the risk that our development expenses for games for smartphones, tablets and next-generation platforms are greater than we anticipate; the risk that our recently and newly launched games are less popular than anticipated or decline in popularity and monetization rate more quickly than we anticipate; the risk that our newly released games will be of a quality less than desired by reviewers and consumers; the risk that the mobile games market, particularly with respect to free-to-play gaming, is smaller than anticipated; the risk that we may lose a key intellectual property license; the risk that we are unable to recruit and retain qualified personnel for developing and maintaining the games in our product pipeline resulting in reduced monetization of a game, product launch delays or games being eliminated from our pipeline altogether; the risks related to the COVID-19 pandemic, including potentially higher variability in bookings and useful life of users over the near term, and other risks detailed under the caption “Risk Factors” in our Form 10-Q filed with the Securities and Exchange Commission on May 11, 2020 and our other SEC filings. You can locate these reports through our website at http://www.glu.com/investors. We are under no obligation, and expressly disclaim any obligation, to update or alter our forward-looking statements whether as a result of new information, future events or otherwise.
About Glu Mobile
Glu Mobile (NASDAQ: GLUU) is a leading developer and publisher of mobile games. Founded in 2001, Glu is headquartered in San Francisco with additional locations in Foster City, Toronto and Hyderabad. With a history spanning over a decade, Glu’s culture is rooted in taking smart risks and fostering creativity to deliver world-class interactive experiences for our players. Glu’s diverse portfolio features top-grossing and award-winning original and licensed IP titles including, Covet Fashion, Deer Hunter, Design Home, Diner DASH Adventures, Disney Sorcerer’s Arena, Kim Kardashian: Hollywood and MLB Tap Sports Baseball available worldwide on various platforms including the App Store and Google Play. For more information, visit www.glu.com or follow Glu on Twitter, Facebook and Instagram.
COVET FASHION, DEER HUNTER, DESIGN HOME, DINER DASH, TAP SPORTS, GLU, GLU MOBILE, and the ‘g’ character logo are trademarks of Glu Mobile Inc.
Contacts
Investor Relations:
Bob Jones / Taylor Krafchik
Ellipsis
IR@glu.com
646-776-0886