Micro-Transactions and In-Game Advertising Grew 98% Sequentially Glu Mobile Inc. (NASDAQ:GLUU), a leading global publisher of social games for smartphone and tablet devices, today announced financial results for its third quarter ended September 30, 2010. For the quarter ended September 30, 2010, Glu reported revenues of $15.5 million compared to $19.6 million in the third quarter of 2009. GAAP loss from operations and net loss were $(1.2) million and $(1.6) million, respectively, for the quarter ended September 30, 2010 compared to GAAP loss from operations and net loss of $(2.8) million and $(4.0) million, respectively, in the third quarter of 2009. GAAP loss per basic common share was $(0.04) for the quarter ended September 30, 2010 compared with a GAAP loss per basic common share of $(0.13) in the same period last year. GAAP net loss for the third quarter of 2010 included $177,000 in foreign exchange gains compared to $(28,000) in foreign exchange losses last year. For the quarter ended September 30, 2010, non-GAAP income from operations, which excludes stock-based compensation expense, amortization of intangibles arising from business combinations, restructuring charges and MIG earnout expenses, was $232,000 compared to $300,000 of non-GAAP income from operations in the same period last year. Non-GAAP net loss, which excludes foreign currency exchange gains and losses primarily related to the revaluation of assets and liabilities, was $(363,000) for the quarter ended September 30, 2010 compared to non-GAAP net loss of $(889,000) in the same period last year. Non-GAAP basic loss per share was $(0.01) for the quarter ended September 30, 2010 compared to non-GAAP basic net loss per share of $(0.03) in the same period last year. Excluding non-cash royalty impairments of $513,000 in the quarter ended September 30, 2009, non-GAAP net loss would have been $(376,000) in the quarter ended September 30, 2009 or $(0.01) per basic common share. The Company achieved positive cash flows from operations for the sixth consecutive quarter, generating $389,000 in cash from operations during the third quarter of 2010. Glu ended the quarter with cash and cash equivalents of $15.9 million while reducing its draw down on its line of credit to $1.6 million. The Company's cash and cash equivalents balance reflects the $13.5 million private placement that closed in the third quarter of 2010. "We are confident that our new product strategy will gain traction in the coming quarters, as we continue to make progress in repositioning the business," stated Niccolo de Masi, Chief Executive Officer of Glu. "During the third quarter, we were able to sequentially grow smartphone revenues by 12%, micro-transactions and in-game advertising by 98% as well as monthly active users by 15%. With our goal of launching five to six new social, persistent titles every quarter beginning in the fourth quarter of 2010, I am cautiously optimistic that our smartphone and tablet revenue growth will accelerate in 2011." 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." "I am once again pleased with our ability to maintain breakeven or better cash flow from operations for the sixth consecutive quarter, especially during this transition period," stated Eric R. Ludwig, Glu's Chief Financial Officer. "While we continue to carefully manage costs, we expect to increase our investments in marketing to support the launch of our new products during the fourth quarter of 2010. With a significantly strengthened balance sheet, I am confident that Glu is in position to successfully implement its strategy." "We are delighted to announce that Ben T. Smith, IV, a pioneer in the freemium mobile gaming space, has joined our Board effective today," stated Bill Miller, Chairman of Glu. "Ben was one of the earliest investors in Tapulous and provided leadership to its Board through its sale to the Walt Disney Company earlier this year. He is also an investor and Board member in a number of other social platforms including having co-founded MerchantCircle and Spoke Software. We look forward to benefiting from his insights and support." Business Outlook The following forward-looking statements reflect expectations as of November 2, 2010. Results may be materially different and are affected by many factors, such as: consumer demand for mobile entertainment and specifically Glu's mobile products; consumer demand for mobile handsets, including the next-generation platforms; carriers' and distributors' marketing to consumers, including premium deck placement; continued uncertainty in the global economic environment; carriers' and other distributors' maintaining their networks and provisioning systems to enable consumer purchases; development delays on Glu's products; competition in the industry; changes in foreign exchange rates; Glu's effective tax rate and other factors detailed in this release and in Glu's SEC filings. Fourth Quarter Expectations - Quarter Ending December 31, 2010: - GAAP revenue is expected to be between $14.0 million and $14.5 million.
- GAAP net loss is expected to be between $(7.0) million and $(7.4) million, or a net loss of between $(0.16) and $(0.17) per basic share.
- Non-GAAP operating loss is expected to be between $(3.0) million and $(3.3) million.
- Non-GAAP net loss is expected to be between $(3.4) million and $(3.7) million, or a net loss of $(0.08) per basic share, which excludes $1.0 million for amortization of intangibles, approximately $370,000 of anticipated stock-based compensation expense and approximately $2.3 million of anticipated restructuring charges primarily related to the planned relocation of our corporate offices to San Francisco, planned headcount reductions in EMEA and costs associated with the transition of our former General Counsel.
- Our income tax expense in the fourth quarter of 2010 is expected to be approximately $388,000.
- Weighted average common shares outstanding for the fourth quarter of 2010 are expected to be approximately 44.6 million basic and 45.3 million diluted.
Full Year Expectations - Year Ending December 31, 2010: - GAAP revenue is expected to be between $62.7 million and $63.2 million.
- GAAP net loss is expected to be between $(15.5) million and $(15.9) million, or a net loss of between $(0.44) and $(0.45) per basic share.
- Non-GAAP operating loss is expected to be between $(3.4) million and $(3.8) million.
- Non-GAAP net loss is expected to be between $(5.4) million and $(5.7) million, or a net loss of $(0.15) to $(0.16) per basic share, which excludes $4.4 million for amortization of intangibles, approximately $1.6 million of anticipated stock-based compensation expense and approximately $3.5 million of anticipated restructuring charges.
- Our income tax expense for the full year is expected to be approximately $1.4 million.
- Weighted average common shares outstanding for the year ending December 31, 2010 are expected to be approximately 35.4 million basic and 35.8 million diluted.
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