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 fourth quarter and full year ended December 31, 2015.

“Our ability to exceed revenue and EBITDA expectations in Q4 was driven by the ongoing traction of our catalog titles, including the continued solid performance of Kim Kardashian: Hollywood, Cooking Dash 2016, Racing Rivals and Deer Hunter 2016,” stated Niccolo de Masi, Chairman and Chief Executive Officer of Glu. “During the quarter we hired new studio leadership, with Tim Wilson joining as our Global CTO and Nick Earl as our President of Global Studios. Nick and Tim have hit the ground running and have already begun evolving our global studios. We anticipate that our global studio improvements will significantly enhance Glu’s product delivery on a go forward basis.”

de Masi continued, “I am pleased that Glu has extended our lead in building the premier celebrity gaming platform via a multi-year, exclusive gaming partnership with Taylor Swift. Swift is the most followed woman in the world with over 220 million social followers and a powerful addition to our celebrity gaming partnerships which now total approximately 1.3 billion social followers*. The strength of our catalog, new launch roadmap, and strong balance sheet, positions Glu for growth in 2016 and beyond.”

Fourth Quarter 2015 Financial Highlights:

  • Revenue: Total GAAP revenue was $61.0 million in the fourth quarter of 2015 compared to $72.9 million in the fourth quarter of 2014. Total non-GAAP revenue was $57.9 million in the fourth quarter of 2015, compared to $76.2 million in the fourth quarter of 2014. Non-GAAP revenue excludes changes in deferred revenue and litigation settlement proceeds.
  • Gross Margin: GAAP gross margin was 58% in the fourth quarter of 2015 compared to 56% in the fourth quarter of 2014. Non-GAAP gross margin was 63% in the fourth quarter of 2015 compared to 61% in the fourth quarter of 2014. Non-GAAP gross margin excludes changes in deferred revenue and litigation settlement proceeds, change in deferred cost of revenue, amortization of intangible assets and non-cash warrant expense.
  • GAAP Operating Income/(Loss): GAAP operating loss was $(3.1) million in the fourth quarter of 2015 compared to income of $5.1 million in the fourth quarter of 2014.
  • Non-GAAP Operating Income: Non-GAAP operating income was $2.1 million in the fourth quarter of 2015 compared to $13.5 million during the fourth quarter of 2014. Non-GAAP operating income 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 and settlement proceeds.
  • Adjusted EBITDA: Adjusted EBITDA was $2.8 million for the fourth quarter of 2015, compared to $14.1 million during the fourth quarter of 2014. Adjusted EBITDA is defined as non-GAAP operating income excluding depreciation.
  • GAAP Net Income/(Loss) and EPS: GAAP net loss was $(3.0) million for the fourth quarter of 2015 compared to net income of $1.4 million for the fourth quarter of 2014. GAAP EPS loss was $(0.02) for the fourth quarter of 2015, based on 127.8 million weighted-average basic shares outstanding, compared to a GAAP diluted EPS of $0.01 for the fourth quarter of 2014, based on 107.0 million diluted weighted-average shares outstanding.
  • Non-GAAP Net Income and EPS: Non-GAAP net income was $2.3 million for the fourth quarter of 2015 compared to$12.2 million for the fourth quarter of 2014. Non-GAAP diluted EPS was $0.02 for the fourth quarter of 2015 based on 129.4 million weighted-average diluted shares outstanding, compared to non-GAAP diluted EPS of $0.11 for the fourth quarter of 2014 based on 107.0 million weighted-average diluted shares outstanding.
  • Cash and Cash Flows: As of December 31, 2015, Glu had cash and cash equivalents of $180.5 million compared to$182.3 million at the end of the prior quarter. The company continues to have no debt. Cash flows generated from operations were $139,000 for the fourth quarter of 2015 compared to $19.3 million for the fourth 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:

  • Today, we announced a multi-year, exclusive mobile gaming partnership with Taylor Swift, an award-winning singer, musician and song writer.
  • In January 2016, we announced the exclusive partnership with award-winning chef Gordon Ramsay on the development of a new mobile game that is currently slated for global release during the summer of 2016.
  • In January 2016, we announced an investment in QuizUp developer Plain Vanilla Corp. We also have a call option to acquire Plain Vanilla Corp. for 15 months from the closing of the initial investment at a pre-agreed price.
  • In January 2016, we acquired a minority equity stake and entered into a publishing agreement with Dairy Free Games.

In addition, our Board of Directors has formally approved a stock repurchase program under which we may repurchase up to $50 million of our outstanding common stock. We currently intend to enter into a Rule 10b5-1 trading plan in order to facilitate this program, under which we may repurchase shares without suspension for trading blackout periods. The repurchase program may be suspended, discontinued or modified in compliance with applicable securities laws.

“Our solid fourth quarter results were highlighted by our ability to exceed our revenue expectations,” stated Eric R. Ludwig, Chief Operating Officer and Chief Financial Officer. “Glu remains committed to enhancing the long-term value of the company through the ongoing investment in internal and external opportunities supported by our strong balance sheet.”

