Glu Reports Third Quarter 2020 Financial Results

November 9, 2020

SAN FRANCISCO–(BUSINESS WIRE)–Glu Mobile Inc. a leading global developer and publisher of mobile games, today announced financial results for its third quarter ended September 30, 2020. The company also provided an outlook for its financial performance in the fourth quarter and raised its financial guidance for the full year 2020

We followed up a very strong second quarter with a better-than-expected third quarter that saw year-over-year bookings growth of 22% led by the continued strong performance of our Growth Games,” said Nick Earl, Chief Executive Officer. “Our focus on margin expansion led to significantly higher profitability driven by greater productivity from our marketing spend. We announced the title and genre of our new Crowdstar game, Table & Taste, which will serve the culinary category and complement our Crowdstar brand perfectly with a larger and more diverse addressable user base. We anticipate a very strong finish to the year driven by our core brands, Crowdstar and Glu Sports, as well as our growth initiatives. Looking ahead, our continued expected growth, future game launches, and strategic initiatives give us confidence as we enter 2021 with significant, positive momentum.”

Third Quarter 2020 Financial Highlights:

Three Months Ended
in millions, except per share data September 30, 2020 September 30, 2019
Revenue

$158.5

$107.1
Gross margin

63.9%

64.7%
Net income/(loss)

$13.4

($5.1)
Net income/(loss) per share – basic

$0.08

($0.03)
Net income/(loss) per share – diluted

$0.07

($0.03)
Weighted-average common shares outstanding – basic

171.3

146.2
Weighted-average common shares outstanding – diluted

181.6

146.2
Cash generated from operations excluding royalty advances

33.4

$3.3
Cash paid for royalty advances that are included in cash used in operations

(1.2)

($0.0)
Cash and cash equivalents

$318.1

$102.4
Additional Financial Information

Three Months Ended

Guidance provided for three months ended
September 30, 2020

September 30, 2020

September 30, 2019

Low

High
Bookings

$147.3

$120.4

$130.0

$135.0
Platform commissions, excluding any impact of deferred platform commissions*

$39.7

$32.1

$35.6

$36.9
Royalties, excluding any impact of deferred royalties*

$9.9

$7.2

$9.0

$9.3
Hosting costs

$1.9

$2.0

$2.1

$2.3
User acquisition and marketing expenses

$34.5

$40.2

$36.9

$37.9
Adjusted other operating expenses*

$36.8

$30.7

$38.9

$39.1
Depreciation

$1.4

$1.0

$1.5

$1.5
* Platform commissions, excluding any impact of deferred platform commissions, Royalties, excluding any impact of deferred royalties, and Adjusted other operating expenses are non-GAAP financial measures. These non-GAAP financial items should be considered in addition to, but not as a substitute for, the information provided in accordance with GAAP. Reconciliations for these non-GAAP financial items to the most directly comparable financial items based on GAAP are provided in GAAP to Adjusted results reconciliation table.

“Our strong third quarter financial results reflect continued positive player engagement trends and higher monetization as our business scales,” said Eric R. Ludwig, COO and CFO. “Our much stronger than anticipated profitability and solid cash flow generation was driven by strong bookings growth, more efficient and productive UA investment, and operating expense reductions. Our balance sheet remains strong and liquid with $318.1 million in cash, supporting our acquisition growth strategy. Based on our significant third quarter outperformance, we are raising our assumptions on the top and bottom line for the fourth quarter and the full year 2020.”

Financial Outlook as of November 5, 2020:
Glu is providing its financial outlook for the fourth quarter of 2020 and updating guidance for the full year 2020 as follows:

Fourth Quarter 2020 Guidance:

in millions Low High
Bookings

$119.5

$124.5
Platform commissions, excluding any impact of deferred platform commissions

$32.3

$36.6
Royalties, excluding any impact of deferred royalties

$7.6

$8.0
Hosting costs

$1.7

$1.8
User acquisition and marketing expenses

$19.0

$19.0
Adjusted other operating expenses

$38.4

$38.6
Depreciation

$1.5

$1.5

Supplemental information:

Income tax

$1.5

$1.5
Stock-based compensation

$8.8

$8.8
Amortization of intangible assets

$0.6

$0.6
Weighted-average common shares outstanding – basic

172.5

172.5
Weighted-average common shares outstanding – diluted

185.2

185.2

Full Year 2020 Guidance:

in millions Low High
Bookings

$555.3

$560.3
Platform commissions, excluding any impact of deferred platform commissions

$150.1

$154.4
Royalties, excluding any impact of deferred royalties

$37.9

$38.3
Hosting costs

$7.6

$7.7
User acquisition and marketing expenses

$146.1

$146.1
Adjusted other operating expenses

$148.0

$148.2
Depreciation

$5.6

$5.6

Supplemental information:

Income tax

$1.4

$1.4
Stock-based compensation

$31.8

$31.8
Amortization of intangible assets

$3.3

$3.3
Weighted-average common shares outstanding – basic

162.5

162.5
Weighted-average common shares outstanding – diluted

173.2

173.2
Cash and cash equivalent balance

At least $365.0

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.

Quarterly Conference Call Information:
Glu will discuss its quarterly results via teleconference today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). Please dial (866) 582-8907 (domestic), or (760) 298-5046 (international), with conference ID #7448906 to access the conference call at least five minutes prior to the 2:00 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 5:00 p.m. Pacific Time, November 5, 2020, and 8:59 p.m. Pacific Time, November 12, 2020, by calling (855) 859-2056, or (404) 537-3406, with conference ID #7448906.

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;
  • Litigation costs; and
  • Restructuring 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.