Stock Update (NASDAQ:GLUU): Glu Mobile Inc. Reports Second Quarter 2015 Financial Results


Glu Mobile Inc. (NASDAQ:GLUU), a leading global developer and publisher of free-to-play games for smartphone and tablet devices, today announced financial results for its 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.
  • 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.
  • 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.
  • 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.
  • 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.
  • 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 ofTencent 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:

  • In August 2015, we announced an exclusive, multi-year mobile game partnership with Nicki Minaj.
  • In August 2015, we announced an exclusive, multi-year mobile game partnership with our first male celebrity, Jason Statham.
  • 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.
  • In July 2015, we announced the availability of Mission Impossible – Rogue Nation.
  • In June 2015, we completed the second tranche of the strategic investment from a subsidiary of Tencent Holdings Limited.
  • In June 2015, we announced the availability of Cooking Dash 2016 and Terminator Genisys: Revolution.
  • 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:

  • Non-GAAP revenue is expected to be between $58.0 million and $60.0 million.
  • Non-GAAP gross margin is expected to be approximately 60.5%.
  • 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.
  • Income tax is expected to be an expense of approximately $0.6 million.
  • 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 millionfor amortization of intangibles.
  • 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:

  • Non-GAAP revenue is expected to be between $267.0 million and $282.0 million.
  • Non-GAAP gross margin is expected to be approximately 61.3%.
  • Adjusted EBITDA is expected to range from $22.5 million to $27.5 million.
  • 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.
  • Weighted-average common shares outstanding are expected to be approximately 119.1 million basic and 125.2 million diluted.
  • We expect to have cash and short-term investments at December 31, 2015 of at least$200.0 million with no debt. (Original Source)

Following the earnings announcement, hares of Glu Mobile are trading at $5.67, down $0.11 or 1.9%. GLUU has a 1-year high of $7.03 and a 1-year low of $3.27. The stock’s 50-day moving average is $6.23 and its 200-day moving average is $5.56.

On the ratings front, Glu Mobile has been the subject of a number of recent research reports. In a report issued on July 23, Cowen analyst Doug Creutz reiterated a Buy rating on GLUU, with a price target of $10, which represents a potential upside of 72.7% from where the stock is currently trading. Separately, on July 6, Northland Securities’ Darren Aftahi maintained a Buy rating on the stock and has a price target of $9.50.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Doug Creutz and Darren Aftahi have a total average return of 20.5% and 2.1% respectively. Creutz has a success rate of 56.5% and is ranked #624 out of 3724 analysts, while Aftahi has a success rate of 54.2% and is ranked #1721.

The street is mostly Bullish on GLUU stock. Out of 4 analysts who cover the stock, 4 suggest a Buy rating . The 12-month average price target assigned to the stock is $9.00, which implies an upside of 55.4% from current levels.

Glu Mobile Inc develops, publishes & markets games designed to appeal to users of smartphones & tablet devices. Its gaming brands include Blood & Glory, Contract Killer, Deer Hunter, Eternity Warriors, Frontline Commando, Gun Bros, & Heroes of Destiny.