Fiscal 2015 Financial Highlights:

  • Revenues: Total GAAP revenues were $249.9 million for the year ended December 31, 2015 compared to $223.1 million for the year ended December 31, 2014. Total non-GAAP revenues were $242.2 million for the year endedDecember 31, 2015 compared to $241.8 million for the year ended December 31, 2014.
  • Gross Margin: GAAP gross margin was 57% for the year ended December 31, 2015 compared to 62% for the year ended December 31, 2014. Non-GAAP gross margin was 62% for the year ended December 31, 2015 compared to 63% for the year ended December 31, 2014.
  • GAAP Operating Income/(Loss): GAAP operating loss was $(6.3) million for the year ended December 31, 2015compared to operating income of $2.1 million for the year ended December 31, 2014.
  • Non-GAAP Operating Income: Non-GAAP operating income was $13.9 million for the year ended December 31, 2015compared to $32.6 million for the year ended December 31, 2014.
  • Adjusted EBITDA: Adjusted EBITDA was $16.8 million for the year ended December 31, 2015 compared to $35.1 million for the year ended December 31, 2014.
  • GAAP Net Income/(Loss) and EPS: GAAP net loss was $(7.2) million for the year ended December 31, 2015compared to net income of $8.1 million for the year ended December 31, 2014. GAAP EPS loss was $(0.06) for the year ended December 31, 2015, based on 118.8 million weighted-average basic shares outstanding, compared to $0.08 for the year ended December 31, 2014, based on 96.9 million weighted-average diluted shares outstanding.
  • Non-GAAP Net Income and EPS: Non-GAAP net income was $13.8 million for the year ended December 31, 2015compared to $33.3 million for the year ended December 31, 2014. Non-GAAP EPS was $0.11 for the year endedDecember 31, 2015 based on 122.8 million weighted-average diluted shares outstanding, compared $0.34 for the year ended December 31, 2014 based on 96.9 million weighted-average diluted shares outstanding.
  • Cash Flows Generated/(Used) from Operations: Cash flows used in operations were $(14.0) million for the year ended December 31, 2015 compared to cash flows generated from operations of $30.6 million for the year endedDecember 31, 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 “Non-GAAP Financial Measures.”

Business Outlook as of February 3, 2016:

The following forward-looking statements reflect expectations as of February 3, 2016. Results may be materially different and are affected by many factors, such as: consumer demand for mobile entertainment and specifically Glu’s products; consumer demand for smartphones, tablets and next-generation platforms; our ability to improve the monetization of our titles and continue to successfully launch and update new games; development delays on Glu’s products; continued uncertainty in the global economic environment; competition in the industry; storefront featuring; changes in foreign exchange rates; Glu’s effective tax rate and other factors detailed in this release and in Glu’s SECfilings.

First Quarter Expectations – Quarter Ending March 31, 2016:

  • Non-GAAP revenue is expected to be between $46.0 million and $48.0 million.
  • Non-GAAP gross margin is expected to be approximately 59.9%.
  • Non-GAAP operating expenses are expected to be between $35.2 million and $35.4 million.
  • Adjusted EBITDA, defined as non-GAAP operating income/(loss) excluding depreciation of approximately $0.6 million, is expected to range from a loss of $(6.0) million to $(7.0) million.
  • Income tax is expected to be an expense of approximately $0.2 million.
  • Non-GAAP net income/(loss) is expected to be between $(6.8) million and $(7.8) million, or between $(0.05) and $(0.06) per weighted-average basic share outstanding, which excludes approximately $4.1 million of anticipated stock-based compensation expense and $2.4 million for amortization of intangibles.
  • Weighted-average common shares outstanding are expected to be approximately 129.5 million basic and 129.9 million diluted.

2016 Expectations – Full Year Ending December 31, 2016:

  • Non-GAAP revenue is expected to be between $250.0 million and $275.0 million.
  • Non-GAAP gross margin is expected to be approximately 56.2%.
  • Adjusted EBITDA is expected to range from a loss of $(7.0) million to $(15.0) million.
  • Non-GAAP net income/(loss) is expected to be between a loss of $(10.3) million and $(18.3) million, or between$(0.08) and $(0.14) per weighted-average basic share outstanding, which excludes approximately $17.7 million of anticipated stock-based compensation expense and $9.2 million for amortization of intangibles.
  • Weighted-average common shares outstanding are expected to be approximately 132.2 million basic and 134.7 million diluted.
  • We expect to have cash and short-term investments at December 31, 2016 of at least $140.0 million with no debt.

Q4 non-GAAP revenue of $57.9 million and Q4 GAAP revenue of $61.0 million Q4 Adjusted EBITDA of $2.8 million Announced exclusive partnerships with Taylor Swift and Gordon Ramsay Approximately 1.3 billion total social followers* of celebrities with whom the company has exclusive partnerships; titles featuring these celebrities expected live by end of 2017 Investment in and option to acquire Plain Vanilla Corp., developer of hit trivia game QuizUp Approved a stock repurchase program to potentially repurchase up to $50 million. (Original Source)

Shares of Glu Mobile jumped nearly 17% in after-hours trading. GLUU has a 1-year high of $7.03 and a 1-year low of $1.98. The stock’s 50-day moving average is $2.40 and its 200-day moving average is $3.81.

On the ratings front, Glu Mobile has been the subject of a number of recent research reports. In a report issued on January 27, Wedbush analyst Michael Pachter maintained a Hold rating on GLUU, with a price target of $3.30, which implies an upside of 54.2% from current levels. Separately, on December 28, Craig-Hallum’s Mitchell Bartlett maintained a Buy rating on the stock and has a price target of $4.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Michael Pachter and Mitchell Bartlett have a total average return of -9.9% and -10.1% respectively. Pachter has a success rate of 34.5% and is ranked #3537 out of 3600 analysts, while Bartlett has a success rate of 41.7% and is ranked #2915.

Overall, 4 research analysts have assigned a Hold rating and 3 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $4.23 which is 97.7% above where the stock opened today.

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.